The Future Battlefield is "Local"
A couple of days ago in Pittsburgh, Donald Trump sounded a theme that seems to suffuse, like the scent of smoke, every corner of our world. “It is the consequence of a leadership class that worships globalism over Americanism ... As a result, we have become more dependent on foreign countries than ever before.” Voters in the UK felt their country had lost its sovereignty and chose to leave the EU. Politicians from Bernie Sanders and Jeremy Corbyn to Marine Le Pen and Geert Wilders argue for more local control. I'm sort of joking, but only halfway, when I point out that there's a similar mood in beer: people have adopted a new skepticism to big breweries, even when "big" may be a craft brewery from a neighboring state.
I identified one data point for this trend yesterday when the Oregon Brewers Guild released statistics for 2015. Today we have more. Lagunitas' Tony Magee, in the midst of a world-conquering push that includes new brewery openings and a partnership with Heineken, today unveiled a go-local initiative. As with everything Magee writes, there's a lot more light and heat than clear explanatory prose, but the upshot looks not terribly different from AB InBev's own High End portfolio of craft breweries. In a far clearer and less self-congratulatory post, Michael Kiser and Matthew Curtis describe what's going on:
Announcing on his blog yesterday, Lagunitas founder Tony Magee reveals that he has purchased stakes in three US craft breweries. These are Moonlight Brewing Company of Santa Rosa, CA, Independence Brewing Company of Austin, TX and Southend Brewery and Smokehouse of Charleston, SC. The latter of which will be turned wholly into a Lagunitas branded brewpub.
Magee also commented that his company, which sold a 50% stake to Heineken last year for a reported $500m, is to open two ‘non-profit fund raising community rooms’ in Portland, OR and San Diego, CA.
(It's a wonderful piece: go read it.) They continue:
Citing the new brewpubs from Goose Island and 10 Barrel as examples of his competitors working the “local” angle around the country, Magee seems compelled to follow in their footsteps as he has in the past — but puts a different spin on it. As much as he derides his largest competitors, he tends to follow their lead often, as he does with his efforts to consolidate distribution and control store shelves and retailers' buying behaviors by creating recommended "shelf sets." But in this case, Magee is nervous about watering down the Lagunitas brand by appearing to do the same things that Goose and 10 Barrel have. So it’s through these local brewery acquisitions that Magee hopes to earn local relevance and growth, which positions him in a role more akin to AB-Inbev than Goose Island in his own metaphor.
And the final data point I'll offer is the quick and steep decline of national independent craft brands like Sierra Nevada Pale and Sam Adams Boston Lager as well as large brewery craft brands Blue Moon and Shock Top. All of this is happening even while growth in non-mass market lagers continues to be robust.
And now we come back to Trump, globalization, and localism. We have entered a moment in beer where quality and availability has reached a point of saturation. For decades, most markets had deficits in one or the other category. If drinkers wanted a quality beer, they often had to turn to a Sierra or Sam Adams. That's no longer true. In nearly every town of any size, you're going to be able to buy tasty, well-made pale ales, IPAs, and amber lagers. In another era, you might have valued Sierra Nevada's pale as much as your local brewery's, but we're not in that era. All things being equal, people seem to be gravitating to local beer--at least within the craft segment.
The big breweries know this, which is why everyone from ABI to Constellation Brands to Lagunitas/Heineken has been investing in local brands. The big craft brands also know this, and they still appear to be developing a strategy for how to handle it. Pay attention to this word--"local"--because it will define beer over the next half-decade or so. (At some point we can assume the word will be drained of all meaning, like "craft," and the battlefield will shift.)
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I suppose I should use this occasion to direct your attention to my manifesto, which keys on this very point: Buy Local, Buy Good, Drink on Tap.