Goose Island Sale Will Damage Small Brewers

I know you are all sick of hearing about Goose Island and the Anheuser Busch acquisition.  I think every beer blogger, writer and news outlet wrote knee jerk responses.  I stand by my previous post, but I wanted to write a more thoughtful post especially now that a discussion had occurred.  I was faced with a difficult problem while writing on Monday.  No one had made an argument for or against this acquisition  This blog is not about me proselytizing, but rather about the conversation that occurs within the beer community in which I am one voice.

Beer enthusiasts have fallen into three camps.  The people who think Goose Island’s sale is a great thing, those who regard it as horrible and the wait and see camp.  I think in some respects all three camps are correct.  Yes, I think everyone is right.  They are right for their own reasons.

The sale is great for Goose Island as a brand.  AB will pump up production, and may even bring back some retired styles like Oatmeal and Nut Brown.  The two Chicago brewpubs are unaffected, and I read in more than one article that they are evaluating their options.  The Hall family got a nice chunk of cash for building the business.  With AB at the helm I think people from coast to coast will see Goose Island in their stores over the next few years.  No doubt this is a win for Goose Island as a business.

The people in doom and gloom land are right for the same reasons.  These people do not like large corporations selling beer to them.  They believe in environmental sustainability, drinking local, and the diversity craft beer has to offer.  Craft trumps profit and they believe the industry is damaged.

The wait and see people are probably the most reasonable people.  AB is promising to let John Hall retain control.  They have also said the St. Louis brewery will not be used to produce Goose Island beer, but curiously did not mention the other AB facilities.  The recipes will not change and everything will be the same.  The question is whether AB holds true to their word or not.  These are huge questions and time will tell.  AB has not always followed this in the past, although they may have learned from mistakes.

Where do I sit?  I believe in all three camps.  This is great if your name is Hall or your a Goose Island production worker.  Without a doubt a larger corporation is selling the beer.  Goose is now a subsidiary.  Make no mistake this is not the “partnership” some have tried to frame this as.  AB owns Goose Island -do not be stupid.  AB will look to make their money back, and they will look to find ways to cut costs.  Will those changes come at the expense of quality?  Only time will tell.  I will put money on AB brewing 312 Urban Wheat Ale in giant brewkettles at their facilities within 3 years which may or may not affect quality.

The people who really need to be concerned are Metropolitan, Half Acre, Three Floyds and other Chicago brewers.  Without a doubt AB will flex their marketing muscle to keep their new brand out in front.  If AB is able to keep these breweries from expanding their taps and shelf space their business models went to hell.  Now imagine if AB is able to go after 5% of a small brewers accounts.  Metropolitan Chicago’s only strict lager brewery is a strong up and comer.  (My review)  Metropolitan is sold in about 363 bars and restaurants in the Chicago area.  AB would only have to successfully shut Metropolitan out of 18 outlets to hit that goal.  Looking at the list it would not be that hard.  You can watch the movie Beer Wars to see how the retail side of things works.  AB may not need to shove them out, but imagine if Metropolitan’s their shelf space went from two facings to one?

Many small startup breweries are running with debt right now.  Their business models are built on ever increasing growth.  Should AB flex their muscles many smaller craft brewers may be in trouble.

Tags: Anheuser-Busch, Goose Island, Metropolitan Brewing