BrewDog – Independence Is The New “Craft”

Goose Island. Camden Town Brewery. Meantime. Elysian. Lagunitas. Ballast Point. Nøgne Ø. Golden Road. RIP.

2015 has been a bad year for craft beer. Global beer mega corporations, the ones who destroyed, bastardised and commoditized beer over the last 50 years have been acquiring craft breweries left right and centre. Let’s be honest, the intentions of these big companies are completely clear: they cut costs, they cut people, they cut corners and they take pride in doing so. Their God is market share and their stock market valuations; they act accordingly.

Craft brewer’s God is amazing beer.

Disillusioned at their declining sales (for instance, Budweiser has lost 16 million barrels between 2003 and 2013) the mega corporations want a piece of the craft beer action. However, it is by standing for everything that big beer is not that craft beer become so successful.

Once you scratch the surface of the recent acquisitions, the picture is pretty damning:

Nøgne Ø

Within months of selling to a mega beer corporation, Nøgne Ø founder and former CEO Kjetil Jikiun posted this message on Facebook. He said the new buyers had ensured "Nøgne Ø The Uncompromising Brewery was changing into Grey Ø The Average Brewery" and the new values introduced were "Good Enough. Mediocre. Average." Kjetil left, obviously distressed as to what became of the brewery he loved. At the time of the acquisition both Kjetil and Hansa (the buyer) insisted nothing would change. It obviously did, and quickly.

Meantime

Meantime was acquired by SAB Miller in May of this year. Meantime Managing Director Nick Miller said SAB Miller ‘believe in longevity of Meantime and puts beer first’. Despite claiming it was ‘born and brewed in London’ Meantime London Lager was soon brewed in Holland (thus wilfully deceiving the consumer). Despite being in for the long haul and insisting nothing will change, less than six months after the acquisition Meantime has been put up for sale again.

Goose Island

Now mainly made at a Budweiser brewery in upstate New York, Goose Island is still marketed as being brewed in Chicago; even with a brand called 312 which is Chicago’s area code. Goose Island’s Suzanne Wolcott admits Goose IPA’s recipe is massively different when brewed at the AB-InBev owned Labatt brewery in Canada. Looking at reviews and feedback online, it is obvious the beer has changed for the worse.

Elysian & Lagunitas

Dick Cantwell, founder and former CEO of Elysian brewed a beer called Loser IPA: Corporate Beer Sucks. As soon as Elysian was sold, he left, saying he is a “craft brewer, past, present and future.” He said also said "My concerns were never even considered as a factor… From the start it was me against everyone else, with no regrets expressed."

Tony Magee, founder of Lagunitas, saying this…

…and that he would rather die at his desk than sell out, before selling out to Heineken feels pretty hollow too.

Outgoing founders always say nothing will change. Except Everything Does. And the reality is they are powerless to stop any changes.

Big beer companies need a return on their investment into craft brewers, They are not doing this for fun or because they love beer. This return can only happen one of 2 ways:

1) They sell much more of Camden/Goose Island/Elysian at a much better margin. Meaning they have to produce the beer more cheaply at a much bigger scale.

Even yesterday Jasper from Camden insisted nothing would change. The reality is that he is now an employee of AB-Inbev and completely powerless to stop any changes the parent company want to make.

The first thing that will change at Camden is their cost of goods. Just by being owned by AB-Inbev the beer duty Camden will pay on a 50L keg of Hells will instantly increase by around £20. On their current production numbers (quoted at 65,000 HL this year) the difference between full duty and half beer duty is approximately an extra £2.7m of beer duty annually.

To put this into perspective, in their last financial year they Camden made £319k of profit. So all of a sudden Camden have much, much higher beer duty costs and they also need to generate significantly more profit to give AB-Inbev a return.  So something will have to give. No prizes for guessing what it will be.

2) They leverage the crafty brands in their portfolio to sell much more of their big beer brands thus locking other true craft brands out of retail.

The mega corporations are offering huge discounts on their ailing mass-market brands to customers to stock their newly acquired crafty brands. For instance, the AB ‘Promo-Opti’ plan offers steep discounts on Bud and Bud Light if a retailer stocks Goose Island.

Thus, brands like Lagunitas, Nøgne Ø, Goose Island and Ballast Point are used as pawns to lock out true craft brewers and also to drive higher sales of lowest common denominator fizzy yellow lager. These acquired former craft brewers are being used by the big brewers to kill and stifle the craft category.

It is pretty ironic that once iconic craft brews are being used to push mash market beer sales and lock out other craft beers.

We believe independence is massively important to great beer. We believe the lack of overbearing parent company is key to being able to make fantastic beer. We believe that the evidence massively shows mega corporations taking over former craft brewers is horrifically bad for the beer, for the consumer, and for the industry overall. And we love all 3 of these things.

So that is why we are going to take a stand.

We are going to nail our colours to the mother fucking mast. We are going to live and die by what we believe in and the values we hold true. We are not doing this for money, we are doing this because we love craft beer. We are doing this because, despite having seen it hundreds of times, the video at the top of this blog still gives us goosebumps.

We are going to entrench our independence. We are going to call a meeting of our Equity Punk investors and propose an amendment to our articles of association. We intend to make 37.5 of the BrewDog plc articles read as follows:

37.5 “The Board will  exercise its discretion granted in Article 37.1 to refuse to register any transfer of any Certificated Share to a transferee who is a monolithic purveyor of bland industrial beer.”

The wording is our lawyers. But we kinda like it.

We are BrewDog. We are independent. We are in this for the beer. And we are here to stay.

James, Martin and the Team x

UPDATE:

GREG KOCH – STONE BREWING CO.
24th December, 2015 11:26am

James, Martin & Crew –
I’d say "Say strong!" but I know you will. You continue to righteously represent the righteous indignation of craft beer. That’s necessary. Why? Because the world of big industrial beer continues to represent all the reasons why our righteous indignation is needed. We must fight their attempts to co-opt what craft beer stands for. It stands for quality over profit, and it stands for flavor over mass-acceptance. Some profit, and some acceptance are necessary. Without those, there’s no business. However, those should NOT be the overriding guiding principles…quality and flavor are!
Cheers,
Greg