Who’s Really Brewing The Beer?

This is the first of a two-part post. Part 2 will be out next Tuesday.

engagement ringWho owns whom in the beer universe is just about to get a lot more complicated with this morning’s announcement that SABMiller has agreed to AB InBev’s buy-out offer of $104 billion. Yes, that’s 104,000,000,000 dollars.

There’s still plenty to work out, plus the necessary kisses of approval from major investors, but that’s all peanuts compared to the intense courtship that had resulted in SABMiller turning down AB InBev four times in recent weeks. What will be more interesting is how the world’s two largest brewers make their marriage legal in all the countries where they operate. My guess is that the new behemoth brewing conglomerate will have to sell off MillerCoors to avoid U.S. anti-trust issues.

It’s not business as usual in craft beer, either. Let’s review some recent craft beer acquisitions, mergers and deals.

  • Last Friday, October 10, Labatt, a subsidiary or AB InBev, announced it had just purchased Mill Street Brewery in Toronto, one of Canada’s most successful craft brewers and Labatt’s sixth acquisition since 2011.
  • In September Coors acquired St. Archer in San Diego.
  • In January, AB InBev purchased Elysian in Seattle.

And the trend is quickly getting more complex:

  • In July, Firestone-Walker and Duvel Moortgat “combined their U.S. operations.” No merger or acquisition, which left a lot of people scratching their heads over exactly what it will mean.
  • September 8, Heineken announced it had purchased a 50% stake in Lagunitas.
  • September 29, Dogfish Head announced that the company had sold a 15% stake to private equity firm LNK Partners. Owner Sam Calagione said, “They (LNK Partners) understand the primary goal is that the family buys them out at the end of their investment.”

Let’s face it, the whole small craft brewery idea hasn’t been simple for a long time. Anheuser-Busch first brewed the “craft” beer Shock Top in 2006. Blue Moon, which brews at Coors Field for a reason, is celebrating its 20th anniversary. Boston Beer, founded in 1984, has contract brewed Sam Adams for years.

The difference now is that changes in the industry appear to be accelerating at all levels. Meanwhile, the largest craft players in the West are on a tear to build second breweries in the East, which saves them bundles on transportation costs as they expand distribution.

  • In 2016, Colorado-based New Belgium will open a brewery near Asheville, N.C. where Sierra Nevada (California) and Oskar Blues (Colorado) have recently built breweries.
  • September 24, Oskar Blues announced it will open a third brewery and taproom in Austin, Texas in April, 2016.
  • October 5, The Roanoke (Virginia) Times published a fawning 1000-word love letter to Deschutes (Oregon) about why they should pick Roanoke for their new East Coast brewery.
  • October 9, Stone Brewing (California) announced it will built a brewery in Richmond, Virginia.

But how much do all these changes really matter to average craft beer consumers? Do most of them care as much as my friend Rich about who’s really brewing the beer in their hands if it tastes good? Will thousands of them start boycotting their local brewery if it sells out to Big Beer? What do you think?

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