Breweries, bottle shops, and bars are foaming at the mouth over Wicked Weed acquisition
Asheville, North Carolina-based Wicked Weed Brewing on Wednesday announced its acquisition by Anheuser-Busch InBev (that’s ABI, the behemoth that resulted from last year’s merger between AB InBev and SAB Miller, the two biggest beer companies in the world). The craft beer community’s breakup with its former buddy was instant and it was harsh. One North Carolina beer store announced it would donate all profits from the sale of its remaining Wicked Weed cans to Doctors Without Borders. Walter’s 303, in Denver, Colorado, wanted Wicked Weed out of its taps so quickly it launched a promotion: mention “Wicked Bud Weed” and your pint’s on the house. The North Carolina Craft Brewers Guild immediately revoked the brewery’s voting rights.
And whole kegs of unfinished beer were caught in the breakup detritus. Colorado’s Black Project Wild and Spontaneous Ales wrote on its website that it had two collaborative brews in the works with Wicked Weed—one in Denver and one in Asheville. It withdrew its name from the beer fermenting in North Carolina and announced it would blend its Denver-fermented Wicked Weed collaboration with existing aged beer “to make something totally different we will not consider a Wicked Weed collaboration.” Oof. That’s like melting down your half of a “best friend” locket and recasting it into a dagger charm. Love hurts.
There are likely several reasons why the backsplash against Wicked Weed is even more bitter than its legendary Freak of Nature Double IPA. For starters, people really love this brewery. Its product is hard to find, but it’s won a plethora of awards at the Great American Beer Festival and the World Beer Cup. It hosts an annual Funkatorium Invitational that celebrates sour and wild ales and draws like-minded brewers from across the country. This is beer for beer nerds: the Wicked Weed website features an advanced search option that lets you search for brews based on your favorite hops and yeasts. So yeah, the brewery’s departure from the craft beer club is a little like the talented keyboard player leaving the band. It was really cool and a little aspirational, and everyone is sad to see it go.
But Wicked Weed might have inspired a very different kind of response if it had announced a bankruptcy rather than an acquisition. The vitriolic backlash from fellow brewers and craft beer advocates is more about who Wicked Weed is selling itself to than the fact that it’s agreed to an acquisition. That’s because its purchaser, AB InBev, now controls 45 percent of the United States beer market.
The bottle shops and bars that plan to drop Wicked Weed are doing so because they refuse to carry any AB InBev brands. That policy is not at all uncommon. Jonathan Shikes over at Denver’s alt weekly, Westword, found half a dozen InBev-free businesses in Denver alone. (ABI owns a lot more than just Bud. Its “High End” portfolio also includes Goose Island, Stella Artois, Shock Top, Elysian Brewing Company, Blue Point, and soon Wicked Weed.)
Small business opposition to ABI is about a lot more than David and Goliath. It’s always going to be difficult for the corner store to compete with WalMart. But many small-scale brewers believe that AB InBev acts in ways that directly hinder their ability to function. Which is why Wicked Weed’s decision feels like salt in the wound—not only is it going big, it’s also selling its name and clout to what its peers see as the enemy. “The majority of them are critical of the move and expound on feelings of betrayal for selling out to a global giant,” Paul Gatza, director of the Brewers Association, explains in an email. “Many express sentiments such as ‘dead to me.’”
AB InBev’s modus operandi is seen as anti-competitive by many craft brewers. “This is about the slow annihilation of craft beer in America. They are going to do it by a thousand tiny cuts,” Jeff Schrag, president of the Missouri Small Brewers Association, told the St. Louis Post-Dispatch in response to the passage of a law that allows beer companies to lease coolers to retailers in Missouri. The policy itself doesn’t seem like a big deal. Shouldn’t breweries be allowed to rent fridges to mom and pop shops that may not be able to buy their own equipment? But Schrag points out the law gives the big guys an unfair advantage. AB InBev is much more likely to be able to offer coolers for lease, and its ownership of the equipment may give it unfair sway in deciding what gets stocked inside.
Other craft brewer grievances against ABI have involved practices just as subtle. As Chase Purdy at Quartz reported in December 2015, the company incentivized distributors to push its product over its competitors’ beers by reimbursing them for marketing expenses related to AB InBev products. The incentive structure was based on proportions: Sell more AB InBev beer and less of everyone else’s, and the distributor gets up to $1.5 million per year in reimbursements. But sell more AB InBev and more craft, and the incentives go out the window. You can see why craft brewers were pissed. (This incentive structure changed when the Department of Justice (DOJ) gave last year’s merger the green light. As part of the settlement, the DOJ mandated that “the settlement also prohibits ABI from instituting or continuing practices and programs that limit the ability and incentives of independent beer distributors to sell and promote the beers of ABI’s rivals.” Does that mean the incentive program is over? Not exactly. But now, ABI can’t structure the incentives based on the proportions anymore.)
Craft brewers suspect other anti-competitive practices they can’t quite pin down. “When the craft brewer sees a tap handle or shelf placement of theirs replaced by one of the large brewers, the craft brewer wonders what was the arrangement in the change of that placement,” Gatz explains. Federal law does not allow slotting fees for beer (those are what brands pay stores to place their products at eye level—hear our editor Kate Cox explain them on WNYC here), and Gatz says most state laws don’t allow brewers or distributors to provide “things of value” to retailers. Even so, many brewers say they have seen their tap handles disappear or their spots on the shelf change arbitrarily in recent years.
The Wicked Weed acquisition still has to be approved by the DOJ, which has said it will be scrutinizing all of AB InBev’s craft purchases. By pursuing Wicked Weed, Gatz says AB InBev was probably going after the company’s growth rate and brand name, not its current size. Wicked Weed’s relatively teeny footprint likely means the sale will get DOJ approval. But every cloud has its silver lining: Soon, the rest of the country may be able to find Wicked Weed’s beer. Just not in the bars that refuse to carry Bud.