Charleston brewers look for ways to stand out

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Jamie Martin remembers when he tasted his first craft beer.

“There were craft breweries popping up all over the place in the mid-’90s, and those of us back then who are old were like, ‘Holy crap, what is this incredible beer?’ ” said Martin, co-owner of Cooper River Brewing Co. “Because we had had nothing but Miller Lite.”

At the time, Martin said big beer companies such as Anheuser-Busch and Miller Brewing Co. were fighting against craft beer with marketing techniques to try to put smaller breweries out of business.

As the craft beer market has grown, though — the United States has more than four times the number of breweries now than it did a decade ago — the strategy has shifted.

“Now their strategy in the last five years has been to buy … an independent brewery that has a strong following, pay as much as $500 million for them, and basically offset their losses from their big brand,” Martin said. “And almost confuse and confound and deliberately mislead the consumer into thinking that they’re still buying an independent, locally produced product.”

The Brewers Association, a nonprofit trade group for craft brewers based in Boulder, Colo., defines a craft brewer as small, producing fewer than 6 million barrels per year; independent, meaning less than 25% of the brewery is owned or controlled by a non-craft brewer; and traditional, which means a majority of its products is beer, and not flavored malt beverages such as spiked seltzer or hard soda.

“There are more challenges than ever,” said Julia Herz, craft beer program director for the Brewers Association.

She added: “It’s not just about the beer lover and information, but because those acquired brands are in the mix from the largest of large breweries, they have much more muscle at the distributor level and much more attention to get on the restaurant menu or liquor store shelf.”

To help craft breweries stand out from bigger beer companies and the craft brewers they’ve acquired, the Brewers Association created a logo that identifies the brewery as a craft brewer.

Almost all breweries in the Charleston area use the logo. Chris Brown, production manager at Holy City Brewing, said he’s glad the Brewers Association offers the logo, and he said he plans to eventually have it on all of the company’s cans.

“There’s just a little ambiguity with how breweries are these days, with who’s owned by who,” Brown said. “We’re proud to be independent and thought it was a cool way to show that on our cans, that we are independent.”

Brown said he isn’t sure using the logo affects sales, but he said it’s an easy way for small breweries to stand out.

“Distinguishing brands, it can be a good thing in the marketplace, especially with competition of small breweries against some of these bigger guys,” he said. “We don’t get our voices heard like they do sometimes.”

Herz said making sure craft breweries stand out is important because of the role they play in their communities. In South Carolina, breweries accounted for 4,862 full-time jobs at an average wage of $42,765 in 2017, according to the Brewers Association, making an economic impact of $780 million.

“Craft brewers are huge bright spots for our economy,” Herz said. “There’s a huge tax base from craft brewers, (and) for wages and benefits.”

Michael Biondi, co-owner and general manager of Frothy Beard Brewing Co., said he understands why some craft brewers might agree to be sold to big beer companies, but it ultimately changes what the company stands for.

“They don’t connect with the community anymore because they’re not people,” he said. “They’re entities.”

Biondi said Miller and Budweiser deploy competitive practices that end up hurting smaller, craft brewers.

He said big beer companies have more money and resources to get onto grocery store shelves and into restaurants, making it harder for small breweries to break into the market.

Billy Pyatt, co-owner of Catawba Brewing Co., said the market pressure from big beer companies is part of the reason Catawba acquired Palmetto Brewing Co. last year. Palmetto Brewing is still considered a craft brewer because it was acquired by another craft brewer and not a bigger company.

“I want to stay independent, and as an independent brewer, I’ve got to find ways to compete,” Pyatt said. “And one of those is to get a little bigger. I can change my scale and scope and hopefully become a little more financially competent, as well as have something a little larger to get mind share (meaning consumer awareness). And if I can do that, then I can continue to compete as an independent, stand-alone brewery.”

Pyatt said he has no ill will toward brewers that decide to sell to bigger beer companies — “you’ve got to do what’s right for yourselves” — but it’s not the path he’d like to follow.

“My preference would be to keep Palmetto and Catawba independent,” Pyatt said. “I’m old and set in my ways, but I know that’s not going to be the case for everybody and every concern.”

Local flavor

Others don’t see big beer companies as a problem.

“I think every small business has a goliath counterpart somewhere, no matter what you’re talking about,” said Jaime Tenny of Coast Brewing Co. “There’s probably Big Cotton Candy. You’re always going to have somebody who is bigger, has more money, has more clout, has more appeal, has more, more, more, more. And they also have more to lose, too.”

Tenny said she’s more concerned with how fast craft breweries have opened — in Charleston, the number of breweries has almost tripled over five years ago — compared to beer sales. Craft beer sales grew by 5% in 2017, but overall beer sales fell by 1.2%.

“The market has been established now, but how big is the market? I mean, nobody knows that,” she said. “Nobody has that answer. Nobody can tell the future.”

Martin, of Cooper River Brewing, said he doesn’t think any Charleston breweries are making enough money to be acquired by a big brewery: “You would have to be a pretty big fish in the sea to even draw interest from a conglomerate brewery.”

Even if a Charleston-area craft brewer was acquired by a larger company, Martin said he trusts his customers.

“We have an educated consumer here in Charleston, and it’s such a small market,” he said. “We’re not like Chicago where that could happen and it would be unnoticed. I’m thinking that people would hopefully realize that and you would hear about it and would kind of solve the problem from the consumer standpoint.

“The reason why people buy craft beer is because it’s local.”

Chris Winn, co-owner of Tradesman Brewing Co., said, “There’s certainly challenges when you’re playing against much larger companies … with much more resources and staff and marketing budgets,” but he said big beer companies and craft brewers sell inherently different products.

“Maybe sometimes you can’t get that tap handle or that slot on a grocery store shelf, but I think when you’re part of a highly localized economy, you’ve got people supporting products and purchasing things not just because of what the item is,” he said.

“The value proposition is much larger than the 12 or 16 ounces of beer you’re getting. And that’s something the big guys can’t compete with.”

Brook Bristow, executive director of the S.C. Brewers Guild and founder of the law firm Bristow Beverage Law, said he tells breweries not to worry too much about big beer companies.

“They’re always out there, and you need to be aware of them, but your priority doesn’t necessarily need to be what those guys are doing,” he said. “It needs to be to focus on your quality first and foremost, because if your product’s not as great as it can be, that’s obviously a concern and the market will do what it’s going to do to correct that.”

‘A package deal’

The Charleston Brewery District is an area on the Upper Peninsula that includes Tradesman Brewing Co., Palmetto Brewing Co., Revelry Brewing Co., Cooper River Brewing Co., Fatty’s Beer Works, Edmund’s Oast Brewing Co., Munkle Brewing Co. and Lo-Fi Brewing.

The district began when Edmund’s Oast Brewing Co. opened last year and convened the eight breweries to find a way they could work together.

“It’s really to promote awareness to an area here in Charleston,” said David McLain, owner of Fatty’s Beer Works. “You know, you have the medical district, you have the historic district, you have South of Broad. What’s to say we can’t have a brewery district because of the high density of the breweries in this geographical area?”

McLain said the breweries together can do more than a single craft brewery could do on its own, such as marketing campaigns, and they often collaborate on recipes and share resources.

Winn said, “Most of us are all small and scrappy and trying to figure out how to do this thing. And we’ve always had a good history of calling each other and asking for help or parts or grain or whatever we needed. And obviously Charleston has a large transient, tourist-based economy. … It felt like, man, this is something we should take advantage of. If we’re all going to be up here, we can all benefit from some shared exposure.”

Martin, of Cooper River, said the breweries have also considered investing in a shuttle that would bring people to all eight breweries.

“We have a lot of great ideas that we’re working on,” he said. “It’s just a way to kind of get together and help save cost and also get the word out there and help differentiate ourselves in a very crowded market.”

This story originally appeared in the Oct. 1, 2018, print edition of the Charleston Regional Business Journal.