Local craft brewers stick together to fight big beer buyouts

(Delmarvanow.com) -- Sam Calagione wants beer lovers to know the difference between a craft label that's independent like Dogfish Head and a craft beer sitting next to it on the shelves that is owned by a multibillion dollar corporation. 

Local brewers are concerned the consumer doesn't know where their craft beer is coming from. The care and experimentation breweries like Dogfish Head and RAR Brewing put into each concoction isn't just for their fans' tastebuds, it's also about sticking to their roots and the local communities they support. It's why local microbreweries are doing whatever they can to stick together.

Wearing a retro Milwaukee Brewers hat, Sam Calagione threw pieces of pine tree bark into a mesh holder with the help of a few friends from Cambridge, Maryland. It was a brew day in early September — one of the last in the cramped back room of the old Dogfish Head brewpub.

The sense of giddiness in the air was only masked by the scent of boiling wort.

It wasn't the first time RAR Brewing's founders, Chris Brohawn and Randy Mills, collaborated with the Delaware brewery. The casual T-shirts and playful humor passed among Brohawn, Mills, Calagione and Dogfish brewing ambassador Bryan Selders more resembled high school friends getting back together than four of the sharpest craft beer minds on the Delmarva peninsula working on a new product.

This is the new status quo for area brewers. The collaboration will create energy between the breweries and among fans, giving them something to look forward to when "Frosty and Havering" is released. The Vienna-style lager brewed with maple syrup near where Calagione was born and pine tree bark from Cambridge will be released at Analog-A-Go-Go on Nov. 4.

RAR's and Dogfish's collaboration means more than a tasty treat for beer lovers. In its simplest terms, the two are competitors, but that's not how many local brewers view one another in the growing craft beer market.

They see the real competition as between local, independent craft breweries and big beer corporations such as global brewing leader Anheuser-Busch InBev, who has been purchasing craft breweries across the country.

In 2016, the number of craft breweries bought by larger companies resulted in 1.2 million fewer barrels of craft beer, according to the Brewers Association, a nonprofit trade group representing independent craft breweries.

“We’re in an industry dominated by foreign conglomerates," Calagione said. "So, we generally see that a rising tide floats all ships, and if we can help each other and turn each other’s fans onto each other’s breweries then we’ll all be better off for it.”

Small and independent brewers represent 99 percent of the country's 5,300-plus breweries but only account for 12 percent of the beer produced and sold, according to Brewers Association's statistics.

In May, Anheuser-Busch InBev announced it would purchase Wicked Weed Brewing in North Carolina, adding to a portfolio that includes Stella Artois and Shock Top, along with craft partners Goose Island, Blue Point, 10 Barrel, Elysian, Golden Road, Virtue Cider, Four Peaks, Breckenridge Brewery, Devils Backbone, SpikedSeltzer and Karbach Brewing Co.

InBev also owns a minority stake in Fordham and Dominion Brewing Company, which prevents the Dover brewery from selling its ales on site under Delaware law.

It's why Dogfish Head, RAR and other Delmarva breweries like Burley Oak in Berlin and Evolution in Salisbury have joined the movement of the Independent Craft Brewer Seal created by the Brewers Association.

The seal, an upside beer bottle with "Brewers Association Certified Independent Craft" on the label, was announced in late June and has over 2,300 breweries pledging to include it either on their packaging or bottles, said Julia Herz, craft beer program director for the Brewers Association.

"We have a desire to make things less muddy in the marketplace," Herz said. "It has become very confusing for the beer lover to know when they're buying a brand from a small and independent craft brewer or from a big multinational conglomerate brewery."

But Steve Crandall doesn't think that his brewery being owned by Anheuser-Busch InBev changes anything that made it successful before the purchase in 2016.

The founder of Devils Backbone said his brewery in Roseland, Virginia, was "organically grown" and one of the most awarded by the Brewers Association, and he plans to keep it that way.

"Significant infighting in the craft beer space is creating divisions and confusion amongst beer drinkers," Crandall said in a recent statement. "The (Brewers Association's) definition of who is a craft brewer and who is not is arguably inconsistent and derogatory."

"A tipping point" 

There are a lot of craft breweries in the country.

But not enough to buy Anheuser-Busch for $213 billion. That didn't stop the Brewers Association from taking a jab at the Belgium company, announcing a crowdfunding campaign to "take back craft."

In seven days, almost $3 million has been pledged, but the sarcastic marketing tool is serious about touting qualities of independent craft brewers.

It's why the founder and CEO of Dogfish Head believes there is a "tipping point" coming for the industry in the next two or three years. The consumer is going to have to make a decision, Calagione said.

"It’s a clear line, but so many beers that the average consumer – not the beer geeks – thinks came from an independent craft brewery actually came from a foreign-owned conglomerate that’s marketing beers as if they came from a craft brewery," Calagione said.

Local breweries are "fighting hard," he said to keep jobs and profits within their communities. That's why in 2015 Calagione and Dogfish expanded its capital by selling 15 percent stake in the company to a New York-based private equity firm LNK Partners with the option to buy back. That was after completing a $50 million expansion at the Milton brewery. Dogfish also recently finished the new $4 million Brewings & Eats on Rehoboth Avenue.

Calagione has turned down meetings with InBev in the past and believes LNK Partners' investment will allow Dogfish to remain family-owned and operated.

Other craft brewers have recently done the same. In 2016 Victory Brewing Co., of Downington, Pennsylvania, joined Lakewood, New York-based Southern Tier Brewing Co., in an umbrella group called Artisanal Brewing Ventures to share resources and capital.

“The craft beer community is at its most critical moment since its inception as larger brewing corporations have bought into our grass-roots movement, irrevocably changing the marketplace," said Victory founder and brewmaster Bill Covaleski. "Like-minded brewers such as Victory and Southern Tier can preserve our character, culture and products by banding together."

But as Crandall said when Devils Backbone was purchased, the brewery planned to stick it its roots.

Other breweries purchased by AB In-Bev have had the same retort to independent craft breweries.

"Nothing's going to change," Walt Dickinson told USA Today.

The head blender and co-founder of Wicked Weed, one of InBev's latest purchases, added that they are "just looking forward to doing more of the things people love us for."

The Brewers Association defines and independent brewer as a company that has less than 25 percent of its brewery "owned or controlled (or equivalent economic interest) by an alcohol industry member that is not itself a craft brewer." 

Herz, the program director, said the Brewers Association is not trying to tell consumers what beer to buy, but make people aware of what they can try and where it comes from.

"We want the marketplace to be fair," she said. "Right now, it's skewed in favor of big beer, and that's a complex thing ... because of distribution in US and how distributors are controlled by either (Anheuser-Busch InBev) or Molson Coors (Brewing Company).”

In Delaware, there are 13 wholesale and importers that distribute craft beer to the state.

While both Maryland and Delaware have laws the restricting breweries also owning a wholesaler, larger companies with more money can flex their beer muscles when it comes to pricing and still make an impact on the distributing market.

Being the biggest player can create some economic pressure, said John Cordrey, commissioner of the Office of the Delaware Alcoholic Beverage Control Commissioner.

“In Delaware, as in many states, we operate under what’s called the three-tier system,” Cordrey said. “So that a manufacturer can’t have interest in a wholesaler, who can’t have an interest in a retailer.”

The exception is for entities that are considered microbreweries, he said. A manufacturer like Dogfish Head's brewery in Milton, can also operate what's considered a retail entity like a brewpub as long as both locations do not sell more than 2 millions barrels per year set by federal regulations to qualify for a "reduced rate of tax for certain brewers."

But microbreweries who want to distribute their beer must rely on the wholesaler to do so throughout the state, Cordrey said.

Independent brewers still claim that "big beer" is controlling what is being put on store shelves and restaurant coolers instead of the consumer deciding.

The only reason Burley Oak founder Bryan Brushmiller can walk into a package store and pick out the independent brews is because he is part of the public relations committee for the craft seal project. 

And while most locals can walk into a store and know that RAR, Burley Oak and Tall Tales in Parsonsburg, Maryland are local, that doesn't mean local consumers can decipher independent microbreweries across the country, he said.

"Some people entering the craft beer scene may have a total clean slate and have no idea who is independent and who is not," Brushmiller said. "And then there’s people that are entrenched in it in the last 10 years that still might not know.”

Beer love growing on Delmarva 

Every Friday, the two end seats of the Crust & Craft pizza pub are filled with the same jovial couple that have become a bartender favorite.

Johnny and Ellie Kuntzmann, of Long Neck, bring craft beer goodies to share for their local bartender on Coastal Highway in Rehoboth Beach.

“We love going to the can releases and checking out seasonal beers,” Ellie Kuntzmann said.

They've lived in Wilmington and Seattle, and the artistry, and of course taste, is what draws the mature, laid-back couple to Delmarva's brews. Ellie with her purple lipstick and Johnny with his long white beard and tattoos down to his wrists fit a mold, although there doesn't seem to be a mold for the "typical" craft beer fan.

It wasn't surprising that both were aware of the Independent Craft Brewer Seal and supported it.

“I think it’s pretty shady, actually,” Johnny Kuntzmann said, rattling off labels that have sold shares to larger breweries.

While the Kuntzmanns say they do their part to support local microbrews, they believe the area isn't fully educated on craft beer news.

“There’s a really passionate beer audience and beer crowd down here,” Johnny Kuntzmann said. “With that said, this area is still primarily a Coors Light, dollar-drink environment.”

Even restaurants like 99 Sea Level in Bethany Beach, a place known for high-quality small plates and entrees, sees a clientele that expects craft martinis, Manhattans and wine rather than beer.

“On an estimate, at least 85 percent of the drinks I make are shaken or stirred,” said Ryan Minnick, bartender at beaches for 10 years before joining the restaurant when it opened July 2015.

Despite the expectation, 99 Sea Level keeps six of eight rotating drafts with local craft beer, and Minnick has seen an increase in consumers willing to try a flight or taste before going with their normal cocktail or domestic beer.

At bars and restaurants that tout their draft selection as part of the attraction, local brews line tap handles.

Katie Sherman picks all of the draft beers as the head barkeeper at Crust & Craft. The 31-year-old says the restaurant and bar looks to highlight its beer menu with local craft selections as well as other unique finds from across the country.

“Any small local brewery, we will support and have them on tap,” Sherman said.

Tourists and locals come in look for it, she added. She recalled a gentleman who drove nearly an hour from Bridgeville for his birthday because of the beers the restaurant promoted that day on Facebook.

Beer tourism is becoming a thing at the Delaware Beaches and in nearby Ocean City.

So much so, the Delaware Tourism Office recently released its new Delaware on Tap app, giving residents and vacationers a guide to Delaware’s 20-plus breweries.

The app allows users to view events, deals, tours, including rides from Uber and a drink-themed photo booth.

In Maryland, Gov. Larry Hogan declared the second month of the year FeBREWary as a way for towns like Ocean City to receive a bump of visitors during a traditionally slow period.

Salisbury recently had its annual “Good Beer Festival” and Shore Craft Beer is online source dedicated to prompting beer on the Lower Shore and collaborating for events.

The collaborations between breweries are designed to spur interest.

That is part of RAR's approach. They’ve collaborated with The Other Half Brewing Company in Brooklyn, New York, and Finback Brewing in Queens. "Frosty and Havering" is their second collaboration with Dogfish, also well-known for working with other breweries and artists.

Evolution Craft Brewing in Salisbury brewed with  Flying Dog out of Frederick, Maryland, and D.C.’s Right Proper brewing. Most recently, they partnered with 3rd Wave Brewing, which was a significant partnership because 3rd Wave is in the building, and using the brewing system, that Evolution Craft Brewery started with when they began in Delmar.

"In a general sense, we can all see that the beer culture is much more advanced today than it was 10 years ago,” Herz said. “Our advanced beer culture today is a result of small and independent craft brewers and their beers.”

Local towns with successful brewers have felt a surge on Delmarva, too. Dogfish put Milton on the map for many, and they’ve been successful in Rehoboth. The number of surrounding breweries in the Rehoboth/Lewes area is an attachment to that.

The same can be said for Cambridge, which has had a downtown revitalization. RAR’s presence contributed it that.

It’s part of the reason why the Mills and Brohawn wanted to open up in the tiny Eastern Shore town — both were born and raised in Cambridge.

“We see it day-to-day,” Brohawn said. “Obviously being downtown, we’ve watched people come from other businesses to us and then leave us to go to our neighbors, which is completely satisfying.”

Mills said they opened up with $600 in the bank and weren't sure how locals would react. The business partners quickly found out they needed more than two tanks for brewing.

“I can’t imagine running a business where we don’t see our customers,” Brohawn said.

DelmarvaNow Correspondent Tony Russo contributed to this article.

Delmarvanow.com


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