The story taking the craft beer world by storm this week is the sale of Chicago’s Goose Island to Anheuser-Busch InBev. Most of you probably know the details, since it’s even getting play in the mainstream media, but here’s a quick summary if you don’t:
Goose Island began as a brewpub in Chicago in 1988, and since then has become a staple on the burgeoning American craft beer scene. (Though it’s not quite as big as many discussing the story seem to think — Goose Island produces 127,000 barrels annually; about 1/18th the output of Samuel Adams, or about on par with Stone Brewing Co. or Bell’s Brewery.) The brewery has a standard line of unexciting but solid beers including Honkers Ale, 312 Urban Wheat, and their IPA — all good gateway craft beers for your friends, by the way. In the past few years, they’ve been producing a series of excellent Belgian-style ales and, of course, their Bourbon County Stout, quite possibly my favorite beverage on Earth.
In 2006, Goose Island joined up with the Craft Brewers Alliance, an Oregon-based consortium that distributes Red Hook, Widmer and Kona beers as well. This Alliance, however, was partially owned by Anheuser Busch and was privy to the giant’s distribution channels. Now, Anheuser-Busch InBev (that merger, recall, went down in 2008) has purchased Goose Island outright for $39 million.
Okay, now that you’re caught up, it’s time to talk about what this all means. I’m not all that interested in another discussion about what does or does not constitute “craft beer,” which is the topic that’s engulfed the craft beer world these past few days. I’m more interested in trying to figure out the practical implications of all this.
First of all, this deal is another addition to what was already a watershed year for the craft beer industry. In 2010, craft beer sales rose 11 percent while overall beer sales declines. As demand balloons, many of the large but not gigantic (“upper middle class,” maybe) craft brewers have had difficulty keeping up. As a result, we’ve seen Dogfish Head, Avery, Boulevard, and most recently Great Divide pull out of certain states in the past couple of months, in order to solidify their supply closer to home.
As craft continues to grow, it is unquestionable that AB-InBev and Miller-Coors will continue to buy popular craft breweries. Craft beer is clearly where the action is, and American Ale and Shock Top are (anecdotally, I don’t have any numbers here) fooling fewer and fewer people. Lots of people are saying that they’ll never drink a Goose Island product again. Again, discussing craft vs. not isn’t the point of this article, but I expect the people making these promises are going to have to repeat them several times over the next few years.
In terms of the mechanics of the takeover and new production, here’s what we know. Contrary to rumors spread right after the deal was announced, Goose Island production will not be moving to St. Louis. It will stay in Chicago, and in fact AB-InBev is immediately pouring in money to upgrade the facility. Longtime brewmaster Greg Hall will be stepping down and is replaced by Brett Porter, who was brewmaster at Deschutes for several years. (Incidentally, some people have reported that Goose Island will be making a brett porter, i.e. a porter brewed with brettanomyces, but I can’t find any confirmation either way and I’m wondering if somebody got some wires crossed. It would be cute, though.)
Unfortunately, that’s about all we know at this point. The most pressing question is, “What will happen to Goose Island’s quality?” and none of us know for sure.
The best case scenario is that nothing will change quality-wise. The ownership transition will result in much improved distribution and financial resources, but Goose Island’s production team will be left alone. Advertising for Honkers and 312 Urban Wheat will lead to those beers selling briskly, and will provide a nice financial cushion for Mr. Porter and Co. to keep experimenting with and perfecting Belgian and barrel-aged styles.
The worst case scenario is that Ab-InBev decides that the Goose Island name is sufficient to lure enough people, and drastically reduces quality across the board to cut costs. “312 Urban Golden Wheat” becomes a big seller, and people love the 2012 edition of Bourbon County Stout that’s 5% ABV and aged for 10 days on bourbon-soaked beechwood chips. Meanwhile, Goose Island discontinues Matilda, Sofie et al., as test audiences declared them “too faggy.”
Where will Goose Island end up? Well, I did go to a liberal arts college, so I’d bet on somewhere between the two extremes. But there’s no way to know for sure yet. There’s not really anything in AB’s or InBev’s history to suggest that they’re going to leave Goose Island’s production alone. They have a proud history of mangling once-proud brewing operations in Europe (e.g. Leffe). On the other hand, Goose Island is a good deal different than anything they’ve bought before, and it’s still (for now) a drop in the bucket sales-wise. Maybe they’ll decide that while the vast majority of people drink their macro lagers, it might be a good idea to have an actual quality product in their lineup.
There’s plenty of good reading out there expressing both optimism and pessimism. Andy Crouch has an optimistic outlook on his site. The Beer and Whiskey Bros. have a more pessimistic look on theirs.
Tags: AB Inbev, Craft Beer, Goose Island