Golden Road Brewing

30 September 2015

End Of The (Golden) Road? When Your Favorite Beer Gets Swallowed By Giants

Part Deux: “So Long” From So Cal

[continued from the previous page]

Over the past few years, sales of bland mass-market beers (Bud, Miller, Coors) have been flat (pun intended) while craft beers are rising. So the giants attempted their own variations of craft beers, such as MillerCoors’ Blue Moon and A-B’s Shock Top. Of course, all their efforts lacked the character of the true crafts.

So in the past few weeks, MillerCoors snagged San Diego’s Saint Archer, Heineken grabbed Petaluma’s Lagunitas, and Anhueser-Busch (A-B) just engulfed Golden Road Brewing, adding the brand to its trophy shelf alongside Chicago’s Goose Island Brewery, Oregon’s 10 Barrel Brewery, and Washington’s Elysian Brewery. Here’s the announcement video for those who like to watch executives talking:

Golden Road Brewing and Anheuser-Busch Announce Partnership from A-B and Golden Road Brewing on Vimeo.

Now I’ve spent many balmy afternoons sipping microbrews and watching trains fly by on Golden Road’s patio, so that last takeover hits particularly close to home. Although A-B and the other giants promise to keep these acquisitions independent (at least as far as brewing is concerned), how can I not suspect and expect the worst? In the eyes of us craft beer snobs, our dearly devoured just won’t be the same.

Indeed, they’ll probably no longer even qualify as craft beers, as defined by The Brewers Association (“A Passionate Voice For Craft Brewers”):

An American craft brewer is small, independent and traditional.

Small: Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to the rules of alternating proprietorships.

Independent: Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer.

Traditional: A brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation. Flavored malt beverages (FMBs) are not considered beers.

Now the key question here: so what?

I can’t speak for Golden Road’s founders, but since it’s my blog, I will anyway.

Obviously, no brewer wants to offend us craft beer purists here in L.A., but we make up such a minute fraction of their overall potential market that even if we were to boycott Golden Road, their new bottom line wouldn’t feel it.

Yes, enthusiasts are influential: we help average drinkers discover new brands — but so does advertising. And with A-B’s resources, Golden Road’s promotional reach will far surpass our tiny spheres of influence. Certainly, A-B doesn’t seem worried about mass defection.

Andy Goeler, A-B’s CEO of craft beer (now there’s a dream job) told the L.A. Times:

“[The consumer backlash] has gotten less and less with each acquisition… [Goose Island] was the first step. It went very well for us because we stayed focused on the beers, maintained the company, and we just let them be more of who they were. There’s less and less consumer pushback because we have history of showing people that we’re going to let [the founders] do tons more of what they’ve been doing. We’re not going to hinder that or change that. We’re here to help and provide resources. It should be a pretty good partnership.”

Note also that these acquisitions weren’t hostile takeovers. In fact, Golden Road approached A-B. And it makes perfect business sense. This deal will give Golden Road the financial resources and distribution to grow nationally overnight. So if you don’t have Golden Road in your city now, you likely will in the coming years. What entrepreneur doesn’t want their creation to achieve widespread recognition and enjoyment?

And while I like to rail against corporate giants, I also acknowledge that they’re not all evil, and most can offer better salaries and benefits to their workers than mom-and-pop startups can. They also create better advertising and sponsor the TV shows and sports events I love. As a football fan, I shouldn’t hate the giant beer brands — Golden Road was hardly running Super Bowl commercials.

Might A-B do to Golden Road what the giants previously did to Weinhard and Olympia and Rainier? Of course — but all small businesses risk going under. Many of the Pacific Northwest beers were struggling before they sold out. By selling to a giant, the founders secure a a greater chance of survival with a rich return on their investment now.

So I confess: if I were these craft brew owners, I’d do the same, then use my new-found wealth to pursue another interest. In fact, if any media conglomerate, including the odiferous Orcs of Fox News, offered to buy Atomic Tango right now for seven figures or more, I’d sell out. In a heartbeat. (I’m young, I need the money.) So to criticize Golden Road for this decision would be hypocritical of me.

But as a beer lover, I’m leaving this relationship.

Golden Road and I had good times and fond memories. I don’t regret a penny spent. But I’ll be seeking a new drinking buddy.

And it’s not because I have anything against major brands. I drive a Ford, wear a Seiko, use an Apple everything, and own stock in myriad corporate beasts, including Boston Beer (the not so little company behind Samuel Adams).

But as a beer lover, I see craft brewing as an art. While I enjoy commercial products, whether it’s music or movies or coffee, I also want to support local artists. That makes for a healthier local economy and happier neighbors. If one of them manages to strike gold with someone like A-B, bravo! … and I’m on to the next aspiring artist. I’ll happily pay nearly $10 for a single pint to support a local craft brewer, but not if my money disappears into the bottomless maw of a giant corporation. In other words, if it’s A-B, I want a deal.

In addition, part of the thrill of zythology (pretentious word for drinking beer) comes from discovering new indie brands and sharing them with friends. I also get to bring home the wildly creative craft beer coasters (which makes me a tegestologist — that’s two pretentious words for you in one paragraph). Who collects Budweiser coasters?

There’s also a bit more on the personal side.

I started this post with the beers of my childhood, which I loved without ever drinking them. In college, I had enjoyed Sam Adams (then, just a microbrew).

Then I moved to L.A., then a beer desert.

Back then, most L.A. bars carried only 1 to 3 beers: Bud, Miller, and Coors (not counting their bilge-water “light” versions). Some bars would serve Corona, whose primary flavor was the lime, or Guinness, which never tastes as great as one hopes it will (though I do love Guinness ads). But most of the time, I had to settle for the low-alcohol/low-flavor concoctions of Bud, Miller, or Coors.

Naturally, I celebrate the ongoing craft beer explosion here in my backyard. So imagine my reaction when I first heard that my favorite local craft brewer, Golden Road, sold out to one of the corporations that made beer drinking in my twenties so boring.

A-B moving into L.A. craft circles may also mean that other independents will struggle. When average, non-devout beer lovers patronize Golden Road thanks to A-B-funded advertising and distribution, how will the self-funded microbrewers compete? Some will survive, but others may have to seek out sugar daddies of their own.

So, Golden Road, I bet you go on to greatness, and I wouldn’t turn down a glass of your tasty brew should I be served one. But I hope you’ll understand when I seek out another local brand that still evokes the sensation of fresh, small, and purely L.A.

It’s enough to drive anyone to drink… local.

Update 10/13/15: Ah, now we remember why we hate Anhueser-Busch: U.S. probes allegations AB InBev seeking to curb craft beer distribution

Tags : , , , , , , , , , ,

Freddy is the Founder & Creative Strategist of Atomic Tango. He also teaches graduate-level marketing communication courses at the University of Southern California (go Trojans!), shoots pool somewhat adequately, and herds cats. Freddy received his BA from Harvard and his MBA from USC.

10 Responses

  1. Years back (I’m thinking late’80s) we were visiting friends in Oregon but flying home from SeaTac. On our way from Portland to Tacoma, we stopped for a tour of the Olympia brewery. I carried home a 6-pack of Olympia Dark because it was only available from the brewery.

  2. Freddy, great article and well crafted (pun intended).

    Good luck in your search for a replacement craft beer. I’m sure, if nothing else, you’ll ensure the search period and having to endure drinking all that craft beer in search for your favorite new haunt.

    You certainly present a conundrum for what the small craft breweries are to do when presented with the golden ticket. Which you rightly point out is every entrepreneur’s dream. It is little wonder the big brewing behemoths sought out the local craft brewers when they were taking market share and with local micro-breweries popping up everywhere in every town in the last 20 years, I’m sure it only accelerated the ‘big-boys’ need to react. So reacting they are and big business gets bigger and a few smaller entrepreneurs are lucky enough to get their golden ticket stamped.

    So in the end, the cycle from small to big will continue. Small business is BIG. Meaning that there are over 28 million small businesses in the USA and only 11% ever make it to the 6 figure earning opportunities from their businesses. When small craft brewers get the opportunity to make that big leap, hooray for them and as you say, you’d make that same leap. Happy hunting Freddy and all the very best from your former RKC student.

    • retro

      Hey Stephen:

      Thanks for your comment and the great stat — only 11% make 6 figures! So, yes, selling out makes perfect financial sense for the entrepreneur. Indeed, buyouts are part of the incentive for many to start a business in the first place (I know many entrepreneurs who have no interest in running their business until retirement).

      Freddy

  3. Hey Freddy,
    Next time you are in the Palm Springs area stop by Babe’s Bar-B- Que & Brewhouse (in Rancho Mirage) they were just announced as Best Brewery in California. They are the oldest brewery in the Coachella Valley and it such a cool place to hang out.
    Let me know when you are there and I will pop in to buy you a pint.

  4. retro

    The L.A. Times just wrote on this topic:

    Craft brews are in great demand, and so are the breweries

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.