Fake Craft Beer in San Diego

Jun 25, 2018

One thing you’ll never see on our website is the promotion of craft beers from breweries like Ballast Point, Saint Archer or 10 Barrel Brewing. These 3 breweries all have locations in San Diego County and do not fit our current vision for the craft beer industry.

 

Why you ask?

Simply because these breweries are no longer independently owned and are now operated by big corporate beer.

You may or may not know that Ballast Point, although at one point was a huge player in bringing up the San Diego beer scene, is no longer independently owned and was bought out in 2015 by Constellation Brands. Constellation Brands also owns other brands such as Corona, Modelo, Pacifico and most recently; Funky Buddha.

Saint Archer Brewing, which many already believed this brewery was founded with the sole purpose of being sold, was also sold in 2015 to MillerCoors.

10 Barrel Brewing, although not originally from San Diego, opened a brewery/restaurant in downtown in 2017 and it’s owned by one of the biggest beer giants; Anheuser-Busch InBev or AB InBev. Anheuser-Busch also owns Budweiser, Stella Artois and has been buying out craft breweries such as Goose Island from Chicago (2011), Blue Point Brewing Co. in New York (2014), Elysian Brewing Co. in Seattle (2015), and even Wicked Weed Brewing in North Carolina (2017) among many more.

 

What’s the big deal?

Here at San Diego Beer Official, we’re all about capitalism and we believe companies and individuals should be able to build companies and sell them to the highest possible bidder. We also believe that competition is good for innovation and the creation of better products.

However, we do not believe in unfair practices and dirty or unethical tactics.

This is exactly what many of the big beer companies have been doing and continue to do, especially AB InBev.

 

What dirty or unethical tactics?

We understand that some people may not care about this subject, because at the end of the day most people just want to drink good beer regardless of who makes it. But what if the beer is only good until these beer giants put the small independent breweries out of business? What if the beer is no longer as good as it used to be but they just leverage the brand in hopes that many people won’t even notice the change in quality? What if they underprice their beers so people buy theirs and not from independent breweries? What if these beer giants use their large marketing budgets to buy expensive ads and deceive the public with inaccurate information knowing very well that the majority of people won’t take the time to do further research? What if they want to use their deep pockets to create a monopoly and push out the little guy out of taps at bars and shelf space at retail stores? You see, this exactly what many of these beer giants attempt to do on a daily basis–especially AB InBev.

In 2017 AB InBev was fined $400,000 by California’s Department of Alcoholic Beverage Control for illegal pay-to-play activities. The ABC had spent a year-long investigating AB InBev and found they had been illegally paying for refrigeration units, television sets, and draft systems at Southern California retailers. And even though $400,000 seems like a huge fine, it really isn’t. Some reports estimate that a $400,000 fine on AB InBev only amounts to about 3% of their profits made in a single day ($12,602,739 is their daily profit according to their overall profits report in 2016). In other words, AB InBev can continue this type of activity and continue to pay fines without really hurting their bottom line but instead making major damage to independent breweries who do not have this kind of money.

Also in 2017, AB InBev purchased a minority stake in RateBeer.com, one of the biggest review sites for beer in the world. Of course, this doesn’t sit well with us or the craft beer industry, given that review sites are supposed to be unbiased and fair in order to carry any real credibility. In fact, this is a direct violation of the Society of Professional Journalists (SPJ) Code of Ethics. When this happened, some breweries like Dogfish Head immediately asked to be removed from the site.

Also in 2017, AB InBev took control of all South African hops through an acquisition of SAB Miller in 2016 who owned SAB Hop Farms. Immediately after taking control, it cut off the entire South African hops supply from American craft breweries and stated that it needs all the hops for the exclusive use of their own breweries. As you would imagine, this caused an outrage among the industry.

When 10 Barrel Brewing, which is owned by AB InBev, was about to open in downtown San Diego in 2017, they decided to buy expensive full-page ads around town with misleading headlines that claimed they were a “San Diego Pub & Brewery”. If you live in San Diego you know there’s a new brewery opening up in town almost every month and this type of message without a doubt would make the average beer drinker think 10 Barrel was just another new San Diego brewery. Again, this type of marketing tactics caused the entire industry to stand up against big beer. Downtown breweries all got together and collaborated in making a protest beer called 11 Barrel IPA and the beer community even rented a plane that flew during their grand opening with a banner attached that said ’10 Barrel is Not Craft Beer’.

 

 

 

A post shared by San Diego Beer Official (@sdbeerofficial) on

In addition, AB InBev also owns craft beer websites or blogs that appear to be independent journalism for the craft beer industry but in reality are just another way for them to have control of the commentary for their own brands. Do you really think these blogs will ever portrait AB InBev in a negative way? For example, October (https://oct.co) appears to be a very well written and designed beer blog on the surface, but the reality is that we can’t trust anything that ever comes from it since anything they’ll ever publish will be carefully crafted so that AB InBev or its brands never look bad.
AB InBev disclaimer of ownership in October blog
Another important aspect of business to consider is buying power. When any big company, regardless of the industry, has the need to buy large amounts of goods to make their products, they get a price break because they’re able to negotiate wholesale pricing. Sometimes they even manufacture their own supplies in order to cut out the middleman. In the case of beer, we’ve already established how AB InBev owns their own South African hop farms and have monopolized that arena. But what buying power also allows them to do is brew beer much cheaper than independently owned microbreweries who do not have this advantage. As a result, it allows them to have these fake craft beer brands out in the market at a much cheaper price than beer from real craft breweries. Some people even argue that at times they’re willing to underprice their beers and even take a small loss in order to make sure that money is not going to real craft breweries. This type of approach is not something new. We’re all familiar with big companies, most notably Walmart, where they go into small towns and open up a new location with rock-bottom prices and can sustain to take a loss for as long as it takes in order to make the small independents retailers go out of business– they then bring their prices back up and start profiting.

To further emphasize how much interest AB InBev has in infiltrating the craft beer scene and gaining control of it in every aspect, in 2016 they acquired Northern Brewer, the nation’s largest home-brewing supplier, and its sister company ­Midwest Supplies. Many craft beer drinkers are also home brewers and this helps them continue to shift the dollars spent from independently own shops to their own pockets.

 

TL;DR

When you look at the big picture, you realize that Big Corporate Beer’s sole intention is to hurt the craft beer industry for the benefit of their macro beer and to continue to profit. In all honesty, there’s nothing wrong with wanting your company to continue to profit. What is wrong is to use unethical tactics to do so.

What Big Corporate Beer has done so far:

  1. Illegally taken beer space at bars, restaurants, and retail stores.
  2. Have bought beer review sites (ratebeer.com) which creates a conflict of interest.
  3. Have bought entire hop farms and has cut out access to all American microbreweries from obtaining new hops varieties which puts a burden on innovation.
  4. Have used their marketing dollars in order to deceive the public with misleading headlines and has an “unlimited” marketing budget to continue to do so.
  5. Owns web entities such as blogs that appear to be independently reporting on the craft beer scene but also creates a conflict of interest.
  6. Have the buying power to allow them to underprice their fake craft beer and take away sales from real craft breweries.

 

In conclusion

It’s clear that many Big Beer Corporations are only interesting in destroying the craft beer industry for the benefit of their overall sales and profits. You see, as a business, the only thing that’s important is to continue to make a profit so that investors in the company can get a return on their money. They no longer care about the craft and quality of beer. Their goal is to make a consitent product at the lowest possible cost.

If a company starts to lose market share or their growth starts to slow down, they will get more aggressive and will find ways to regain control. They can either take market shares back by creating new products and/or entering a new vertical or they can also just lower their cost of goods. In this case, they do both.

When a microbrewery gets bought out by a beer giant, often times the beer quality goes down or it changes–ask anyone who used to drink Sculpin when it first came out. By lowering the costs of ingredients or substituting them for cheaper alternatives, it allows them to make more profit on the same item.

By buying microbreweries, it allows beer giants to take a piece of the craft beer pie.

But the problem is that they’re not really interested in taking a piece of the pie for themselves, they’re only interested and taking it away from small independent breweries.

Many people don’t realize that all craft beer sales in the United States only amount to 23% of the $111.4 billion U.S. beer market. Big beer doesn’t make their money in craft beer, they make their money by competing with other beer giants over the remaining 77% of the industry.

So next time you’re about to buy a beer from a non-independent brewery, consider everything we’ve just discussed. In the meantime, we will continue to be true to our mission statement of only supporting independent businesses in the craft beer industry. Big beer has enough money to market their own products and doesn’t really need our help.

@sdbeerofficial

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