Once, the beer wars were about Bud versus Coors. But now both brands — or, rather, the giant companies that brew these kinds of mass-audience beers — are mostly battling for market share against craft brewers, the independent, fiercely committed group of people who preach a message of quality and care that comes from small-scale brewing.
In the last few years, it's become clear that the independent brewers are winning: In 2012 there were 2,538 breweries in the United States. Now there are more than 3,700. That's an average of roughly two new breweries opening every day. Sales of megabrands like Bud Light and Miller are flat; craft beer, meanwhile, now accounts for 11 percent of all beer consumed in the U.S. (In terms of revenue, that's nearly 20 percent of the American beer market.) And store shelves and taps around the country almost always carry an array of craft beers. At this point, even your parents probably have a craft beer or two that they prefer to Bud, even if that beer happens to be Samuel Adams. In fact, Budweiser is now directly attacking craft beer, and its fans, in its advertising — something that until recently would have been unheard of.
"When you talk about Portland, San Francisco, or Seattle — that's the future," says Tony Magee, the founder of California's Lagunitas Brewing Company, among the first generation of craft brewers to rise to national prominence. "Craft is already at 50 percent market share in those places, and I think reaching that market nationwide is inevitable." He explains, "If you go to Alabama, you'll find energetic young people in beer bars pouring the most obscure sorts of things. That's San Francisco circa 1993!"
Garrett Oliver, the head brewmaster at Brooklyn Brewery, has likened the growth to the explosion of interest in gourmet food several decades ago: Once, when people thought of "mustard," they thought only of yellow mustard — the lone variety available at most grocery stores. Now there are hundreds of brands, and nobody seriously thinks we'll go back to a time when there's just one. (The variety of craft beers has gotten so complex that it's become difficult for store owners to figure out how to stock their shelves, since many craft lovers will try a new beer once, then move on to something else. The number of available beers is so enormous that, earlier this year, NPR reported brewers are actually running out of unique names for their beers.)
This explosive growth and ongoing market saturation puts the entire industry in an interesting spot, though. Many of the biggest craft brewers are at a tipping point, and in order to keep growing, some are choosing to do the unthinkable: either embracing the business practices of the macrobrewers they've spent their careers railing against — or merging with them completely. As Magee, who recently sold a 50 percent stake in Lagunitas to Heineken, puts it, "Craft beer is just about to completely explode and become unrecognizable to itself."
Other brewers echo this sentiment: "The term craft is losing its ethics, and we need to come up with new terms," says Lauren Grimm, who co-founded Grimm Artisanal Ales in Brooklyn with her husband, Joe. "Craft made sense from the 1970s to '90s because the whole brewing industry was divided. 'You're either macro or craft.' But that was such a simplistic vision of beer in the United States, and there is much more going on now. The industry is more complex."
To understand why, it helps to know just a little bit of technical nitty-gritty: A brewery's size is measured by how many "barrels" (usually stainless-steel kegs, really) it produces each year. Before 2010, to be considered craft by the Brewers Association — craft beer's trade group — a brewery had to produce fewer than 2 million barrels per year. By comparison, A-B InBev produces more than 100 million barrels annually. To most beer drinkers, though, the easiest way to think of it is that craft beer is the small-brand stuff, usually rocking a goofy name (Fuzzy Baby Ducks IPA, Zombie Dust, Stickee Monkey, etc.), that's brewed with high-quality ingredients and often includes strong flavors or a higher-than-usual percentage of alcohol, or both traits that also command a premium price.
This is no accident, as both the BA and brewers themselves have spent decades marketing their beers as "better" than the macrobrews or mass-market imports like Heineken or Stella Artois, which tend to be lighter in color and lower in alcohol because that style of beer is the most efficient to make, largely forgoing long fermentation time or aging that slows production and raises costs.
But, just as Grimm says, the definition of a craft beer is literally changing to accommodate brewers' growing output. A brewery can now be considered "craft" if it produces up to 6 million barrels, which is why the Boston Beer Company, the brewery that makes Samuel Adams, is still included among this group. Higher production doesn't necessarily mean a lower-quality product, of course, but the BA also now allows craft brewers to use so-called "adjunct" ingredients in their recipes, cheaper grains such as corn or rice that brewers will use in place of barley to keep costs down — a strategy most associated with mass-market macrobrewers like Anheuser-Busch.
As a result, the country's biggest craft brewer today is officially Yuengling, the independent Pennsylvania brewery most closely associated with a middle-of-the-road lager that most people would probably call "Bud-like," meaning it's a pale, light beer that's very easy to drink. It's perfectly fine, but it's also at odds with the deeply flavored, hoppy beers that craft brewers have used to set themselves apart from Big Beer — things like double IPAs and coffee stouts that are to Miller Lite what a handmade, wood-roasted pizza from Roberta's is to a frozen pie from Tombstone.
The other, perhaps more significant change is that the biggest craft beers are rapidly aligning themselves — or being sold outright — to bigger brewers. Magee, of course, sold that 50 percent stake in Lagunitas to Heineken. Michigan's Founders, one of the country's most celebrated and recognizable craft breweries, sold a 30 percent stake to Mahou San Miguel, a massive Spanish brewing company, last December. And A-B InBev has spent the last several years buying craft breweries outright, absorbing popular brands like Goose Island, Elysian Brewing, and Long Island's Blue Point. Of the changing landscape, Dogfish Head founder Sam Calagione says, "We will quickly see which breweries are truly passionate about beer, or are just serving a master who is focused on money."
When the definition of craft beer must change to include beers brewed to resemble Budweiser, or the breweries are simply sold to the company that actually brews Budweiser, it raises a number of red flags for people in the craft community, which has long defined itself as standing against Big Beer. Maybe the quality of the beer itself won't dip, but the consolidation of craft breweries nevertheless gives these large companies more leverage over their distribution deals, so a company like A-B InBev can force distributors to carry its beers — both Budweiser and craft options — exclusively. It's called the "100 percent share of mind" strategy, and its aim is to squeeze out upstarts and, in turn, reduce the actual number of options available to beer drinkers. (Antitrust regulators are right now investigating claims that A-B InBev is buying up distributors expressly to curb competition. At the very least, A-B InBev can afford to offer its "craft" products at a lower price than truly independent brewers.) "They are feeling around for a weakness," warns Magee of A-B InBev's recent acquisitions, "to find out how they can destabilize craft so they can get back to the business they would like to be in."
Whether that actually happens remains to be seen, of course. What's clear for now is that the line between these businesses is indeed getting blurrier: Companies like A-B InBev are seriously reconsidering the ways in which they do business, and craft brewers are (cautiously) adopting some of the practices that helped macrobrews grow into the giants they are today. The upside is that there's more good beer than ever before — even if people are becoming increasingly less sure about what to call it.