“Big beer” has long been trying to capitalize on the rising popularity of craft beer. Blue Moon (Miller Coors) and Shock Top (AB InBev) are two long-time presences in the specialty beer market.
In 2016, craft beer sales growth started slowing down. According to IRI reports, craft beer sales in the first half of 2016 were up only 6.5% over the previous year. While still a great increase by most standards, in 2015 that number was over 17%. People started to wonder if the craft boom was finally over.
A deeper look at the numbers reveals that if you take out the two brands mentioned above, Blue Moon and Shock Top, whose sales dropped 4% and 9% respectively, the growth number shoots up to 8.9%.
Remove the four largest independent craft breweries (Yuengling, New Belgium, Sierra Nevada and Boston Beer), which were collectively down 4%, and the growth number shoots up to almost 11%, a much more respectable number.
Some breweries are still thriving (Firestone Walker’s sales were up over 50%), and some craft styles are still charging ahead (IPAs were up almost 30%).
The real lesson here appears to be that “big beer craft beer” is on the decline, not that craft beer is.
What is more interesting is the approaches that the two major big beer players have taken. Miller Coors has been trying to promote Blue Moon, and its other “craft” holding, Leinenkugel’s, as craft brands. They are also trying to expand Leinenkugel’s market beyond the Midwest.
AB InBev, on the other hand, has recognized the trend toward smaller brewers, and rather than trying to compete with its existing products, has started to acquire craft brands of its own. In fact, since 2011, they have acquired 8 large or growing craft brands (Goose Island, Blue Point, 10 Barrel, Elysian, Golden Road, Breckenridge, Four Peaks and Devil’s Backbone). They have marketed Shock Top as more of a specialty item, for the newly-legal drinker who may be looking for something that tastes less like beer.
The brands that AB InBev acquired are all different, but also have some similarities, namely that they were well known regional or local brands, with a very large footprint in their home markets, but not very well known nationally. Supposedly, the brands retain creative control, and AB InBev’s goal is to help them with expanding both production and distribution. Although I can’t speak for all craft beer fans, I would say that Goose Island’s journey with AB InBev so far has been successful. Although there was a lot of concern when the deal was announced, Goose Island continues to produce its flagship beers, and has even opened a new brewery and tap room, while also continuing to produce rare and special releases.
Shock Top’s sales (down 9% YOY in the first half of 2016) are still falling (down 3% so far this year), but that reduction has slowed.
With the increased access to information provided by the internet, the lesson that AB InBev seems to have learned is that it is hard to sell a product as something it’s not. Rather than try to rebrand a specialty brew into a “craft” beer, they have acquired some brands that are already established as craft breweries.
Miller Coors, on the other hand, seems to be less focused on acquiring craft brands, and more on rebranding their existing holdings in a way that will hopefully take advantage of the trend toward craft beer.