Craft beer turbulence

Fasten your seat belts

Over the past couple of months, the craft-beer business has experienced more than its share of uncharacteristic bumpiness. "Uncharacteristic" because for as long as anyone can remember, craft beer news has been dominated by good feelings, growing brands, new breweries... and unrelieved antipathy toward large breweries.

Are these latest events predicting the end of smooth sailing for the craft brewing darlings?

Flashes of nastiness in hoppy town

The sixth-largest craft brand, Lagunitas, sued the second-largest, Sierra Nevada, over the similarity of the letters "IPA" on the label. Lagunitas promptly dropped the suit when the social-media craft hipsters screamed bloody murder that such tactics were "just like BigBeer."

In a similar turn of events, Bell's Brewing, the large and very successful Michigan craft brewery, challenged a trademark registration by the South Carolina's tiny Innovation Brewery. Once again, social media exploded with cries that Bell's was engaging in bullying. Defamatory and libelous posts--including personal attacks on Bell's founder--revealed a nasty dark side of the craft beer "community."

Less than a day after initiating it, Lagunitas dropped its lawsuit alleging trademark violation when social media lit up with criticism.

Bell's founder targeted

"Legendary growth" is no more

According to published reports, between 1993 and 2013, the craft beer market grew, on average, by 14% a year. (Mother Jones) 

Now the rate is one-fifth that. Just-released data show that for the most recent year, the craft beer market grew by a far-less-spectacular 3%. (Beer Marketers Insights)  

Many of the most successful crafties are losing share

The same data show 8 of the top-14 craft-beer brands lost market share in 2014. (Beer Marketers Insights) Included among those losing share are Boston Beer, Sierra Nevada, Craft Beer Alliance, Deschutes, and Dogfish Head. 

Selling-out becoming a trend?

The eagle has landed... again. The Seattle-based craft brewer, Elysian, which uses the slogan "Corporate beer still sucks," finalized its sale to Anheuser-Busch. This renders Elysian no longer an official craft brewery in the eyes of the Brewers Association. (To our knowledge, this trade group made no announcement that Elysian's beer now sucks).

And as to whether this is a trend, the Wall Street Journal quoted ABI's president on the mega-brewer's craft-beer plans: "You shouldn't be surprised (if ABI) buys a few more craft breweries."

And they're not the only one.

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A month earlier, one of the fastest-growing craft brewers, Michigan's Founders Brewing, sold 30% of its equity to the very large Spanish brewer, Grupo Mahou San Miguel. Proceeds are expected to fund further Founders expansion as well as pay back some of the brewer's startup investors. 

Dominated by its small-brewer membership, the Brewers Association will also de-list Founders as a craft beer because outside ownership now exceeds their arbitrary 25% limit.

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And from the mouths of babes, a key truth...

A tiny Michigan brewer--Saugatuck Brewery--grew its volume by more than 80% in 2014, and expects that rate to continue this year. Perhaps unwittingly stating the most fundamental of business truths, a company vice president recently described where his brewery is headed...

- Kerry O'Donoghue, Vice President, Saugatuck Brewing

Gosh, that sounds like something Anheuser-Busch might say. Or Grupo Mahou San Miguel.

Or any other serious business, for that matter.

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Note: This article was updated on March 17, 2015

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