“Disgusting.” “Greed.” “Sellout.” “Californians.”
These are the terms disappointed former fans of 10 Barrel Brewing posted on Facebook to describe their reaction to the acquisition of the popular Bend brewery by Anheuser-Busch/InBev, the largest beer company on the planet.
“It was exactly like a death; like someone I knew and loved was in excellent health one day and stone dead the next,” Seattle-based beer reviewer Steve Body wrote on his blog, The Pour Fool.
Others are responding as if the brewery is, indeed, dead to them, vowing to nevermore take a swig of Swill or step foot onto the brew pub’s frequently-packed patio. The devastation caused by this breakup speaks to both 10 Barrel’s growing fan base and Bendites’ almost religious commitment to craft brewing.
Bend has more than 20 craft breweries. In a town that seems worship at the shrines of Bachelor and Beer, locals have an intense loyalty to hometown brands. Oregonians spend more money on craft beer than residents of any other state (more than half the drafts poured are brewed in state), which likely has something to do with the fact the state boasts the highest number of breweries per capita, according to the Oregon Brewers Guild.
And, with such a vibrant craft brew scene, it should not be surprising that Bend is raising its national profile—and, such popularity comes with a price, tradeoffs and philosophical questions—like, to whom does a beer really belong? The fans? The brewers? The brewery itself?
All told, it seems as if the honeymoon is over.
HOW DID WE GET HERE?
10 Barrel's owners say they got into their beer business for the usual reason: beer. They like drinking it, making it, sharing it with their friends. They are less into the other half of the equation: business.
"We discovered there are some things we're good at—brewing beer, having fun—and some things we're not so good at—distribution, that kind of business stuff," 10 Barrel co-owner Chris Cox explains.
He describes the decision to sell to Anheuser-Busch/InBev as a "mutual deal" that started as a conversation over beers. The local brewery already used AB/InBev as a distributor in the Northwest market and co-owner Jeremy Cox, who handles the company's sales and marketing, tells the Source he's excited to get a better taste of AB/InBev's distribution skills.
While 10 Barrel has no immediate plans to expand distribution, the owners say they were looking into a northern California expansion before making the deal with AB/InBev and will likely extend the brand's reach next year. In addition to its home base in Bend, 10 Barrel has a brewpub in Boise and is preparing to open one in Portland.
"The Northwest has always been the most important territory," Jeremy Cox says. "But we've been growing since day one."
The owners say they hope that the acquisition by AB/InBev will give 10 Barrel access to resources that will allow the brewery to improve its product. But beyond a broader distribution and a higher quality beer, 10 Barrel's owners say they expect little else to change.
"The most important thing for us was our employees," Jeremy Cox says. "In the beginning it was obvious on the AB/InBev side they didn't want to change anything here at the company. The plan from day one was to keep the staff intact."
The owners add that their beers will continue to be brewed in Bend, in 10 Barrel's recently expanded brewery. And its highly respected brewers—Jimmy Seifrit, Tonya Cornett and Shawn Kelso—are expected to stick around.
WHAT DOES IT MEAN?
Experts can only speculate about the potential impact of the sale, because it's still relatively uncommon for a company like Anheuser-Busch/InBev to purchase craft breweries. Once the 10 Barrel deal closes, the multinational corporation will own three, including Chicago's Goose Island and New York's Blue Point. Anheuser-Busch/InBev also is part owner of Seattle's Red Hook and Portland's Widmer Brothers Brewing.
"You have to separate the short run from long run," explains Bart Watson, Ph.D., chief economist for the Brewers Association, noting that there will likely be no "discernable impact" in the near term. "Bend will have a few more millionaires; you might start to see some nice home construction in the area."
The infusion of cash from the sale and the imposition of corporate standards could also lead to improved pay and working conditions, Watson says, pointing out that AB/InBev's brewers are unionized. Employees may have access to corporate benefits a smaller business couldn't afford to provide.
"In the long run...I think it restricts how much of an impact 10 Barrel could have had locally," Watson explains. "When you look at Goose Island for example, the flagship brands are brewed elsewhere."
10 Barrel's founders insist that their beers will continue to be brewed locally, but what happens when the demand for its most popular brew, Apocalypse, outgrows the brewery's local facilities? Watson says that if 10 Barrel had continued on an independent path to expansion, it would have meant more local jobs. Now, when the time comes to grow, he says it's likely those jobs will be created someplace else.
"In short run, it may be good for current employees, but in the long run, they're just employees," Watson says. "One thing that won't happen is some sort of employee ownership structure."
And though it's to soon to make conclusive predictions, Watson says that these kinds of sales are an emerging trend, reflecting big beer's interest in "playing in this space." Given the geography of AB/InBev's acquisitions, he adds that the company may be crafting a regional strategy. 10 Barrel was an especially good get on account of its strong growth and award-winning selection of beers.
"[10 Barrel has] a history of recent growth, which suggests it's a brand beer lovers are connecting with," Watson explains, adding that beer lovers are increasingly looking for two things: full flavor and a local connection. "In buying 10 Barrel [AB/In-Bev is] getting the former; it remains to see if they can do the latter."
The local backlash has been strong, and while the sense of local connection plays a role in craft beer sales, Watson says that AB/InBev is probably not concerned with how locals are reacting.
"Locally, it matters a lot, but when [AB/InBev] makes an acquisition like this they aren't thinking about Bend, they have a broader strategy," Watson explains. Even if Bendites jump ship, the increased distribution resources AB/InBev brings to the table mean that millions of people up and down the west coast are likely to be introduced to 10 Barrel in the near future.
WHY DO WE CARE?
Some locals have clearly decided to throw 10 Barrel out with the Budweiser, so to speak. Without waiting to see how the acquisition may or may not change the brewery, they have drawn a clear line in the sand.
"Packed house with local supporters all the time! Is bigger really always better? Couldn't you create more jobs locally to help expand your horizons?" Angela MacKellar McIntire writes on Facebook. "I support biz growth but not to the level (corporate AB) you have stooped. No more 10 Barrel for me."
McIntire wasn't the only one singing an anti-corporate tune. Many of the complaints honed in on concerns about the company acquiring 10 Barrel.
"We're not 'haters.' We're proud of 10 Barrel and its leadership as a unique, local company. And we're not jealous of their success," Terri Bishop Allender points out on Facebook. "It's just that AB is such an enemy of craft brewing. It would be like...General Mills buying Sparrow Bakery. Or Fox News buying OPB. Or Monsanto buying Grove Farm. It's a sad day for those who helped 'build it'—their employees and their loyal patrons."
Others have risen to 10 Barrel's defense, arguing that this is simply how capitalism works and congratulating the brewery on its financial success. But the visceral response to the news may be more than a "Damn the Man" knee-jerk reaction. AB/InBev, as a publicly traded multinational corporation, is beholden to its stockholders and therefore highly motivated to maximize profits. And in the pursuit of profits, AB/InBev has supported legislation that some say hampers craft brewers' ability to grow and prosper.
Like in South Carolina, where AB/InBev is opposing the "Stone Bill," which would allow brewpubs to produce up to 500,000 BBLs a year instead of the 2,000 BBLs currently permitted. The bill is intended to both support existing brewpubs and help attract California-based Stone Brewing Co., which is considering setting up shop in the craft beer-loving state.
According to an email sent from attorneys for AB/InBev to South Carolina state senators in May, the company is concerned that the bill would "give some brewers a competitive advantage over others." In other words, AB/InBev could lose some of its market share to smaller breweries. There is suspicion in the blogosphere that AB/InBev's acquisition of craft breweries is part of an "if you can't beat 'em, buy 'em" strategy with the end goal of eliminating the competitive threat posed by craft breweries.
"InBev is not just targeting the smaller craft brewers, it is trying to control the entire game," says Ezra Johnson-Greenough, marketing/public relations manager for Portland's Breakside Brewery, in a post for his popular craft beer blog The New School. "The company swooped up Grupo Modelo last year, and rumors suggest SABMiller is next. The only significant piece of the pie the conglomerate might not be able to acquire is Molson-Coors due to DOJ antitrust laws. Regardless, if InBev controls the whole industry, then the next step is making it as profitable as possible, and that will not happen by raising the quality of beer."
10 Barrel's owners say that AB/InBev wasn't the first company to come knocking, but it clearly made the best pitch. While details of the sale have not been released, AB/InBev reportedly paid $38.8 million for Goose Island in 2011.
"We're one of the fastest growing breweries in the nation. We've had a ton of conversations and people that are interested," Cox points out. 10 Barrel's owners took up AB/InBev's offer, he adds, because they "felt it was a really strategic partnership for our company."