You’re a craft brewer, winemaker or distiller. You care about the quality of your product. Sure, it’s nice to make a salary, but for you it’s all about the product, not the money. That could change. You would, of course, still care about the beer, but what if you want to make more of it? Or even a whole lot more. What if you want to invest in your infrastructure, add tanks, add a new facility, or buy more barrels? What will you do to get to the next level?
What are your or your company’s core values? Is your approach artisan or corporate? Artist or hobbyist? Do you want to make a living or a really good living? How much money do you want to make? Van Gough died broke, meanwhile some guy sells pet rocks and makes millions. It’s the age old dilemma of artistry vs commercialism. Will you shoot for the stars or are you happy where you’re at?
Along comes an investor, say AB InBev, the craft beer division of Anheuser Busch. They offer to invest in your company and help you grow. You read their mission statement on their website.
“We are AB InBev. Committed to driving growth that leads to better living for more people in more places. Through brands and experiences that bring people together. Through our dedication to brewing the best beer with the best ingredients. And through our commitment to helping farmers, retailers, entrepreneurs and communities grow.
We are building a company to last. Not just for a decade. But for the next 100 years. Through our brands and our investment in communities, we will bring more people together, making our company an integral part of our consumers’ lives for generations to come.”
With all these financial decisions will come the inevitable dilemma that comes to most artists — Quality vs Quantity? There are many, many considerations to this dilemma.
Wesley Hagen, Winemaker, WSET2 and Brand Ambassador for J. Wilkes Wines in Santa Maria Valley California weighed in on the discussion.
“We’re all in this business to make people happy through delicious beverages and, in the end, to make a living. In a world of shrinking small, independent winemakers and brewers there are plenty of owners waiting for a Constellation, Jackson Family, or other large company to swoop in and toss bags of money at us. Often they will compel a winemaker or ‘face of the brand’ to remain at a purchased brand a few years for a smooth transition. It’s the way business works, and although some of my favorite brands have lost their independent ‘shine’, I find that many times quality actually improves under the watchful eyes of bean counters and corporate reorganization. Not always.”
Will you have friends in the industry once you’ve sold your shares?
“Generally I find people in the drinks business to be about the most interesting, over-educated, best table companions on the planet, and I wouldn’t expect much social flak from such a sale,” said Hagen. “ For instance, I recently had dinner with a bunch of winemakers, one of them being a Sonoma producer that recently sold his winery for millions. Dude picked up the check (unexpectedly), we all benefitted, and toasted the memory of Jess Jackson for the assist. In short, I will quote Tom Wolfe: ”The rich? I don’t mind the rich. At least they pay for their own drinks.”
Will local vintners or brewers associations accept you?
“Vintners associations thrive on big vineyards and productions,” Hagen said. “Most of them produce the lion’s share of dues from a small number of larger producers. Large, corporate winery groups also do an excellent job of supporting and being inclusive (or at worst ignorant) of smaller producers, as they do not want to be seen as bullies in the market–a market that relies on reputation and perceived quality more than just about any luxury good. As such, I have had excellent experiences with larger wineries’ involvement with Vintners groups, and they often allow/compel/suggest their executives volunteer on the boards, both for self-interest and to elevate the professionalism of said groups.”
How will other companies compete with those who haven’t sold their interests?
“Most folks that get into wine or beer know they are taking a huge risk in a saturated market, and that they are doing it as a passion project–normally it’s a way to spend money and not make it. If you make dog toys in your basement you have to fight Hartz and Kong, if you roast coffee there’s Starbucks and Stumptown. Name a business and there’s a 900 lb. elite, corporate silver-back gorilla waiting in the shadows. You can try to learn from their model or complain about the unfair playing field. I prefer seeing myself as nimble and unencumbered, but I’m sure there are brewers and vintners that feel that their success has been limited by consolidation,” Hagen said.
What strategies need to be implemented for competing in an uneven playing field?
“First, buck up and love the challenge. If [one of these purchased companies] can come in and make better beer or serve better food, or have more handsome bartenders, then step up your game. Show some hospitality. Elevate, improve and behave how beer would want us to behave: drink a few pints with your competition and end up laughing and becoming friends.”
“Simply put: elevate, adapt, sell out or die from attrition. I still strongly believe that a talented brewer or winemaker still has a job in this industry, and someone who can sell alcoholic beverages with skill will always be a valuable hire. And ironically, or at least secretly, the specter of large, corporate wineries waiting in the wings to scoop up talent has elevated the pay scale of those of us kicking butt with independent, family wineries and breweries.”
What are your company’s core principles?
Bottom line is what are your core principles? On Wicked Weed Brewing purchase, Jester King Craft Brewery posted on their website the following statement:
“…We have some core principles that define who we are as a brewery, and those principles must not be compromised. One of our core principles is that we do not sell beer from AB InBev or its affiliates. We’ve chosen this stance, not because of the quality of the beer, but because a portion of the money made off of selling it is used to oppose the interests of craft brewers. In Texas, large brewers (and their distributors) routinely oppose law changes that would help small, independent brewers. We choose not to support these large brewers because of their political stances, and in some cases, their economic practices as well.”
What will you do?
Wes said, ”I can handle Fat Tire being corporate, as I never drank their beer much. Boneyard in Bend Oregon broke my heart a little when it sold, and if Russian River sold tomorrow I’d probably grab a torch and pitchfork. So when it comes down to it, it’s usually a selfish and self-righteous anger toward a brand we loved and wanted to stay independent. Multi-generational business is weird in the US. Often it’s seen as a ‘failure to launch’ to stay with a family business, and Americans are rebels to both our families and to our old homelands. We like to give money to iconoclasts and that guy who can make a million barrels but still flow dreadlocks and be himself.”
After all these considerations Wes has a last bit of advice. “Work hard, make killer beverages and then take them into the market with passion and enthusiasm that the big guys can’t compete with. Find a niche and celebrate those who support your products. And if all else fails, have a drink and try harder tomorrow.”