Critical Drinking

Critical Drinking With Dick Cantwell

As the author of three brewing books (not to mention, a couple unpublished novels), Dick Cantwell is used to being the one telling the story. But when Seattle’s Elysian Brewing Company sold to Anheuser-Busch InBev in 2015, Cantwell—a dissenting co-founder of the acquired brewery—was suddenly at the center of the tale.

With a new book, Wood & Beer: A Brewer’s Guide (co-authored with New Belgium’s Peter Bouckaert), about to drop in June, and a non-compete clause about to expire (except in Washington, Oregon, and Idaho), we sat down to talk about the AB deal and the deals that followed, how professional decisions can affect personal ambitions, his role as Quality Ambassador for the Brewers Association, and what, exactly, is next.

Cantwell, in the middle, getting by with a little help from his friends performing karaoke at CBC.

Cantwell, in the middle, getting by with a little help from his friends performing karaoke at CBC.

You mentioned that you’re getting settled in San Francisco. Are you living there now?

We [Cantwell and his girlfriend, New Belgium co-founder, Kim Jordan] live here part-time. Our plan, over time, is to transition to spending more of our time here. It’s a place that we both enjoy and can agree on, and we have a place here. So, up till now I haven’t spent close to the time we intend to eventually, but that’s the idea.

You’ve written a number of books now, both brewing and otherwise, but how many have been published?

Well, there’s the three brewing-related books, those are the only publications I’ve done. I wrote a couple of novels eons ago, but neither of those, or any of the other fiction I wrote, saw the light of day publication-wise. There’s the barleywine book, the starting-your-own-brewery book, and, any day now, the book I wrote on wood and beer with Peter Bouckaert will be out.

What were the novels about?

You can ask, but I’m not going to tell you. [laughs]

I’ve heard you’re a storyteller at heart. Looking back at the AB deal now, how do you tell that story?

Well, there’s so many angles to it. I spent a couple hours the other day talking about that, so I can go on and on. But the short version of the story is, I was initially approached by George Reisch, an AB brewmaster, at the World Beer Cup in 2014, and was kind of horrified. But I felt that I needed to take the conversation back to my partners—whom I considered my partners and whom I trusted at that point. And it turned out that my opinion on that deal, which was negative, really didn’t count for much. And they went ahead and got the backing of the rest of our board members and I was outvoted.

Do you think if you hadn’t taken the deal to them, it still would’ve happened?

Hmm. No, I think it’s unlikely. But I felt that if you have partners, you need to share everything with them that has come across your path, along those lines. Have I regretted that? Sure, I’ve regretted it. But I still think I did the right thing.

It was almost as if Elysian was losing its story. You were losing control over the story you were going to tell moving forward. Is that how you felt?

I think that’s putting it very well. That was one of the points I continually tried to make to them: we were losing a great deal of everything we had strived to create, and the story that we tried to tell over the many years we had been open—the different things we developed and the fun we had. And it turned out that didn’t really matter to them. But you’re right, I think it did sort of strip away a lot of the story of what the brewery was and who we were.

Even though it must’ve been heartbreaking, you got a really interesting story out of the whole thing. Now, you’re looked at as sort of a legend. How have people responded to you as you’ve traveled around the country?

I’ll back up just a little bit and say that I did get good support from people right off the bat. I think this kind of thing has come up before, and I think most people within the industry know there’s often a story behind the story that’s being told at the moment. Of course I had to sit still and bite my tongue for a little while. But it was very important to me for people to understand what my position had been, and to try to serve as an example for other people who maybe were being approached right then. And those who, maybe, into the future, would be approached. Not necessarily to absolutely convince them not to sell their breweries, but to recognize some of the things that were at stake. And to recognize the importance of having—of going into a business with—some core values to refer to with your partners.

That’s something we didn’t have. We were pretty bereft that way. Also, the wisdom of having some kind of exit strategy, if for no other reason than as a courtesy to your investors. But I think people have paid attention to my story, and I think it’s been gratifying to me to have people respond positively to that and seem to have respect for the choices I made. I hope it can serve as some kind of example to people that there are alternatives out there. There are more elegant solutions out there than selling to the most obvious, largest brewing entity in the world.

There are more elegant solutions out there than selling to the most obvious, largest brewing entity in the world.
— Dick Cantwell

Have you heard any stories that directly correlate to that? As far as people being approached by AB and turning it down or finding another solution?

I’ve heard some rumors, but I can’t really corroborate anything. One thing I did hear, and the end result is sort of a sad outcome, is that back when I announced my resignation from Elysian about a year ago, Devil’s Backbone had been in conversation with AB back then, and had backed out of talks in consideration and reaction to what I had done. I don’t want to lean too heavily on that because it makes me sound like I consider my own voice that important, and I don’t necessarily. But I did hear that story. And then, of course, if that was the case, they eventually changed their minds and went back to it.

So when the deal was made, did you know at that time that you’d leave? Or did you actually plan to give it a go?

No, I was going to leave. I was trying, behind the scenes, to convince my partners to not do what they were determined to do. So I hoped that it wouldn’t come to that. But they treated me with such disrespect about what it was going to mean, both to the legacy of Elysian, and also to my future possibilities in the industry, that I just couldn’t possibly work with them. There was such hatred and bad feelings surrounding the whole thing. And of course I wasn’t thrilled with the idea of having to work for AB.

When the whole negotiation was going on, they were saying they wanted us to stick around for two years and I said I would need the right to have some sort of assessment after a very short time, just to make sure it was mutually beneficial and reasonably felicitous. And Michael Taylor, the guy I was talking to, said, “Oh yeah, yeah, at any time.” And then I was very surprised when I got the first version of the contract they sent me, and it had a 30-day out. So as soon as I saw that, that was my plan.

At the time, you said, “Working with them into a future of any duration is an intolerable prospect for me.” Hearing you talk about it now, that seems to perfectly sum up the whole situation.

Yeah, it does. Naturally, in the course of the short time that I worked for AB, I met some terrific people within the company. They’ve got a lot of expertise and I got to meet all their brewmasters, and their raw materials people, and all that. And they were very talented and quality and friendly people. One side of me was sorry that was something that could never develop as part of my career, but given that it was within the AB framework, there was no way.

Have you followed what’s been happening with Elysian? Have you tried the beers lately? Seen any effects of the deal?

Oh, yeah. Since I’m not there day-to-day, I am in contact with a number of people who work there, I see the brewers socially, out and around in Seattle. We talk a little bit about what’s going on, but we don’t exclusively talk about that. In some cases we’re talking about the plans they have to leave and start their own places. [laughs] That’s happened in the case of Steve Luke at Cloudburst Brewing. But I’m not really privy in the way of strategy.

A friend of mine was at a spring training game in Arizona. He sent me a picture of an Elysian cup that was pouring at the ballpark he was at, and I was like, “Oh, I didn’t know Elysian was in Arizona.” But I suspect that similar things will be happening in the future. They do seem to have their regional strategy, and it remains to be seen how they’re going to sprinkle all those brands all over the place. It seems to make sense that they would keep them, more or less, within their region. Goose Island seems to be the anointed national brand, so I don’t expect that to change either. But the beers—I’ve tasted the beers. So far, there’s no beer that’s been produced in an AB brewery that’s been offered for sale. I understand that it’s being test-brewed, and that’s not surprising to me. At the time of the sale, I kind of said that I expected that to eventually happen. And I wasn’t dismissive of that. I think if they can figure out things like large-scale dry-hopping, there’s no reason they couldn’t make our beers, if they devote the resources to it they said they would, pretty much as well as we could.

That’s always been the argument from the breweries doing the acquisitions: they don’t plan to change anything, they plan to give the breweries they acquire more resources to work with. Was that the sense you got in your talks with AB?

Oh, yeah. Yeah. Just the idea that raw materials—crunches—would not be something that would affect us that much as we grew. Although, at Elysian, I worked very hard on all our hop contracts. I feel like we were in pretty good shape to grow into the next few years. It’s not like we would’ve run out of possibility there. But AB makes it a lot easier for you. You don’t have to spend the hours a day that I very often would, working on those contracts. They’ll do it for you.

I worked very hard on all our hop contracts… But AB makes it a lot easier for you. You don’t have to spend the hours a day that I very often would, working on those contracts. They’ll do it for you.
— Dick Cantwell

You touched on Devil’s Backbone. What are your thoughts on all the other acquisitions?

Well, there’s been an awful lot. One thing that I think is kind of interesting about the AB approach is that they’re picking up breweries that don’t really amount to much in terms of size, barrelage, or market effect. I think their thought is probably—and this is not anything I heard from them—the ability to clog up a full length of tap handles or shelf space with these other brands, so that it will look like there’s a big choice when, in fact, it’s all under one corporate umbrella. I think that has to be the way they’re looking it, because, as far as your size goes, it doesn’t really make sense. It doesn’t move the needle in terms of market share or anything like that.

I think something like the Heineken acquisition of a portion of Lagunitas—and, I mean, Ballast Point is a deal unto itself, that seems so stupid that I can’t imagine Constellation will ever make any money on that. But the Heineken deal, that made business sense. That was good business sense on the part of one of the world’s largest brewers to pick up one of the fastest-growing and ablest American craft brewers. That will move their needle. That will have a realistic effect on what their market share is. Especially in the U.S. craft market.

I don’t know, I think AB’s strategy is, as I said, to sort of take up space and to scare people. To have that way of limiting choice and forcing choice out of the market. I don’t think it makes a ton of sense in terms of numbers, but it makes sense in terms of other types of strategy.

I think that, while the sizes may be negligible now, they’ve been going pretty hard at various geographic regions. So instead of having one larger brand that can cover the entire country, they have lots of smaller brands in every pocket of the country. But at some point, wouldn’t you guess that there’d be plans to start scaling up?

Well, yeah. I don’t know how they’re going to decide how to do that. I guess they’ll just sort of see what has the legs. So far, it seems like the projects they’re most interested in are real novelty kinds of things. I think they’re really excited about some of the sour beer that 10 Barrel has made in the past—they want to scale those. They’ve done some of that stuff with Elysian as well. I think they would really like to capture that kind of a niche, because it fits with the way they’re already able to think. It’s a far cry from Strawberry Lime-A-Rita to Cucumber Crush, but I think they think of them in kind of the same way.

What sort of effects do you see all this consolidation having on the craft beer community?

One of the things that craft beer has had to fight for every step of the way is access to market. These acquisitions and the rumblings we hear about AB muscle being exerted on their distribution network to do an updated version of the 100% share of mind from the mid–‘90s, all of these things act to limit the access to market of craft brewers. I think that’s a really important thing.

I think AB is also trying to poke holes in the whole three-tier system through their acquisition of breweries that have pubs. People were sort of scratching their head about 10 Barrel and Elysian, but they’ve succeeded in changing the laws here and there, and we all do those things as best we can with our legislators. But I think they are going to try to take as much control of all three tiers as they can. So that’s going to effect, not just brewers, but distributors as well. And ultimately have a great deal to do with limited consumer choice.

What they’ve seen in this country kind of angers them, because I think they probably feel like if they’d really made a concerted effort, they could’ve put a stop to it early. But they let it go. So what they’d like to do is duplicate the market share numbers they’re seeing in some of their South American and African and Asian markets. They want everything. They want world domination. They’ve got 85–90% of the market share in some South American countries. That’s the kind of thing they want here. They really want to make sure that China doesn’t slip away from them. So they’re certainly thinking globally. We can think of it in terms of U.S., but they’ve got a bigger strategy than that.

I know the Elysian deal was really personal to you. You had your scruples and you chose to leave. But did your role and involvement in the Brewers Association, and your relationships there, play into your decision to walk away?

I wasn’t really sure how that would be affected, honestly. That was one of the things that I put into my list. Pretty early on in the discussion with AB, I went to one of our internal Elysian board meetings with a list of everything I felt making such a deal would mean to Elysian as a brand. In terms of its legacy. And what it would mean to me and my career. I’ve already touched on the fact that those weren’t really serious considerations for my former partners, but when I left, I really didn’t know.

I knew that I would no longer be able to be the one who announced the awards—or do the opening ceremonies at the Craft Brewers Conference—because I would be working for a large brewery that wasn’t a craft brewery. I was concerned that, depending on how people took it, I might not have the same sort of publication opportunities that I had before. I had been elected president of the Washington Brewers Guild prior to the deal, and sure enough, I was basically asked to step down from that role.

So there are all these things that I was suddenly not eligible to do and my role with the BA, as it developed later, was on the fly. That was conducted in good faith after the fact. I was given the assignment to write the wood book with Peter, fortunately. The opportunity to be the BA’s quality ambassador came along and I interviewed for that and was given that. But it was by no means a sure thing that I was going to be able to make the jump from working for Elysian to working for the BA.

What was it like working with Peter on the book?

Oh, it was great. We had a really good time. We had some terrific trips. We went to France. We went to barrel makers in the Chateau. We went to Kentucky and a bunch of bourbon distilleries and cooperages down there. We went all over the place. And it was really interesting—really fun—bouncing material back and forth between each other. He’s really the master of technique and has the scientific background on a lot the material we needed to cover.

He provided me with a whole lot of material that I would have to sit down with and systematically turn into reasonably coherent English prose. [laughs] It was a really gratifying process, and I hope he had as good a time with it as I did. I think he did. He’d go over my stuff and clear up anything I’d gotten wrong and he would just react. At one point, there was a chapter and he said, “Ah, I’m really not crazy about this.” So I redid that chapter three or four times and finally got it into the kind of shape he liked. And then there was one chapter that had the potential to be pretty dry, there was a lot of scientific stuff in it, and he wrote me later and said, “Wow, you turned a lot of boring information into pretty interesting material.” So it was really fun. It was really gratifying.

What exactly does being the BA’s quality ambassador entail?

About every six weeks or so, I go visit a different state’s brewers guild—or a state brewers guild’s gathering. It’s usually some sort of a mini-conference that’s been put together at the state level, and I talk on the importance of quality for beer, and protecting our collective brand as craft brewers, and also a few words with an eye toward maintaining the kind of camaraderie that we have that I think has been such an important part of our industry. That’s mostly it. It’s been great. I’ve really enjoyed being able to take that message around and see old friends and meet a whole bunch of new brewers. I mean, typically, in any given state, more than half of the breweries have been started since 2014. It’s a new wave of people, for sure.

As quality ambassador, what insights do you have on the 20% by 2020 goal, and where that stands with all the acquisitions recently?

I don’t know exactly how that has affected the numbers. I have to think that the effect hasn’t been that enormous, because they’re chipping away at our numbers at about a rate of 50,000 barrels each. Now, the Heineken-Lagunitas deal, that’s going to have more of an effect. I don’t know. I think we also have to recognize that it’s just a number. I think beer culture is leaping forward, and the quality of the beer that’s out there, I hope, is advancing. But I haven’t really heard a digest from the BA about how all that’s going to be affected.

Everyone is anxious to hear about what your next chapter is going to be. Can you say anything about what’s next?

Well… [pauses] My non-compete—in any state other than Washington, Oregon, and Idaho—[is about to expire]. So I’m thinking about a couple possibilities. I’m in San Francisco right now, and I was driving around town, looking at places. Trying to see how serious I feel like getting about some of these possibilities, recognizing the amount of work it would take to do something. But it would have to be something completely unique. I wouldn’t just say, “Okay, I’m going to open a brewpub of my own and I’m going to make a Pale Ale and a Porter and an IPA and a pumpkin beer and whatever else.” For me, that doesn’t hold enough excitement in itself. It would have to be something entirely new. I don’t want to get too specific yet, because I don’t want to jinx it, but I’ve had some really exciting talks with people and I have one idea in particular that I think would be really fun.

Critical Drinking™

Beer is so much more than what's in the bottle for the men and women who make it and sell it. There are real livelihoods at stake, and they spend an inordinate amount of time thinking about the industry they serve. These are their forward-looking thoughts, and their critical thinking on what's happening now.

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