Big beer is on a buying binge, and craft brewers are the targets. Hear what a few locals in the beer business think about this trend and what it means for small breweries.
The craft beer industry is never dull.
The recent purchase of North Carolina’s respected Wicked Weed Brewing by Anheuser-Busch InBev and (to a lesser degree) the acquisition of Lagunitas Brewing by Heineken caused quite a stir in the craft beer community. Brewers, bloggers, and beer drinkers with active social media profiles seemed to have more to say about the Wicked Weed purchase because it’s the latest in a string of craft brewery acquisitions by AB InBev that includes Seattle’s Elysian Brewing and Breckenridge Brewery in Colorado.
Craft beer fans take their brews seriously and there’s reason to pay attention when big breweries make moves. An excellent article by Chris Herron at Good Beer Hunting outlines that AB InBev isn’t just acquiring breweries to offer something better than Bud Light Lime-A-Rita to consumers. It’s much more complicated, and perhaps more nefarious. Herron mentions that other goals may include manipulating craft beer pricing and crowding local brewers out of valuable retail shelf space.
It’s essential to consider the small brewer in this complex equation. A big check can serve as a nice reward for a brewer who has put in years of hard work. Case in point, Ballast Point was purchased for a cool $1 billion (that’s billion, with a “b”) by Constellation Brands in late 2015—a jackpot that’s hard to turn down. And, “selling out” doesn’t have to mean that the brewer relinquishes total control.
It’s a tricky subject with plenty of ins, outs and what-have-yous. I spoke to a few local experts to get their take on a trend that isn’t going away.
Russ Klisch, President of Lakefront Brewery
“The big guys can try to take the price of craft beer down, which will affect the profitability of a lot of craft breweries and force them out of the market. The big guys control the sets in the large stores. They are able to get the brands they purchased on the shelf and leave less space for the small independent brewer. When I was in Los Angeles a few months back in a grocery store, over half of the craft beers on the shelf were brands the big guys have bought. To the average craft consumer that doesn’t have a score card, they will not know which ones are owned by the big guy and which brands are independent since they all look ‘crafty.’”
Kevin Wright, Brewmaster and Co-Founder of Third Space Brewing
“As long as the major brands keep losing market share, their parent companies will continue to look to purchase small growing brands. It is a natural part of the cycle caused by the disruption of small, local brands in the market.
I think the decision to sell is a difficult and very personal one. While there are some people entering the craft brewing market with the plan to sell out quick and make a bunch of money, most of us start doing this because it is something we are passionate about and a way for us to make our living doing something we love. The challenge comes when you grow at a rapid pace. Growth in this industry takes a lot of capital to sustain and, for better or for worse, some breweries have found that capital injection through selling to major brands.
We have no plans of selling Third Space. I have a three-year-old daughter and an eight-month-old son and I would love to see them brewing beer at Third Space one day.”
Andy Jones, Brewmaster and Co-Founder of Good City Brewing
“It’s pretty tough to say much on the topic without offending somebody. I do feel comfortable saying that working in and owning a brewery is extremely hard work. It takes a lot of capital, often a lot of debt, and a lot of long days and giving up evenings and weekends to start and grow a brewery. The situation is probably different for every brewery, but with the question of whether to sell, everyone has to make their own business decisions and figure out what’s right for them.
That said, we did not start Good City with any intention to sell it. We love the city of Milwaukee and we are committed to bringing great beer and food and a great taproom experience to the city.”
Erin Anderson, Founder of the Milwaukee Chapter of Barley’s Angels
“I think it’s hard to lump these acquisitions together. It seems to me that AB is actively trying to squelch craft beer, while other companies like Heineken and Constellation are infusing Lagunitas and Ballast Point with the capital they need to continue to grow. The parent companies seem to be pretty hands off. Lagunitas is still Lagunitas, and I still drink their beer.
The thing most people forget is that these are businesses—capital intensive businesses—that require money coming in to keep the doors open and the beer flowing. It’s easy for us to romanticize the beer business, but that’s what it is—a business.”