29 Feb Big Beer Targeting San Diego
How Big Beer Is Trying to Take Over a Craft Beer Stronghold
by Chris Morris
Battleground: San Diego
San Diego isn’t the birthplace of craft beer. And cities like Denver and Portland (among others) may argue it’s just one of many hubs. But a good percentage of craft beer enthusiasts consider it the epicenter of the movement – a place where many of the finest brewers have come from.
This is a city where the disdain towards macro brewers is often palpable. So when Anheuser-Busch InBev AHBIF -0.74% announced plans to open a craft-themed brewpub in the city, the backlash came about quickly.
AB InBev-owned 10 Barrel Brewing wants to open an establishment in the city’s East Village. This week, San Diego’s Downtown Community Planning Council approved a neighborhood use permit for the facility, the first of many steps to make it a reality.
The local brewers guild, though, is sounding an alarm, saying the addition of a brewery that presents itself as a craft establishment (but is, in fact, owned by a large, international corporation) could damage the city’s craft beer ecosystem.
“Beer drinkers here in San Diego may think that when they patronize [this brewpub], and buy and drink 10 Barrel’s beer, that they are supporting the local brewing community,” said the San Diego Brewers Guild in a statement. “That is not the case. Instead, 10 Barrel seeks to deceptively communicate itself as being part of the locally grown marketplace and leverage its resources and size as a corporation to compete against and ultimately harm the true local brewers and disrupt the market.”
Local brewers echoed that sentiment.
“The ‘big beer’ companies would like nothing better than a return to the cozy situation of 20 years ago when they enjoyed a 100% cartel market position with no competition!,” wrote Simon Lacey, president of New English Brewing Co. in a letter to the planning council. “We must not let that happen, but it’s a war that will be fought one skirmish at a time. This is part of the opening salvo.”
Kevin Hopkins, president emeritas of the San Diego Brewers Guild, adds that the money AB InBev spends on the 10,450 square foot brewpub could ultimately prevent smaller brewers from being able to open downtown, as property values escalate.
“It’s not just what the definition of craft is, it’s what impact does that have on the passion of independently-owned businesses?,” says Hopkins. “If large companies can throw around millions, how are smaller companies going to be able to move in? … What they’re doing is putting a local flavor and feel to something that has been done in a factory.”
The Brewer’s Guild says this would be the first non-craft brewer to expand into the city, which houses 117 local breweries and 40 more in planning. Technically, that’s true. The problem with the argument, though, is it overlooks the fact that big beer is already firmly entrenched in San Diego.
Last year, Ballast Point, one of the leaders in the San Diego craft scene, sold a controlling interest in the company to Constellation Brands (which also owns Corona and Modelo) for $1 billion. Smaller brewer Saint Archer, meanwhile, was sold to Miller-Coors.
While both brewers certainly have roots in the area, both now fail to meet the Brewers Association’s definition of a craft brewer. But neither is going anywhere.
Consolidation and buy-outs are a natural extension of craft beer’s popularity – and with the big dollars being flung at craft brewers today by macro companies, it’s getting harder to say “no” now. And with San Diego’s rich collection of well-respected breweries, more are likely to consider a buyout (though some, like Stone and AleSmith have both declared they plan to remain independent in the past week).
Hopkins says he respects the right of brewery owners to sell their businesses – even in San Diego. But, he believes, those that do – and one-time craft brands that are now under the umbrella of macro brewers – should make it clear to patrons exactly who’s reaping the benefits of sales.
“There is absolutely a changing landscape here,” he says. “The issue is does perception become reality? … Economics 101 says mergers and acquisitions and expansion and contraction are going to happen. I’m not advocating we throw [brewers] out and say you can’t be considered any more. What I’m trying to do is make sure that public opinion is part of the conversation.”