Author Archives: rmoses

One Beer Article You Need To Read And Why, 6/2/17

Today, as I catch up to the world of beer news from my month away, I read this article about the continuing fight between North Carolina craft brewers, the large distributors, and the state legislature.

Apparently, and to no one’s shock, AB used to put language in their franchise agreements stating that the distributor agrees to push AB products above all else.  Now, the article rightly points out that this type of agreement is illegal under new laws and a consent agreement between ABInbev and the department of justice.

However, as we all know there is the law as it is written, there is the law as it is enforced, and there is the law as it is practiced.  Everyone in the beer world knows that while not requiring distributors to sell their products above all else, AB incentivises them with money if they hit certain levels of distribution.

Even if one believes that the franchise law changes and the consent agreement make these type of actions illegal, they signal a clear mindset that pervades AB and it distributors.  That is the zero-sum win at all costs mindset.  It is becoming increasingly clear that AB is not interested in a robust beer industry.  It is interested in controlling the beer industry for its own profit.

ABInbev and other big beer companies are a Leviathan whose main concern is feeding itself and growing ever larger.  Not through malice, but through its hardwired survival instinct, this beast devours all in its path.

How do you deal with such a beast? The same way you eat an elephant. One bite at a time.  It starts with beer drinkers making decisions every day with every purchase.  However, it goes beyond that.  It means individuals have to press their elected representatives to not allow large companies to trample and devour smaller companies for the sake of convenience and profit.

If you are a craft beer fan who lives in North Carolina and your state representative or senator has aligned himself against craft brewers and with the large distributors and big beer, you must let your unhappiness be known.  It is only through direct local action, that the world can change and Leviathan be defeated.

What Do We Do Now?

There was a great disturbance in the craft beer universe a month ago.  In the latest of a series of purchases by big beer, Wicked Weed Brewing in Asheville, NC was purchased by AB-InBev.  This had reverberations far beyond North Carolina where Wicked Weed was seen as the leading light of the state’s craft beer by many.

Luckily for me, I had the Cicerone exam to study for and recover from which afforded me the opportunity to organize my thoughts and opinions on the sale.  I did read the writing and opinions of others and can say much of what I read was cogent and interesting even when I may have disagreed with the writer’s conclusions.  However, too much of the writing degenerated into the, “I’m more CRAFT then you” didactic that is part of too much online discourse.  Too many craft supporters take the position that if you don’t agree with every point they’re making you are at best a big beer apologist or at worst a sellout like Wicked Weed.

That line of writing, discourse, and thinking is boring to read.  More importantly, at a time when craft beer is at a very important flexion point in its existence, it bogs the conversation down into needless finger pointing, keeping the conversation from moving forward into, “What do we do next?”

What do I think of the sale?

I am of two minds when it comes to the Wicked Weed sale or the sale of any other craft brewery to big beer.  First, is my business mind.  It tells me that neither I nor anyone else should presume to tell another person how to run their business.

While there are nebulous obligations to the craft beer collective and concrete obligations to the affected employees, in the end, the owner/brewer of the brewery must do right by the rest of the ownership group/investors.  You invest in a fledgling company or start up because you believe you will see a return on that investment at some point.  From a business perspective, this current moment in craft beer is a good time to sell a brewery.  The number of new breweries popping up is beginning to create greater and greater competition, that hurts future growth and current margins of breweries.  Cashing in may be the best advice for many breweries and their investors.

Also, in all honesty, if you are not an investor or a member of the ownership group of a brewery, you have no real idea what the original business plan promised potential investors and you have no idea what the other internal machinations lead a brewery to sell to AB or other big beer company.  You cannot attack someone who starts a business, builds it into a successful national brand, and then sells that business for a profit.  In almost any other business sector that is applauded.

Second is my small business/buy local/craft beer mind.  There are national coffee chains close to my apartment with slightly cheaper coffee and tea, however, I walk to a locally owned place a little farther away that has more personality and keeps my dollars in the community and appreciates my business.

So, while my business (i.e. intellectual) mind understands these decisions and accepts them, this second mind, while not angered is disappointed and saddened.  I am disappointed that we are losing a successful locally owned business to a conglomerate that treats beer like any other factory-made commodity.  I am saddened by the fact that much of the Wicked Weed beer you buy in 3 years will be a hollow facsimile of the Wicked Weed beer you can buy today.

This second mind knows that craft brewing is a creative endeavor and respects and honors the work it takes to make it creatively and financially.  The second mind believes that craft beer is about more than money.  It is a business and everyone wants to succeed, but as Greg Koch, founder of Stone Brewing, put it in this article, craft beer is more of a foot race then a hockey match.  Each craft brewer is running their own race pushing themselves and by extension everyone else by doing their own thing their own way to the best of their abilities.  Big beer treats beer as a zero-sum game where you win or die.  That point of view is not only antithetical to my personal beliefs, it stands in stark opposition to the founding principles of craft beer.

No craft brewer gets into brewing to make money.  The hours are long and there is no guarantee the yeast will create the beer you want or expect.  Brewers do this because they love that part of the challenge and they love how brewing allows them to express themselves.  This separates them from their investors who may not have the same almost romantic vision of brewing and expect to make money from this venture.

We must accept both realities as part of craft beers future to ensure its continued growth.

Back to Wicked Weed. I understand the sale, but I don’t like it.  Sometimes the money they offer is too great to turn down.  This sale like almost all the others before it is understandable and defensible on a business and intellectual level as individual business decisions.  They are, however, against everything the craft beer ethos espouses.

Where are we right now?

First, big beer companies are going to continue buying craft breweries.  That is part of a long-term strategy that will not change and is exacerbated by a business environment that makes some craft brewers ripe for buying.

Second, we know that capital investment in new and existing breweries is increasing as the segment matures as a business.  Many of these investors no longer just want to say they own part of a brewery to be cool but want to turn their investment into a profit.

Third, the almost exponential growth we saw in the last few years in the number of craft brewers is leading to equally exponential growth in competition for tap handles and shelf space among craft brewers.  The larger, regionally focused craft brewers are beginning to get squeezed out of the marketplace not necessarily by big beer and their many tentacles but by the mass of extremely localized small breweries that they inspired.  Many of those larger brewers have been faced with flat if not negative growth in the last year.  That is why this business environment breeds these sales.  For some breweries selling means recouping an investment now when that may not be possible in a few years’ time.

What do we do?

The first thing to do as a craft beer fan is to start simple and start local.  Let your love of craft beer inform your buying decisions of what and where you buy.  If you have local breweries near you, frequent them.  Buy their beer, their growlers, and their swag.  If you go to a local brewery and their beer isn’t as good as you had hoped, don’t frag them on social media. Send a personal email or letter to the owner/brewer expressing your concerns in a thoughtful and respectful manner.  We must be the ones who control craft beer.  Not the faceless conglomerates who could just as easily be selling ball bearings rather than beer.

Another thing you can do is join your state brewer’s guild or the Brewers Association as an affiliate member.  Most state guilds have this option to raise funds and create a group of supporters and volunteers.  For as many issues as you may have with some of the day to day decisions the Brewers Association and state guilds make, they are organizations whose expressed reason for existence is to support and promote independent craft brewers.  Give money, get a t-shirt, get newsletters, and get discounts at members taprooms for stuff you wanted to buy anyway.

Finally, bloggers, writers, and podcasters should try to be more Thomas Jefferson than Thomas Paine.  In every revolution, there is a time for rhetoricians to spit hot fire from the blog post or podcast microphone.  However, there is also a point when that loses its effectiveness.  You need equally iron-willed and no less committed people who will create and implement the ideas and theories that make the revolution’s goals self-sustaining.  Too often, online discussion about craft beer ends up with everyone talking in circles, saying nothing, and going nowhere.  However, for craft beer to continue to move forward through this time of growth and upheaval, we all need to step off the hamster wheel of online discourse and offer something thoughtful and new.

I don’t think big beer is evil, much in the same way I don’t think Hurricane Katrina was evil.  However, there are two things.  First, many of their business practices and the actions their distributors perpetrate in their name are detestable and contemptible and are rooted in the fundamental belief that this is a zero-sum proposition.  Every time we hear those stories we should challenge big beer in ways large and small. Second, AB will turn Wicked Weed into another one of its stable of beers with just a little twist to make it stand out in its sea of mediocrity and that is what is maybe the saddest part. What Wicked Weed could have become will never be.

Update

The new post will be up tomorrow morning.  It is a bit longer then I anticipated, and has gone through a few edits and revisions.  However, I think it is almost ready.

The Beer Counselor

Hello, again

It has been over a month since I posted and wanted to let everyone know everything is well.

I took some time off to study for, take, and recover from the Cicerone exam.  I found studying for the exam and working 50 hours a week at my job was exhausting so I’m currently on a mini-vacation. However, there will new posts coming in the next day.

I will post my thoughts on the Cicerone exam and the thing I learned studying for it.  I will tell you my palate is better then before, but I realized some other interesting things studying styles.

I will also have a post on my thoughts about the Wicked Weed sale.  I am actually glad my break to study occurred during the sale and the resulting social media outrage. I not only took a break from writing but also a break from Twitter in a meaningful way.  That may have saved my sanity during that week.  Anyway, I just wanted to drop a post and let everyone know what was going on with me.

Stay tuned to this space later today for the new post.

One Beer Article You Need To Read And Why, 4/26/17

For the second consecutive day, I am highlighting an article that has nothing to do with beer.  Why do I do this?  Because people within a bubble often don’t notice anything outside the bubble and begin to believe their problems are unique.

ESPN is going to lay off about 100 people today.  Some of them you’ve never heard of and some them on air talent.  They are also slashing the contracts of some of the people staying.

ESPN’s revenues are usually around the $10 billion range. ESPNs problem is that a significant portion of those revenues come from carriage fees.  What are carriage fees you ask?  Look at your cable or satellite bill to find out.  Basically, ESPN gets a huge cut of all the carriage fees paid to cable/satellite companies.  However, if you haven’t heard, many people are abandoning cable/satellite for internet over the top services.  That means people are using Apple TV or Roku or other similar services to get their television fix. That leaves companies like ESPN, who because the way live sports rights fees work, screwed.  ESPN bought all the television rights for live sports, but didn’t or couldn’t buy the internet rights.  Now, a successful company that has almost always made the right decision is facing a troubled future.

Again, why I’m writing about this in a beer blog? Because, with all the talk about a craft beer bubble bursting or a shakeout of the craft beer business, we are watching as ESPN, one of the most successful and ubiquitous brands in the world, must lay off people.  ESPN has a good business plan and good leadership, yet they are still subject to the quickly changing landscape of their chosen business.

I learned to accept that people are here one day and then they are not at an early age.  When brands or businesses die, I don’t get angry at capitalism or the people who didn’t buy the thing.  I feel sorry for the people who lose their livelihood because of it and wish them luck and a speedy recovery to the land of the working.  Just because something exists doesn’t mean it must always exist.  Continued existence is not guaranteed for anything or anyone.

The thing I learned most from playing sports and then again when I started studying Zen and then again when I started his blog, is you cannot affect outcomes.  All you can do is what you are supposed to do to the best of your abilities.

If successful and powerful ESPN can make missteps and must lay off people, your brewery no matter how successful may have to do the same thing.  It may even have to close.  However, do not let that be the end.  Whatever happens in the next 5 years in craft brewing, don’t operate in fear.  Just control the things you can control.  It took a long time for me to understand that. It isn’t that there haven’t been failures or missteps, but I learned from those more than any of the successes.  How do you learn to walk? By falling down, getting back up, and doing something different then what made you fall down.

One Beer Article You Need To Read And Why, 4/25/17

In my perusal of news stories this morning looking for my One Article, I ran across two things that changed my focus.

One was from Bomani Jones in a series of Tweets about how the news publishing world has changed from the base being the publication to the article to the kernels of information. Here is the end of the Tweet that caught my attention, “…and i think we could objectively say plenty of valuable stuff loses to bullsh_t.” As craft beer fans or just as beer fans in general, we know this is true and we will say that play out as the next couple of years.

The second thing, the one article for the day, is this from one of my favorite websites, brainpickings.com.

In this space, I have often made the point that brewing is a creative endeavor.  Besides the beer, one thing that I love about craft beer is how that creativity bumps up against the business of craft beer.  This summary of physicist David Bohm’s essay On Creativity, captured my attention today as I tried to stay away from legislatures and the alcohol wholesaler lobby.

My favorite part of his summary is Bohm’s description of how a child learns to walk.  I requote it here, “trying something out and seeing what happens, then modifying what he does (or thinks) in accordance with what has actually happened.”

In a perfect world, that is how brewers would approach each new beer they create.  I love the creativity of craft beer while grudgingly accepting the business of craft beer. Again, the fun thing is how the inclination to create runs into the need to move product.

As a brewer, you have to understand your customers also want familiarity because it grounds them and orients them.  If you create a beer and your customers love it to the point that you barely can keep up with demand, as a business you must keep making it. It almost doesn’t matter if you like the beer or even if you viewed as a step towards the creative “oneness” Bohm wrote about.  You keep making it to keep paying rent.

I’ve noticed when people come into the bar and taste beers before they pick one, it seems to me they are looking for the right answer when they aren’t even taking a test.  Bohm was right that as we grow older we become afraid to make mistakes and lose that sense and pure joy in discovery that toddlers have.

The bigger the brewery the greater the fear and consequences of making mistakes.  That is one area the smaller breweries have an advantage over the bigger brewers.  Smaller brewers can afford to be constantly creative and feed the craft beer’s public insatiable search for the next big new thing. If something doesn’t work, they change course quickly.  However, just as important is knowing what you are and making those creative choices within a consistent framework and plan.

That is why the brewers I like and respect most are ones who combine that creativity with a good business plan and have a strong sense of who they are, what they are, and where they want to go.

Beer Counselor Fun Fact, 4/24/17

The article in today’s One Article got me thinking about something.

Here is a fun little fact that many don’t know about how grocery stores work, at least here in NC.  Let me back up.  Retail store shelf space is laid out in these things called planograms.  They are just as they sound: the plan of how each store is laid out.  It is not just what departments are where in each store, but what products and specific brands are placed where on each shelf.  Most large retail companies either have internal groups that handle it or they farm it out to companies that specialize in planograms.

That brings us back to grocery stores and their beer/wine set ups.  These planograms, at least the beer planograms are done by one of the two big beer companies you are thinking about as soon as I said big beer companies.  There is input from the grocery store chain and some chains are starting to put all planograms in house, however still with input from the big beer companies.  By and large however the big beer companies decide how much shelf space everybody gets.  Now, the shelf space is mostly divided up by distributor with the distributors of ABI and MillerCoors brands getting the bulk.  Then it is further divided among their “craft” brands and then finally any craft brands and self-distributed beers.

Now, whereas your frozen pizza shelf placements are mandated by corporate headquarters and stocked by the store, beer and wine are stocked by the distributor.  So, while the main beer sets are set by the planogram and stocked by a distributor, the smaller craft brands are picked at the store level and stocked by whoever distributes that beer.  The grocery store staff doesn’t touch beer or wine.  That puts smaller brewers at a disadvantage.  All the store manager wants to see is full shelf space, they don’t care what is in that shelf location as long as it isn’t empty.  The big distributors that handle the big brewers have sales reps who all they do is work the off-premise accounts like grocery stores ordering and policing their shelf space.  A small brewery self-distributing doesn’t usually have enough people to do that even just for local grocery stores.

That is why all these new breweries are competing with each other for shelf space in places where most beer is sold more than they are competing with the big beer companies.

When institutional racism is mentioned, people believe it means institutions are actively discriminating against people of color, women, or gays/lesbians.  It usually means the institution was set up in a way to often unintentionally benefit the majority group.

Because alcohol laws differ from jurisdiction to jurisdiction even within a county, it was easier for grocery store chains to let the big beer companies and distributors create their beer sets.  When there were fewer than 200 breweries that made sense.  AB gets this Miller gets this and then whatever weird German stuff that makes it over can go here and will put malt liquor and 40s over here for black folks.

Many of the beer and alcohol laws that govern us to this day were written at the same time those decisions were made.  Now, the world done changed and those who benefit the most from the way the things were always done and the way laws are written will not give up those advantages without a fight.  Even if that fight is probably doomed.

 

One Beer Article You Need To Read And Why, 4/27/17

I’m a romantic.  The only way to become truly cynical is to willingly throw your heart out there and to have it stomped on enough times that thick scar tissue forms around it and you so you don’t feel anymore.  Was that TMI?

Anyway, I’m a romantic, but I love stories that take a slightly bent view of romance.  My favorite romantic comedy of all time is Roman Holiday, the one where the guy doesn’t get the girl in the end.  If the news is slow one day I’ll give you my top 5 romantic comedies.

Yet, I continue to digress.  Stories that take a slightly bent view of romance are my favorite.  I like this story about mobile beer canaries precisely because in its unromanticized snapshot of brewery work, it sums up the romance of it exactly.  All the photos of inside the brewery are of guys in dirty rubber boots and overalls who look like they have been there for 12 hours because they have.  For the most part, they wouldn’t want to be anywhere else.

This story also sheds light on the economics of brewery work.  There are more breweries than ever which is great for the consumer, but hard for the brewer.  That is where mobile canning helps small brewers who can’t afford their own canning line.  Mobile canning operations allow them to get their beer canned and ready to sell without the overhead of keeping and running a small canning line somewhere in their facility allowing them to at least attempt to get shelf space in stores, and with so many new brewers out there that shelf space is getting harder and harder to get.

When I really began to understand that craft beer wasn’t just some little thing among a small diehard group of people, but a real industry is when I started noticing all the ancillary businesses popping up around craft beer.  Things like mobile canaries are what makes this more than just some mom and pop operation, but a real industry that politicians are going to have to take more seriously as an economic driver.  Many at the local level do, but that number is much smaller at the state and federal levels.

Craft beer isn’t just some little engine that could anymore.  It is developing into a true economically important business engine for parts of this country.  That isn’t a bad thing.  It also doesn’t mean craft beer is out of the woods as far as its survival.  However, as this story also points out the threat to that survival isn’t just big beer.  It is also its own growth.  Not every brewer that has started in the last 5 years will survive the next 5 years.  Some of those will be good breweries caught in a bad geographic area or who came too late or too early to the party.  However, the majority will be breweries that make mediocre beer, don’t have a brewing plan, or don’t have a business plan.  Or they do have those, but they are unrealistic and poorly executed.

What We Learned This Week 4/21/17

What did we learn this week?

This week we learned that the NC Legislature is a dysfunctional mess.  We already knew that after HB2 where they managed to solve a problem that didn’t exist thereby creating a bigger mess, but the debacle of HB500 is a red underline to go with the yellow highlighter that is HB2.  It isn’t that the legislature didn’t pass HB500 and increase the self-distribution limit for NC breweries and loosen up distribution rights contracts.  It is that the bill was not allowed to come up for a vote. It is that there was no attempt at negotiation on the part of those opposed to the bill.  That is not how you govern.  I used to love politics when you had two opposing parties who had the best of intentions for its constituents. Somewhere in the Clinton administration, both parties stopped caring about the people that voted for them and more about accumulating wins and power and imposing your beliefs on everyone whether they believe the same thing or not.  Anyway, this will end up in state court. Regardless of what the actual effects of the law changes would be, I support raising the cap and I support loosening the distribution contracts.

We also learned that Boston Beer is quickly moving on from being a craft brewer as well as being primarily a beer company.  This isn’t so bad except that Sam Koch and the rest of Boston Beer haven’t quite figured out that the general craft beer drinking public already think they aren’t craft brewers.  The leadership at Boston Beer is the guy who can’t let go of how great they were in high school or college and don’t understand how everyone else has moved on and doesn’t care about 20 years ago.  I think it is a sign of health and maturity of the craft beer industry that companies like Boston Beer, Sierra Nevada, Bells, etc. are moving on to the next phase of their existence.  The companies that don’t fight that growth, but embrace it and figure out how to use that maturity as an asset are the ones who will continue to grow in the future.

We learned that the Brewers Association does listen to its constituents or at least they are trying to keep themselves from looking like misogynists or worse.  The BA will no longer allow GABF or World Beer Cup winners with “offensive” names to use the medals as advertising nor will they announce the names at the ceremonies.  This is about as much as a voluntary membership organization can do to its members without pissing them off enough to leave.  This is more of a symbolic gesture to announce to brewers that they need to think twice about naming a beer that might offend a segment of the population.  This is an important point to remember as craft beer continues to saturate the 25-35-year-old white male market.  The BA knows the way you continue the growth of craft beer in the future is to attract non-white males to craft beer.  That starts with not offending them before they even walk in the door with the names of your beers.

Hopefully, we will learn more next week.

One Beer Article You Need To Read And Why, 4/20/17

Wooderson is kind of cool.  Yeah, it is creepy he still hangs out with high school girls when he is somewhere in his 20s, but he is still kind of cool mostly because he is played by Matthew McConaughey.  He hasn’t learned Chris Rock’s advice about being the old guy at the club.

I don’t think Sam Koch or Boston Beer company has learned that.  However, circumstances are proving that Chris Rock was correct for some brewers as well as Wooderson or guys like this.

Bryan Roth has written a great blog post about Boston Beer and why it may no longer be considered craft by the Brewers Association long after it is no longer considered craft by most craft beer drinkers.  I posit that the average 26-year-old sitting in a tap room he walked to from his apartment this afternoon thinks of Sam Adams the same as he thinks of Bud or Miller.  It seems at least recently Sam Koch didn’t understand this.  Also, until recently the Brewers Association agreed, literally changing its own rules to keep Boston Beer as a dues paying member.

That time is probably over and it should be according to Roth’s research.  Currently, estimates project that only 57.2% of Boston Beer’s barrel production comes from actual beer.  Why is that you ask?  They produce Angry Orchard and a bevy of hard sodas, teas, and other liquids with just enough alcohol to make the drinker think they are living on the edge.

I think it is harder for larger (and particularly legacy brewers) to change course as fast as the current craft beer scene requires.  I believe brewers like Boston Beer, Stone, Lagunitas, Stone and even Sierra Nevada are in danger.  That danger is not from ABI or MillerCoors.  It is from all the small locally focused brewers who were inspired by Boston Beer, Sierra Nevada and their like.

My advice to those breweries is not really an answer, but it is to be nimbler.  Figure out how to change course and quickly and adjust what you are offering to the craft beer public without changing the core of who and what you are.  The one way to do that is to bring in new, younger leadership.

That doesn’t mean to go out and find some hired gun CEO type to run the business.  It means elevating someone who has been with the brewery for a while and is steeped in what the brewery stands for to a position of true leadership and influence.  That is often the child of the founder like in the cases of Sierra Nevada and Bells Brewery.  In the last few years, both companies’ founders have begun the process of turning over decision-making to their children.  Time will tell if the younger leaders can manage this changing craft beer dynamic.

Valar Morgulis.  No one likes to see companies fail and die.  However, no company (or country) is guaranteed infinite existence.  Just as all men die, so do all companies eventually.  We, the craft beer drinkers of this country must accept this, especially of the next few years because some of the brewers that will go away will shock and surprise us.