Monday, July 9, 2012

Big Breweries take on craft

They have requisite money, talent, and desire to enter craft beer, but curiously fail often. American Lagers are a difficult beer to brew and large breweries make, ship, market and sell millions of gallons of it worldwide. So why can't they get a simple craft beer right?

40 oz of America! Pabst Brewing Company is the largest domestically owned brewery.
Miller, Coors, and Aneuser-Busch and Buweiser are owned by British and Belgian-Brazillian  multinational corporations. 

It's likely difficult to put the craft back into corporate brewing. Similar to attempting to reverse engineer Ikea into a producer of handcrafted furniture. Big brewing's business model relies on annihilating inconsistencies, fostering mass appeal, and extending shelf life. Broad appeal and using any chemical means necessary to create a heat and light stable beer clash with the very soul of craft beer. Craft means using local, fresh ingredients, appealing to small number of people and creating once a year magic. Hops and barley subtly change year to year. Like a hand crafted cigar that has subtle notes of acidic soil the tobacco is grown in; craft beer feels special, not plebeian.

Also, consider American brewing history. The mega breweries that dominate today survived prohibition by creating nonalcoholic beer and entering the pharmaceutical production field. They learned how to produce consistently on a massive scale. Breweries that prospered during Prohibition are unlikely to abandon ideas that helped them survive. I think these companies cannot shake ideas of homogenization and control in order to brew craft beer.

John points out that the brewing industry created food and packaging science. He ponders how they fail even with talented and knowledgeable teams. While craft beer also benefits from innovation and technological advances, developments created by big brewing serve specific challenges not seen in craft beer. They developed beers as a mass product; cheap, drinkable, low alcohol, and largely forgettable. Packaging and flavor science pushed boundaries for distribution and consistency. Beer could last longer, taste the same in every bar across America and withstand abuse it was never expected to endure before. Goals pursued by corporate beer have little in common with the needs of craft beer drinkers.

They have succeeded by borrowing craft concepts with heavy, citrus extract infused wheat beers. Citrus notoriously covers up most problems in beer. In craft world, lemon and orange were probably originally added to American wheat ales to cover up infected beer or dirty draught lines. Wheat adds sugar and texture and also covers up any problems with particulate in bottle. When brewing 800-1000 bbl batches, risk of infection and minor changes could cost a brewery tens of thousands of dollars. These ingredients lack the consistency of sterilized rice and isomerized hop extract. Malted barley and pelleted hops vary each year if not batch to batch. Choosing wheat citrus styles may help breweries manage that risk. Large scale production of craft styles that show inconsistencies may turn customers off unless large brewers teach customers to appreciate and expect slight variation.

Corporate beer may have money, desire and science to get into craft beer but lack a connection to consumers and craft mentality. Craft beer centers not on bottom line mentality but on supporting individuality, humor, camaraderie and quality ingredients. Frankly, they just wouldn't get it. Small craft beer companies also know their customers better than larger companies. Whoever controls the relationship to the customer wins. Smaller brewing companies get better feedback, respond to specific regional trends faster and know how to market intuitively. Mega breweries also inherently lack credibility, a key to consumer acceptance.

American lagers lose about 3% market share per year. They can sense change coming and will diversify to survive the slow death of fizzy yellow lagers. I believe the large breweries will continue to buy up craft brands and run them on a small- medium scale to keep as much of the original flavor as necessary to hold onto loyal customers and brand identity. They will have to have many small breweries contributing to their distribution flow. Eventually these separate breweries will develop tiny differences and new recipes, techniques and brands will emerge. The brewing industry will benefit as a whole as numbers of professional brewers increase and they eventually start their own breweries armed with large scale production experience.

Large breweries' interest in the fate of craft beer benefits craft brewer's political and legal aspirations as well. Large breweries control legislative lobbying and give all beer producers a voice. Small craft brewers cannot pass legislative changes without the big boys.

Cross pollination of large brewery technology will improve craft beer as personnel migrate away from big labs and into craft beer. Quality control and assurance will become a part of even small brewery planning. Women, minorities and smaller marketing segments will become important consumers. Consumer education will transform the pub landscape into one of beer appreciation. Moronic and sexist advertising will fade away as we look upon a new golden age of American small business and a revival of beer culture nation wide. You may say that I'm a dreamer, but I'm not the only one.

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