The Crux of the Craft Beer v. Crafty Beer Debate: It’s Personal

Posted by Jason Gladfelter, M.A. on June 14, 2013  /   Posted in Craft Brewery Conflict Mediation

–To better understand the arguments behind Craft v. Crafty, see links at the end–

There is a heated debate between a few large breweries (AB-InBev, MillerCoors, etc) and more than two thousand small breweries across the U.S. and some other countries.  To get a quick outline of the situation, the large breweries bring in about 90% of beer sales, with craft breweries claiming 10%, but this share has grown over the last decade. With overall beer sales losing out to liquor, malt beverages and wine, big breweries have endured further losses of sales to craft breweries.  As any company would do when they lose sales, they look to change the trend.

Craft breweries are enjoying a huge boom.  In a major recession, rarely do we find any company that enjoys profit, and here we have the craft breweries increasing their profits and share of the beer market.  It’s quite remarkable. How can the overall beer market lose shares to wine, liquor and malt beverages, AND the biggest breweries see sales down, but have craft breweries grow?  There must be a secret.

Many theories exist as to what this secret might be: hand crafted beer, sense of community, better tasting product, etc.  Apparently, the large breweries think the secret is the image of craft beer. MillerCoors and AB-InBev have many smaller breweries under their umbrella (AC Golden, Leinenkugel, Goose Island, Rolling Rock…) or have specific brands under different names (MillerCoors has Blue Moon, AB-InBev has Shock Top).  More brand names under this umbrella are popping up.

In countering this maneuver from the large breweries, craft breweries are crying foul, and not because they feel the image of craft beer is being tarnished or stolen, although we’ll see how this affects the situation. Craft breweries say that on an unequal playing field–where the big breweries have the advantages of money, marketing, etc–now they are bypassing the rules of the game: selling a product under their own name. Craft breweries are asking the large breweries, “hey, if your product is so good, then why are you hiding it under a different name?  Step up and claim ownership. Be proud of your product”.

Ostensibly, the debate then is that Craft breweries want open and honest competition.  That they feel the large breweries are denying this. Large breweries counter and say the consumer should purchase what they like.  Craft breweries feel the consumer is being lied to by large breweries, and skewing the playing field.  But this is the business translation of the core of the issue.*

At the heart of this debate is that Craft breweries feel their hard work and precious investments of time, money, energy and lifestyle are being taken advantage of by the large breweries.  Ask yourself, if someone took your idea and ran with it at your expense, how upset would you be? Now imagine the person doing this is already extremely rich.  How do you feel?  This is how craft breweries feel.

With large breweries using the image of craft brewing, craft breweries feel cheated and robbed. Not about the image itself, but what that image represents; all the sacrifices craft brewers made to establish a small business around their passion. It is an internal assault on their being and this hurts more than market share, shelf space and financial losses. But, in the end, large breweries are correct: consumers will buy what they enjoy drinking.  Who’s right is the focus of the debate, but it shouldn’t be…a debate.

* Some craft breweries will remain outside this debate as their product is distributed by subsidiaries of the large breweries. The three-tier system in the U.S. is a complex machine that cannot be disregarded in this debate

Definitions: Brewers Association   http://www.brewersassociation.org/pages/media/press-releases/show?title=craft-vs-crafty-a-statement-from-the-brewers-association

Short video: CBS http://beerpulse.com/2013/06/calagione-on-cbs-craft-vs-crafty-generated-over-100-million-media-impressions-video/

Miller’s response:  http://management.fortune.cnn.com/2012/12/12/sabmiller-big-beer-craft-brewers/

Another take:  http://management.fortune.cnn.com/2012/11/15/big-beer-craft-brewers/

Some analysis: http://cultivatedpint.blogspot.com/2013/02/craft-and-crafty-beer-brewers.html

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