In business, the companies that win are those who are able to capture the largest share of the market. Whether that market share comes from having a first mover advantage or a more innovative product, once captured, most companies will do anything they can to protect it.
Recently that’s exactly what the macro brewers have been doing when it comes to their smaller, craft brewing rivals. The beer business is a big one and when the pie is as large as that of American beer sales, brewers are reluctant to give up any of it, even a tiny sliver. But craft brewers have been cutting larger and larger slices for themselves over the past decade, whether or not macro beer wants to share, which means the large macro brewers have to get more creative in order to protect their pie, and that’s where lobbying comes in. In lobbying usually the side with the most money wins, and in the past, that has clearly been the macro bottlers, which is what makes The Brewers Association’s — the professional association for craft beer — recent labeling of Yuengling as a craft brewer even more interesting. It’s all about money.
To understand how fiercely brewers are willing to fight to protect share, one only needs to view the recent fight that’s been occurring in the state of Kentucky. In 2014, Democratic House Speaker Greg Stumbo introduced a bill that would forbid companies from both brewing and distributing beer – at the time, the only brewery doing this was Budweiser. Basically, Budweiser is making beer, and then using its large distributor networks to sell that beer, and only that beer, shutting out the smaller brewers – who don’t have the financial means to both brew and distribute. According to the proposed legislation’s supporters, Budweiser presently has a monopoly on beer distribution in the state, and passing this law is the only way to restore free trade and access by sellers to more independent products.
Obviously this law would cut into Budweiser’s current market share, so they’ve been fighting the law with a large amount of spending. Since the bill was introduced at the beginning of the year, no organization has spent more lobbying the state of Kentucky than Budweiser, who has spent $290,908 in the past two months to try and kill the bill. That’s more than double what’s been spent by their craft brewing rivals in the bill’s support. Market share is truly that important.
Which is what makes the recent labeling of Yuengling as the largest craft brewer in America so interesting – sure there are probably lots of other reasons to include the brewery such as the fact that it’s been independent for all these years, but the money they potentially bring to the table can’t hurt either. Currently the craft brewers can’t match the spending of their macro rivals, but Yuengling’s addition could mean a larger war chest in the future – though let’s be honest, the addition of Yuengling alone isn’t going to all of a sudden make craft equal to macro, especially when Bud Lite sales alone are at the level of a Fortune 500 company, but it still helps. Until now, the largest brewer who has been able to spend in defense of craft has been Boston Beer – whom the association has also made changes to their rules in the past in order to allow them to keep the craft label. Adding a second large brewer – who happens to make the 19th most popular beer in America – has the potential to add more money to craft brewers’ lobbying efforts, resulting in the capturing of more market share, and your taste buds.
You didn’t really think you were the only one who decided what you drank, did you?
