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Forget craft, what does ‘independent’ mean?

March 7, 2017
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Lion’s decision to withdraw its craft brands from membership of the Craft Beer Industry Association, in the face of growing opposition to their continued membership, highlights the growing pains the small brewing sector faces as it matures.

It also raises the question whether there is actually any real benefit to small brewers by seeking to exclude Lion from its clubhouse, as well as what actually is a ‘small’ brewer these days?

The moves to exclude large breweries in one sense makes for a cleaner slicing of the brewing industry pie by creating an easier distinction between the traditional large breweries and their boutique offshoots and the ever growing number of small breweries. However it also creates artificial divisions around the source of business funding that will become more pronounced as the industry moves forward.

The tensions between large multi-national brewers with enormous scale and clout in the marketplace and fledgling brewers looking to establish themselves in that same marketplace are clear.  Less clear and far less visible will be the effect on the market of the growing amount of anonymous capital looking for a home in the small brewing industry.

With the growth and hype surrounding the ‘craft’ industry, it has become a target for venture capital. There are romantic notions of a group of mates throwing in with family and friends to buy some stainless with which to craft their own brand of  interesting ales for a devoted band of followers. We are actually starting to see an influx of unsentimental dollars interested in rapid growth and targeted exit strategies for handsome profit. Rather than real estate or biotechnology, brewing is seen as a source of sound returns.

Because these new enterprises won’t be funded by a highly visible multi-national brewery, these beers will bear the stamp of authenticity that CBIA membership carries. Because image is all in this part of the market, the brand will be fun and funky. Because they will be well-funded and interested in a short-term exit rather than the long term vibrancy of the industry, they will out-compete many breweries with good beer but quaint notions of cottage economics.

Most beer drinkers won’t even realise that the cool faces that front the brand own but a fraction of the business, fewer will likely care.

With so many ownership models and funding sources now a feature of the ‘craft’ market, even notions of independence are becoming obsolete when applied to small breweries.

So what is the benefit to the remaining members of the Association in Lion’s departure? The conflict of interest between large breweries and small breweries is often cited as being the reason that large brewery membership of the Association is untenable. However, the industry is rife with subtle but more intractable competing interests.

One of the most acute issues to face small breweries in recent years was the labelling issue highlighted by the Byron Bay Lager case. In what was a matter of obvious importance to small brewers – that of clearly articulating the provenance of a beer on its label – the CBIA struggled to enunciate a clear position on the matter. Not because CUB was a member of the Association (it wasn’t) but because of the number of members, including executive members, that were contract brewers or heavily contracting their beer without disclosing it on their own labels.

At the same time, Lion with Chuck Hahn’s active involvement, changed its labelling policy to clearly state its ownership of all brands under its control, a move not matched by many small brewers until after the ACCC announced its findings, and still clearer than many.

While issues such as tap contracts are regularly thrown up, these issues are also much more nuanced than the populist platitudes issued on social media would suggest, especially as smaller breweries have come to adopt these same tactics to secure distribution and volume themselves.

Chuck Hahn was instrumental in the formation of the CBIA and the significant fees Lion paid to be a member were important in providing the resources needed to create the professional and dynamic voice for good beer that is has so quickly become.

It is hard not to be sympathetic when Chuck says

There is a part of the industry that seems intent on defining itself not in terms of what’s great about craft – the quality beers, the passionate brewers and the characters behind them – but in terms of who owns what.

Ultimately, I suspect Lion’s departure may matter less to the company than it does to the Association and its work and it simply raises a new debate about the nature of brewery independence.

Read more:
CBIA unveils reforms, salutes Lion and Hahn
Radio Brews News – Episode 116 – Chuck Hahn
Lion resigns from CBIA amid ‘divisive’ debate

 

 

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2 Responses to Forget craft, what does ‘independent’ mean?

  1. PiesJosh on March 10, 2017 at 8:24 am

    I’ve thought this for a while. Just because a brewery is “independent” doesn’t mean it’s not mostly owned by a big businessman with profit as the main or sole motivator. These smaller brewers seem to forget that they wouldn’t be the brewers or beer lovers they are without the Matilda Bays and Malt Shovels of the world.

  2. Anon on March 8, 2017 at 6:33 pm

    could not said it better or agree more, plenty of small breweries out there quietly hoping no one notices where they are brewing their beers, or who has provided funding for them to operate.

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