Battle brews between big and craft beer
Anheuser-Busch InBev, which is on target to complete its planned $ 100 billion- plus acquisition of No. 2 global beermaker SABMiller, is still on the hunt for more
Escalation is brewing in the battle between big beer brands and independent craft brewers.
Even as global leader Anheuser- Busch InBev progresses toward its planned $ 100 billion- plus acquisition of No. 2 global beer maker SABMiller, to be consummated later this year, the company remains on the hunt for new quarry.
AB InBev CEO Carlos Brito last week suggested the company is far from done acquiring craft breweries. “The segment is growing, and it’s profitable,” he said in a conference call about the company’s fourth- quarter earnings.
While AB InBev saw a drop in profit for the year, its Goose Island brand grew 150%, Brito said. “It’s showing that there are consumers out there that, yes, will consider a national craft,” he said.
Craft beer sales in the U. S. continue to grow, as overall beer sales have remained flat in recent years. Craft brewers command about 19% of the $ 100 billion U. S. beer market — up from 10% in 2012, according to the Brewers Association.
Seeking revenue growth, AB InBev has gone on a craft- beer spending spree, acquiring Chicago’s Goose Island in 2011 and several other U. S. craft breweries since then, including Blue Point Brewing, Elysian Brewing and Breckenridge ( Colo.) Brewery.
AB InBev’s strategy makes sense. While overall U. S. beer consumption is expected to decline through 2019, that of ale — which includes the most popular craft beer styles such as India Pale Ale and pale ale — is forecast to increase at a compound annual growth rate of 8%, research firm Euromonitor estimates.
The megabrewer has begun to tap into the craft beer strategy internationally, too, acquiring craft breweries in countries such as the U. K., Mexico, Canada, Colombia and Brazil. “So the next question is what about consumers, the global consumers? Will they consider a national or international or global craft?” Brito said. “We think the answer is yes.”
Even before Brito’s statements, some independent brewers and regulators have called attention to the pending AB InBev-SABMiller merger. Three weeks ago, the House of Representatives’ Small Brewer’s Caucus, made up of 200 legislators from nearly every state, urged the Justice Department to review the deal.
The resultant company’s “effective control as the major supplier to independent distributors ... allows for greater opportunity to suppress the sale of the various brands of other brewers,” the legislators said.
A similar warning was issued by the Brewers Association. Even with the combined company’s plan to sell off SABMiller’s Miller Coors assets, “the size and scope of the AB InBev business has many ramifications for the U. S. beer industry,” association President Bob Pease said when the merger was announced.
Craft beer supporters cite the recently announced plans by AB InBev to open a 10 Barrel brewpubs in San Diego as a sign of the megabrewer’s goal to divert sales from that vibrant local brewing community. The Bend, Ore.- based 10 Barrel Brewing Co., acquired by AB InBev in 2014, “seeks to deceptively communicate itself as being part of the locally grown marketplace and leverage its resources and size as a corporation to compete against and ultimately harm the true local brewers and disrupt the market,” the San Diego Brewers Guild said in a statement to Fortune.
Elsewhere some independent breweries are bracing for what happens next.
The fourth- largest independent, New Belgium Brewing Co. of Fort Collins, Colo., reportedly is looking for a buyer at a price of more than $ 1 billion, persons familiar with the situation say, according to The Denver Post and Reuters.
“It is vital for the continued success of small brewers that we have access to market with an independent and competitive middle distribution tier.” Brewers Association
President Bob Pease