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Craft brewer sells out to InBev

RyderRyder Kalamazoo, Mi Icrontian
edited 3 May in The Pub

http://www.charlotteobserver.com/living/food-drink/article148413509.html

@RyanMM @UPSLynx @MAGIC @mertesn and all the other Icrontians who enjoy craft beer, check this out.

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Comments

  • NiGHTSNiGHTS San Diego Icrontian

    Nice, good for them - will be interesting if they manage to make lambics more mainstream. I can't stand it, but always good to increase exposure.

  • BlueTattooBlueTattoo Gentleman Farmer Houston, TX Icrontian

    Karbach Brewing Company in Houston sold out a few months ago. I didn’t drink their beer much, but I hated to see it happen. I mostly drink local beer (maybe 70/30) and like to see the little companies make it. To me, that doesn’t mean getting big enough to sell out to a mega corp. My local beer is Saint Arnold. I had several tonight.

  • Cliff_ForsterCliff_Forster Baltimore, MD Icrontian

    I will never forgive InBev/AB for destroying Rolling Rock. That was my cheap lawn mowing beer and they ruined it. When you move production, even the water source can be enough to ruin the taste of a brew. In some cases the tanks, or the storage facility for the ingredients, they all seem like little things but they give a brew their character. Nothing good comes out of their Texas or St. Louis facility.

    UPSLynx
  • GargoyleGargoyle Purveyor of Lincoln Nightmares Illinois Icrontian

    The way they keep saying "partnership" instead of sale makes me think AB InBev's PR team is already in charge. To me, the communication difference between craft and macro beer companies is one of the key differences. Companies aligned with craft are less likely to blow smoke up your ass.

    BuddyJUPSLynxWagsFTW
  • UPSLynxUPSLynx Top EA shill, The Dean of Computer Graphics Redwood City, CA Icrontian

    And 24 hours later, Lagunitas is now fully owned by Heineken.

    http://www.chicagotribune.com/dining/drink/beer/ct-lagunitas-sale-tony-magee-heineken-20170504-story.html

    I gave up on Lagunitas when they sold 50% of their business to Heineken back in 2015, after owner Tony Magee spent years lambasting breweries like Sam Adams, Boulevard, and Firestone Walker for "Selling out" or not being true to their craft and their beliefs. I guess money talks. I haven't bought a sixer of Lagunitas since.

    I follow the business of beer very closely because I find it incredibly interesting. We're living in a super rare period of time for the industry, living in an era to see the rise and incredible growth of craft beer, taking on the century old behemoths like Anheuser Busch and Miller-Coors. We've seen the number of breweries grow from less than 100 in the US in the early 80's, to today where there are over 5,000, the most this country has ever enjoyed. Things in the business end of beer have gotten fascinating during all of this.

    With that massive amount of growth and change in national beer culture, something was bound to break. We love independent beer culture, and the stories that inspired the breweries in our back yard. But that kind of vibe only goes so far, and at the end of the day, beer is still a business. I don't think anyone would have EVER expected to see breweries like Lagunitas, Cigar City, Boulevard, Firestone Walker, Founders, Elysian, and others "sell out" their breweries to macro, especially the rise of AB-InBev and Miller-Coors gobbling up these previously beloved craft jewels. The party is just getting started - the new 2-3 years will show tons more of massive sales and mergers like this in beer, and I'm betting some of the ones that go the route will shock us.

    AB-InBev in particular has gotten aggressive about their acquisition strategy, and they've gotten VERY good at it. Their "The High End" arm of the business is directly focused at acquiring breweries that are gems in the eyes of craft beer fans, and that have a very strong grip on their local markets (making a place like Wicked Weed the perfect target for such a thing).

    They're buying up brands and covering up their tracks. Look at 10 Barrel Brewing. Fully owned by AB-InBev, yet you'd never see the two names on the same package. 10 Barrel is pitched as the hometown hero of Oregon, crafting microbrew by hand. Yet you'll find it all across the nation, alongside beers like Space Dust from Elysian (AB owned), Breckenridge Vanilla Porter (AB owned), Goose Island Bourbon County Stout (AB owned), and Golden Road Wolf Among Weeds IPA (AB owned). The point is, these beer brands take up the majority of shelf space at major retailers and stores because AB-InBev has a huge influence on national distribution, yet most consumers never know that their money, rather than going to the little guy making hand-made beer for their hometown, is actually going to the 15 billion dollar giant that makes Bud Light.

    It sucks a lot to see this happening, but you gotta applaud companies like Anheuser Busch for seeing the tide shift and changing with the times. It's a smart business move, but ultimately hurts the choice of the consumer.

    RyanMMGargoyle
  • UPSLynxUPSLynx Top EA shill, The Dean of Computer Graphics Redwood City, CA Icrontian

    @Cliff_Forster said:
    I will never forgive InBev/AB for destroying Rolling Rock. That was my cheap lawn mowing beer and they ruined it. When you move production, even the water source can be enough to ruin the taste of a brew. In some cases the tanks, or the storage facility for the ingredients, they all seem like little things but they give a brew their character. Nothing good comes out of their Texas or St. Louis facility.

    This is exactly it. A lot of people try to defend the breweries after selling out, claiming that they taste the same and the corporate overlords are allowing the recipes to stay the same.

    Except they usually don't. Like you said, water source is a KEY part of the taste, and often with these acquisitions, the production is moved over to a mega facility usually far away from the original brewery. Just look at all of Goose Island's "normal" beers. 312, honkers, IPA, they've all lost quality after being moved to a larger production facility.

    RyanMM
  • RyanMMRyanMM Ferndale, MI Icrontian

    I can't reduce my footprint of macro-owned beer to zero, but I do try and avoid it when possible.

    Goose Island gets bought out by Ab-Inbev in 2011 - I didn't buy any less Bourbon County, at least while the quality was good. 2015's debacle though led me to pass hard and in 2016 I didn't chase the trucks and bought maybe 3 bottles total. I may trade for some more, I may not. But I certainly am not lining up to spend money on their year-round offerings.

    Likewise with Lagunitas. I've never been a fan of a lot of their yearly offerings, but I was a big fan of Hop Stoopid. I think I'll pass on buying any more of that. Will I buy their limited releases? Maybe.

    But my spending will always shift to companies who aren't owned by global hegemonies that seek to use their size to crowd out their competitors via anti-competitive practices.

    Don't be fooled - Ab-Inbev, Heineken, et al are buying these craft brewers to use as a tool to bludgeon their competition out of the market rather than innovating themselves. They'll use their distribution power to flood the market with cheap, loss-leading offerings using these brands, and in doing so try and bleed off margin from the craft brewers.

    The best thing you can do as a beer drinker in America today is minimize the amount of beer you buy from companies which are distributed by and majority owned by the megacorps.

    UPSLynxGargoyle
  • LincLinc Bard Detroit, MI Icrontian

    What sucks is that I don't know of any non-conglomerate that a craft brewer can sell to. What if someone builds a great business for 20 years and they're just over it and wanna cash in their poker chips? There aren't really medium-size buyers in this market that I'm aware of. Either you try for a 1:1 sale for someone to carry on independently at lower margins, or you talk to a megacorp.

    ThraxWagsFTWpigflipper
  • WagsFTWWagsFTW Grand Rapids, MI Icrontian

    Honestly, it's too much work to follow a lot of this when shopping for beer. I love beer. I love good beer. I don't blame a small microbrewery for wanting to grow and expand, or like @Linc said, just cash out. Sorry some of your favorite beers aren't brewed the same way once a large company buys them. But then find a different one you like. Luckily, there's a lot to choose from. There's cheap shitty beer, and there's good beer. Drink what you like, spend what you want. ;)

    Joe has worn off on me, and I'm not as much of a beer snob as I used to be, but we still like to support our local breweries, and buy microbrews, brew our own, etc. But we also will buy a case of cheap beer for home reno projects and for something refreshing. Not a big deal to me anymore what they do with their beer business, as long as the beer is delicious and we can afford it.

    Cheers :cheers:

    Ryder
  • LincLinc Bard Detroit, MI Icrontian
    edited 5 May

    I have absolutely no problem with folks keeping a blacklist of AB InBev- or Heineken-owned beers. I do find the shade thrown at the sellers a bit off-putting tho. Buying someone's beer doesn't give you a vote in their future business choices. Once you're on the other side of that expectation you figure out real quick how absurd and insulting it is.

    That said, it's no accident my lawnmower beer is Yuengling (America's oldest and largest brewery) and my go-to is Sam Adams anything (America's #2 largest brewery). Yuengling has already survived owner turnover and I surely hope Jim Koch has a succession plan. Pretty sure it doesn't involve InBev, lol.

    Ryderdrasnor
  • NiGHTSNiGHTS San Diego Icrontian
    edited 5 May

    I'll believe they sell "loss leaders" when I see it. Still can't get a 6pack of Ballast Point for <$12 in San Diego, even.

    Happy when microbrews hit it big and I think it's silly that people get upset when they do. You'd sell out too if someone waved a $1B check in your face. Agreed with @Linc - you can keep your blacklist but I don't think it's worth getting bent out of shape over.

  • LincLinc Bard Detroit, MI Icrontian
    edited 5 May

    Actually looking into this more:

    • Boulevard is owned (as of 2014) by Duvel Moortgat, a Finnish family-owned company.
    • Founders is 30% owned by Mahou-San Miguel, the largest Spanish brewing company.

    Are those companies big enough that we hate them? Or is it just the 2-3 giants? Not being facetious, I've never heard of either of them before (aside from knowing "Duvel" was a beer, obviously).

    Personally it seems insane to me that a brewing giant would use a small-batch beer as a loss-leader when they already must be bigger costs. It's not like you can own the small batch market - there's always gonna be a new nano brewery that gets folks in the door and then starts bottling. It's an untenable game to lock up the entire market.

    If the market is already expanding the fastest it ever has, we're well into the black on new independent breweries annually no matter how many they pick off to put in some "High End" group, and beer stores know better than to devote all their space to conglomerates. Maybe they own the Meijer beer section, but I kinda doubt Meijer is why the industry is booming, right?

  • LincLinc Bard Detroit, MI Icrontian
    edited 5 May

    This also seems a pertinent time to mention: Stroh's is gone (as a brewery/entity) because it tried to expand nationally on its own. It's super risky and difficult. Yuengling, the largest US brewery, isn't even national.

  • UPSLynxUPSLynx Top EA shill, The Dean of Computer Graphics Redwood City, CA Icrontian

    I was actually going to mention both Duvel and Mahou-San Miguel as perfect examples of what you meant by "medium size" buyers. Duvel owns Boulevard and Firestone Walker (two of my absolute favorite breweries). I was concerned with both acquisitions, but Duvel has shown us that they respect those businesses and their craft, and they've allowed them to prosper in a way that hasn't been deceptive or anti-competitive. It helps that Duvel itself is family owned and operated, and they don't brew trash beer with rice adjuncts. They know good beer.

    To me, that's the real difference - the business practices. I blacklist any brewery that sells out to the macro breweries like AB or Miller because those are the exact companies that destroyed beer in America prior to the 80's, and are working really hard to control the market in a pseudo-monopoly. In fact, AB-InBev has faced numerous anti-trust suits for moves they've made in the industry. When it comes to disgusting megacorps, they're the cream of the crop.

    The end game isn't to own the small batch market - it's to deceive consumers and control distribution. Beer distribution of beer is key, here. And companies like AB-InBev and Miller literally control the market, and can use those distribution channels to bully shelf space and tap handles away from real craft brands and smaller brewers. The Motley Fool has an excellent writeup on exactly why this distribution problem is a dilemma for beer drinkers.

    Brewers who have built an amazing brewery and brand deserve to have a long life, retire, and make real money. I don't blame anyone for doing that. I only have a problem with it when they choose AB/Miller/Molson to do that, which is directly counter to what began this beer revolution in the first place. In addition, there are other reasonable choices than the big Macros such as Craft Brew Alliance and True Craft.

    To be clear here - keeping an AB-InBev blacklist is not some sort of hipster thing where I believe I'm going to put them out of business by not buying. It's simply a choice I've made as a beer consumer to ensure my money goes to small business and supports the local craft. It's easy to give up Lagunitas when I can walk 30 minutes to a small place that brews even better beer.

    GargoyleLincMiracleManSRyanMM
  • UPSLynxUPSLynx Top EA shill, The Dean of Computer Graphics Redwood City, CA Icrontian

    @Linc said:
    This also seems a pertinent time to mention: Stroh's is gone (as a brewery/entity) because it tried to expand nationally on its own. It's super risky and difficult. Yuengling, the largest US brewery, isn't even national.

    This is why the trend we've began seeing over the last 5 years is breweries focusing on their local crowds. Many awesome new breweries flat out refuse to expand out beyond a couple of states because there's more money independently distributing to local channels and serving local patrons in their tap rooms. A few years ago, Dogfish Head actually cut out 3 or 4 states from their distribution because they overextended, so they focused on local.

    Also, worth noting, Stroh's put themselves in heavy debt after buying out Schlitz, and then found themselves unable to compete with, Anheuser-Busch, Coors and Miller (shocker) who were busy buying out all of the nation-wide tiny breweries from the turn of the century. Another reason why I won't let my dollars go to those corporations.

  • BlueTattooBlueTattoo Gentleman Farmer Houston, TX Icrontian

    I have a policy. When I’m home I drink what I want, mostly local, but not all. When I’m away, I drink the local beer. It usually works out.

    Right now I have Saint Arnold (Houston, Texas) and Guinness (Dublin, Ireland) in the house. I drink micro EPAs in Portland, Oregon and Seattle and good lagers in New Hampshire and Maine. When I go to a Japanese restaurant, I drink Sapporo. (Damn, just found out it was bought by a Canadian company in 2006.) At Mexican restaurants and sometimes at home I drink Bohemia (Pilsener). I’ll drink Dos XX Amber if Bohemia is not available. It’s a Heineken brand.

    I used to drink Beck’s a good bit. It was bought by InBev in 2008, although I didn’t know it at the time. A few years later, it seemed to taste different and I looked at the label. It no longer said “Imported from Germany.” They had started making it in the US in 2012. I don’t drink it any more.

    I disagree with @RyanMM that InBev et al are flooding the market with cheap brands. At least around here, the once-small-now-mass-produced brands and beers made to masquerade as craft beer are priced to compete at full price with the real micro brands. I do agree that they are packing the shelves to make it harder to pick out the real craft brands. I once bought a six-pack of Blue Moon on a trip to Maine thinking it was a local beer that I hadn’t seen. It was Miller crap for about 40% more than Miller.

  • UPSLynxUPSLynx Top EA shill, The Dean of Computer Graphics Redwood City, CA Icrontian

    This is a fantastic writeup by the owned of Creature Comforts Brewing on the business implications of selling out, and the strategies ABI are using. There's a lot of business and finance nerdery in it, but it's written in a way that makes it easily understood if you're not in the know-how.

    TL:DR - megacorps like ABI buy these breweries as a move to protect their core, legacy brands from impairment charges. If you can't raise the price of your products, then buy the competition to bring craft prices down. Really sheds light onto the cards ABI have been playing the last couple years.

    http://goodbeerhunting.com/blog/2017/5/5/watch-the-hands-not-the-cards-the-magic-of-megabrew

    RyanMM
  • RyanMMRyanMM Ferndale, MI Icrontian
    edited 9 May

    Also, it allows you to crowd out legit craft from shelves and tap handles using brands you profit from, rather than doing the impossible task of filling the shelf with more macro beer nobody is asking for.

    UPSLynx
  • BuddyJBuddyJ Dept. of Propaganda OKC Icrontian

    Craft drinkers have very little brand loyalty either individual beers or to breweries. They'll drink Organic Soulcrusher Sour Quad Dunkle IPA because it's "craft" and "authentic" and "real" and then move on to the next new hotness. For a business, it's incredibly hard to operate in that kind of environment where margins are so tight and demand can spike and drop so suddenly. So as a brewery owner, why would I not want to minimize some financial risk by tying myself to a larger brand with better distribution and procurement options who can increase my margins and help smooth the otherwise rough waters?

    I'm just not buying the doom and gloom here. There are more and more craft breweries opening every day. Isn't the number over 5,000 now in the US? So what if a major buys out a micro. Congrats to the people who built the business. They finally hit a payday to pay off the millions it took to build a successful brewery. They can pocket the rest and go start another brand.

    A brewery is a business. It shouldn't be a shock when they operate like one.

    primesuspectSonorousCyclonite
  • NiGHTSNiGHTS San Diego Icrontian

    Well said @BuddyJ - agree with that sentiment

    BuddyJ
  • RyanMMRyanMM Ferndale, MI Icrontian

    As a consumer, of any stuff, I try when I can to buy local and from small businesses. That's not always possible, but with craft beer, you really can. You can support the neighborhood brewpub or pubs, you can buy beer made in your state by small business owners, etc.

    Selling a portion of a company is not an easy decision, but there are private equity firms and partnerships with moderately-sized companies that can allow you to cash out from a business without deliberately helping a giant company that exploits their monopoly powers to suppress the competition and lobby to keep actual craft beer out people's hands.

    Just because breweries are a business doesn't mean there aren't people with serious ethical concerns with how they run things. Not every business owner is in search of MAX PROFITZ at the expense of their competition. There is still so much room in the craft beer market for stealing marketshare from Ab-Inbev and MillerCoors without having to attack your fellow craft brewers.

    MAGICMiracleManSUPSLynx
  • UPSLynxUPSLynx Top EA shill, The Dean of Computer Graphics Redwood City, CA Icrontian

    What Ryan said. Again, this isn't about doom and gloom - the beer industry is going to be fine. It's about personally making sure my beer dollars actually support local business and craftspeople and not allowing megacorporation deception to get the best of me. I have no issue with selling out if it's done right - see Firestone Walker and Boulevard. Two of my absolute favorites that I still support today because they're not manipulating distribution on your store shelves. ABI can, and actively does this enough to earn themselves anti-trust suits.

    As much as the statement has been tainted by the internet over the last few years, for me, this is actually about business ethics. Make no mistake, I have no disillusion about the strength and impact of my decision to not support breweries owned by ABI/Miller, I just personally refuse to let my dollars go to them. I fault no one for continuing to purchase those products.

  • UPSLynxUPSLynx Top EA shill, The Dean of Computer Graphics Redwood City, CA Icrontian

    lol, how timely:

    http://www.bostonglobe.com/business/2017/05/09/budweiser-owner-accused-stifling-competition-with-giveaways-hundreds-bars-and-stores-massachusetts/ZK4GlD6BTUTSkpQwMuP4uN/story.html

    This is exactly the kind of stuff I'm talking about. My money will not support a company that engages in this kind of behavior. ABI gave nearly 450 retailers in Massachusets equipment worth nearly 1 million dollars, exclusively for serving additional ABI products. From the article:

    Sales representatives for Anheuser-Busch “offered the refrigeration equipment to the retailer at no cost,” investigators wrote, “provided that the equipment was only utilized for Budweiser products.” The company also paid for delivery and installation of the hardware, the ABCC said.

    My beer dollars won't support pay-to-play in the industry.

    MiracleManS
  • RyanMMRyanMM Ferndale, MI Icrontian

    Here's another byproduct of these megabiz - the ability to lock down crops for use by their subsidiaries and shut out craft brewers from access to the same ingredients.

    This is why your beer dollars matter. This is why craft brewers have an OBLIGATION to look at alternatives to selling out to Megabeer when they want to cash out.

    UPSLynx
  • LincLinc Bard Detroit, MI Icrontian

    First, I agree that's amazingly shitty (and I'll highlight Boston Beer doing the opposite in 2008 & 2012 as an example of a larger company not sucking).

    But let's state this a different way: You're sourcing your hops solely from a competing conglomerate's farming operation, and are shocked that the conglomerate has chosen to stop selling to you? And you're angry they told you now instead of waiting until the last minute so they could allot it all internally first?

    Does this rise to the level of an anti-trust lawsuit? If it does, get that ball rolling. If it doesn't... sorry?

    They didn't pass a law saying no one in South Africa can sell hops to anyone else, they bought out a farming operation. Being able to throw their weight around is the only reason they exist.

  • LincLinc Bard Detroit, MI Icrontian

    It really boils down to this: If your company is public, your duty is to the folks who own your shares. Full stop. Full stop. If they do anything that is not in their justifiable self-interest, they will be fired by the board.

    Why is Boston Beer Company publicly traded and not such an abomination?

    The Boston Beer Company went public, selling shares of Class A Common Stock on the New York Stock Exchange, under the ticker symbol, "SAM". These shares, however, have no voting rights, while the company is controlled through its Class B Common Stock, of which Koch owns 100% of the shares.

    That's it. The whole story in 2 sentences.

    BuddyJ
  • BuddyJBuddyJ Dept. of Propaganda OKC Icrontian
    edited 10 May

    l'horreur!

    (╯°□°)╯︵ ┻━┻ How dare they not sell to competitors!

  • RyanMMRyanMM Ferndale, MI Icrontian

    @Linc said:
    First, I agree that's amazingly shitty (and I'll highlight Boston Beer doing the opposite in 2008 & 2012 as an example of a larger company not sucking).

    But let's state this a different way: You're sourcing your hops solely from a competing conglomerate's farming operation, and are shocked that the conglomerate has chosen to stop selling to you? And you're angry they told you now instead of waiting until the last minute so they could allot it all internally first?

    Does this rise to the level of an anti-trust lawsuit? If it does, get that ball rolling. If it doesn't... sorry?

    They didn't pass a law saying no one in South Africa can sell hops to anyone else, they bought out a farming operation. Being able to throw their weight around is the only reason they exist.

    In some cases, these companies had contracts to buy hops in 2017 - and now they are being cancelled. They could probably sue, but who can afford to fight a global megacorp? The playing field is stacked against the small guy.

    Anyways, fuck the shareholders. The point is, there are alternatives to ABI and other big beer. You literally could never drink another macro beer in your entire life if folks don't let big beer drive little beer out of business. You can't name many other industries where that is the case in 2017.

    UPSLynx
  • LincLinc Bard Detroit, MI Icrontian

    Anyways, fuck the shareholders.

    As long as it's not your retirement fund MIRITE?

    In some cases, these companies had contracts to buy hops in 2017 - and now they are being cancelled.

    You wanna bet a dollar there's a cancellation clause in them?

  • LincLinc Bard Detroit, MI Icrontian

    @RyanMM said:
    The point is, there are alternatives to ABI and other big beer.

    I don't see anyone arguing that. You're preaching to the choir.

    if folks don't let big beer drive little beer out of business.

    But we just said:

    Again, this isn't about doom and gloom - the beer industry is going to be fine.

    Someone being butthurt about their contract being cancelled by their competitor is not them being put out of business by shady underhanded dealings.

    If someone making custom CPUs by buying production time at a foundry got their slot bought out by Samsung, would we all get out our pitchforks? Or is them the breaks of doing business?

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