Colorado Brewers Guild Split

Last Saturday, the world learned of a troubling schism in Colorado: 14 of the state’s breweries, including the five largest not located in Golden, quit the Colorado Brewers Guild to form their own rival organization. This is only the latest development in a quickly-fracturing craft brewing community that until a couple years ago could plausibly call itself collegial and cooperative. The events in Colorado are the harbinger of a less-collegial, less-cooperative future.

Beer is always local, and most of the issues that led to the fracture were characteristically Coloradan. The departing breweries had complaints about how the Colorado Brewers Guild was being run, citing secrecy and “information control.” Those complaints amounted to more than a disagreement among breweries, because the Guild’s lobbying agency, Weist Capitol, also left the Guild. Then there were tensions around the recently-signed law that would allow regular-strength beer to be sold in a handful of Colorado grocery stores (currently only available at liquor stores).  And of course, buyouts and mergers are taking their toll as well. The Guild was not prepared for the situation that emerged when Anheuser Busch InBev purchased Breckenridge Brewery last year; the brewery’s president, Todd Usry, was and remains a board member on the Guild.

The real issue, when you drill down beneath the press releases, is that “craft breweries” are no longer a remotely cohesive group. If you’re brewing 200,000 barrels and selling half that in-state, your interests are different than if you’re making 500. It’s instructive that the Guild took no position on the bill to open up grocery store sales—because member breweries could have hardly been neutral themselves on the issue. The Guild remained silent because member breweries didn’t agree.

[Jennie] Peek-Dunstone [of Keep Colorado Local] says this law is one reason why Colorado’s craft brewers have been able to thrive. In order to distribute their products, small brewers have had to forge dozens of individual relationships with liquor store owners throughout the state. Opponents of the bill say large grocery store chains will want to have a homogenous selection of beer at all of their stores, but small craft breweries won’t be able to produce enough beer to supply them all. If liquor stores are forced out of business, it would leave nowhere for small-and medium-sized brewers to sell their suds.

It’s probably best to leave aside this rationale, which seems clearly disproven by the experience of small breweries in other states, and note instead that breweries have different interests. Beer is a product that benefits by scale; the per-barrel cost to a brewery declines as the system gets bigger and more efficient. For breweries looking to sell a lot of beer, getting into as many retail outlets has to be job one. Small production breweries, large production breweries, and brewpubs all sell beer, but they exist in almost exclusive retail environments.

The need to sell more beer is why larger breweries are growing so fast, and this creates a second set of tensions. In a distantly related fracas, the owner of Denver’s most revered beer bar, Falling Rock, posted an open letter targeting Oskar Blues Brewery three weeks ago. The subject of his ire had just quit the Colorado Brewers Guild—before the new organization had been announced. (Important background: a private equity group bought a majority stake in Oskar Blues in 2015; earlier this year, Oskar Blues bought Cigar City. The new entity has plans to grow rapidly and has opened brewing facilities in Texas and North Carolina.) Falling Rock’s owner, Chris Black, was incensed about Oskar Blues’ plan to open a pub in Denver selling not only its own beer, but that of other breweries:

When you want to sell your own products, I am a huge supporter, when your primary goal is to sell other people’s beers, I’m not so much in favor. That’s kinda the job for the accounts out in the marketplace. As you might have noticed, there are over 4300 breweries in the US, 300+ in Colorado alone, I have LOTS of choices, & I choose to spend my money on beers brewed by brewers that don’t actively & directly compete with me. Oh, I understand it’s ‘legal’ for you to carry other people’s beers, that doesn’t make it right, or the right thing to do for your brand.

Again, Black’s position is less the issue than the fracture it represents. (One could imagine a different publican taking exactly the opposite tack, that selling other breweries’ beers was good for the craft brewing scene.) The dispute itself is not critically important; rather, it’s another example of an internecine dispute that would have been unimaginable five years ago.

When Americans started making beer again on a small scale, it was easy enough for them to clump together as a way of magnifying their influence. They were such a fractional part of the beer market that working together helped buoy all of them—it’s how “craft brewing” came to be. But more importantly, they were all small and all had the same needs and goals. Now neither condition is true. Breweries of very different sizes and interests now crowd uncomfortably under the umbrella of craft. They no longer see their interests aligned—indeed, in many cases their needs are in open conflict. Something’s got to give. In Colorado, it already has.

Jeff Alworth is the author of the book, The Beer Bible (Workman, 2015). Follow him on Twitter or find him at his blog, Beervana.