Survey Reveals People Feel Misled by Big Alcohol Takeover of Small Beer Breweries

Corporate takeover of ‘craft beer’

A new survey reveals that many consumers are unaware that previously independent craft beer producers are now owned by Big Alcohol corporations. In the UK, smaller breweries are moving away from using the term “craft beer” in favor of “indie beer” to distance themselves from Big Alcohol conglomerates. This shift is a response to growing concerns that Big Alcohol has taken over many formerly independent beer breweries, misleading consumers into thinking these are still “artisanal”, small-scale operations. This Big Alcohol strategy is a marketing stunt to preserve the illusion of authenticity and craftsmanship, despite the growing consolidation of the alcohol – especially the beer – industry.

The Society of Independent Brewers (SIBA) commissioned the survey from YouGov as part of an ongoing debate in the UK over the definition of “craft beer.” This survey represents an intensified phase in the dispute regarding what can be classified as “craft” versus commercial beer. Consumers participating in the survey were asked to identify whether ten different beer brands were made by “independent craft breweries.” The results highlight that many people are unclear about the ownership and authenticity of various beer brands marketed as “craft,” particularly as large alcohol corporations increasingly take over small breweries to hide behind the craft image.

The findings highlight growing concerns about Big Alcohol strategies that mislead people and hide true affiliations. This issue has become particularly pressing following the boom in the UK craft beer industry after former Prime Minister Gordon Brown reduced alcohol taxes for small-scale brewers between 2007 and 2010. This helped fuel the craft beer industry’s rapid growth. However, the so-called “craft beer revolution” in the UK has largely been co-opted by Big Alcohol corporations.

For instance, Katie Mather wrote in an opinion article for The Guardian:

Craft beer quickly became big business, which was a difficult hypocrisy to settle for many of its fans. This alternative style of beer was marketed as underground, as “punk”, and sold to [alcohol consumers] as independent, fresh, exciting, and nothing to do with the big corporate beer conglomerates that ruled the pubs and taps up and down the country.”

Katie Mather, food and alcoholic drinks writer, and deputy editor, Pellicle magazine

Multinational beer giants have poured vast amounts of money into taking over successful craft beer brands, capitalizing on consumer interest in varied beer styles like IPAs and stouts. Despite these acquisitions, many of these brands continue to be marketed as “craft” beers in pubs and bars, leading to growing confusion among consumers.

The tax reduction originally intended to support smaller brewers backfired as Big Alcohol came in and exploited the system. This raises questions about how the tax system may ultimately need to address the harm caused by the growing influence of large corporations in the market.

SIBA has launched a campaign to help consumers distinguish “indie” beers from those owned by larger corporations. This initiative comes amidst increasing concern within the sector that the term “craft” no longer holds the same meaning it once did. To qualify as a member of SIBA, a brewery must be British, independently owned (not part of a larger brewing group), and produce less than 1% of the UK’s total beer production.

Furthermore, more than three-quarters of respondents felt that consumers were being “misled” because beers like Beavertown, Camden, and Fullers – owned by Heineken, Anheuser-Busch InBev, and Asahi – are still marketed as “craft” beers.

What is “craft” beer?

The craft beer industry refers to the production of beer by small, independent breweries that emphasize quality, flavor, and traditional brewing methods. Unlike large-scale, mass-market beer producers, craft breweries typically prioritize innovation and the use of distinctive ingredients, often experimenting with a wide range of styles and flavors.

The term “craft beer” generally applies to breweries that meet specific criteria, which may vary by region and country but often include limitations on production size (e.g., producing fewer than 6 million barrels per year), independence (not owned by a large conglomerate), and a commitment to producing beer in small batches. Craft breweries are known for their focus on artisanal production, creating unique beers such as IPAs, stouts, sours, and more, in contrast to the standard lagers and pilsners that dominate mainstream beer markets controlled by Big Alcohol.

The craft beer movement gained significant momentum in the late 20th century, particularly in the U.S. and the UK, as consumers sought more diverse and flavorful beer options. It is often seen as a response to the homogenization of beer produced by global corporations. Craft beer has become synonymous with creativity, local culture, and a connection between consumers and brewers.

In a recent The Guardian opinion article, Katie Mather wrote:

Giant multinationals are swallowing up independent breweries yet keeping the subversive, sock-it-to-the-man branding. Do they think drinkers are daft?

Katie Mather, food and alcoholic drinks writer, and deputy editor, Pellicle magazine

Stains on the romantic “craft” image

Clearly the craft beer industry has a better image than Big Beer. Nevertheless, craft beer breweries and the industry as such are plagued by the same unethical practices as Big Beer and the reality that the ethanol is craft beers is carcinogenic, addictive, teratogenic, and harms human tissues, DNA, the human brain and more.

In 2021, Movendi International reported that a wave of #MeToo reckonings shook the craft beer industry. It was sparked when Brienne Allan, production manager at Notch Brewing in Salem, Massachusetts, got tired of the sexist remarks at work and decided to share her experience on her Instagram account. Then she invited women in the alcohol industry to share their stories of sexism and harassment via her Instagram account. What followed was a stream of harrowing revelations of sexism faced by women within the alcohol industry, specifically the craft beer industry.

Strategic advantages for Big Alcohol from taking over and deploying craft brewers

The takeover of craft breweries by large multinational beer giants is driven by several strategic and financial reasons. As Ms Mather writes in The Guardian, with the “craft” image, Big Alcohol buys the idea of “craft beer equals good beer” and of beer consumption as expression of individuality and even rebellion. The word “craft” never meant anything specific, and so it could be used to market beers that aren’t “craft” in any understanding of the term. This was the reason for small, independent breweries to ditching the craft beer tag all together.

Analyzing the developments in several countries, Movendi International has identified nine main factors:

1. Rising Consumer Demand for Craft Beer: Over the past few decades, consumer interest in craft beer has surged, driven by a growing desire for more diverse, flavorful, and unique beer options. Big Alcohol saw this trend and realized the opportunity to tap into the lucrative craft beer market by acquiring successful independent breweries.
2. Profit Potential: Craft beer is often sold at a premium price compared to mass-produced beers, offering higher profit margins for producers. By acquiring popular craft breweries, Big Alcohol can access this more profitable market segment and capitalize on its growth.
3. Diversification of Product Portfolio: Large corporations such as Heineken, Anheuser-Busch InBev, and Asahi are known for producing mainstream beer brands (e.g., lagers and pilsners). By taking over craft breweries, they can diversify their product offerings to include a broader range of styles, appealing to new consumer tastes and broadening their market reach.
4. Market Share Expansion: With the craft beer market expanding, multinational alcohol giants seek to maintain and grow their market share in an increasingly fragmented beer industry. Acquiring well-established craft brands allows Big Alcohol to instantly enter or solidify their position in the rapidly growing segment, without the risk and time commitment involved in creating their own new craft brands.
5. Access to New Consumers and Demographics: Many craft beer consumers are younger, more adventurous consumers who prefer unique, locally made, and flavorful options. For large corporations, acquiring popular craft breweries allows them to tap into this demographic, which might be more inclined to avoid mainstream beer brands.
6. Brand Loyalty and Established Reputation: Many craft breweries have already built strong consumer loyalty based on their authenticity and quality. By acquiring these breweries, Big Alcohol can leverage their established reputation and customer base, saving time and resources compared to starting new brands from scratch.
7. Consolidation and Economies of Scale: Larger corporations can bring efficiencies of scale to the craft breweries they acquire. By streamlining production, distribution, and marketing, Big Alcohol can reduce costs and increase profitability while still capitalizing on the craft beer market.
8. Strategic Control of Distribution Channels: By owning popular craft beer brands, multinationals alcohol giants gain greater control over the distribution channels of craft beer, which can be crucial for market penetration, especially in local or regional markets.
9. Undermining Growing Need for Alcohol Policy Making: Through utilizing the “craft” image and strategic advantages of the appeal of craft beer, Big Alcohol gains strategic capacities to undermine the public recognition of the real extent of alcohol harm. This in turn undermines the need for urgency in responding to the alcohol burden with evidence-based alcohol policy solutions. Similarly, Big Alcohol can deploy the “craft” beer dimension of the alcohol market to undermine alcohol policy making, by carving out exceptions for “craft beer”, for example in initiatives to raise alcohol taxes or protect people from alcohol marketing.

It is clear that craft brewery acquisitions make business and lobbying sense for alcohol giants looking to maximize profits and avoid regulation in a changing market landscape. At the same time, the increasing rate of takeovers of craft breweries by Big Alcohol is raising concerns about the integrity of the “craft” label and unintended consequences concern acceleration of alcohol harm, derailing of alcohol policy making, and misleading of consumers.

Concerns around the world over Big Beer taking over craft breweries

The takeover of the craft beer industry by Big Beer is a growing concern in several countries around the world. The problem is not limited to the UK or the US but is becoming more prevalent in other beer markets as well. Here are some countries where Big Beer’s takeover of craft beer breweries is a growing concern and the reasons why:

1. United States

Ms Mather explained the origins of the craft beer industry in the United States:

In the US, craft beer had created a whole universe of beer drinkers who wanted to care about the quality of their beer and the artisanal way in which it was made – by skilled professionals, in small batches, often in their own brew pubs. There was nothing mass-produced about the original scene. The point was to have beer that was as individual as its brewery, a complete departure from the homogeneity of Big Beer, where a pint was the same no matter where you drank it, when you drank it and in what year.”

Katie Mather, food and alcoholic drinks writer, and deputy editor, Pellicle magazine

• Why it’s happening: The U.S. has been at the forefront of the “craft beer revolution”, and as the craft beer segment grew rapidly, multinational beer corporations (e.g., Anheuser-Busch InBev, MillerCoors) started acquiring successful craft breweries to capitalize on the booming market. These acquisitions allow Big Beer to tap into the premium, flavorful beer market while still maintaining control over the overall beer market.
• Impact: While the craft beer market continues to grow, many consumers feel that the “craft” identity is being diluted as major corporations take over once-independent brands. Additionally, smaller craft breweries face increasing competition from these corporate-backed brands, which can afford larger marketing budgets and more widespread distribution. The craft beer industry together with Big Alcohol lobbied for reductions in alcohol taxes – and won to the detriment of people, communities and society as deaths and diseases due to alcohol keep growing.

Case study: US Craft Beverage Modernization Act

On December 27, 2020, U.S. President Biden signed the Taxpayer Certainty and Disaster Tax Act of 2020, which made permanent most Craft Beverage Modernization Act (CBMA) provisions of the Tax Cuts and Jobs Act of 2017, that then U.S. President Trump signed into law.

The temporary CBMA provisions that are now permanent include: 

• Reduced tax rates on beer and distilled spirits, and certain tax credits for wine,
• Adjusted alcohol content for certain still wine tax classes from 14% to 16% alcohol by volume,
• Lower tax rates for certain meads and low alcohol wines, and
• Transfers of beer in bond between brewers who are not of the same ownership.

The Craft Beverage Modernization Act (CBMA) in the United States was designed to support the craft beverage industry by reducing excise taxes. However, it introduced significant complications. Large producers exploited the tax reductions originally intended for small businesses, effectively undermining the CBMA’s goal of promoting smaller producers. According to the Brookings Institution, large companies restructured their operations to benefit from these reduced rates, diminishing the law’s impact on the intended beneficiaries.^[i]

Additionally, the Act brought new administrative burdens and compliance requirements. 

In 2020, Movendi International reported about a study showing inflation had reduced American alcohol tax rates by 70% since 1933. The trend was made even worse by the decision of the Trump administration to cut taxes further for major alcohol producers in the United States.

At the time of the Trump tax cuts for the alcohol industry, experts revealed that those tax cuts benefited Big Beer much more than craft beer producers, even though the tax cut was promoted as a gift to small breweries.

In neighboring Canada, a similar story unfolded in 2022: the craft beer industry succeeded with its lobbying push for a tax break, as Movendi International reported.

2. United Kingdom

• Why it’s happening: Similar to the US, the UK has experienced a surge in craft beer demand over the last decade. Big Beer companies such as Heineken, Carlsberg, and Asahi have acquired independent breweries (e.g., Beavertown, Camden, Fullers) to gain a foothold in the growing craft beer segment. These multinationals want to appeal to a new generation of beer consumers who prioritize quality and variety.
• Impact: There is concern that the craft beer identity is becoming confused, with multinational corporations marketing beers as “craft” despite owning them. This is problematic for smaller independent breweries, which struggle to compete with the marketing muscle of these large corporations. As in the US, Big Beer also uses the label and image of “craft beer” to lobby for alcohol policy gifts, such as lowered alcohol taxes. Such campaigns mislead the public about the harm inherent in “craft” beer and the economic detriments of alcohol harm in its totality.

3. Germany

• Why it’s happening: Germany, with its pervasive alcohol norm often centering around beer and the outdated belief in the beer purity laws (“Reinheitsgebot”), has seen an increasing influence from global beer conglomerates. As craft beer has started gaining traction in cities like Berlin and Munich, multinational breweries such as AB InBev (which owns brands like Beck’s) have invested in or acquired smaller craft breweries to expand their portfolios.
• Impact: While Germany’s craft beer scene is still in its relative infancy compared to the US, the increasing control by large alcohol corporations could overshadow the unique local brewing traditions. This has raised concerns about the authenticity of beer brands that are marketed as “craft” but are owned by multinational conglomerates.

Already in 2016, Christian Bölckow wrote that German beer brewers did not communicate honestly about their products. They use what 500 years ago stood for quality, today as a mere marketing tool for profit-maximization purposes.

In addition to abandoning the “Reinheitsgebot” and using it only in deceptive marketing, German beer was also found to be contaminated. The Munich Environmental Institute (Umweltinstitut München) revealed the results of a study showing that traces of the weed killer glyphosate have been found in 14 different beer brands.

This exposes how Big Beer uses the image of “purity” and “craft” for marketing purposes but fails to ensure production standards.

4. Australia

• Why it’s happening: Australia’s craft beer market has seen significant growth in recent years, attracting the attention of global brewers. Multinational companies like AB InBev and Asahi have taken over local craft beer brands such as 4 Pines and Pirate Life. The desire to profit from the premium market and the growing consumer demand for diverse beer styles is driving these acquisitions.
• Impact: Smaller craft breweries in Australia are concerned that the growing presence of Big Beer could hinder their ability to compete. The fear is that Big Beer will dominate distribution and marketing.

As in the US, the UK, and elsewhere, the craft beer industry is lobbying for alcohol tax exemptions since 2017.

5. Mexico

• Why it’s happening: The craft beer industry in Mexico has exploded in the last decade, driven by a growing demand for diverse beer styles. However, the two largest brewers in Mexico, Grupo Modelo (owned by AB InBev) and FEMSA (which owns part of Heineken), have increasingly taken over local craft beer brands to expand their offerings.
• Impact: Mexican consumers are beginning to question the authenticity of beers marketed as “craft” when they are produced by large alcohol corporations. This has raised concerns within the craft beer sector about the future of independent breweries, with some fearing that smaller brewers will struggle to maintain market share.

In Mexico, people and communities, and even former President Andres Manuel Lopez Obrador have expressed concern and called for boycotts of Big Beer – over their fears of water insecurity and drought caused by water intense beer production.

6. Brazil

• Why it’s happening: Brazil’s craft beer market is still relatively young, but it has seen rapid growth as consumers shift away from mass-produced beers in favor of more diverse and flavorful options. Multinational brewers like AB InBev and Heineken have recognized this profit-maximization opportunity and have been acquiring craft beer brands in Brazil.
• Impact: The consolidation of the craft beer market by Big Beer is reducing the availability of truly independent options. As multinational companies continue to dominate the industry, smaller brewers face increasing pressure to compete with the marketing spending power of multinational beer giants.

In Brazil, Big Beer is clearly following the playbook of Big Beer in the US. After all, mainly the same multinational beer giants are competing for market shares and dominance, for profits, and against alcohol policy improvements.

For example, in the current tax reform that includes an initiative to raise alcohol excise taxes, the beer industry is lobbying for a special exemption from excise taxes for “craft beer brewers”. But as this story illustrates, the risks for Brazilian society of such a policy approach are serious:

• Tax Avoidance and Revenue Loss: As seen in the cases of the US and the UK, special brackets for craft beer can lead to significant revenue losses through tax avoidance schemes.
• Market Distortion: Large multinational alcohol corporations are likely to exploit the alcohol tax exemptions for small-scale producers by taking over craft beer companies, or by restructuring their operations to benefit from reduced alcohol tax rates, or by exploiting other unintended loopholes that allow them to qualify for tax reductions.
• Complication of Tax System: A special tax bracket for craft beer would add unnecessary complexity to the tax system, making oversight, administration, and transparency unnecessarily difficult.

7. Japan

• Why it’s happening: Japan has a pervasive alcohol norm, less focused on beer compared to Germany, but with traditional beers like lagers dominating the market. But in urban areas like Tokyo and Osaka large beer companies such as Asahi and Kirin have responded to growing interest in craft beer, by taking over craft breweries such as Minoh Brewery and Yo-Ho Brewing.
• Impact: The rise of Big Beer in Japan’s craft beer market is blurring the distinction between “craft” and mass-produced beers, leading to consumer confusion.

8. South Africa

• Why it’s happening: South Africa’s craft beer scene is relatively young but growing, driven by a new generation of beer consumers. Major global brewers like AB InBev and Heineken have recognized the profit maximization opportunities and are acquiring or partnering with local craft breweries to gain a foothold in this emerging market.
• Impact: While the craft beer segment in South Africa is still small, the influx of global players will use the “craft beer” image for profit maximization and as a claim to lobby against much needed alcohol policy improvements in the country.

Why It’s a Global Issue

The takeover of craft breweries by large multinational beer giants is a concern in many countries for three reasons:

• Authenticity and Integrity: As Big Beer takes over, there is a growing sense that the “craft” beer movement, which was initially about independent, small-scale production, is being watered down. This can erode consumer trust and confuse what it means to consume craft beer.
• Competition for Smaller Brewers: Independent craft breweries often struggle to compete with the marketing power, distribution networks, and financial resources of large corporations. This can push smaller players out of the market and drive market concentration and dominance by Big Beer.
• Alcohol Policy Impact: Multinational alcohol corporations seek to evade public recognition of the true extent of alcohol harm and the urgent need for governments to protect people from the harms caused by the products and practices of alcohol companies. The “craft” label and image is being used by Big Alcohol to disguise the inherent harm in their products. And the “craft” image of being local is deployed to lobby for alcohol policy gifts to Big Beer, as has happened in the US, Canada, and elsewhere.

Sources

Drinkstrade, 2017: “US government to cut craft beer tax by 50%“

Brookings, 2018: “Who benefits from the “craft beverage” tax cuts? Mostly foreign and industrial producers.”

NPR, 2018: “Health Experts Worry Brewer Tax Cuts May Increase Costs To Nondrinkers“

Sveriges Radio, 2024: “Government proposes tax cuts for Swedish microbreweries“

The Times, 2024: “Alcohol duty changes explained: What has the budget announced on booze tax? How much is alcohol duty on beer, wine, spirits and cider?”

Katie Mather, The Guardian: “The corporate takeover of ‘craft beer’ leaves a nasty taste in the mouth“

“Economic Challenges Facing Craft Brewers” – Details the challenges craft brewers face due to Big Alcohol’s influence and market power: Brewers Association – Economic Challenges Facing Craft Brewers

Brewers Association, “2020 Craft Brewing Industry Production Report” – Examines production trends and the influence of macro-brewers buying out small brands: 2020 Craft Brewing Industry Production Report

The New Brewer, Brewers Association, “Industry Review 2023” – Analyzes how multinational acquisitions impact the identity and competition in the craft beer market: The New Brewer 2023 Industry Review

^[i] Brookings Institution, How to Close the Loopholes in the Craft Beverage Modernization Act, available at:https://www.brookings.edu/articles/how-to-close-the-loopholes-in-the-craft-beverage-modernization-act/ (accessed 7 November 2024).

^[ii] Alcohol Justice, Impact of Craft Beverage Modernization Act on Public Revenue, available at: https://www.alcoholjustice.org/wp-content/uploads/2024/02/CraftBevImpact-2.pdf (accessed 7 November 2024).

Source Website: The Guadian