Craft beer was supposed to be the antithesis of the “fizzy yellow beer” doled out by big brewers, but a new round of lagers is putting that thesis to the test.
My father-in-law, a longtime Seattle-area homebrewer, still has a “Life Is Too Short For Yellow Beer” bumper sticker on his truck. At one point, Stone Brewing Co. based a healthy chunk of its marketing and personality around making fun of “wussie yellow beer.” Even the Brewers Association once dedicated a pillar of its definition of a craft brewer to excluding brewers who made the majority of their beer using adjuncts like corn (often used by pre-Prohibition brewers to make up for American-grown six-row barley that was inferior to European two-row).
So what happened? How did the craft beer segment go from tarring “yellow” lagers and pilsner as the enemy to having brewers including Firestone Walker, Founders and Stone introduce light lagers of their own–even when they bore little resemblance to anything else in those breweries’ portfolio? While brewers often note that pilsners and lagers represent the natural progression of a brewer’s skill and leave few places for flaws to hide, it isn’t the brewers themselves driving the recent push for lagers.
Back in 2014, the Brewers Association was reconsidering its craft beer definition. Members argued that the “traditional” branch of the definition not only restricted the beer brewers could make, but alienated some strong potential allies like pre-Prohibition brewers D.G. Yuengling and Sons and August Schell. The Brewers Association changed the definition that year and opened the doors to light lager brewers like Yuengling, Schell, Straub and others.
While lager and pilsner wasn’t exactly foreign to craft beer–Bell’s, New Glarus, Full Sail, Victory, Oskar Blues, Brooklyn Brewery, Gordon Biersch, and Boston Beer Co.’s Samuel Adams are just some of the brewers who built legacies around those styles–the craft definition and the capacity required to cold ferment those beers were obstacles for many smaller breweries. That was about to change. In 2014, the brewers who fit under craft beer’s initial definition saw sales increase 18 percent by volume and reach a double-digit share of the overall beer marketplace (11 percent) for the first time.
From that growth, Brewers Association economist Bart Watson noted that brewers collectively had a production capacity of 34.6 million barrels, but were only brewing to about 44 percent of that capacity. Presciently, Watson quoted National Beer Wholesalers Association economist Lester Jones: “Give me a light beer recipe and a canning line, and I’ll show you some capacity.”
Meanwhile, that same year, Anheuser-Busch InBev finally followed up its purchase of Chicago’s Goose Island in 2011 by purchasing Barrel Brewing in Bend, Oregon. As A-B InBev pressed further into craft beer’s space, however, giant Spanish brewer Mahou San Miguel took a 30 percent stake in Founders, the nation’s 23rd-largest brewery, while Belgian brewer Duvel Moortgat would buy all of Kansas City, Missouri’s Boulevard Brewing Co. Founders had just announced a $35 million expansion that would give it 900,000 barrels of capacity and make more room for lower-alcohol beers like its All-Day IPA–which was released just a year earlier, but already building sales and a year-round following. The Brewers Association would no longer consider Founders “craft”–the threshold for non-craft ownership is 25 percent–but Founders wouldn’t be encumbered by that label’s aversion to pale lager, either.
In 2014, lager made up roughly 9 percent of all craft beer produced, according to IRI, and even that seemed like a bit of an underestimate. That year, while writing for TheStreet.com, I predicted that the Brewers Association’s embrace of light lager coupled with larger craft brewers’ ability to brew lagers and pilsners would make those styles craft beer’s future. It didn’t take long for brewers to prove me correct.
In 2015, with craft brewers still seeing 13 percent growth (and double-digit percentage-point growth in eight of the last 10 years), the entire game changed. A-B InBev bought four breweries–Elysian, Breckenridge, Four Peaks and Golden Road–in the same year. Heineken bought a half-share of Lagunitas that would later become a full stake. Oskar Blues sold to Fireman Capital (owners of Wasatch and Squatters) and bought Perrin Brewing to form what, after the addition of Cigar City in 2016, would become the CANarchy Craft Brewery Collective. Corona owners Constellation Brands bought Ballast Point for $1 billion, while its San Diego neighbor Saint Archer sold to MillerCoors.
Duvel Moortgat also got in on the action by buying Firestone Walker, which had recently debuted its Pivo Pils. Firestone Walker had just doubled its capacity with a $15 million expansion in 2015, but hadn’t released a pilsner or lager other than Pivo since Firestone Lager back in 2000, when fans were inconsistently receptive at best. The brewery’s Pivo debuted in 2013, the same year Goose Island unveiled its Four Star Pils, yet even the most hardcore craft beer adherents were softening on fizzy yellow beers.
In 2016, after taking $90 million from private equity firm VMG Partners, Stone Brewing announced that it was not only spinning its Arrogant Bastard beers into their own brand, but also releasing a lager under that brand’s umbrella. Who You Callin’ Wussie Pilsner was a nod to Stone’s prior stance on pilsner and lager, but also signaled the end of the brewery’s war on light, cold-fermented beers.
The entire time craft beer was wrestling with its views on pilsners and lagers, it was shedding its aversion to something else it considered big-beer territory: Cans. In 2013, just before the Brewers Association’s change of heart on adjunct lagers, beer in cans made up less than 15 percent of all sales from brewers the BA considered craft. By the end of 2017, that share was roughly 30 percent, with nearly a 35 percent share of all summer beer sales.
Craft brewers may have warmed up to cold fermentation and cans just in time. By 2016, craft beer’s growth by volume had slowed to 8 percent, with larger craft brewers like Boston Beer and Sierra Nevada starting to see declines. A year later, that growth would be down to 5 percent, with smaller breweries accounting for more than three quarters of all gains.
However, Founders (not considered part of that craft growth) saw sales increase 34 percent last year with All-Day IPA–now in 15-packs and 19-ounce cans–accounting for 60 percent of the brewery’s sales. Founders is now the ninth-largest brewery in the U.S., has 82 percent growth for low-alcohol seasonal brands like PC Pils and Mosaic Promise and recently released a light lager–Solid Gold–that sells for $19 a case in certain Midwest states. That beer is being followed to market by a new version of Firestone Lager, Night Shift’s Nite Lite Lager and various other light lager brands, and it’s in keeping with the latest lager rush.
In recent years, lagers brewed by large Mexican brands like Corona, Modelo, Pacifico and Dos Equis have seen their sales and profiles rise in the U.S.–with U.S. craft brewers attempting to emulate them all the while. Lager- and pilsner-producing U.S. craft brands like Victory, Full Sail and Brooklyn, meanwhile, have all attracted investment from Ulysses Capital, Encore Consumer Capital and Kirin. Is it working? Well, among the Top 15 craft brewers listed by Beer Marketer’s Insights, several breweries with strong lager and pilsner brands posted gains in 2017, including Bell’s (up 19 percent), Stone (up 14.5 percent), Firestone Walker (up 16 percent), New Glarus (up 16 percent) and Victory parent company Artisanal Brewing Ventures (up 16 percent).
Then again, it isn’t just lager and pilsner driving that surge. Beer industry consulting firm Bump Williams points out that while craft lager sales grew 21.5 percent by volume last year (not including a 1.2 percent decline for craft pilsners), craft pilsner and lager combined account for just 3.2 million cases of all craft beer sales. By comparison, similarly light golden ales (like New Belgium’s Dayblazer or Firestone Walker’s 805) account for more than 4.1 million cases and saw sales rise 37.5 percent in 2017.
Combined, lagers, pilsners, golden ales and session beers (just 474,500 cases in 2017, but up 24 percent from a year earlier) are still only a small fraction of the 32.4 million cases of IPA sold last year. IPA sales grew 14 percent in 2017 and still account for roughly a quarter of craft beer sales by volume and nearly a third of its sales in dollars. Yet IPA, Belgian wit, golden ale, stouts, Scotch ales, session ales and other growing ale categories aren’t enough to keep the tanks full or to woo drinkers away from big-beer lagers that still make up about 70 percent of all beer consumed in the U.S.
While it wasn’t the beer of craft beer’s pioneers, lager is well-suited for this moment in craft beer history. If craft beer’s outsized growth doesn’t return, however, it could turn brewers like Founders and Firestone Walker into this generation’s version of regional brewers like Schell and Yuengling before them. At this stage, that seems more a blessing than a curse.
Jason Notte is a freelance writer based in Portland, Oregon. His writing has appeared in The New York Times, The Huffington Post and Esquire. Notte received a bachelor’s degree in journalism from the S.I. Newhouse School of Public Communications at Syracuse University in 1998. Follow him on Twitter @Notteham.