Branding brew-ha-ha

BY Mike Barber

With craft beer, authenticity is everything. So why does Big Beer keep buying up smaller brands?

Granville Island. Mill Street. Creemore Springs and Unibroue. What do these Canadian brewery brands all have in common?

If you’re an average Canadian beer drinker, you’d probably answer that they make “craft” beers: handmade alternatives to the mass-produced “big” brands (the Coors, Budweisers, Molsons and Labatts of the world, which many beer drinkers have come to abandon in the quest for the more interesting flavours and perceived quality of artisanal beer). They all sell at a premium price compared with their mass-produced counterparts. And their products are branded with more personality, with names like Lions Winter Ale, 100th Meridian Amber Lager, UrBock Seasonal Dark Lager, or Le Fin du Monde Tripel-style golden ale.

What the average beer drinker may not know is that these brands are also all owned by the world’s biggest corporate breweries: MolsonCoors and AB InBev (whose main brands include Molson, Coors, Budweiser, Labatt, Corona, Michelob and dozens more)—also collectively known as Big Beer. With their industrialized operations, thousands-strong workforces, mighty distribution channels and massive marketing budgets, these corporations are worlds away from most perceptions of craft beer.

In fact, Big Beer’s craft ownership is so widespread that it’s given rise to new terms among beer aficionados, such as “crafty” beers or “stealth craft.”

The rise of crafty beers

But why would a massive brewery forego its economies of scale, taking the time and spending the money to buy or launch a “crafty beer” brand?

The answer is that beer is like any other fast-moving consumer good: if a product category is popular, it’s worth getting into. Think of coconut water, quinoa and green tea. Craft beer is simply a new trend to tap into.

It’s also one of the few beer categories that’s on the upswing. Overall, mass-market beer sales have stalled or declined in North America, as wine and spirits bite into their market share. Craft beer has been one of the industry’s few good news stories: in 2014, market research firm the NPD Group found that, while overall beer consumption in Canada declined by about 6% from 2013, craft beer consumption was up 7%. In restaurants, craft beers now make up almost 20% of all beer sold.

Selling, or selling out?

So, if beer drinkers find something to like about these crafty beers, what’s the problem? After all, some of the larger European breweries have been mass-producing the same high-calibre brews for centuries, and no one raises a stink about Kronenbourg 1664, Guinness, or HackerPschorr not being hand-crafted in small batches by some burly, bearded dude wearing a leather apron and plaid shirt.

But not everyone is saying “cheers” to bigger players getting into the craft scene.

Craft beer associations have been vociferous in policing their membership credentials. When the news went public in October 2015 that Labatt had bought Toronto’s Mill Street brewery, Ontario Craft Brewers (the association of which Mill Street was a charter member) sent out a news release on the same day, “wishing them well,” but noting that Mill Street was no longer a member of their ranks (while, according to the Toronto Star, the Ontario government has defended Mill Street’s status as “craft,” but not as “small,” factors that are relevant to shelf space at the province’s The Beer Store—although Labatt’s status as a co-owner of The Beer Store makes that a moot distinction).

Similarly, the BC Craft Brewers Guild dropped Granville Island from its roster almost immediately after Molson bought the Vancouver brewery in October 2009.

It’s perhaps understandable that the craft beer associations would excommunicate a small brewery that sells to a macro operation. The more important question, however, is how these purchases affect the public’s view of the brand.

Matthew Ebbing, Associate Creative Director for The Brandit, an agency that works specifically with craft beer companies throughout the US, cites the example of outdoor apparel company Patagonia’s success being achieved, in part, by the values that it passionately shares with consumers, in tandem with the quality of the clothing it sells. Likewise, he explains, “many craft consumers look for an authentic brand spirit that they want to be a part of. We see roots as a big part of legitimizing one’s brand spirit, and being owned by a major corporation degrades those roots.”

However, he acknowledges that not every customer will share these concerns as passionately. “If a shirt keeps you warm, somebody will wear it,” he concludes. “And if a beer tastes good, somebody will drink it.”

Your roots are showing

Some craft brewers are very specific about how those “roots” translate into their brand promise.

Steve Beauchesne, co-founder of Beau’s All Natural Brewing Co., describes one factor that separates his brewery (which recently celebrated its 10th anniversary by inviting employees to become co-owners) from, say, Labatt (which tore down its Toronto brewery and became a subsidiary of global beer giant AnheuserBusch InBev around the same time Beau’s started brewing its first batches) as “a sense of place, a real relationship with the people behind the beer, the thrill of discovery and authenticity.”

Ten years ago, tiny Vankleek Hill (population: 1,996), the small town that Beau’s calls home, was known mostly for being the “Gingerbread Capital of Ontario.” A lot has changed since then. By focusing on the experiential side of brewing—the sampling room and tours, as well as a year-round calendar of tastings and parties, most notably their Oktoberfest, which has become one of the region’s biggest piss ups—and sponsoring just about any fundraiser or community event that asked, Beauchesne and his father, Tim, have made their town a destination for beer enthusiasts across Ontario.

Beauchesne, who’s also a Vice-Chair of Ontario Craft Brewers, says the fact that “people want to have a relationship with their brewer”—in part to feel more connected to the product they consume, but also to hold them accountable for their production—makes this geographical attachment indispensable to craft brands.

The big-league beers get this, too. Mill Street has put its brewpubs, both the original in Toronto’s Distillery District and another, appropriately, in an old mill in downtown Ottawa, at the centre of its branding—even though the majority of the company’s brewing has long been done at a facility in an industrial park in the Toronto suburb of Scarborough. Likewise, Granville Island Brewing’s connection to its location is right in its name, where it had been a fixture of the Vancouver marketplace for decades before being bought by Molson—even if most of its brewing now takes place in a non-descript Molson facility a kilometre away.

Place matters. But so does process.

Fifteen years ago, most Americans and Canadians were lucky to have one or two craft breweries within their city limits. Those early craft breweries—often known as microbreweries—were able to easily align their brand with the city or town of their birth.

But as the market grew, a dozen or two breweries began jostling for breathing room in the same market, which meant that the concept of local attachment became diluted as a brand driver.

The next step was for breweries to differentiate further. Many have achieved this by pointing to how their products are made—and how the “how” gets communicated.

Beau’s attracted a lot of initial attention for leveraging its brand position as a commitment to all-natural ingredients just as the organic food movement took off.

Collective Arts Brewing’s eye-catching labels are the outward presentation of the Hamilton, Ontario, brewery’s founding commitment to work with and promote artists, designers and musicians that the brewers love.

Flying Monkeys, from Barrie, Ontario, has differentiated on the basis of a psychedelically tinged hops-worship (They boldly abandoned their previous brand, The Robert Simpson Brewing Company, on the grounds that “beer is supposed to be way more fun than a history class.”).

Halo Brewing, a tiny new brewery in Toronto’s Junction neighbourhood, is making waves for positioning itself as the city’s first “open-sourced” brewery.

No matter the specific recipes, philosophies or ingredients used, though, one thing all craft brewers share is the challenge of starting up a brewery from scratch.

Bootstrapping integral to the “craft” brand

The years of hard work required to bring a brewing pipe dream to reality is the fundamental difference between a craft brewery and corporate one, according to Steve Body, a Seattle-based beer columnist known as the Pour Fool.

“[The big breweries] did not struggle, scramble to find financing, fail repeatedly, schlep their own beers out to a tiny core of original clients, develop a local and expanding cult following, move four times as space ran out, or ever, in fact, worry about much of anything but MillerCoors shareholders and their complaints,” he wrote in The Pour Fool in 2013.

In speaking with Sway, Body notes that anyone who doesn’t recognize this discrepancy is “actively aiding in the destruction of the very culture that they think is so cool.”

Distribution, intimidation and acquisition

While “destruction” seems like a strong word, he has an equally strong point. In the US, at least, the beer conglomerates that have bought up beloved craft breweries, such as Chicago’s Goose Island and Seattle’s Elysian Brewing, have also started buying major beer distributors, making it more difficult for smaller brewers to get their products on store shelves. In response, anti-trust regulators have begun investigating AB InBev’s recent distributor purchases, made all the more pressing by the fact that AB InBev and MillerCoors—by far the world’s largest beer conglomerates—are working out the details on a merger, expected to be finalized later this year.

In tandem, Budweiser also launched a cynical ad campaign that mocked craft breweries for making “pumpkin peach ale” that is supposed to be “fussed over,” contrasting that against their “proudly macro-brewed” beer meant for “drinkin’.”*

For Body, the message of these maneuvers is clear: waging a “mini culture war” is “all they have left.” Fearful of losing their grip on the market, beer corporations have intimidation as one option, but Ebbing points to “imitation” (designing craft-looking labels, expanding into hoppier pale ales, hearty stouts, and fruity or spicy beers) and “acquisition” (buying up smaller breweries) as strategies less likely to alienate beer drinkers.

Power to the people

But the public will choose, just as it has all along: cumulatively, thousands of beer drinkers, making the same decision over and over again to pick up a six pack, growler, tall can or bomber of craft beer, have forced the industry’s giants to reckon with market demands for quality, experimentation and that most nebulous of characteristics, authenticity.

“People like to be lulled into believing that their actions don’t influence the marketplace,” says Beauchesne, “but if you look at the success of craft beer, it’s very easy to see how much good can happen when individuals support independent, local breweries.”

Ideally, there’s a balance yet to be struck between the affordability and access provided by the big brewers—this writer isn’t about to forget his years spent downing Old Milwaukee or Pabst tall cans, still the best value at most retail outlets in Ontario—and the innovation and taste of more expensive craft beers.

Perhaps we can hope that, if Big Beer doesn’t screw around with its acquisitions too much, “crafty” brews will fall somewhere in the middle: fine beer that can be had in just about any market, produced at an economy of scale that makes its price attractive to most every budget.

I’d drink to that.

*At the same time, the Budweiser-owned Elysian Brewing actually makes a pecan peach pumpkin amber ale called Gourdgia on My Mind. Obviously, Budweiser knows full well that these two market segments aren’t about to merge anytime soon.

What is craft beer, anyway?

Because small, neighbourhood brewers have never had the same budgets or distribution channels to compete with the big brewers at either a local or regional level, they’ve established trade associations that can represent them as a bloc instead of as individual businesses. And because craft brewers’ brands are so integral to their survival, a handful of trade associations—namely those in BC, Quebec and Ontario, as well as the US-wide Brewers Association— have also taken it as part of their mandate to define what is and isn’t craft beer.

Generally speaking, to be considered a craft brewery, an operation has to brew less than a certain threshold of beer (140,000 hectolitres/year in BC, 400,000 in Ontario. In case you’re wondering, one hectolitre = 100 litres, or two kegs, or 12 24-packs of beer. By comparison, MolsonCoors brewed 8.1 million hectolitres in Canada in 2014—that works out to about 2.5 billion 330 mL servings a year); be independently owned and operated, and brew beers with either “traditional” or “innovative” techniques.

These definitions aren’t legally enforceable—at present, they’re just marketing strategies. BC and Ontario do offer tax incentives to small brewers, but in effect, there’s nothing stopping Molson or Labatt from branding any of their beers as “craft.” Like “natural” or “artisanal” before it, “craft” can mean whatever its makers want it to be—unlike the protected terms for scotch in Scotland or bourbon in Kentucky, where distillers have fought to secure those terms to prevent watered-down imitators from biting into their market, ensuring quality across all labels bearing the name.