The business side of beer is just as important as the pleasure side, but I tend to focus on the latter, mostly because I’m a cut-rate hedonist but also because I simply don’t know too much about running any kind of commercial operation. And no outsiders seem to know too much about running any given brewery, in part because nearly every brewery we discuss in these tasteful pages is privately owned. This is not synonymous with independently owned. It just means the guys in charge — no matter how big their boats are — have no obligation to tell reporters how they run their shows. And even when a heretofore small business gets gobbled up by a publicly traded company, its laundry gets lost amid the oceans of spiked seltzer and hard cider that really affect the annual report.
We generally have access to information about how much beer a brewery pumps out, but we’re in the dark when it comes to profitability, as the link between barrels brewed and dollars stacked is a pretty crooked one. But we can make inferences based on what we observe in the market, and it’s gratifying when they are proven correct.
Anyone paying attention to Ballast Point in 2014 and 2015 knew it was selling massive amounts of Sculpin (and Sculpin derivatives) despite charging 25 to 40 percent more than most of the competition. It’s hard for a layman, or even a veteran beer writer without access to the books, to suss out how the math works when dealing with off-beat or complex styles, or beers brewed in a small or variable volume, but in 2015 Sculpin was a really good 7-percent ABV West Coast IPA produced and distributed on a relatively large scale. Ever have one of those before? You knew Sculpin was delightful, but you knew the same about Sierra Nevada Torpedo, say, for four bucks less per six-pack. So you might have guessed there was some serious money being made, and your suspicion was confirmed when booze conglomerate Constellation Brands wrote a billion-dollar check with the memo line, “Damn, you fellas have FIGURED IT OUT.”
But what do I do when I see one of the guys from beloved local brewery Aeronaut out on the town? My instinct is to buy him a beer for meritorious service to Somerville water, but maybe I should make him buy me a beer? I really have no idea. Aeronaut is very small; founder Ben Holmes told me they expect to brew about 2,000 barrels this year (Sierra Nevada brews more in a day). But their taproom is usually busy and they get a handsome dollar for their fine wares — somewhere along the lines of $7 for a 13-ounce pour in-house and $15 per six-pack of pint cans out in the wild. They would seem to have very little by way of marketing, distribution, or even packaging costs, so maybe they’re rich? Or, uh, broke? Who knows? It likely depends on whether their landlord accepts equity in stainless steel in lieu of cash.
There are, of course, some beer writers with a deep understanding of how this all works —Jason Notte of MarketWatch appears to be one, and I only qualify it with “appears” to acknowledge that I’m not informed enough to fully judge — but there are many more chumps like me who just make inaccurate guesses or swallow whatever propaganda a brewery chooses to feed us. For instance, I have decided that I shan’t be paying my tab when I head to Aeronaut later this afternoon to try their new pilsner. The reason? Because I just remembered that they’ve somehow acquired the means to project old-school Nintendo games onto the wall at movie-theater dimensions. I know even less about the economics of video display than I do about beer money, but I also know that is some flat-out rich-kid shit if I ever saw it.
All this ignorant guessing and bullshit-repeating means the beer public should be grateful to Modern Times’s Jacob McKean for being an eloquent and forthright blogger when he’s not busy making great beer. Last week, he took exception to a Serious Eats post that purported to explain the ins and outs (and ultimate nobility) of “selling out” to a giant company. The original post makes many good points and seems fairly thoroughly reported, but it also got some details wrong through either sloppiness or gullibility or some third thing I can’t think of right now, because I’m not very clever myself. I’m not trying to attack that Serious Eats article, which, like I said, had plenty of merit. But it earned a few demerits as well, and McKean took them apart point by point. I urge you to read both posts.
Most of the things that set McKean off were inaccurate portrayals of the allegedly insurmountable financial burdens small brewers face. Let me pause here to say I generally disagree with the people who take to Facebook to launch boycotts when a small brewer sells itself to the highest bidder. I have no problem with anyone making as much money as he ethically can without hurting anyone else in the process, and by and large, trading your brewery for a couple generations of financial security clears that bar. If I heard Aeronaut got sold tomorrow, I’d be disappointed for a second, then get mad at myself when I realized how selfish that is. It’s literally none of my business.
But just because cashing out isn’t even a tiny bit evil doesn’t mean it’s virtuous, either. Part of the fore-lash to the backlash against sell-out breweries is a new line of horseshit about how selling your brewery is actually the most humane and community-minded thing you can do, because it allows you to continue to grow and evolve and tighten up quality control and afford to experiment and bring your blessed beer to more of the masses. Yeah, all that, maybe, and it also lets you buy a house in cash. Which is great! But not noble, or even necessary.
There seems to be a peculiar debt-aversion among a lot of small breweries, to the point that we’re now being fed the idea that your cherished local beersmith simply has no choice but to sell her company to Big Barley, because otherwise she’d be forced to do the unthinkable — get a goddamn loan like every other small business person does. Again, I have zero qualms with cashing in. I only get annoyed when you expect praise for doing so or act like you had no choice. Craft brewing is no longer a little outlaw niche industry without access to traditional financing.
I’m not saying it’s simple to secure a bank loan, but it’s generally an option for the kinds of places being acquired; if you’re struggling to keep the lights on, Anheuser-Busch InBev probably ain’t interested. Remember, Constellation didn’t give Ballast Point a billion dollars because they speculated it might one day develop into the type of brewery that could get people to pay a premium for a mainstream, if excellent, IPA. And I’ve got a hunch Tony Magee’s student debt had been settled long before Heineken rolled the Brinks truck up to Lagunitas.
Which is OK! Selling a brewery almost certainly makes the original owner very wealthy, which is fine by me. And better yet, bigger companies often provide better pay and benefits, so the acquired employees get to trade the cache of independence for the mundane comfort of dental insurance. And now I get to drink 10 Barrel’s Joe IPA at a chain restaurant in the mall, which is nice for me when that situation rears its buffalo-sauced head.
Of course, there are downsides, too, and I’m not trying to minimize the effect that large-scale re-consolidation could have on the quality of American beer. If we revert back to a handful of near-monopolies, small brewers and smart drinkers will be hosed. But on a case-by-case basis, I don’t blame any individual for selling his business to whoever has the most ink in his check-writing pen. Just please don’t pretend it’s about anything other than cash.
