Walmart’s Ripoff Beers Are a Recession Indicator. Brewers Must Answer Anyway.

The general thesis of the craft-brewing “movement” — such as it was/is — at its founding midway through last century was that beer wasn’t a commodity until macrobrewers made it into one. This was a compelling thesis, and I think it’s borne out by the facts. But craft brewing is just one small segment of the overall beer industry, which is governed by theses of its own, such as the importance of market access, the superiority of scale, and the basic reality that if you can’t beat ‘em, you can usually buy ‘em. Last decade, Big Beer commodified craft beer, muddying the wort to the point that the American drinking public lost whatever interest they had in the ownership structure of their favorite breweries and started buying hard seltzer. Or whatever.

You’ve probably read that story before. I’ve certainly written it. But a decade later, the landscape has changed. Craft brewers are certainly struggling, but so are its foes. With beer sales down, brewing capacity available, and the balance of power in the three-tier system shifting away from suppliers, the commodifiers are ripe for getting commodified themselves. What corporate colossus could possibly cadge value off the biggest beer brands in the country? By the looks of things, Walmart is going to flex its muscles and give it the ol’ private-label try.

Earlier this month, Beer Business Daily published a report noting that the country’s leading retailer — and grocer, and private employer — is prepping a line of in-house beers. If the labels recently posted to Reddit are any indication, the forthcoming “Brewmasters Selections” portfolio will include at least three beers, all brewed in Irwindale, Calif., by the solvency-squeezed contractor City Brewing. The designs are unmistakable knockoffs of Modelo Especial (“Brewmasters Golden Cerveza”), Miller Lite (“Brewmasters Lite”), and Michelob Ultra (“Brewmasters Premier.”)

Neither Walmart nor City Brewing responded to a request for comment, and I should note here that I was only able to locate two of the three leaked labels in the Alcohol and Tobacco Tax and Trade Bureau’s (TTB) occasionally finicky database. Not every label that gets submitted winds up as a production beer, mind you; most approvals don’t expire, so companies will sometimes submit for them preemptively, then abandon course for whatever reason down the road. So we don’t know for sure that Brewmasters Selection is coming to a Wally-World near you soon, or ever.

But it would make a good deal of sense if it was, because Walmart is fairly late to the private-label beer game, and the players on the field have been racking up the points. Everybody knows about Trader Joe’s long-running success with house brands, and its beers — attributed to the virtual Josephsbrau Brewing Co. and contract-brewed by Gordon Biersch, Rhinelander, and a handful of other firms around the country — have been shopping-cart staples for many a young sh*thead over the years (including this one). But the beloved specialty grocer is hardly the only chain private-labeling its pilsners these days. “We are crushing it in beer right now,” Aldi’s director of buying for adult beverages told Brewbound in November 2024. Beer sales, he added, “have been growing over 100% almost across the board.” That same month, the country’s most popular buyers club/elder millennial personality, Costco, launched a private-ish label with Oregon’s venerable first-wave craft pioneer, Deschutes Brewery.

“We wanted to show everybody that Kirkland can do beer just as well as wine and spirits,” Costco’s corporate beverage-alcohol buyer told The Wall Street Journal recently. Despite its success in those latter two categories, the firm’s previous private-label forays into the beer aisle under its zeitgeist-y store brand have been middling to flat-out bad. (Kirkland Signature Light, which was brewed by Regal Brau Brewing and sold for something like $22 per 48-pack before it was discontinued in 2018, came in for mostly brutal reviews, such as “smells like a urine soaked diaper sitting on a piping-hot radiator.”) But the Deschutes-brewed Helles lager is genuinely good craft liquid at commodity prices: a 12-pack ran me $14 here in central Virginia.

Competitive pricing is an enduring thesis that’s animated store brands for decades. With considerable economies of scale, no marketing spend, and an intimate relationship with the end user — that’s you, drinker — supermarkets have long been in position to siphon sales off the bottom of a given category with cheap lookalikes of the name brands they sell. Certainly, given Trump’s corrupt, deeply destructive trade war, shoppers are looking to stretch their dollars further throughout the store; the beer cooler is not exempt. But an underdiscussed aspect of private-labeling is how it shapes the power dynamic between retailers and producers in the former’s favor.

“If you look back in time, big manufacturers were the gods, they were the guys who were running the show,” says Benjamin Lorr, the author of the excellent 2021 book “The Secret Life of Groceries.” “They’re spending all this money both developing products and then also marketing the hell out of them, and when it came to negotiating, supermarkets were really price takers. They felt like they were beholden to these brands.” But that was almost a century ago. In the intervening time, once-vertically integrated consumer packaged goods firms began to outsource their production to copackers and contractors to reach new markets and reduce their own costs. Expertise and equipment that was once specialized became commonplace. Ingredients that used to be carefully selected from closely guarded vendors became standardized inputs — commodities — that any firm could reliably buy on open markets. Opportunities for ripping off proprietary goods were rife.

“All the [non-disclosure agreements] and ethical assurances kind of fail when you’re using the same industrial chef on the same line to make the same product,” says Lorr, describing the shift as a “Pandora’s box” being opened. “It has really changed the landscape. These big national brands are no longer the kingmakers, and you have a big rise of power for the big retailers.” This private-label paradigm shift, coupled with the consolidation of the grocery sector and the emergence of supermarkets as “brands” in their own right, had tilted the balance their way.

Walmart has played this game for a long time, in many categories. The fact that it has designs on the beer aisle, though, should sound klaxons in the halls of power of the American brewing industry, and especially in the firms the mega-retailer appears poised to rip off with Brewmasters Selection. After all, Walmart is not Aldi or Trader Joe’s: It controls over 20 percent of the country’s grocery business, compared to the latters’ low-single-digit market shares. Even if City Brewery winds up in the chaos of a long-rumored bankruptcy, it shouldn’t have too much trouble finding cheap production partners for Brewmasters Selections, given the Brewers Association estimates that around half the country’s aggregate brewing capacity is unutilized. The beer category is showing short-term and structural weaknesses as it grapples with expensive mistakes, changing tastes, and more competition. With consumer sentiment in the gutter, shoppers are apt to be looking for trade-downs on nonessential goods. Walmart’s timing is good.

It’s true that the vagaries of the beer business have bamboozled many interlopers, from Costco (Kirkland Signature Light), to Pepsi (Blue Cloud Distributing), to Tilray and Monster (you know the deal). But brewers shouldn’t count on the category’s logistical moats to protect their brands. This is a shot across the bow from a powerful frenemy in a battle for the most valuable intellectual property in the brewing industry, and some of the highest-volume retail space in the country. If Walmart succeeds in taking share from, say, Michelob Ultra with a goofy “Premier” dupe, it can do likewise from all the major commodity brands. Brewers can defend such a retail raid by doubling down on what they’ve traditionally done best: marketing the shit out of their beers. “It’s all going to happen at the level of marketing,” says Lorr, regarding how companies protect themselves from private-label usurpation.

Brewers can’t restigmatize store brands writ large; that ship has probably sailed. But they can flog their pedigree, quality, and cachet to convince shoppers to aspire to drink the genuine article. They can refocus on revitalizing beer’s flagging presence in the on-premise, where Walmart’s entré is nil and brands like Guinness have succeeded in building revenue-generating buzz that boosts off-premise volume. Hell, they could even take a page out of the 20th-century playbook and start shopping oppo research to media outlets about the murky provenance of this odd new brand. All right, knowing Big Beer’s contemporary C-suite, that last one would probably backfire. But there are plenty of ways they can make Brewmasters Selection a tougher swig for shoppers to swallow. Start scheming now.

Of course, there’s always the question of will. Are the United States’ biggest brewers for such a fight against such foe? A new Light Beer Wars of sorts? If Brewmasters Selection ever sees the light of day, I guess we’ll find out. But if they don’t, they’re sending a message to retailers, distributors, and customers alike that their beers are just another commodity. Which complicates the thesis that they’re worth the premium.

🤯 Hop-ocalypse Now

Things are of course not going well for the American beer industry, and levity is in high demand. So the fact that National Beer Wholesalers Association chief economist Lester Jones kicked off its quarterly data dive with a slide showing Austin Powers as the embodiment of the trade lamenting he’d “lost his mojo” was good sport, if a bit on the nose. After all, the final film in that series, “Goldmember,” hit theaters in 2002, at which point traditional beer still had its mojo. If only Dr. Evil’s time machine actually existed.

📈 Ups…

Hog Island Beer Co. announced plans to acquire fellow Cape Cod outfit Mayflower Brewing… Urban South Brewing reached an offer-in-compromise with the Internal Revenue Service, which still exists (for now)… Apparently there’s still some appetite for food/drink mergers and acquisitions among financiers, per BMO Capital’s chief exec…

📉 …and downs

Wholesaler consolidation continues apace, with KEG 1 buying Iowa Beverage and its 6.6-million cases in Des Moines… RFK Jr. announced a new directive telling manufacturers to phase out food dyes…

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