Microsuds: Small Breweries on the Web

Now microbrew purists are selling T-shirts at beer fests that say "Budhook-St. Louis, Missouri" even though Redhook steadfastly maintains that their beer won't change. The investment by Augie Busch will allow Redhook to open regional breweries in the South, East and who knows where else. In exchange, Augie will get sole distribution rights to all Redhook products, which means that the biggest producer of bland, watered-down (did I mention hugely popular) beer in America has its hooks into one of the country's best microbrews. I suppose you can't blame the boys at Redhook. Now the whole country gets to sample a stellar beer brewed with pride and care.

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I'm not quite sure if the Redhook deal is a sellout or an attempt to give finely crafted beer to the masses.

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You certainly can't blame Bud. The growth of the microbrew industry has been phenomenal. Ten years ago, there were 29 small breweries in the country. Today there are nearly 500. Estimates vary, but the market share of microbreweries, including brewpubs, jumped from about .07 percent in 1992 to more than 1.5 percent of the $40 billion beer market last year. I'm not quite sure if the Redhook deal is a sellout or an attempt to give finely crafted beer to the masses, but it is definitely a harbinger for the beer renaissance.

"The Redhook deal changed the microbrew landscape," says Benj Steinman, editor of Beer Marketer's Insight, a trade newsletter for the brewing industry. "It was the first, but it certainly won't be the last. The big surprise is that similar deals haven't taken place. I hear that a lot of microbrewers are approaching the majors with inflated money demands, so that could be one of the hitches holding up other deals."

Although they don't measure up to Redhook in quality, style or microbrew cachet, other regional breweries were swallowed up before the Redhook deal. In 1988, Miller bought Leinenkugel's in Wisconsin and started shipping its beers to 31 states. One year later, Stroh's took over Augsburger, maker of what I consider one of the best cheap beers around and a mainstay for poor college students with rich palettes. Stroh's is also allowing its five breweries to fool around with new recipes that may be marketed regionally.

But Anheuser-Busch and crew aren't content to buy their way into the burgeoning microbrew market. They're also marketing their own faux microbrews or, in industry parlance, "specialty beers." Adolph Coors, the first major brewery to go red with its introduction of George Killian's Irish Red, has since added Eisenbock, Weizenbier and Oktoberfest (that's German, dummkopf). The Bud men complement Redhook with Elephant Red, Elk Mountain and Red Wolf Lager. One of Bud's public-relations men told me their specialty offerings correspond to GM's marketing pyramid-Redhook is the Cadillac and Red Wolf is the Chevy. Miller has Reserve Amber Ale and Reserve Velvet Stout (sorry, but anyone who's had Guinness or Mackeson knows this ain't no stout; it's closer to a porter) and, in case you haven't watched television in the last few months, Red Dog.

In a segment of the beer market in which image means a lot, most major brewers have taken care to leave their corporate fingerprints off their new products. The ugly mutt in the Red Dog commercials isn't exactly barking about being Miller's lap dog.

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The image of a hearty band of brewers producing beer in quaint local settings is a false one when it comes to many microbrews.

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Now before you start mumbling about a corporate conspiracy to trick hip iconoclasts into swilling Coors Light in disguise, consider where some of the most popular microbrews are made. Portland's Widmer Brewery, another Northwest microbrew gem, has an agreement to brew at a G. Heileman Brewery. Unfamiliar with Heileman's? Does Blatz ring a bell?

Pete's Wicked Ale may be based in Palo Alto, but it's brewed in Dubuque, Iowa. Bill Owens helped usher in the microbrew craze with Buffalo Bill's brewpub in Hayward, but he now brews his Pumpkin Ale in Iowa as well. It's called contract brewing. Does it lessen the wonderful hop flavor of Widmer Altbeir or the fruity, bitter finish of Pete's? I think not, but the image of a hearty band of brewers producing beer in quaint local settings is a false one when it comes to many microbrews.

Just ask Jim Koch, the "golden-throated pitchman" for the Boston Beer Co., makers of Sam Adams. Although very few were brewed in Boston, Koch produced 700,000 barrels of beer last year, nowhere near the 89 million produced by Anheuser-Busch but an ocean compared to the roughly 2,000 produced by the Santa Cruz Brewing Co. Of all the brewers I talked to about the encroachment of the big brewers, Koch had the most foreboding message.

"In the long run, the big brewers would like to dominate this part of the beer business the way they dominate every other part-why shouldn't they?" Koch says, after apologizing for eating a candy bar during the interview. "Anheuser-Busch has stated they want to control half the beer industry. Microbrewers are naive to think that doesn't mean half the microbrew business."

Many smaller brewers, after they finish accusing Sam Adams itself of being more of a minor-major than a true microbrew, discount Koch's dire pronouncements. They believe the big brewers will simply raise awareness about microbrews and introduce the various styles to Americans who don't know the difference between reinheitsgebot and a gravy boat. (The former is the 16th century German beer purity law, the latter, well, it rhymes.)

"I'm not really worried," says Gerry Turgeon, general partner of the Santa Cruz Brewing Co. "It's something that will get the average American-who doesn't really exist in Santa Cruz-to start drinking good beer. They might try Miller Reserve Amber Ale and like it. Then they might be willing to try my Lighthouse Amber.

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"In the long run, the big brewers would like to dominate this part of the beer business the way they dominate every other part-why shouldn't they?"

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"Besides, it will give some of the small brewers a chance to sell their operation and retire in Rio. I think that's great. I'd love it if somebody came to me with an offer like that. I'd be out of here in a heartbeat."

Even other major microbrewers like Pete Slosberg of Pete's Brewing Co. think the widespread awareness the major brewers can foster will help business, at least in the short term.

"I believe any vehicle that will introduce more Americans to different beers, even if its not our brand, is a good thing," says Slosberg. "It lets drinkers know there is an alternative."

Bill Owens, famous among beer afficionados for beers like The Big Jump, a malt liquor commemorating the 50th anniversary of the Golden Gate Bridge, and Hearty Ale, featuring a label with an anatomically correct image of a human ticker, doubts that the big brewers can match the quality or the quirkiness of the best microbrews.

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Ever take a swig of Bud and say, "Gee, this one tastes different from the other 9 billion bottles on the planet?" Probably not.

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"I do not foresee Miller or Bud or Coors ever doing a beer with cilantro or apricot or anything eclectic," says Owens. "They're mainstream marketers, and there is plenty of room for competition. I can see microbrews getting 8 to 10 percent of the beer market."

Perhaps, but the majors brewers are liable to have an alarmingly large chunk of that 10 percent. Ask any brewer what the hardest part of their job is and most will tell you it's producing a beer with consistent taste. The major brewers do this with amazing skill. Ever take a swig of Bud and say, "Gee, this one tastes different from the other 9 billion bottles on the planet?" Probably not. Likewise, to pretend that the brewmeisters at Coors can't produce an excellent microbrew in a few years if they wanted to is shortsighted. Jim Koch understands this.

"The major brewers may spend their time making light, watery beer, but we should not forget they are good brewers," Koch cautions. "They may not have the soul of great microbrews, but their skills are superb. We should not underestimate their ability to make good beer."

The major brewers have another thing going for them. In addition to charging lower prices for their specialty beer, they control most of the beer wholesalers in the country. Anheuser-Busch has a relationship with 44 percent and could, if the brewer chose, pressure the wholesalers to carry only it's microbrews. If the other major brewers followed suit, most microbrews would be forced to be very small, regional brewers or simply fold. This hasn't happened, but it could.

Maybe it was all too good to last anyway. Like any industry that rapidly expands, the microbrew industry is bound to contract at some point. The question is when it will happen and who'll be left standing. Beer analyst Bob Weinberg, a walking beer encyclopedia with a doctorate in economics and a teaching stint at the Massachusetts Institute of Technology on his resume, thinks there's still some time before the issue is decided.

"You have very successful domestic specialty brewers who are trying to act like big brewers-which is stupid-and you have some big brewers trying to act like domestic specialty brewers-which is equally stupid," says Weinberg, who was once an executive at Anheuser-Busch and now advises the major brewers as an independent consultant. "There's a roll reversal at work that makes no sense to me, but the competition won't really heat up until microbrews and specialty beers account for at least 3 percent of the market. How's it going to shake out? I don't think anybody really knows."

I just hope there's still a place for the individuality that made the microbrew craze so impressive if these heady days (pun intended) of a brewpub on every corner come to an end. I suppose choosing from five or six of the biggest microbrews-especially Sierra Nevada and Anchor-wouldn't be too bad, but I'd much rather have the chance to pick up St. Stan's Amber Wheat shipped direct from Modesto or sample a BlueBeery Ale from Marin Brewing Co.

Troy Paski, who created Hoppy Face Amber Ale with Craig Swackhammer in a Willow Glen apartment, is optimistic.

"There is only so much shelf space out there, so you are going to see consolidation in the industry. The bigger fish will eat the smaller fish," says Paski, who drives to Torrance to brew his beer while scouting sites for a forthcoming brewery in Willow Glen. "But I think there are people out there who really want to drink something that's small, handcrafted and authentic. If those drinkers know that they are drinking a product that's mass-produced, even if it's good, they are going to turn their noses up at it. Those are the people who will keep brewers like us in business."

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