What’s brewing in Boulder’s craft beer market

05 Jun 2015

Beer Wars

By Eli Wallace Nobody likes a sellout. At least, that’s how it seemed to Washington state’s Elysian Brewing in the wake of their January announcement that it sold to Anheuser-Busch’s parent monolith, InBev. In a statement on its website, Elysian defended the decision, saying, “This week has been oddly similar to last week with the notable exception that a lot more people hate us.” The Elysian buyout, the fourth of Anheuser-Busch’s craft takeovers, signals a growing trend in the beer conglomerate’s growth strategy. Goose Island (Chicago), Blue Point (Long Island, N.Y.) and 10 Barrel (Bend, Ore.) round out A-B’s craft portfolio. The purchase of Elysian, a 20-year-old institution that ironically declares on its packaging for Loser IPA that “Corporate Beer Still Sucks,” has a lot of people in Colorado talking about the future of independent brewing. “It’s disappointing to see another domino fall,” says Justin Tilotta of Boulder’s Twisted Pine Brewing. “It’s unfortunate for craft. It muddies the line between craft and craft-y.” Though the Brewer’s Association defines craft brewers as small (making less than 3 million barrels per year), independently owned and traditionally brewed (which cuts out flavored malt beverages), the industry is seeing a movement toward craft-quality beers produced by non-craft brewers. The poster-brewchild for this phenomenon is MillerCoors’ Blue Moon, but in recent years the field has expanded to include MillerCoors’ Batch 19 Lager, A-B’s Landshark and Wild Blue, and North American Breweries’ Magic Hat and Pyramid, among others. “By hitching onto the formerly independent, they’re taking sales away from craft,” Tilotta says. “Look at Goose Island. Now there’s a ton of it. People don’t know it’s A-B. They’re tricking consumers.”

Looking for a Local Foothold

As Coloradans already know, good craft breweries strike the right chord between company culture, quality suds and local connectedness. According to the Brewer’s Association, that chord has become a significant chunk of the beer market. In 2014 craft brewing took 11 percent of volume share of the entire beer marketplace, the first time in history craft brewing has reached double digits. David Zuckerman, lead brewer of Colorado’s first craft brewery, Boulder Beer, sees this as a return to normal. “If you go back to the 1880s, America had 2,000 brewing operations. If you consider the population, that per-capita is much higher than now,” he says, stressing that the changes in the industry have been predictable. “The major brewers have very challenging data on their own brands—Budweiser, Bud Light. They know the market isn’t going to look the same in 50 years, and they don’t know how to turn those trends around. But they’re not going to roll over and disappear. They’re looking for a foothold in the [craft] industry.” Thus far, A-B’s purchases have followed a discernible pattern: Their sights are set on larger breweries with regional distribution and a brewpub. Tilotta explains, “Twisted Pine does 4,000 barrels per year. None of the places that A-B is buying are super small; 40,000 barrels per year seems to be the sweet spot.” By those guidelines, Colorado’s bigger players—New Belgium, Oskar Blues, Odell, Left Hand, Breckenridge and Avery—fall right into that sweet spot, while Boulder Beer is a little short at 30,000 barrels per year. In an article in The Denver Post, each of these companies denied any plans to sell out, which is highly unsurprising. Corporate structure, however, will reinforce that commitment to independence beyond just words. New Belgium, Colorado’s largest craft brewery, is almost definitely “safe,” as it’s entirely owned by its employees. Left Hand fits into that same mold with 50 percent of shares owned by employees, while rumor has it that family-owned Odell is considering moving toward an employee-owned model. Zuckerman offers a little more insight into the selling trend. “This is Boulder Beer’s 36th year. Founders from the early brewers, like Elysian, are getting older. They’re looking to get out, to find something less involved. That’s standard business; they can either sell or shut down. People need succession plans. They can hand it down in the family, sell it to others in the business, or sell to these major brewers. You’re seeing all of that now,” he says.

Craft Buying Craft

And then there’s Oskar Blues, which bought out Michigan’s Perrin Brewing in April. Perrin, a small, three-year-old company at the time of the purchase, seems like a strange choice. But Oskar Blues spokesman Chad Melis says it was a natural next step after their collaboration beer, Cornlaboration.
Brewers from Oskar Blues and Perrin during their 2015 collaboration.
Brewers from Oskar Blues and Perrin during their 2015 collaboration.
“They were making great beer and doing great things in the market. In two years, hitting nearly 15,000 barrels—that’s a growth rate that took Oskar Blues 10 years to get to,” Melis says. Oskar Blues now brews 150,000 barrels per year. “When we visited, we were stoked to drink their beers. After Cornlaboration, their brewer, John Stewart, came out here. We really grew a relationship from seeing eye to eye and doing it.” Craft buying out craft has only happened a few times before. Last year, California’s Green Flash bought out Alpine Brewing. In 2012, Boston Brewing (makers of Samuel Adams) bought Angel City out of L.A, following that with a purchase of Coney Island Craft Lagers in 2013. Before that, Vermont’s Long Trail Brewing bought Otter Creek and The Shed, both nearby Vermont breweries. That makes a grand total of five buyouts ever, hardly enough weight yet to carry a trend. Oskar Blues, however, wants to keep its options open for the future, Melis says. “Our strategy is historically to be light on strategy and heavy on opportunity. Dale [Katechis], our founder, is super entrepreneurial-minded, and that’s spread into our culture. Moving forward, we’re looking to stay nimble, stay aggressive and react when we see opportunity. As we look for ways to grow, we’re trying to keep it small and intimate.” Of course, it’s too early to tell if Oskar Blues has started a movement in these buyouts or will end up the odd duck of the brewing world. Either way, “My initial reaction is that it’s got to be better than InBev,” Tilotta says, his gaze falling on the West Bound Braggot in his glass. “At least you have people who care about product over spreadsheets.” As with other craft brewers, there’s a definite sense Tilotta would rather be discussing how he blended Buddha’s hand, a southeast Asian citrus fruit, into the brew before him. After all, that passion for flavor underpins the craft movement. “People make beer. People love that. Beer is one of the most personally connected products,” says Zuckerman. “At Boulder Beer, we pride ourselves on a wide selection of flavors. We want someone who doesn’t like beer to try these things and make sure. Craft brewing is a unique culture around a common love.” Melis echoes that sentiment, though he doubts that other craft breweries will follow in Oskar Blues’ footsteps soon. “Nobody has a crystal ball, and everything’s changing rapidly right now. Everyone’s expanding, and that’s a huge strain on your bandwidth,” he says. “It’d be a tough time for a lot of breweries to make those acquisitions right now. Oskar Blues is fortunate to bring in some great people to grow and make more and make better, staying true to that mission that fuels us. And it’s a hell of a lot better than just building a big beer factory.”
Assistant editor Eli Wallace enjoys a strong drink and a good book. She is a recent transplant to Boulder from Telluride, where she cofounded and edited Telluride Festivarian.
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