“One of the strategies that big breweries have taken up is purchasing craft breweries to broaden their appeal…”
Brewing has been part of the Colorado economy for a long time, but the craft brewing industry has exploded in the past decade. KGNU’s Fiona Foster reports as part of a series on brewing in Colorado.
There are currently more than 350 craft breweries in Colorado, which creates around 12 thousand jobs and in 2015 the industry an economic impact of 1.7 billion dollars.
Ed Sealover with the Denver Business Journal has been covering the beer industry since 2003. He says given that craft beer is also a nationally growing trend which makes up 21% of beer sales in America, it is no surprise that larger beer companies want to get a piece of the pie.
“One of the strategies that big breweries have taken up is purchasing craft breweries to broaden their appeal to reach out to drinkers who are not drinking their traditional products and give them that bit of ingenuity and creativity as part of their company”
Larger beer companies such as Anheuser-Bucsch and MillerCoors are looking to ride the coattails of craft popularity by buying up craft brands, or creating their own. But craft brands that experience growth and success have created further complexities. For example, Oskar Blues, is the first Colorado craft brewery to have distribution in all fifty states, and in October announced international distribution in nine markets They have also purchased two other craft breweries: Perrin Brewing in Michigan and Cigar City Brewing in Tampa. Reactions in the industry have been mixed, some feel this expansion is an example of the successful growth of a small brewery, while others begin to view these breweries similarly to the larger breweries.
“Some in the industry have received this very warmly. Others have looked at his like especially since Oskar Blues has teamed with a private equity firm it is just the same thing that AB or MillerCoors is doing but under a different name.”
The Brewers Association defines craft brewing as small, independent and traditional, which means it has to be a company that makes less than 6 million barrels of beer a year, second that is no more than 25% owned by a non-craft company as it has got to be small or owned by another craft brewers, so to exclude brands purchased by Anheuser-Bucsch or international interests, and third the beer must made largely with natural ingredients.
And this raises the question, what happens to the perception of a beer when a craft brand becomes a heavy hitter, or gets bought out by a mainstream beer company. Will consumers begin to treat them like major conglomerates? Sealover says that while to a certain extent this is already happening, we might be in the age of a new middle ground.
“Where it will loose this halo of being a craft brand without being seen just like a Coors or an Anheuser-Bucsch and still lose some people who say ‘no that is too big’. I think this is already going on out there, I know people who aren’t that interested in drinking new Belgian who is the 4th largest craft brewery, the 8th largest brewery in America already is seen to kind of teeter off of the that craft brewery edge because it is so big.”
Sealover also says that while the general American consumer may not know about the murkiness now forming around craft beer brands, that growing interest in local industry means people are asking more questions.
“A lot of restaurants, everybody involved in the food industry have talked about the trend since the great recession that people want to know where their food and drinks are coming from and they want to support local companies so this is becoming more of a high profile subject”
Which brings us to the taproom, the place that–it could be argued–encapsulates the local ethos and home-grown spirit of the craft movement. Marty Lettow, co-owner of Vindication Brewing, describes these community relationships as he sits in the taproom in Gunbarrel.
“People meet here, we’ve had babies that have occurred from people meeting here and marriages, we’ve hosted a semi wake funeral sort of moment for a guy who lives across the creek there. It is about community.”
Not only does the tap room create the foundation for community, but it is also part of the business model that has allowed for so many new breweries to enter the market. Ed Sealover says that since 2010 the tap room scene has exploded because the cost of entry is so much more more affordable.
“The tap room is the reason, one of the main reasons so many credit for Colorado having so many breweries.”
“It takes a lot less money to launch a brewery if what you are doing is making your product on sight and serving it in a vessel that can be cleaned and used again rather than thrown away.”
As it stands, the craft beer trend is set to continue and Sealover predicts that growth will be driven by the taprooms, especially in small towns, where Coloradans showing up at their local will not only find other beer enthusiasts but also their neighbors, and the revival of an intimate community experience.