Industry News

Craft Brewing’s Growing Pains

In the last couple of months,’s Jason Notte has seen disquieting trends in the craft beer industry:

  • Craft Brew Alliance’s Redhook brand announced layoffs at its Woodinville, Washington, brewery. The Woodinville plant is contract-brewing for Pabst Brewing Company, but the Pabst business accounts for only 30 percent of its capacity.
  • Stone Brewing Company, headed by fiercely independent CEO Greg Koch, admitted that it had received $90 million in private equity financing and would lend the Stone name to a hotel. It, too, is cutting jobs.
  • And homebrew supply retailer Northern Brewer has agreed to be acquired by than Anheuser-Busch InBev.
  • Notte doesn’t think these developments mean the craft beer bubble has burst. He writes:

    “If anything, it all begrudgingly recognizes that the players in all tiers of the beer industry have found themselves in the same predicament: Running a business in an environment where constant growth isn’t a given and where big decisions are often followed by unintended fallout.”

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    The Friday Mash (Strait and Narrow Edition)

    On this day in 1520, Ferdinand Magellan discovered a navigable sea route separating South America and Tierra del Fuego. The treacherous body of water is now known as the Strait of Magellan.

    And now…The Mash!

    We begin in Columbus, Ohio, where Scotland-based BrewDog will have a brewery up and running late this winter. BrewDog is also raising capital by crowdfunding: you can buy shares for $47.50 each.

    It took him 16 tries, but reddit user “boomboomsaloon” finally succeeded in buying beer using a Blockbuster Video membership card as proof of age.

    “It’s like a death in the family”, said Revolution Brewing Founder Josh Deth after he recalled more than 10,000 barrels of beer that didn’t meet his brewery’s quality standards.

    Kirin Brewing Company, Japan’s second-largest brewery, will buy a 25-percent stake in Brooklyn Brewing Company. Kirin will introduce Brooklyn’s beers in Japan and distribute them in Brazil.

    Food blogger Kyle Marcoux aka The Vulgar Chef found a new way to pair beer and pizza. He made a koozie by rolling a square pizza base with pepperoni and mozzarella around a beer can.

    Engineers at University of Colorado have developed a process to make lithium-ion battery electrodes from the sugar-rich wastewater created in the beer-making process.

    Finally, beer writer Josh Bernstein says these six trends will be the talk of 2017: Marzen beers in the fall, the revival of Kolsch beers, juice-like IPAs, milk stouts, coffee beers, and fruited sour beers.

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    The Friday Mash (Cubs Win! Edition)

    On this date in 1908, the Chicago Cubs last won the World Series. Managed by Frank Chance of “Tinker to Evers to Chance” fame, they beat the Detroit Tigers, 4 games to 1. Cubs fans are hoping their team can end their 108-year drought in this year’s playoffs.

    And now…The Mash!

    We begin in Detroit, where Ludwig’s beloved Lions will sell $3.50 beers during Sunday’s game against the L.A. Rams. The way the Lions are playing, fans need a few to get them through the game.

    D.G. Yuengling & Son is waging a last-ditch fight against the pending merger of Anheuser-Busch InBev and SABMiller. Yuengling argues that A-B is trying to keep it out of new markets.

    German scientists have found that beer causes less liver damage than hard liquor. The reason? Hops may inhibit the formation of reactive oxygen species, which can damage cells in the liver.

    Ken Pagan, the Toronto-area man accused of throwing a beer can at a player during a baseball game, better have his lawyer warming up. A Canadian attorney discusses Pagan’s legal problems.

    Two Copenhagen men have taken the idea of freeze-dried coffee and applied it to four of their craft beers. They’ve created instant versions of a coffee beer, a fruity IPA, a wild-yeast IPA, and a pilsner.

    After a church in Canyon, Texas, ran an anti-alcohol ad in the local paper, an establishment called the Imperial Taproom offered a discount to customers who brought in a copy of the ad.

    Finally, Fat Head’s Brewery had a very short reign as “Mid-Sized Brewing Company of the Year” at the Great American Beer Festival. Officials revoked the award after concluding that Fat Head’s, which has three locations, had been misclassified.

    The Friday Mash (Blowout Edition)

    One hundred years ago today, Georgia Tech defeated Cumberland University, 222-0, in the most lopsided college football game of all time. Tech coach John Heisman had an incentive to run up the score: back then, football rankings were based on margin of victory, not strength of schedule.

    And now…The Mash!

    We begin in Asheville, North Carolina, where Catawba Brewing has honored a native son, author Thomas Wolfe, with a beer called Wolfeman Kolsch. Its ingredients include hops grown in western North Carolina.

    Even though the economy has improved since the Great Recession, beer sales at bars and restaurants have stayed flat. Factors include competition from brewery taprooms and growlers.

    Two more non-beer companies are rolling out their own beers: Vice Media and the clothing company Patagonia, Inc.

    In the UK, the brewery count has topped 1,700. An industry analyst says that some of the country’s craft breweries are attractive acquisition targets.

    Some in the brewing industry oppose legal marijuana for fear of losing market share. However, that hasn’t happened in Colorado and Washington State, where recreational pot is legal.

    Entrepreneur Josephine Uwineza plans to open a brewpub in Kigali, the capital of Rwanda. It will not only be Rwanda’s only women-owned brewery but also the country’s first-ever craft brewery.

    Finally, People for the Ethical Treatment of Animals raised eyebrows by claiming that beer is healthier than milk. PETA contends that beer can strengthen bones and extend life, while milk is linked to obesity, diabetes, and cancer.

    The Friday Mash (Piggly Wiggly Edition)

    One hundred years ago today, the first Piggly Wiggly grocery store opened in Memphis. It was the first true self-service grocery store, and the originator of such supermarket features as checkout stands, individual item price marking, and shopping carts.

    And now…The Mash!

    We begin at sea, where part of the sixth annual Brews by the Bay will be held tomorrow. Festival venues are Cape May, New Jersey; Lewes, Delaware; and the ferry connecting those two towns. It’s the only multi-state beer festival we’re aware of.

    Edinburgh’s Innis & Gunn latest release is “Smoke & Mirrors”, whose ingredients are said to make the drinker more likely to tell the truth. The brewery has sent a bottle to both Hillary Clinton and Donald Trump.

    Liquor laws left over from the repeal of Prohibition are a case study in how government regulations can stifle entrepreneurship, then leave entire regions playing catch-up when they’re finally relaxed.

    What makes breweries’ flagship beers disappear? The reasons include waning brand loyalty, competition from newcomers, and consumers’ changing tastes.

    Researchers at Indiana University found that that if you really want a beer and want it right now, the source of your craving may be a pea-sized structure deep inside the right side of your brain.

    English illustrator Tom Ward has created a series of beer mats depicting fictional bars from the movies. The collection includes the Hog’s Head Pub from Harry Potter and The Prancing Pony from Lord of the Rings.

    Finally, Suzanne Schalow and Kate Baker have found success with Craft Beer Cellar: small, selective stores with hundreds of beers and knowledgeable staff. Schalow and Baker have learned that “craft” and “local” don’t equal quality.

    The Significance of Snoop Dogg v. Pabst

    The legal battle between rapper Snoop Dogg and Pabst Brewing Company might sound like tabloid material, but the case is putting the spotlight on financing deals that have become increasingly common in the craft beer industry.

    Snoop Dogg contends that his agreement to promote Colt .45 contained a “phantom equity” clause: if Colt .45 were sold, he’d become a 10-percent owner of the brand. Pabst, which owns Colt .45 and numerous other brands, was sold last year. Pabst’s new owners told the judge that the sale changed “control” of Colt .45, but not its ownership—which was, and still is, Pabst. The case will be tried before a jury this fall.’s Jason Notte urges would-be buyers of craft breweries to do their homework or else face the possibility of a similar lawsuit. He points out that a number of craft breweries, some of them worth hundreds of millions of dollars, have legal obligations to meet in the event of a sale. For example, employees own a substantial number of shares of New Belgium Brewing Company, whose estimated valuation well over $1 billion. If New Belgium is ever sold, its employees are in line for a big payday.

    At least New Belgium’s ownership structure is straightforward. That isn’t the case of some other craft breweries, which are part of larger holding companies, controlled by private equity funds, or both. If those breweries have outstanding agreements like the Snoop Dogg contract, there are tricky questions as to what transactions would trigger the obligation to pay—and who actually has to write the check—after a sale occurs.

    Which brings us back to Snoop Dogg. Notte observes, “Snoop’s case against Pabst could set a precedent for how breweries in those umbrella portfolios are treated, and how they can treat their employees, investors and contractors, in the future.”

    The Friday Mash (Great Fire of London Edition)

    Three hundred and fifty years ago today, the Great Fire of London broke out. The blaze, famously described in the diaries of Samuel Pepys destroyed most of the city’s buildings, including St. Paul’s Cathedral and countless pubs.

    And now…The Mash!

    We begin in Winnipeg, where a man dressed as a hockey goalie broke into a store and made off with some beer. It wasn’t even Canadian-brewed beer; he stole Budweiser. Speaking of the King of Beer, a man wearing a Batman costume swiped two 18-packs of Bud from an Upstate New York store.

    Alan McLeod, the keeper of A Good Beer Blog, found a 200-year-old classified ad for a homebrewing machine that made beer without mashing. That sounds too good to be true, and probably is.

    According to a poll of more than 100 college basketball coaches, Bob Huggins of West Virginia is the coach they’d most like to have a beer with. University of Kansas coach Bill Self finished second.

    Miller Genuine Draft is a dying brand. A Milwaukee Record journalist visited a dozen bars in the city. Nine didn’t carry MGD; one bartender laughed at him, and another was offended that he even asked for it.

    Breweries in Portland, Maine, are asking customers to rank the beers they’ve been served. It’s their effort to promote ranked-choice voting, aka instant-runoff, which will be on the November ballot.

    Stephen Wilmot of the Wall Street Journal warns that the recent slowdown in craft beer’s growth won’t help the big breweries. One major reason is that wine and spirits—bourbon in particular—are growing even faster than craft.

    Finally, a British brewery is celebrating the 100th anniversary of Roald Dahl’s birth with a beer brewed using yeasts scraped off of Dahl’s armchair. The beer will be served at the premiere of a stage adaptation of Dahl’s The Twits.

    Devil’s Backbone Catches Hell

    On Saturday, the fifth annual Virginia Craft Brewer’s Festival will take place at Devil’s Backbone Brewing Company amid controversy.

    Devil’s Backbone is being acquired by Anheuser-Busch InBev. This means it will no longer qualify as a “craft brewery” making it ineligible to compete in the Virginia Craft Beer Cup, even though its Schwarzbier is a three-time Best of Show winner. In fact, this year’s awards ceremony was pulled from the festival, and will take place at a different venue.

    The A-B deal also means that Devil’s Backbone will no longer host the Virginia Craft Brewer’s Festival. The state’s Craft Brewers Guild has decided to stage the 2017 event at a location to be determined. Meanwhile, Devil’s Backbone will host a new event as part of next year’s calendar of festivals and parties. The brewery says that it won’t conflict with the Craft Brewer’s Festival.

    The Friday Mash (“Be Prepared” Edition)

    On this date in 1907, Sir Robert Baden-Powell set up the Brownsea Island Scout camp on the south coast of England. That nine-day event—we assume that no beer was served to campers—was the foundation of the Scouting movement.

    And now…The Mash!

    We begin in Scotland, where the Innis & Gunn brewery has released a “Vintage” beer that is meant to be aged. One bottle has been put inside a time capsule, which is not to be opened until 2116.

    Old Style beer will return to its La Crosse, Wisconsin, birthplace. The brewery will make an Oktoberfest-style version of the 114-year-old brand for the city’s annual Oktoberfest U.S.A.

    After winning his third Tour de France, Britain’s Chris Froome celebrated in style. In the Tour’s final stage, he handed out bottles of beer to his teammates.

    According to the libertarian magazine Reason, state beer laws continued “a slow creep in the right direction.” However, many bad laws remain on the books.

    The Smithsonian has posted a want ad for a beer historian/scholar. This three-year position, funded by the Brewers Association, will pay $64,650 plus benefits.

    Some breweries try too hard to be original, and wind up giving their beers awful names. calls out some of the worst offenders.

    Finally, Jim Vorel of Atlanta magazine criticizes Terrapin Brewing Company for selling a majority interest to MillerCoors—and then keeping mum about the transaction on social media.

    Big Wins for Small Brewers

    As expected, the U.S. Justice Department has approved the merger between Anheuser-Busch InBev and SAB Miller. However,’s Jason Notte reports that the Brewers Association, which represents craft brewers, won major concessions from the government:

    • A-B, which sells 10 percent of beer through company-owned distributors, can’t acquire any more distributors.
    • A-B  can’t require independent distributors to drop competing brands, and can’t offer incentives that would reward distributors for giving A-B brands preferential.
    • Any future craft brewery acquisitions by A-B must first receive Justice Department approval.

    Notte attributes the craft brewers’ win to the Brewers Association’s paying more attention to government relations. The BA has hired a full-time lobbyist in Washington; and, earlier this year, it flew craft brewery executives to the capital to ask members of Congress for tax relief.

    According to Notte, state capitals will become the next battleground, now that states–even thouse as small as North Dakota–have enough craft brewers to form a trade association. Some of the issues these associations will raise include bars selling tap handles to the highest bidders, supermarkets putting distributors in charge of choosing their inventory, and limits on the number of liquor licenses.

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