Beer and Pavement

On Business

Posted in Beer, Intersections, Manifesto by SM on October 12, 2011

I know little if nothing about business or economics, at least not formally. That said, the following conversation happened on Twitter yesterday.

(Be sure to follow Kristen on Twitter if you’re into that sort of thing.)

There were some Tweets in between these, but you get the point. The general idea is that the media is missing the point when reporting on the failings of various industries, especially the two I obsess over. There are clear distinctions between smaller businesses who use innovation to sell traditional products and larger corporations that employ traditional methods to sell new products. Growth and sustainability happen in these smaller ventures. They sell quality over hype, depending on word-of-mouth (via social networking) and they do it in a way that’s easy to maintain.

Indie labels and craft breweries are equivalents in their respective industries. They both depend on the quality of their craft to bring them financial success. They both have large corporate entities to contend with as said corporate devils continue an incestuous practice of mergers and buy-outs. They both prefer innovation in business practices and marketing to sell quality craftsmanship. There’s a focus by both to engage intellect of the consumer by staying above the fray, never appealing to the lowest common denominator. When it comes to steady growth and sustainability, these sub-industries have the answers corporations can’t see through their greedy lens.

Take an indie like Merge. From pretty humble beginnings, this tiny label has built one of the most impressive lineups in the industry, among indies and majors. Yet, they did this while giving their artists a generous share of their album sales and limiting the growth of their label. Artists were allowed freedoms in recording and artwork as long as the tiny label could afford it. For years, they struggled out of a small office in Chapel Hill, NC. Eventually, their model which valued their relationships with artists over profits has led to a record label that actually makes a decent profit, even as the record/music industry dies a slow, painful death.

Some indies try the growth-at-all-costs model their corporate overlords use. Sub Pop – on more than one occasion – has flirted with disaster via major label marketing practices. (Interestingly, Nirvana’s major label breakthrough and a distribution deal with a major label actually saved Sub Pop from bankruptcy on separate occasions.) Sub Pop grew too big at a couple of points in the nineties, signing every band in sight. However, they stretched themselves too thin, featuring a lineup of quantity over quality. They learned their lessons, made some savvy business deals and have found a way to survive as an indie, maybe the most beloved of the sellouts.

Craft breweries have followed a similar track as indie labels. Dogfish Head is a brewery that has placed ideals over profits. They, like other breweries, have cut back on distribution while they slow growth in an attempt to maintain the quality that put Dogfish Head on the map in the first place. As far as marketing, DfH has opted to appeal to the senses as opposed to sexists. A DfH brew belongs at the table with a gourmet meal and that’s what sells. They don’t rely on ads the way Budweiser does. No. DfH’s marketing plan is to brew tasty beers. Too bad Budweiser hasn’t tried that one.

Of course, there’s been some buzz in the beer industry as A-B-InBev purchased craft beer stalwart Goose Island. While there are signs that ABI will stay out of Goose Island’s product, there are already signs that even GI will just become another marketing machine, void of substance that towers over hype. ABI purchased the rights to area codes all over. The plan is to release area code-specific versions of GI’s very popular 312 Urban Wheat Ale. This does not bode well for GI’s future as a pseudo-craft brewery enveloped in a corporate culture.

As corporations continue to push for world denomination through obscene expansion and hostile takeovers, small craft industries are thriving during tough economic times. Consumers know value and will spend their money on it when their cash flow is low. Plus, profits go much further when a company puts said profits toward employee pay and benefits, monitors slow-but-steady growth, and allows the quality of their product speak for itself.

It seems the business models of craft breweries and indie labels should be the models for all business. Not only are they successful – even with an increasing number of competitors, but they have created situations that are sustainable, benefiting everyone in their company. Will there ever be an indie or craft brewery earning as much income as their larger, corporate foes? Doubtful, but maybe that’s the point.

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