contract brewing

Counterpoint: Craft Beer Isn’t Dying

Jim Koch, the founder of Boston Beer Company, warned last month that industry consolidation had put craft beer on the endangered list.

John Hall, the founder of Goose Island Brewery, begs to differ. He predicts a bright future for craft as a whole because it is so diverse, innovative, and in-sync with customers. Hall cites self-distribution (which is legal in many states), and state laws allowing breweries to serve pints, as two factors that change the equation for small breweries.

Hall also explains why Goose Island agreed to be taken over by Anheuser-Busch. One alternative was contract brewing, as Boston Beer has done for many years. Another was to take the company public; however, he didn’t like the idea of having to report every quarter to Wall Street. That left A-B.

Of the A-B deal, Hall said, “Like all big business decisions, it was risky being one of the first craft brewers to partner with a big brewer. But we preferred to partner with brewers who understood the beer business. Through our partnership with Anheuser-Busch, Goose Island was able to do what Boston Beer did, reach consumers nationwide while retaining the quality and integrity of our beer, and our brand.”

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Pabst Brewing’s New Direction

In 2014, businessman Eugene Kashper and two other investors bought the Pabst Brewing Company for $700 million. Under the previous owners, Pabst was a virtual brewery; it contract-brewed all of its beer—Pabst and a variety of other “legacy brands”–at MolsonCoors facilities and marketed those brands using nostalgia rather than advertising.

Kahsper aims to take Pabst in a different direction. It will open a microbrewery and tasting room at the site of the former Pabst brewing complex in Milwaukee. The company will also revive more of the 77 brands that it owns. It will also delve into its collection of beer recipes and bring back classic beers, some of which were last brewed before World War II.

Pabst recently made news by acquiring Small Town Brewery, whose Not Your Father’s Root Beer was the industry’s surprise success story of 2015. The product helped raise Pabst’s overall sales in 2015 by 20 percent and pushed its market share up by a percentage point, even as sales of Pabst Blue Ribbon Beer itself fell off.

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