Heather McClung, second from left, gives a tour of Schooner Exact brewery in Seattle, Washington. Lindsay Brooke Webster

BRONX, New York — Three years ago, Damian Brown and Chris Gallant were brewing tiny batches of beer out of rented space at another brewery in Connecticut, transporting kegs into New York City with a used Red Bull truck. Demand for their signature pale ale quickly blossomed, and in September, the pair was able to relocate Bronx Brewery to a former lace factory in the South Bronx, where they’ve set their sights on a 50 percent production bump in 2015 and the goal of being “New York’s best pale ale.” But Brown and Gallant recognize they’re not Sam Adams or Sierra Nevada — pioneering microbreweries of the early 1980s. With America’s craft beer revolution in full throttle, small-batch brewers like them are wading into a flooded and increasingly stratified market — one where the major beer conglomerates have begun to snap up craft breweries as they consolidate control over 80 percent of the beer market. Meanwhile, the early craft pioneers are opening up second, even third locations, many welcoming outside investment that once would have seemed antithetical to the craft movement. “It’s not just a matter of craft brewers banding together with our fists in the air against Big Beer anymore,” said Gallant, Bronx Brewery’s general manager. “The biggest challenge is that there are just so many of us.” It’s precisely this explosive growth that has led many to question whether craft beer's bubble is about to burst. Over the past decade, craft breweries have more than tripled their market share, from 2.5 percent by volume in 2003 to 7.8 percent in 2013, the most recent year for which data is available. The boom has drawn a swell of new competitors, with the number of independent breweries doubling since 2008 to more than 3,200. The “Big Two” conglomerates — Anheuser-Busch Inbev and SABMiller — recognize the small beer movement is growing into a legitimate threat. Their anxiety was brought to the fore in February, when Anheuser-Busch went on the offensive against craft beer with a Super Bowl ad that juxtaposed “Pumpkin Peach Ale” — characterized as effete and esoteric — alongside their red-blooded American lager, Budweiser.

Meanwhile, across the country, pitched battles are brewing between Big Beer and small beer lobbies over distribution and franchising laws that determine access to markets. In Congress, dueling bills have been proposed to reduce the steep excise tax on beer in the United States, one of which offers a graduated tax schedule that would benefit small breweries. With their deep pockets and army of lobbying firms, Big Beer might just have its way. But experts say no amount of marketing can change the fact that traditional low-cost American beers like Budweiser, Coors and Miller are simply going out of style. Studies indicate that younger drinkers are consuming less beer by volume (and more wine and spirits), but that when they do drink beer, they gravitate towards craft. Meanwhile, according to Anheuser-Busch’s own data, 44 percent of people between the ages of 21 and 27 have never even tried Budweiser. A troubling milestone for Big Beer came in 2013, when craft brew snuck past Budweiser — the once-dominant “King of Beers” — in number of barrels shipped, by 16.1 to 16 million. Compare that to 2003, when Budweiser shipped almost 30 million barrels to craft’s 5 million, and the trajectory is clear. “At Anheuser-Busch, you see a future where if you don’t act now to restructure the marketplace, your present product selection is going to confine you to a much smaller business down the road,” said Barry Lynn, a senior fellow at the New America Foundation who has done extensive research on the beer market. So restructuring the marketplace is what Big Beer has begun to do, experts say. Contrary to its recent anti-craft messaging, Anheuser-Busch has actually begun to buy out independent breweries, starting with the 2011 purchase of Goose Island in Chicago. It has since bought out Blue Point, 10 Barrel, and, last year, Elysian in Washington (which, ironically, produces the Pumpkin Peach Ale that Budweiser mocked in its Super Bowl ad). The company has not commented whether the buying spree will continue, including in an email to Al Jazeera, but its strategy so far seems to involve subsidizing and selling its craft offerings cheaper than its competitors, proliferating them across its massive, coordinated distribution networks. Lynn said he didn't think the plan was to profit off these beers directly. “What they want to be able to do is offer wholesalers or retailers a full array of products, to say ‘you don’t need to go anywhere else, we’ve got your craft covered.’”

The other revolution

Thanks to an unprecedented spate of mergers and acquisitions that have gone mostly unfettered by anti-trust regulators, the Big Two now encompass all of the top five name-brand domestic beers: Bud Light, Coors Light, Budweiser, Miller Light and Natural Light. The result of this "other revolution in beer," as Lynn termed it, is that Big Beer has even greater leverage to pressure the distributors, who move beer from brewer to retailer, because they simply can't afford to lose out on the bulk of their sales — even if consumers are increasingly demanding the more interesting, complex flavors of craft. Paul Gatza, director of the Brewers Association, which represents the craft beer industry, said the Big Two can, by way of co-opted distributors, offer preferential treatment — prices and promotional displays, for example — to bars and stores who choose not to carry independent brews. Now that craft is in their repertoire, Gatza said, “you’ll see it more and more at bars, where Anheuser-Busch is dominating the facility and all the beers on tap are produced or owned by them." In some states, Big Beer has taken the even more aggressive strategy of buying out wholesale distributors. In doing so, Big Beer is challenging the formalized 3-tier system that has regulated the alcohol market in the U.S since the 1930s — whereby the brewer or distiller, wholesale distributor and retailer are all supposed to be separate entities, or tiers. Established in the aftermath of prohibition, the idea was that an intentionally inefficient system would keep the alcohol industry’s once-formidable political power in check. Decades later, those safeguards against vertical integration helped catalyze the craft revolution. Small brewers argue that the acquisitions should be illegal nationally (in most states, it already is), pointing out there is no incentive for a distributor owned by Anheuser-Busch to carry anyone else’s brew. The controversy has come to a head most recently in Kentucky, where earlier this month the House approved a bill backed by independent brewers that could require Anheuser-Busch to sell its distributors in the state. Damon Williams, director of sales and marketing for Anheuser-Busch in Louisville, Kentucky, told Al Jazeera in an email that the bill "has nothing to do with craft beers and everything to do with greedy special interests." But craft brewers elsewhere say the threat of consolidation is real, and that getting their beers onto liquor store shelves, or on tap at stadiums and bars, is increasingly difficult. In Washington state, a craft mecca where the Big Two once had among the lowest market shares in the country, small brewers like Heather McClung say their options have begun to dwindle since Anheuser-Busch swooped in to buy out distributors. “At some point there won’t really be any choice left,” said McClung, the co-founder and owner of Schooner Exact in Seattle, and president of the Washington Brewers' Guild. “And then you become lost in someone’s distributor books, because all these little brands will have to go somewhere.”

Bursting the bubble