And so it begins…

A few months back, Kid Carboy told our readers about the sale of Chicago’s own Goose Island brewery to Anheuser-Busch InBev, perennial punching-bag of Aleheads everywhere.*

*Picture a titanium-sheathed punching bag roughly 87 miles tall being assaulted by a handful of asthmatic ants. That’s a fairly accurate representation of how much damage our slings and arrows do to AB InBev.

I followed up Kid’s piece with a typically Barleyian essay rife with hyperbole and righteous anger. While my post contained my usual pointless drivel, the crux of my argument was that AB InBev was snapping up Goose Island to try to compete in the fast-growing craft segment of the beer industry and would soon be dramatically altering Goose’s business model.*

*Admittedly, even a 5-year-old with no understanding of the beer industry could have come to those same conclusions.

Well…it took four months, but Goose Island has finally been Buschwhacked. They recently announced that their flagship brews, Honkers Ale and India Pale Ale, will be completely outsourced to Red Hook Brewing in Portsmouth, NH, Seattle, WA, and Woodinville, WA. This probably doesn’t strike anyone who has been following the situation as particularly outrageous news. Red Hook (like Goose Island up until a few months ago) is partially-owned by Anheuser-Busch and does most of the contract brewing for other InBev-controlled companies like Kona. More importantly, they were already brewing a portion of Honkers and India Pale Ale as far back as 6 months ago. Transferring the rest of the brewing responsibility for those two beers is unfortunate, but hardly surprising. What IS shocking, however, is that Goose’s other big seller, the 312 Urban Wheat Ale (so named for Chicago’s telephone area code) will now be partially brewed at an AB plant in Baldwinsville, NY.

*Baldwinsville actually uses the very similar 315 area code, but as any drunk dialer will tell you, “similar” doesn’t really cut it when making phone calls.

OK, maybe it isn’t really shocking. You see, Goose’s “excuse” when they sold the brewery was that they couldn’t meet consumer demand and thus practically HAD to sell out to the most reviled name in the brewing industry. They would leverage Anheuser-Busch’s unparalleled capacity and logistics to get their products into the hands of more and more people. It’s a win-win, right? Right?!?!

The problem is that AB InBev doesn’t seem to realize how important the “local” factor is to craft beer drinkers. Look, I’m a huge beer snob and like sampling beers from all over this great land of ours. But I take particular pride in my local products (currently the ever-growing Alabama craft beer scene). And I’m not alone. The astounding growth of the craft beer movement stems from a desire to “drink locally”. Beer drinkers are unabashed homers…touting their local ale factories and drinking anything and everything produced in their stomping grounds. How many stories have you read recently about breweries like Dogfish Head, Allagash, and Flying Dog having to pull distribution from far-flung states because they can barely keep up demand at home?*

*OK, you probably haven’t read any of those stories because they’re super-boring, but trust me, they’re ubiquitous these days.

AB InBev seems to think that because Goose Island is was a respected name in craft beer circles that they can simply start churning out thousands of barrels of their flagship brews and adding them to the taps and shelves of bars and package stores across the country right next to Budweiser and Natty Light. And maybe they’re right. Maybe the quality of Goose’s products won’t suffer and sales will skyrocket thanks to the support of the inimitable AB distribution and marketing machine. Maybe you’ll see an ad during this year’s Superbowl featuring Honker, an AFLAC-esque gander honking away while women walk around in bikinis and some guy gets hit in the balls with something.*

*I should TOTALLY be in advertising!

But I don’t see it that way. The response to Goose Island’s sale at the end of March was OVERWHELMINGLY negative. Goose Island’s owners were called sell-outs and much worse. Former Goose Island brewmaster Greg Hall was so distraught by the situation that he took his buy-out, urinated on a Chicago-area bar, disappeared for a few months, and has now quit brewing entirely to focus on cider. Aleheads everywhere see the sale for what it really was…an attempt by the largest, most ruthless brewery on Earth to try to sink its claws into the craft beer market. And we’re not buying.

Goose Island is no longer a “local” brewery. Sure, owner John Hall is saying all the right things. He has explained that the outsourcing of certain labels will allow the brewery to complete an expansion at their Fulton Street headquarters and will give them an opportunity to focus on more innovative programs like barrel-aging, Belgian brews and sours. And hey, if that’s really the case, more power to him. In fact, I would highly encourage Aleheads to drink Goose Island’s beers…but ONLY if you are living in or visiting the Chicagoland area. Don’t let Anheuser-Busch make a mockery of craft beer by buying up a popular label and turning it into “Bud Premium”. If you’re in Chicago, grab one of the Fulton Street-brewed Goose Island beers. Anywhere else in the country, skip the Goose Island and buy the local beers.*

*And it should go without saying that you should avoid the Honkers Ale, India Pale Ale, and 312 Urban Wheat like the plague.

The 312 Urban Wheat Ale being brewed in upstate New York may SEEM like a minor story, but it really isn’t. It’s indicative of Anheuser-Busch’s approach. Take a popular Chicago beer named after the local area code and exploit it by farming out its production to a facility nowhere near Chicago. AB InBev, a company headquartered in Belgium and run by Brazilians doesn’t care about local, American products. They care about their bottom line and nothing else.*

*Check out this article for an interesting side note to the area code debate. It seems that AB InBev is attempting to trademark a variety of area codes for use in “local”-themed brews. Apparently they saw the success of the 312 and decided that people everywhere would drink beers named after their telephone numbers regardless of where they were brewed. No one misses the point quite like Anheuser-Busch.

We knew this was going to happen, of course, but that doesn’t make it any less sad. Fare thee well, Goose Island. I’ll see you in Chicago, but everywhere else, your name is Bud.

22 thoughts on “YOUR NAME IS BUD

  1. well, i can see that this move has upset you greatly. i feel your pain…however, if the quality of the beer does not change, it’ll still be better than drinking bud light, michelob, blue moon, etc. (when no craft is available).

    this move also gives GI more room to brew seasonals, and bourbon county…so that’s also not a bad thing. we shall see though i suppose

  2. I’m an old man, soon to retire.
    I spent the last 25 years working for multi-mnational corporations.
    There is NO upside to any of this.
    Its multi-national bean-counting on steroids.
    If the shareholders can be handed another penny a share, nothing else matters, or ever will matter.
    AB InBev thinks of their “customers” as sheep.
    Don’t be surprised in NONE of the area code beers are processed within the area codes they are sold in.

  3. Re: Anonymous — Eh, my vitriol tends to be exaggerated for dramatic effect on these pages. Goose Island doesn’t distribute near me so it’s not like I need to put my false self-righteousness into practice.

    The truth is, many craft brewers contract brew out of state. So you could easily argue that it’s hypocritical of me to drink something like Wild Heaven (an Atlanta-based brewery contract brewed in South Carolina) and NOT drink Goose Island. But to me, there’s a VAST difference between one craft brewer using another craft brewer’s facilities because of financial constraints vs. Anheuser-Busch scaling up production of the flagship beers of the craft brewer they purchased to try to gain market share in a segment of the beer industry they’re having trouble competing in.

    Honestly, it comes down to the fact that Anheuser-Busch is simply BAD for the beer industry. They’ve become too large, too complex, and too beholden to corporate interests to be able to make decisions based on anything but the bottom line. I’ve read lots of comments like yours from very reasonable people saying that we just need to wait and see if Goose Island’s quality suffers under AB’s ownership before we cast judgment. I think that’s a perfectly rational response. The reason I DON’T feel that way is because I’ve been watching AB try to hurt the craft beer industry for so long now that I know their interest in that segment of the market is entirely predatory. They want to go back to the old days when it was just them, Miller and Coors fighting for market share. Now that Goose Island is under their umbrella, they’re also a part of that way of thinking. John Hall can say and do all of the right things, but as long as his company is a pawn of Anheuser-Busch, they’re just a cog in the machine that is actively trying to hurt craft beer.

  4. You’re absolutely right, Paul. It’s about the value of their shares and nothing else. That’s just the way it works for a massive conglomerate. I suppose you can’t blame them for taking advantage of a structure that allows those kinds of profits to be made, but you certainly don’t have to support them or any of the companies (Red Hook, Kona, Goose Island, etc) that fall under their aegis.

  5. I don’t like the “Now they can make more stouts and sours” argument.

    If Goose Island really desired to, they could make all the Belgians, sours and imperial stouts they wanted in their normal facility, without jumping in bed with the company (AB) trying to destroy all other craft brewers. But no–they want to make those fancy beers, but only if they can ALSO continually push their regular product into more and more markets. Even if it means outsourcing it to other places where the quality may or may not suffer and shunning their original home market to do it.

    Has anyone ever come to the conclusion that maybe, for the good of a brewery or brand, it’s best NOT to keep expanding through questionable means? Think about it–if the Goose Island brewpubs in Chicago didn’t ship so much 312 (a fairly uninteresting beer) across the continent, they could use that brewing space to continue making these other beers they “can no longer make” because they “have no room.”

    Whether or not you have room for these beers is a CHOICE. They’re not under the gun to make more and more 312 and Honkers Ale; they choose to do so by continuously pushing and promoting those beers to new markets. If they really wanted to focus on their belgians, sours or stouts, they could simply decide to focus less on marketing boring beer. But they won’t do that, because this way makes them more money.

    It’s really just that simple.The money Goose Island makes off of 312 in no way goes back into making more interesting craft beer. What it does is fund the purchases of bigger kettles to make more 312. They simply feed themselves and make the owners more money, not grow the rest of the business. Do you think that if 312 sales grow 100% in the next year it will impact the number of stouts and sours the Chicago brewpubs produce? Hell no. They could make just as many (or many more, actually) if they didn’t whore out the base beers so much.

    This is a brewery that discontinued good beers like its nut brown and oatmeal stout just so it could sell more 312 and Honkers Ale. They don’t REALLY care about you, craft beer drinker. They only care about two kinds of people:

    — entry-level drinkers who make them 90% of their money

    — elitest beer geeks who give them tons of free advertising when they release something like Bourbon County Rare.

    I’ve lived in the Chicago area my entire life. Goose has never been and never will be respected like the other newer breweries in town are, and it’s mostly because they just don’t care. It should have been obvious when they sold the company in the first place.

    They just. don’t. care.

  6. Anyone ever heard of Stella? Hoegaarden? Leffe? These beers are hundreds of yeras old. Do you think Inbev hurt the heritage and quality of these legends?

    I agree, drink local first. But if Inbev maintains the GI quality, I am not going to not drink it because they were able to get it to my area for others to enjoy.

    Regional? Yes. SABMiller owns a part of Terripan. Be realistic. If the craft category continues to grow this is not the last you will see of this. Anyone remember how close the old AB was to buying New Belgium?

    It all comes down to quality and product integrity. If selling out to the larger companies makes crafts more accessible then look out Sam C and 120!

    my two cents

  7. SABMiller does NOT own a portion of Terrapin. That’s an oft-repeated myth. Terrapin accepted a simple loan from Tenth and Blake, a Miller-owned company, in order to buy out other financial backers that had conflicting views with the two co-founders (Spike and John) about the future of the brewery. That loan had NO equity stake as part of the deal so Miller doesn’t own any part of Terrapin.

    It’s the same as getting a bank loan on a house. As long as you make your payments on the loan, the bank has no claim to the house.

  8. Hah, yeah, I was going to say the same thing. Isn’t it considered common knowledge among aleheads that AB is to blame for Hoegaarden and Leffe and Stella sucking? I always kind of thought that was considered common knowledge.

  9. For those of you that keep up with the beer BUSINESS, the reason ABI bought GI was much deeper than getting into the craft business. They are now a brewer in the state of IL which triggers many favorable loop holes in the law that other state based brewers enjoy. They already had a “MYTHICAL” loan from ABI and see how that ended up.

    Now just how far is it from South Africa to Athens, GA. ? Tenth and Blake was set up so SAB could get into the craft business with out having a mega visiible to the general public. So somebody on another continent found this small brewery in Athens and out of the goodness of their heart gave them a loan ,with no stings attached, to buy out a partner. Why do you think they did not go to their bank or a local invester? Aspirations of growing? Nah, they are not in it for the money. Nah, SAB is not interested in the craft business. Nah, SAB has no buy out option.

    Enjoy beer gents, but drink after you write these naive messages, not before.

  10. I’ll have you know that I drink both before AND after I write my posts.

    Comparing the ABI/GI investment with SABMiller/Terrapin is a thoroughly specious argument. AB’s “investment” in Goose Island five years ago involved distribution rights for GI’s beers which gave them tremendous leverage over the brewery. You’re 100% right that there were more incentives for AB to buy a portion of Goose Island. We discussed this at length during the recent Illinois legislative battles (when AB was trying to wreak havoc on the distribution system in the state).

    As for Terrapin and SABMiller, the loan in question was completely financial…absolutely NO equity stake or distribution rights were involved. Essentially, when Terrapin was getting up and running a few years back, they accepted financing from a number of small investors who then expected a certain return on their investment. Eventually, the co-founders (Spike and John) found that they were hamstrung by the requirements of the investors and they went looking for a loan that would allow them to buy everyone out so that they could take the brewery in their preferred direction. Tenth and Blake didn’t just “discover” Terrapin, they were put in touch with the company by a local Miller distributor that saw what was going on in Athens. Tenth and Blake is admittedly a sneaky way for SABMiller to get involved in craft beer, but the loan in question was, in the words of John Cochran (Terrapin co-founder), a “no strings attached” deal. It was just a cash deal and while it does give Miller “some” connection to Terrapin as far as paying back the investment, they have absolutely ZERO influence over the brewery.

    Today, if you purchase a Honkers Ale, you are directly supporting Anheuser-Busch. If you buy a Terrapin product, you are in no way supporting SABMiller any more than you are supporting a bank by eating at a restaurant that accepted a start-up loan from them. Yes, Terrapin has to pay back Tenth and Blake with whatever terms were made on the loan, but Miller gets no say in how Terrapin’s beers are made, packaged, distributed, or sold. Juxtapose that with Anheuser-Busch which had huge control over how Goose Island’s beers were distributed and NOW has 100% control over how they are brewed, packaged, marketed, etc. etc.

    Apples and oranges.

  11. Straight from the horse’s mouth……

    MillerCoors reported double-digit increases for its Craft and Import portfolio in their just-reported second quarter. Thomas Ryan told CBD Tenth and Blake growth was driven primarily by year-round beers, seasonals and variety packs from Blue Moon and Leinenkugel. Peroni Nastro Azzurro also was up high single digits.

    We’ve been reporting on some of the other up-and-coming brands in this portfolio, like Batch 19 and Killian’s. For good reason: In the wake of the latest earnings, new MillerCoors chief Tom Long told the Los Angeles Times he wants to make sure they own “___some of those emerging winners” -of today’s 1700+ breweries. He believes the key to succeed in the space will be with gateway beers that introduce new consumers to the segment (no doubt like Blue Moon) and “other brews for ‘eclectic palates.'”

    And he thinks there’s definitely a place at the table for the big boys in craft, telling the paper that thousands of tiny brands will not survive. “‘Big brands will emerge, and they already have: Sam Adams and Fat Tire and others. Certainly Blue Moon fits into that category.'”

  12. Well, of course. No one is arguing that Tenth and Blake isn’t out to make money for SABMiller in the craft beer market. And obviously SABMiller wants to jump into the craft segment just as eagerly as Anheuser-Busch.

    I was simply pointing out that Terrapin is NOT part of the Tenth and Blake/SABMiller portfolio. It was a good investment for the company as I’m sure Terrapin’s recent success will allow them to easily pay back the loan. But it’s not the same as buying equity in a craft brewer or buying them outright like AB with Goose Island.

    And while the Aleheads are clearly idiots when it comes to the beer business, we’ve been very quick to point out Big Beer’s attempts to make in-roads into the craft segment recently. Blue Moon’s portrayal as a “craft” beer has been a running joke on this site since our inception.

  13. I don’t think anyone is an idiot, myself, I am just a realist. I share the same passion for beer, altho I think I drink from a wider portfolio, and the same distatse for mega corps. ( esp wal Mart!)

    I guess my point is does my beer of choice have to come from a bearded, Dead-Head listening, dope smoking hippie wanna be ( PS I have no issues with any of that!) to be a quailty product? Someone like AB or SAB can hire the best minds in the biz, best brew systems, own a large part of the agriculture products which is a huge quaility control issue, and make a quality product?

    I am not an ABI fan, altho I did admire and respect the AB/ST Louis, pure Americana with a family member at the helm! (his personal issues aside)

    I do have to take exception with you guys on the Stella, and othe InBev imports. Those are NOT owned by ABI. They are held by the original families. Inbev packaged them together, and made them available to the masses. As i said, I cannot stand ABI but because they handle the import does not change the taste of them. Your distatse for large corps may have changed the taste to you.

    oHate the game but not the player. Is that hip for an old man?

  14. “Does my beer of choice have to come from a bearded, Dead-Head listening, dope smoking hippie wanna be?”

    No, of course not. You may also drink beer produced by brewers who listen to Panic, Phish, and Umphrey’s McGee. And please don’t sell us short in terms of our idiocy. We’re much stupider than you’d think. Kid Carboy once tried to drink a Chimay poster. True story.

    The inherent issue amongst the Aleheads is the idea of lending our financial support to Big Beer in any way, shape, or form. You’re right that even AB or Miller are “capable” of producing a consistent, quality beverage if they so choose. Actually, as far as consistency is concerned, they’re the best in the business. Any small brewer who knows his or her craft well will tell you how incredible it is that a company as large as AB can keep churning out the exact same beer time after time after time with no variation.

    The problem is that AB, Miller and Coors (and their parent companies) are beholden to vastly different interests than small craft brewers. Much like WalMart vs. the local Mom and Pop store, their ONLY concern is the bottom line. Of course, the bottom line is obviously important to craft brewers as well, but because they produce at far smaller volumes with far more expensive ingredients, they have to be MUCH more careful to listen to their patrons and maintain cordial relationships within the industry. I know this is pollyannish, but I don’t think I’m alone when I say that I believe craft brewers simply “care” about beer far more than the macros.

    I don’t begrudge you for drinking whatever you want. I bristle a little bit at people that only drink Bud Light without ever trying anything else. But if you’ve sampled all that the beer world has to offer and you still want an MGD or Corona every once in awhile, more power to you. I know a number of Aleheads that feel the same way (Hi Doc!).

    I’m a little confused by your claims about beers like Stella and Hoegaarden. I’d actually love for you to shed some light on those brands since I don’t think I’m alone in not truly grasping who produces them. My understanding was that they were purchased outright by InBev (pre-AB buyout) and that both labels were moved to new(ish) facilities completely owned and operated by AB InBev. Perhaps the story is apocryphal, but it’s pretty well accepted amongst craft beer lovers that Pierre Celis left Hoegaarden because he was pressured by InBev to change the beer’s recipe to make it appeal to the masses (I know, I know…you can’t always believe what you read on Wikipedia). I suspect you probably have a bit more insight into the inner workings of AB than we do (not to give away your identity, Anonymous, but I certainly recognize your writing style and I know you’ve got some insider knowledge of Budweiser).

    As for you being an old man? I’m fairly certain we’re the exact same age. And if either of us were ever hip, we certainly ain’t anymore. My back hurts. And I’m cranky.

  15. We all seem to have a common theme, screw corporate America and a HUGE Passion for the nectar of the gods…BEER!

    Inbev pulled quite a feat to get these competitive families who have had these beers for hundreds of years to be put under one umbrella. They have a marketing agreement and production was obviously ramped up demanding new and bigger breweies. I, myself, have not noticed any change in the tatse. That is only my opinion. Being the nature of the beast, I don’t see the families allowing it but we all know money does talk.

    My drinking portfolio ranges from Piraat or Gulden Draak to Busch Light (gasp) all depending on the drinking situation. I think the best tasting, highest quality, mass produced beer is good ole Budweiser. It is a well structured beer for its class. Again, my opinion.

    I think Great Divide and Moylans (for example) are wonderful products but at the same time don’t understand why Fat Tire is so revered by the masses? Its Mic Amber Bock!

    We are in a great period of the American beer industry. We will have 2400 breweries in the next 2 yrs. That may also be the undoing. There are just so many people who have the taste for a craft beer (or wine)that I just dont see the drinkers to support all of them. Also, the Big 2 will snap up some of these guys sooner than latter. IT WILL HAPPEN. I do think drinking local is the best way to keep the industry alive. The regionals guys are just before sacarficing quality for numbers or being bought. The “TWEENERS” are probably most vulnerable.

    Beer is an affordable luxery, be bullish!

  16. I’m with ‘Anonymous’ on having a huge range of stuff I like. I’ve been known to spend a whole evening drinking nothing but Coors Light or standard Guinness if the mood strikes (or, of course, Keystone Light for pong purposes). But that’s not for the purpose of tasting my beer. Exactly the opposite. That’s so I don’t feel like I have to pay attention to my beer, but rather can just drink a bunch of it over the course of of the night for not much cash without getting too wasted. When I’m in serious mode I’m a huge fan of a good Imperial Stout or IPA, preferably from a local-ish brewery. And sure, part of the reason we (or at least I) tend to speak of the big boys with a certain amount of scorn is simply because they’re the big bad Evil Empire (like, say, in Star Wars, or as in the New York Yankees) and I obviously have to root for the Feisty Little Guy (like, say, any little indie band that you’ve never heard of that I think is really cool vs. the Black Eyed Peas). But all of that being said, I’m pretty interested to see if Goose Island tastes like the same high-end, high-craft brewery in a year that they did a year ago. If the Empire dumbs it down for the masses, that will tell me that they still don’t get the craft beer movement, but rather are just trying to buy their way in to credibility with that crowd. And that will almost certainly not evoke a positive response from the (very) vocal minority of craft beer apprecionados out here in the world blogging their asses off.

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