Craftwashing in the US Beer Industry

13 Pages·2017·1.74 MB·English

by  Philip H. Howard

beverages
Article
Craftwashing in the U.S. Beer Industry
PhilipH.Howard ID
DepartmentofCommunitySustainability,MichiganStateUniversity,EastLansing,MI48824,USA;
[email protected];Tel.:[phone]
AcademicEditor:JanBentzen
Received:17November2017;Accepted:11December2017;Published:26December2017
Abstract: (1) Background: Big brewers, which have experienced declining sales for their beer
brands in the last decade, have been accused of “craftwashing” by some craft brewers and their
aficionados—theydefinecraftwashingasbigbrewers(>6millionbarrelsperyear)takingadvantage
of the increasing sales of craft beer by emulating these products or by acquiring craft breweries,
whilealsoobscuringtheirownershipfromconsumers;(2)Methods: Toestimatetheprevalenceof
thesepractices,theownershipofU.S.mainstreamandcraftbeerbrandswasdecodedandvisualized.
Inaddition,anexploratorycasestudyanalyzedhowtheseownershiprelationsarerepresentedinthe
craftsectionsofselectedretailers(n=16)intheLansing,Michiganmetropolitanarea;(3)Results:
ByOctober2017intheU.S.,allbutonebigbrewerhadeitheracquiredacraftbrewery,orformed
adistributionalliancewithone—withoutdisclosingtheserelationshipsonthepackaging. Inthe
studyarea,30%of4-and6-packfacingsrecordedincraftbeersections(n=1145)hadownership
ties to big brewers; (4) Conclusions: Craftwashing is common in the U.S. beer industry, and this
suggestsconsumersmustexertsubstantialefforttobecomeawareoftheirownroleinreinforcing
thesepractices.
Keywords: craftbeer;ownership;visualization;casestudy
1. Introduction
ThebeerindustryintheUnitedStateshasexperiencedrapidgrowthinthe“craft”beersegmentin
recentyears,anddecliningsalesinmoremainstreamsegments.By2016,forexample,thecraftsegment
hadgrownto21.9%ofU.S.beersalesbydollarvalue[1],whiledomesticsalesweredownby2.8%[2].
Itisnosurprisethen,thatthedefinitionsofthesecategoriesarecontested[3],andthatbigbreweries
(those producing over 6 million barrels per year) have increasingly moved into the “craft” space.
Theyhavedonesobyintroducingcraft-likebrandsand/orbyacquiringformerlyindependentcraft
breweries. Criticshavecalledtheseactions“craftwashing”[4,5],drawingfromtermgreenwashing,
whichdescribesdeceptivemarketingpracticesforenvironmentalissues.
Previous scholarly studies of the craft beer industry have identified a number of regulatory
barriersthathinderthegrowthofthissegment,suchasexcisetaxes,zoninglawsanddistribution
restrictions[6–10]. Otherresearchershaveexploredconsumerperceptionsof“authenticity,”andfound
that craft beer drinkers have negative perceptions of beer produced by big brewers [11] (or even
breweries that offer beer styles associated with big brewers [12]). There has been little research,
however,onhowtheseopaquepatternsofownershiparereflectedin“craft”beerselectionsatretailers.
Howeffectivearecraftwashingstrategiesinthecraftbeersegment? Morespecifically,(1)how
many formerly independent craft beers are actually owned by big brewers; and (2) how is this
representedontheshelvesoftypicalretailerswhenownershiptiesareobscured? Tobegintoanswer
thesequestions,Iconductedananalysisofownershipofleadingbigbrewerandcraftbeerbrands,and
visualizedthisinaclusterdiagram. Ithenappliedtheseresultsinanexploratorycasestudyofthe
craftbeersectionsof16retailersintheLansing,Michiganmetropolitanarea.
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and visualized this in a cluster diagram. I then applied these results in an exploratory case study of
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the craft beer sections of 16 retailers in the Lansing, Michigan metropolitan area.
The results indicate that nearly all big brewers engage in craftwashing strategies, and that they
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methods,results,andadiscussionoftheirimplications.
1.1. Background
1.1. Background
An initial craftwashing strategy was launching “faux craft” or “crafty” beers, with the
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andmarketingofnewlyacquiredbrandstoincreasedramatically.

Figure1.GeographyofcraftacquisitionsmadebyAnheuser-BuschInBevintheUnitedStates,2011
Figure 1. Geography of craft acquisitions made by Anheuser-Busch InBev in the United States, 2011
to2017.
to 2017.
Craftbrewers,particularlythoseorganizedintheBrewersAssociation(Boulder,CO,USA),have
Craft brewers, particularly those organized in the Brewers Association (Boulder, CO, USA), have
beenincreasinglyvocalintheirdispleasurewiththeseactions. Theypointoutthenumerouseffortsbig
been increasingly vocal in their displeasure with these actions. They point out the numerous efforts
brewershaveengagedintokeepindependentcraftbrewersofftheshelvesofretailersanddistributors,
aswellastodiscourageconsumersfrombuyingtheirproducts. Justafewexamplesinclude:
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• One of the two leading beer firms is frequently designated by retail chains as the “category
captain”,whichgivesthemthepowertodesigntheplacementandallottedshelfspaceforthe
entirebeersection,includingdirectcompetitors’products[18].
• Afteraninvestigation,theDepartmentofJusticeprohibitedABInBevfrom“continuingpractices
andprogramsthatdisincentivedistributorsfromsellingandpromotingthebeersof... rivals”[19].
• AB InBev ran advertisements during the 2015 and 2016 Super Bowls belittling craft beer
drinkers[20,21].
AlthoughtheU.S.governmenthasnotyetintervenedincraftwashingdisputes,therehavebeen
severalprivatelawsuitsaccusingbigbrewersofdeceptivemarketingfor“import”brandsthatare
actuallybrewedintheU.S.(oneagainstABInBevbrandBeck’swassuccessful)[22]. InAustralia,
however,thelargestbrewerywasfinedapproximatelyUS$18,000byagovernmentagency,andagreed
to stop distributing its “Byron Bay Pale Lager”. The regulators said the packaging on the Carlton
&United(nowadivisionofABInBev)beerhaddeceivedconsumersintothinkingitwasmadein
asmallfacility,farfromtheindustrial-scalebrewerywhereitwasactuallyproduced[4]. JimKoch,
thefounderofBostonBeerCo.,(SamuelAdams)(Boston,MA,USA)hassaid,“Ithinkabeerdrinker
shouldn’t have to hire a private detective to figure out who actually makes the beer that they’re
drinking”[23]—althoughitshouldbepointedoutthatheengagedinaverysimilarpracticewiththe
“OregonBeerandBrewingCo.”(Salem,OR,USA)inthe1990s[24].
Inresponsetocraftwashing,theBrewersAssociation,whichrepresentssmallandindependent
brewers in the U.S., released an “independent craft” seal in June 2017. Members and eligible
non-memberscanplacethissealontheirbeerlabels,tohelpconsumersidentifywhichbreweriesdo
nothavehiddenownershipties. Toqualify,abrewerymustproduce6billionbarrelsorlessannually,
and have less than 25% ownership by a larger beer/wine/spirits firm [25]. Under this definition,
craft brewers that sell ownership stakes to private equity firms remain eligible for membership.
Thegoalsofprivateequityfirms,however,aretypicallytoachievereturnsof25–100%compounded
annually, and a payout within three to seven years [26], which increases the likelihood that these
brewerieswilleventuallybesoldtolargerfirms.OneofthelargestmembersoftheBrewersAssociation,
BostonBeer,ispubliclytraded,andisthereforealsosusceptibletotakeoverattemptsbylargerfirms.
1.2. TheoreticalPerspectiveandHypotheses
InthisstudyIuseNitzanandBichler’stheoreticalframeworkofCapitalasPower[27]whichposits
thatcapitalistsseektoimprovetheirpositionrelativetootherdominantfirms. Importantly,thismeans
that they do not attempt to maximize profits, nor necessarily to achieve growth in production or
sales, as long as they obtain a bigger share of the total, such as by beating average returns [28,29].
Akeymeansofachievingthisgoalis“strategicsabotage”,whichmayinvolvenumerousstrategies
for increasing firms’ “earnings and capitalization relative to—and often by undermining—those of
others”[29](p. 7). Maintainingregulatorybarriersthatdisproportionatelyaffectsmallerfirmsisone
example,butcontrollingshelfspaceisanother—dominantbeerfirmshavebeeneffectiveinincreasing
thevisibilityoftheirofferings,whilealsolimitingorevenremovingvisibilityforcompetitors.ABInBev
andMolsonCoors,forexample,haveallegedlyusedtheirpowerascategorycaptains,mentioned
above,totakeupdisproportionatelymoreshelfspacerelativetotheirpercentageofbeersales[18],
particularlyforthemostprominentlocations,suchasateyelevelandtheendofrows[30,31].
Thesestrategiesofstrategicsabotagedonotneedtobelogicallyconsistent,andmayresultin
ironies—anexampleisanABInBevSuperBowlcommercialmockingpumpkinpeachale,justone
weekafteracquiringacraftbrewerythatmakesanalewithpumpkinandpeachflavors.DickCantwell,
oneofthefoundersofthiscraftbrewery,Elysian,turnedinhisresignationnoticesoonafterthead
wasaired. Heexplained,“There’sabigdifferencebetweenanindependentcraftbrewerythatmakes
itsowndecisionsandanenormouscompanythathasonearmdevotedtowhattheyconsidertobe
craftbeer. InthecaseofAnheuser-Busch,theyareperfectlycontenttohavethedifferentarmsoftheir
company at war with each other” [32]. Big brewers have frequently responded to criticisms from
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smallercraftbrewerswithvariationsonthetheme“can’twealljustgetalong?”Theyemphasizetheir
sharedinterestingrowingbeersales,whilealsodeflectingattentionawayfromtheiractionsthatlimit
growthinthecraftsegment[5,33].
Basedonapreviousstudyofwineinthisregion,whichreportedmorevarietiesofwineandmore
Michigan-producedwineatlocallyownedretailers[34],Idevelopedtwopreliminaryhypothesesfor
thisstudy. Thesewerethatwhencontrollingforretailerformat(whichallotdifferingamountsofshelf
spacetobeer):
Hypothesis1. Locally-ownedretailersoffermorecraftbeerselections.
Hypothesis2. Locally-ownedretailersofferfewerbrandswithownershiptiestobigbrewers.
Additional support for these hypotheses come from the fact that locally-owned retailers are
much less likely than national chains to select one firm as a “captain” for category management.
Captains may increase the number of stock-keeping-units (SKUs) for their own firm, but also
frequentlyreducethetotalnumberofSKUsinthecategory[35]. Todifferentiatethemselvesfromchain
stores,somelocally-ownedretailersemphasizetheirselectionofbeersfromregionalcraftbreweries,
includingsignagetohighlightlocalorregionalofferings. Increasingly,however,nationally-owned
retailersareimitatingthesestrategiestocapturegrowingconsumerinterestinlocalcraftbeer[36].
2. Methods
Forthefirstcomponentofthisstudy,the25largestbrewersintheU.S.wereselectedbasedondata
fromBeerMarketer’sInsights[37],andtheownershiprelationsoftheirsubsidiarybrandsvisualizedin
aclusterdiagram. Acutoffofthetop25wasselectedbecausenobreweriesbelowthisrankinghadties
tobigbreweriesintheUS,andthereforetheywouldnothaveincreasedthecomplexityrepresented
ininthevisualization. Additionalcraftbeerbrandswereaddedtothefigure,however,iftheyhad
ownershipconnectionswithbigbrewersheadquarteredinotherpartoftheworld(e.g.,Japan),orif
theyhadtiestoprivateequityfirms.
ThisfigurewasdevelopedusingthediagrammingsoftwareOmniGraffle(version6.6.2,Seattle,
WA,USA).TheonlybrewerontheBeerInsightslistthatwasomittedwastenth-rankedMike’sHard
LemonadeCo.,(Chicago,IL,USA)becausetheBrewersAssociationexcludesflavoredmaltbeverages
fromtheirdefinitionof“beer”. Parentfirmsandtheirbrandswerecodedascraftornon-craftbrewers,
basedonBrewersAssociationdefinitions(priortoacquisitions). Brandsthatpromotea“craft”image,
but introduced by big brewers, were color coded in the visualization “crafty”. Partial equity was
representedwithdashedlines,andthepercentageofminoritystakesidentified,ifknown. Distribution
allianceswererepresentedwithdottedlines.
Asmentionedpreviously,clearownershipdataisrarelyfoundontheproductlabelsofbrands
owned by big brewers, and even websites may not reveal the full extent of subsidiary brands
(Leinenkugel’swebsite,forexample,liststhecopyrightasbelongingtoJakobLeinenkugelBrewing
Company—ChippewaFalls,WI,USA,withnomentionofparentcorporationMolsonCoors). Thedata
for this visualization therefore came from numerous sources, including press releases, newspaper
articles, andindustrytradejournalsorblogs. KeysourcesofdataincludedVinepair’s“Definitive
TimelineofCraftBeerAcquisitions[38]andamorenarrowlyfocusedclusterdiagramIpreviously
createdbasedon2010data[39],althoughallrelationshipswereverifiedwithadditionalsourcesto
ensuretheywereaccurateanduptodate.
Thesecondcomponentofthisresearchwasanexploratorycasestudyofcraftbeerselections
atretailershelvesintheLansing,MichiganmetropolitanareainOctober2017. Itencompassedthe
cityofLansing,butfocusedprimarilyonretailersinthemoreaffluentcitiesandsuburbstothenorth
andeast,whichwereexpectedtohavelargercraftbeerselections(evencomparedtootheroutlets
belongingtothesamechaininthisarea). Table1showsthedemographicsofthemetropolitanarea,
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whichindicatesaloweraverageincome,higherpovertyrates,andlessethnicdiversityincomparison
tonationalaverages.Michiganranks6thamongallstatesforthehighestnumberofcraftbreweries[40],
and includes two of the top 25 breweries by sales in the U.S. (Bell’s and Founders). State-specific
regulatorybarriers[6,7,9],andthefactthatbeerisheavyandexpensivetotransport[41],bothpresent
challengestonationaldistributionformanycraftbeerfirms. Asaresult,retailselectionsfoundinthis
areaareunlikelytoberepresentativeofotherregionsofthecountry.
Table1.Lansing-EastLansing,MIMetroArea(population472,276)demographicscomparedtothe
UnitedStates,2015[42].
Demographic Lansing-EastLansingMetroArea US
Medianage 35.4 37.8
Medianhouseholdincome $51,839 $55,775
Povertyrate 17.5% 14.7%
Ethnicity
White 76.6% 61.5%
Black 8.2% 12.3%
Hispanic 6.6% 17.6%
Asian 4.6% 5.3%
Multracial 3.7% 2.3%
An inventory was conducted at 16 retailers, which were purposively selected to ensure
representation along two dimensions: (1) retail format; and (2) store ownership. Table 2 shows
thenumberofretailersinthreecategoriesforeachofthesedimensions. Fouroftheformat/ownership
combinations were represented by just one retailer (e.g., a single nationally-owned natural foods
retailer),becausetherewerenootheroptionstoselectfrominthisarea,whichreducedthepowerof
thestudytodetectdifferencesamongthesedimensions.
Table2.Formatandownershipofretailersinthecasestudy.
Format Local OwnershipRegional National Total
Grocery/Supermarket 2 1 3 6
NaturalFoods 1 2 1 4
Convenience 1 2 3 6
Total 4 5 7 16
Theinventorywaslimitedto4-and6-packfacingsintherefrigeratorcasesatmostoftheseretailers.
Afacingisapackagevisibleatthefrontoftheshelf,withidenticalitemsstockedbehindit,asshownin
Figure2;theseareperiodicallyrepositionedatthefrontoftheshelfbyemployeesasitemsareremoved
by customers. Most retailers also stocked single bottles/cans and larger packages (e.g., 12- and
15-packs) in their refrigerator cases, as well as various sizes on unrefrigerated shelves. However,
thesetypicallyduplicatedbrandsandvarietiesstockedasrefrigerated4-and6-packs,andthuswere
notrecorded. Anexceptionwasmadefortwoofthenaturalfoodsformatretailers—thesehadmore
limitedrefrigeratorspace,whichcontainedprimarilysinglebottles/cans,and4-and6-packswere
displayedprimarilyonnearbyunrefrigeratedshelves. All4-and6-packswererecordedatthesetwo
stores,refrigeratedornot.
Craftbeerwasshelveddistinctlyfromothertypesofbeeratallgrocersandnaturalfoodsretailers
inthestudy,andeveryfacinginthecraftsectionwasrecorded. Althoughthevisualizationofnational
ownershipincludesrelationshipsforbrandsintherelativelynewcategoryofalcoholicrootbeers,
nearlyallLansing-arearetailersshelvedtheseproductsinaseparatesection(usuallywithflavored
malt beverages and hard ciders). Some convenience stores, due to their more limited shelf space,
didnothavedistinctcraftsections,andmixedcraftbrandswithothertypesofbeer. Fortheseretailers,
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onlythebrandstypicallyfoundinthecraftsectionoflargerretailerswererecorded(e.g.,omitting
retailers, only the brands typically found in the craft section of larger retailers were recorded (e.g.,
alcoholicrootbeers,mainstreambeerbrandsand“import”beers).
omitting alcoholic root beers, mainstream beer brands and “import” beers).

Figure 2. Example of craft beer facings at a grocery-format retailer.
Figure2.Exampleofcraftbeerfacingsatagrocery-formatretailer.
These data were then coded for parent company ownership, and analyzed statistically. Based on
Thesedatawerethencodedforparentcompanyownership,andanalyzedstatistically. Basedon
my theoretical framework, I expected even small equity stakes from big brewers to provide them
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formats,andregionalandnation alownershipwerecodedasthecomparisoncategories.
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3.3.R Reessuultlsts
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ei(tbhleure)t,h eriotuhgerh tahnroouwgnhe arnsh oipwnstearksehiopr satadkiest orirb au tdioisntrpibaurttnioenr sphaiprt.nIenrsahdidpi. tIinon a,dtdhietitowno, tlhaerg tewsot blarerwgeesrts
(AbrBewIneBres v(AaBn dInMBeovl saonnd CMooolrsso)nb Coothorhs)a bvoethfi vheavoer fmivoer oer “mcroarfet y“”cr(arfetyd”) (brreadn)d bsr.anDdisa.g Deoiag(Leoon (Ldoonnd,oUnK, ,
anUdKp, aanredn tpoarfeGnut ionfn Gesusinannedsso tahnedr oimthpeor ritmbpraonrtd bs)raisndthse) iosn tlhyeb oignlbyr ebwige brrtehwaterh athsanto htayse ntoatl lyieedt awlliitehda
crwafitthb rae wcrearf.t Abrlseowneor.t aAbllseoi sntohtaatbalet liesa tshtaat daot zleeansct raa fdtobzreenw ecrrsafht abvreewbeeerns phaavrteia blleyenor pfaurltlyialalcyq ourir feudllbyy
paricvqautiereedq ubiyty pfirirvmatse( egqreueitny) .firms (green).
Ownership of Leading
U.S. Beer Brands
craft ncroanft- “crafty” perqivuaittye Beea#rc Iscnaoslriegdshi nrtasg,n t2ko017 ParDtiaisl tOribwuntieornship
Victory MUamlynseasngetes- eSron uTtihe-r C oCEnanspcuiotmarele r Full Sail Br#loy2on3k- HLoobrdo BrPidogrte- WsFtaiorlknee-er MODOURVTEGLA T
minority equity #20
DHo#ge2afi5dsh 15% equity Pa LrtNnKer s 24.5% equity Valterra SSphoientezrl/ GAM#B1R6INUS Bvoaurlde- Ogmamnge-
KIRIN
Geseene- Pyramid MHagaitc- TVaoplapnetteo TrPuimlser YUEN#G7LING
LUabSSaKAetitvn-egns- BMABBRtoareM(euEieNnFwnrEW OI -F#RER8CIRCTOHIA E NS ) BHroonMnweaPlaanyhocn aTrdnta-/'rsC- Sapagitea l ScEhnljaoflyy Beer AbHitaopCat CoMCnaagipnr iu tSaetln. t; CPaasrttnaenresa Bruery SoaEJrpasopltirs-eclloa SPdAreenPstei-POROHarbinbUroAnSuint-eecahmobrK aacrh- WWicekeedd CONBFTuSud#InTOdk3hEyNa PL aLciAfic-oBPa#ol1liaM8nstotC doerloona SBAadOBmamESu#esE6TlORTrNav eler CIsoAlanSdneaadymm s Ygulienng-
BPreioreOJstlOwBhsalye -cladmsou tbMkpe iiTaMel-stiainnoegSrN-BvoMaaoPrilthceaeio-enyanmr'sla-lH oNlelSawHncmhde(aPmiOlneaiA-dbPtsStAI#SB5m SSBeciTqnSEheuo carVihretiy.lfti-)ytzBlatSTzomaFBSwnaatatlnlaisllnlg t-aefSftroh'sPLSroitRmanareoi nier MIndTFHadealhoeynja pricnsleeegn SOtoalgdraae- BfiKRsiMnhUlEiogegNo-rWhntITH-bEouERelmd4DqIt-4Eu %iStyMceCBinnrudoetoeCte-ka rmel LekfaKfenoge-aeHMaorodene-tnienBjgootdKSodntirG -sPiniarBlualsi sASBrtteoelcliask b'RsriedNdga-AetuNBrMBaeHIulNliUsocEc#BhbShU-1ECSFVHkrEawa BnRnezuei-isdrsSe--rpGIast#olea1oRnn5RsDodBe4olal e9cimnZs4k%Bgnti9e o% gMeicetSLqaka nheavur-agqniiltrPadlBuyker oilS/-tuiEyThneolot ypcskia BWnliuBldea31 r20r De.i2nGloRi%oomonl d-aeFBhedoq-nrarreumi DBddbcie-takgoyvceeniknles- PFeoaukrs ALCBLR#RIA1AE4NFWTC WEBiredormsthe-HrR oeodk Kona BcCBeroeaEnct#e-hL1 7L’BSell’AsCnigtyel MinhaBseNlgeiwu BmEMNL#EBI1GN#eW2N2IlHgUe4 iwAuM mSMnoalgia-
Dog Tag 50% equity TBiegeerr Faust
SWwaeteetr- meiqnuoirtiyty CPoanTrsStnuCGeCmi rgisetayrr BPreewrriinng ShorStsoenudth-Am1es9qtm.e 9ueli9inqt%youZritiytyywHeiekeceinnLn-#ai1tga3us-HEIN#E4pMhKuyEr's-N ScCaSormRlturepizpd-oe TEeDqcoausties NCraaotdliovo-eA Sracihnetr TShhiirfdt CMBaorlluoinen g MKOMiIRlLroliiesalSsdhnoO 'sn N sKtoeCyn-eoors hoIcues-e DESC#H19UTESscDhue-tes ST#O22NEStone
sWatac-hSqeurastt- PFCOBairarlsetpuknmieatesaarr nls F3o#e0u2Mr%ns1 dA M-eHqIuGOitUUyE SLAN CCbearBinpRdotcigNoettaaterceosl- kwmt l-eBGRioeirvrdTsCeMochrBooshne.iirr deraett i minority equitSwymicikth's-UintaHDarIpA#G9EOkeKniln-yTerGnrauespinsinR-eveorlv-VHaollepy hHWaeerndinr'Sys- olLkeuignBeelan'sr-EmGxeoTtnlrydaCs kOieM#O2HislRleeeJrprSUPmohri-Aal’qssgnunu eeilrllHa apSmratamPmre'oVeGsr-nqioOreCounnluldeinssn ca-ahFMoksBiletweeeLsra's’etCsu cr-hDRisoetadgl NSeivearNrSdaaE IE#V1RA1RDAA NSeivearrdaa
October 2017
philhoward.net

Figure 3. Ownership of leading U.S. beer brands.
Figure3.OwnershipofleadingU.S.beerbrands.
Among these brands, one of the few exceptions to obscuring ownership is Third Shift, which
wasA inmtroondgutcheeds ebbyr aMnodlss,oonn Ceooofrtsh enfaetwioneaxlclyep itnio 2n0s1t3o. oTbhsec ubroitntlgeso warnee hrsehldip iins aT hcirradftS-shtiyftle, wuhniccohatwedas
inctarroddbuocaerddb cyarMrioelrs, owniCtho soirnsgnlea-tcioonloarl lpyriinnt2i0n1g3.. ATlhtheobuogtthle ssoamreeh ienlidtiainl paaccrkaaftg-sintygl efournmcoatast eiddecnatridfibeoda irtd
caarsr aie pr,rwodituhcst ionfg “leB-acnodlo rofp Brirnetwinegr.s”A, lathndou dgihd snoomt leininki tiita tlop tahcek pagarinengtf coormrpaotrsaitdioenn t[i4fi3e]d, eivteanstauaplrlyo dthuec t
osfm“Baallnerd porfinBtr oenw tehres ”f,roanntd odf itdhen poatclkinakgiintgto sttahteedp,a “rcernatftceodr pbyo rCaotioorns [m43a]s,teerv bernetwuaelrlsy”.t hTehissm barallnedr pwrains t
Beverages2018,4,1 8of13
onthefrontofthepackagingstated,“craftedbyCoorsmasterbrewers”. Thisbrandwasoncehighly
Beverages 2017, 3, 63 8 of 13
visible in craft sections at a number of Lansing area retailers, and continues to be sold at retailers
natoinocnea hlliyg,hbluyt vwisaibslen oint fcoraufnt dseoctnioannsy aot fa tnhueminbveer notfo Lriaendsisnhge alvreeas rinetathiliesrss,t uanddy. continues to be sold at
retailers nationally, but was not found on any of the inventoried shelves in this study.
3.2. CaseStudyofLansing,MichiganRetailers
3.2. Case Study of Lansing, Michigan Retailers
Atotalof1145facings,ina4-and6-packformatwererecorded. Forthesampleasawhole,64.1%
wereidAen ttoifitaeld ofa 1s1h4a5v fiancgincgrsa,f itno aw 4n- earnsdh i6p-p,5a.c9k% fohramdaftu wlleorer rpeacrotriadlepdr. iFvoart etheeq suaimtypolew anse ar swhhipo,lea,n 6d4.310%.0 %
wewreefrue lildyeonrtipfiaerdti aalsl yhaovwinnge dcrbayftb oigwbnreerwsheirps,. 5A.9%to thaladof f2u7ll5 oorf pthaerstiealf apcriinvgastew eeqrueirteyc oowrdneedrsahtiepy, eanledv el,
30.0% were fully or partially owned by big brewers. A total of 275 of these facings were recorded at
butanalysisofthissubsampleindicatedthattheownershippercentageswerequitesimilar—64.4%
eye level, but analysis of this subsample indicated that the ownership percentages were quite
craft,4.7%privateequityties,and30.9%bigbrewerties. Subsequentanalysesthereforefocusedonall
similar—64.4% craft, 4.7% private equity ties, and 30.9% big brewer ties. Subsequent analyses
facings. Inaddition,duetothesmallpercentagesrecorded,thosewithprivateequitytieswereplaced
therefore focused on all facings. In addition, due to the small percentages recorded, those with private
inthecraftcategory.
equity ties were placed in the craft category.
IfIhadappliedthemorelenientBrewersAssociationdefinitionofcraft, 73facingsofShort’s
If I had applied the more lenient Brewers Association definition of craft, 73 facings of Short’s
(19.99%ownedbyHeineken)and2facingsofBrooklyn(24.5%ownedbyKirin)wouldhavemoved
(19.99% owned by Heineken) and 2 facings of Brooklyn (24.5% owned by Kirin) would have moved
to the craft category, resulting in 70.7% craft, and 23.4% with larger stakes held by big brewers.
to the craft category, resulting in 70.7% craft, and 23.4% with larger stakes held by big brewers. The
The analysis does not include in the big brewer category those brands with distribution alliances,
analysis does not include in the big brewer category those brands with distribution alliances,
however. ThiswouldonlyhaveaffectedNewHollandnationally,whichhasadistributiondealwith
however. This would only have affected New Holland nationally, which has a distribution deal with
Pabst,butthisMichigan-basedbreweryaccountedfor45facings,or3.9%ofthestudytotal.
Pabst, but this Michigan-based brewery accounted for 45 facings, or 3.9% of the study total.
FigFuigruer4e s4h sohwowssth teher erseusultlstsf oforre eaacchh rreettaaiilleerr,, oorrggaanniizzeedd aass aasscceennddiningg frformom thteh esmsmallaelslet stot tloarlgaersgte st
nunmubmebrecrr acrftafbt ebeerefra fcaicnignsgsi nine eaacchho offt thhee tthhrreeee rreettaaiilleerr ffoorrmmaattss.. AAss eexxppecetcetded, t,htehsees feofromrmatsa thsahda sdtrsotnrogn g
difdfeifrfeenrecnecseisn int htheen nuummbbeerr ooff ccrraafftt ffaacciinnggss, ,dduue etot ommoroe rleimliimtedit esdheslhf esplfascpe aact ecoantvceonnievnecnei esntocreess,t oinr es,
inccoommppaarriissoonn ttoo nnaattuurraal lffoooodd sstotoreres saanndd mmaianinstsrteraemam grgorcoecresr. sC.oCnovnevneienniecne csetosrteosr eosffoefrfeedre 8d t8o t3o9 3c9racfrta ft
offoefrfienrginsg,sw, withithth tehelo lcoaclallyly-o-owwnneedd ssttoorree ooffffeerriinngg tthhee mmoosstt ffaacciinnggss inin ththisis foformrmata. t.ThTehree rweaws amsomreo re
varviaartiiaotnioinn isnh sehlfelsfp sapcaeced devevootetdedt otoc crraaffttb beeeerr aatt nnaattuurraall aanndd ggrroocceerryy foforrmmaatst:s a:sa slolwow asa 1s41 c4racfrta ffatcfiancgins gs
ataotn oennea ntiaotinoanlalyll-yo-wownneeddg grroocceerryy rreettaaiilleerr,, aanndd aass hhiigghh aass 223377 aat toonne elolcoaclalyll-yo-wonwende gdrogcreorcye rryetareilteari.l er.
ThTehaev aevraegraegneu nmumbebreor foffa fcaicninggssf oforra allll1 166r reettaaiilleerrss wwaass 7711..55..
Ownership ties for “craft” beer facings (n = 1,145) at sixteen retailers in Lansing, M ichigan
Retailer
Format Ownership Total #
62.5,37.5 8
66.7,33.3 9
Convenience 50.0,50.0 10
30.8,69.2 13
68.8,31.3 16
74.4 25.6 39
45.5 54.5 44
73.0 27.0 74
Natural
78.5 21.5 93
69.0 31.0 145
35.7,64.3 14
50.0 50.0 44
70.0 30.0 70
Grocery
67.4 32.6 138
75.4 24.6 191
76.8 23.2 237
Number of 6- and 4-pack facings (labeled by % in each ownership category)

FigFuigruer4e. 4O. wOwnenresrhsihpipt iteisesf oforr“ “ccrraafftt””b beeeerr ffaacciinnggss ((nn == 11114455)) aat tssixixteteeenn rerteatialeilresr isni nLaLnasninsign, gM,IM, UI,SUAS. A.
Beverages2018,4,1 9of13
Beverages 2017, 3, 63 9 of 13
TheT haevearvaegrea gneunmumbebre roof fccrraafftt ffaacciinnggssw witihtho wownenreshrsiphitpie stiteos btiog bbriegw berreswwearss3 7w.9a%s w37h.9e%n cawlchuelna ted
calcautltahteedr eatta itlheer lreevtaeill(eir.e l.e,vneolt (fio.er.,t hneott oftoarl tnhuem tobtearl onfufmacbinegr soifn fathciensgtsu diny )t.hLe osctualdlyy-)o. wLonceadllrye-toawilenresdh ad
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brewraenrg teidesf rroanmge3d0. 0fr%om(g r3o0c.0e%ry )(gtoro6c9e.r2y%) t(oc o6n9v.2e%ni (ecnocnev).enience).
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“craafstw“carsahfitnwga”s, hdiinvgid”e,dd ibvyid peadrebnyt fpiramre,n atnfidr smu,bdanivdidseudb bdyiv tihdeeidr bbryanthdes.i rTbhrea bnrdasn.dTs hweitbhr tahned hsigwhiethst the
perhceignhtaegset poefr cfeancitnaggse owfefraec iMngischwigearne-Mbaiscehdig abnre-wbaesreidesb FreowunerdieerssF aonudn dSehrosratsn d(aSphporrotxsi(mapapterloyx i2m2%at ely
each22).% Heoawche)v.erH, oMwoelvsoern, MCooolsrosn’ “Ccoraofrtsy’”“ cbrraafntyd”s bBrlauned sMBoloune Manodo nLeainndenLkeuigneeln’sk uaglseol’ staaklseo utapk ea up
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receCnotloyr sa’crqecueinretldy bacrqanudirse dwberraen drescworedreedr eicno rtdheed sitnutdhye satrueda.y Caroenav.eCrosenlvye, rAseBly ,IAnBBeIvn’sB erve’csernetc ecnratfctr aft
acqauciqsiutiiosintiso tnosotko oukpu spusbusbtasntatniatlilayll ymmoroer eshsheelfl fssppaaccee tthhaann tthheeiirr ““ccrraaffttyy”” oofffeferirninggss( S(hSohcokckT oTpo,pW, iWldilBdl ue).
BluIen).t eInretestriensgtilnyg,alyn,o atnhoetrh“ecrr “acftrya”ftyb”r abnrdanodw onwednebdy btyh itshfiisr fmirmLa Lnadnsdhsahrkar,kw, awsaps rperveivoiuosulyslyfo fuonudndo nona rea
areas hsehlvelevse,sb,u btunto ntodtu rdiunrginthgi sthinisv einnvtoernytopreyr ipoder.iCodo.n Cstoelnlastteiollnathioans ahlsaos baelseon bqeueitne qsuucitcee sssufuccleinsspfulal ciinn ga
placCinalgi fao rCnailai-fborrenwiae-bdraewcqeudi saictiqounisointiothn iosna rtehais’s asrheae’lsv sehse(l1v1e%s )(,1a1f%te)r, apfateyri npgay$i1nbgi $ll1io bnilflioornB faolrl aBsatlPlaositn t’s
Poincrta’sf tcbrareftw birnegwainngd adnisdt idlliisntgilloinpger oaptieornastiionnNs ionv Nemobveerm2b0e1r5 2.015.
Division of “craft” space for brands with ownership ties to big brewers “crafty”
size proportional to number of 4- and 6-pack facings at 16 Lansing-area retailers (n=338);
% refers to parent company share of total number of big brewer facings craft acquisition
NAB/FIFCO (.03%) AB INBEV (17%) MAHOU SAN MIGUEL (22%) HEINEKEN (29%)
KIRIN(.06%)
O
OR)
APP(1%
GAM- SBRINUS(1%)
MOLSON COORS (21%)
)
(7%
N
LLATIO
TE
S
N
O
C

Figure5. Divisionof“craft”spaceforbrandswithownershiptiestobigbrewersacrossallsixteen
Figure 5. Division of “craft” space for brands with ownership ties to big brewers across all sixteen
retailers(n=338).
retailers (n = 338).
TabTlea b3l esh3oswhos wthset rheesureltssu oltfs tohfet hreegrreegssreiosnsi oannaalnyaselys.s eFso.rF MoroMdeol d1e tlh1e tdheepdeenpdeenndt evnatrviaabrliea bisl ethise the
totatlo tnaulmnubmerb oerf ocrfacfrta ffatcfaincginsg. sN. Noto stusruprrpirsiisnignlgyl,y ,rreettaailielerr ffoorrmmaatt wwaass aassssoocciiaatteedd wwitithht htheen nuummbebrero focfr aft
craffta cfaincginsg,sa,l tahlothuoguhgthh ethdeif fdeirfefenrceenbceet wbeetewnegerno cgerroscaenrsd acnodn vceonnivenenceiesntcoer esstowraess mwuasc hmsutrcohn gsterrotnhgaenr the
thand itfhfeer denifcfeerbeentcwee beentwgreoecne rgraoncdern aantudr anlaftourrmala ftosr.mThates.m Tohdee mlpordeedli pctrsetdhiacttsc tohmatp caoremdptaoregdro tcoe gryrorceetaryil ers,
retaailceorsn, vae ncoiennvceensietonrcee isstoerxep eisc teexdpetocthedav teo 9h0afveew 9e0r fcerwafetrf acrcainftg fsa,cainndgsa, annadtu ar anlaftouordals froeotadisle rre2ta6ilfeerw er
26 fcerwafetrf carcainftg fsa,cainftgesr, caofntetrr oclolinntgroflolirnogw fonre orswhnipe.rsThhiep.p Trehleim pirnealirmyihnyapryo thhyepsiosththeastisl othcaaltl lyoocawllnye odwrenteadil ers
retawiloerusl dwooffuelrdm oofrfeerc rmafotrbee ecrrsaeftle cbteioern sseallesoctrioecnesi vaeldsos ormeceeisvuepdp osrotmfreo msutphpisomrto fdreolm. I ttphrise dmicotsdaelr.e tIat iler
prewdiictths naa rtieotanialelro wwnitehr snhaitpiownialll howavnee7rs8hfiepw werilcl rhaaftvfea c7i8n gfesw,aenrd coranfet wfaictihngresg, iaonnda loonwe nweirtshh irpegwioilnlahla ve
own5e9rfsehwipe rwcirlal fhtfaavcei n5g9s fienwceorm cpraarfti sfoancitnoglso cina lcoowmnpearrsihsiopn, atoft elroccaoln otrwolnlienrgshfiopr, faofrtmera ct.ontrolling for
format.
Beverages2018,4,1 10of13
ForModel2thedependentvariableisthepercentageofcraftfacingswithbigbrewerownership
ties. Therewereveryweakdifferencesbetweenretailerformatsandpercentageofcraftbeerowned
bybigbrewers,aftercontrollingforownership. Ownership,however,wasassociatedwithstronger
differences. Incomparisontolocalownership,themodelestimates19%morecraftfacingsfrombig
brewersinanationally-ownedretailer,and14%moreinaregionally-ownedretailer,aftercontrolling
forformat. Thisprovidessomesupportforthepreliminaryhypothesisthatlocallyownedretailers
wouldofferfewerbrandswithownershiptiestobigbrewers,althoughthismodelexplainedmuch
lessvariation(R2=0.06)incomparisontoModel1(R2=0.48). Bothmodelswereverylimitedinthe
numberofpotentiallyconfoundingvariablesthatwerecontrolled,however,andthediscussionbelow
offerssuggestionsforwhattoincludeinmodelsinfutureresearch.
Table 3. Ordinary least squares regression models for retailers: (1) total number of craft facings;
and(2)percentageofcraftfacingsownedbybigbrewers(n=16)1.
Model1:TotalNumberofCraft Model2:%ofBigBrewer
FacingsPerRetailer OwnershipTiesPerRetailer
Independent
Coefficient(S.E.) p Coefficient(S.E.) p
Variables
Constant 164.36(29.27) <.001 .26(.08) .009
RetailerFormat
Grocer(default)
Natural −26.44(34.66) .462 −.04(0.10) .716
Convenience −90.00(30.34) .013 .01(.09) .876
RetailerOwnership
Local(default)
Regional −58.98(35.56) .125 0.14(0.10) .204
National −77.72(32.68) .037 0.19(0.09) .065
R2 p R2 p
Model .48 .023 .06 .356
1FollowingrecentsuggestionsfromtheAmericanStatisticalAssociation,pvaluesarereported,butnotusedasa
measureofimportance[44].
4. Discussion
TheresultssuggestthatcraftwashingintheU.S.beerindustryisquitewidespread,withonlyone
bigbrewer(Diageo)sofarresistingcraftacquisitions. Itisdifficultforatypicalconsumertoidentify
ownershiptieswithbigbrewers,bothfor“crafty”brandsandthosewithformerlyindependentcraft
heritage. The large numbers of acquisitions by private equity firms in recent years suggests that
even more independent craft breweries will eventually be acquired by big brewers or other large
corporations. Asaresult,thosewhowanttosupportindependentcraftbrewersmustexertsubstantial
efforttoremainfullyinformed,andavoidunintentionallyreinforcingthesetrends.
Locally-ownedretailersinthisstudyweremorelikelytohave(1)largercraftsections;and(2)a
lowerpercentageofbrandswithtiestobigbrewers,aftercontrollingforretailformat,whichindicates
some support for the preliminary hypotheses. Although the small sample size of the case study
limitsthepowertomakestrongergeneralizations,particularlyoutsideMichigan,thesehypotheses
meritfurtherresearch. Thisstudywasnotabletodisentangleifthelowpercentageofbigbrewer
brandsatlocally-ownedretailerswasquitedeliberate,ordueprimarilytoofferinglargerselections.
In other words, do these retailers offer a minimum number of brands with big brewer ties, and
addanincreasingnumberofindependentbrandswithanexpandedspacededicatedtocraftbeer?
Alternatively,dolocally-ownedretailersintentionallytoseektominimizethepercentageofbigbrewer
productstheyoffer,regardlessofthesizeoftheircraftbeershelfspace?
Anecdotally,theanswertothelastquestionisyes,atleastforseveralcraftbeer-focusedbarsand
packagedbeerretailersthatverypubliclydroppedWickedWeedimmediatelyafteritwasacquired
byABInBev[45,46]. Thisquestionhasnotbeenansweredwithmoresystematicresearch,however,