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21 Aug 2018

Desert Cicerone: Should You Care That Your Favorite Brewery Sold Out? Yes, You Should

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It’s not easy to know exactly where your money is going when you buy something. Some large corporations take great care to intentionally obscure this knowledge, at least when looking at products superficially. You might despise a certain large conglomerate, and vow to boycott it … only to later find out that the paper towels you bought are made by a company that is wholly owned by that same conglomerate.

For decades in the craft-beer world, we didn’t have this problem: If you liked the beer you were drinking, you could find out who made it by looking at the label—and that was that. Well, the craft-beer market steadily grew … until the bigger boys in the industry could no longer stand by and watch its massive market share erode.

The plan was simple: Buy up craft breweries around the country.  

“What’s wrong with that?” you might ask. Not a single thing … at least not from a business and legal perspective. Lagunitas Brewing Company, the renowned brewer in Petaluma, sold half of the company to Heineken in 2015, and then sold the remaining half in 2017—yet the beer’s quality remains just as good as ever, and consumer costs have gone down. What could be wrong with that?

The short answer: Plenty. As for the longer answer, we’ll come back to this later, because now I have to try to make a relatively dry concept somewhat interesting: the three-tier system for alcohol in the U.S. At least it has an interesting origin, in the shadows of the Prohibition era and the Roaring ‘20s. In that decade, saloons popped up to serve the sinfully thirsty public, and many of them were “tied houses,” meaning an alcoholic-beverage supplier would pay a saloon to exclusively carry their products. Upon Prohibition’s merciful appeal, federal and state legislators saw the problem with this and sought to institute a system to protect the consumer from tied houses, encouraging free-market activity. Thus, the three-tier system was born: Breweries (or alcoholic-beverage makers more generally) would sell their products to consumers through a distributor that acts as a middle man.  

Benefits and drawbacks to this system have popped up in the ensuing years. One the biggest benefits is to smaller breweries: They have the possibility of getting their beer into other markets relatively easily, thanks to a distributor’s expanded network. This could allow a brewery to gain fans in places it previously might have never been known.

There is a dark side: AB InBev and Molson Coors have become the equivalent to The Empire in the Star Wars movies when it comes to craft beer. AB InBev is the massive multinational conglomerate and parent company to all of the Anheuser Busch and SABMiller beers, as well as many other brands. (Yes, that nasty yellow stuff is owned by foreign corporations. Don’t ever be fooled by the ridiculous beer commercials pasting American flags on everything.) Molson Coors is at least half-American, and I think you can guess which half. The company’s M.O. seems to be combining marketing and packaging efforts, as well as streamlining processes within the company. This allows them to produce the exact same product, no matter where you’ll find it in the world. It’s a feat of engineering, really, and something to be admired for what it is worth (and it’s worth billions for them), but what about the … uh ... taste?

Now we come to “branches”: Large breweries own distribution affiliates in select markets. While legal, it is plain to see the problem with this setup: These distribution affiliates can strong-arm local businesses into essentially becoming tied houses. “Oh, you’d like to carry (fill in the blank) brewery’s beers? They’re not in our portfolio, I’m afraid. And if you do carry them, we’ll pull all of (our popular but bland) brewery’s beers. If you want craft beer, though, you’re in luck! We have some in our portfolio. So what if we stomped on the quality of their beers in an attempt to make them more cheaply and more efficiently (with the exception of Lagunitas/Heineken … for now)?”

These conglomerates count on your ignorance of the origins of the beer you’re drinking. This isn’t anything to be ashamed of, by the way: Beer aisles are an absolute labyrinth, and nobody should be expected to stand around Googling who owns what. However … did you know that Los Angeles’ Golden Road Brewing is owned by AB InBev? Don’t be surprised; AB InBev owns at least 400 beer brands.

This mess inevitably spreads to the shelves. It’s why you might see packages of varying sizes and shapes of Budweiser, Bud Light, Coors, Miller Lite, etc. More shelf space equals more eyes on brands, which equals more sales. It has a distinct, anti-free-market whiff about it, doesn’t it? It’s also why these conglomerates spend ungodly sums of money on commercials that either dazzle you with visual stimuli, distract you with humor, or talk about all of its beer’s attributes without mentioning a single taste descriptor: “Hey, this beer is cold-filtered, crisp and golden? Those are my favorite flavors!”

At this point, a craft-beer fan needs to make up his or her mind. You don’t need my permission to spend your hard-earned dollars on any brand over another—but if you’d like to continue to see craft beer thrive, and become more interesting and exciting with each new beer released, join me in moving away from the products by the breweries that have sold out to Big Beer, and instead support the absolute glut of breweries that have not done so. The Brewers Association recently created the Independent Craft Brewers Seal, which qualified breweries can apply to their labels. (Note, however, that the seal is not yet being used industry-wide, so if a beer does not have the seal, it doesn’t necessarily mean it’s being produced by a brewery owned by one of the large conglomerates.)

Since we’re in Southern California, I’ll mention a couple of breweries that have sold out.

AB InBev owns Golden Road Brewing and 10 Barrel Brewing. The latter is out of Oregon, but opened a large restaurant and taproom in downtown San Diego—something that was a topic of great contention in a county with 150-plus breweries. If you’re in San Diego and find your way to 10 Barrel, you’ve really overlooked some amazing, independent brewers within a stone’s throw (no pun intended).

Constellation Brands owns San Diego’s Ballast Point Brewing. This buyout was a big deal in the industry when it occurred in 2015 due to the $1 billion price tag. At least Constellation is an American company; it also owns Corona, Modelo, Pacifico and many other brands. However, there are so many true craft breweries within a very short distance of any Ballast Point location where you could have a good or better time.

Go forth; stay vigilant; and drink wisely!

Brett Newton is a certified cicerone (like a sommelier for beer) and homebrewer who has mostly lived in the Coachella Valley since 1988. He currently works at the Coachella Valley Brewing Co. taproom in Thousand Palms. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

1 comment

  • Comment Link Andrew Wednesday, 22 August 2018 18:42 posted by Andrew

    And Constellation just laid off a bunch of its employees last week.

    Great article Brett

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