A Theory of Evolution: The Future of Global Beer
It’s been a year of intrigue, plot twists and turns no one could plausibly claim to have seen coming. The big guys continued their steady shopping adventures, scoring many flashy new outfits while quietly lamenting craft-on-craft deals, like one Tampa-based looker that went to a peer. Multimillion dollar deals begat billion dollar deals, while a half-dozen or more transactions constantly swirl in the rumor mill.
For the biggest breweries, the playbook is becoming increasingly clear. Buy smaller breweries, let them be for some window of time until public consternation over the sale settles, then look to growth. Need a flavor of beer? ABI has it, with tap lists in corporate bars, restaurants, and performance venues increasingly looking like Carlos Brito chose them himself. Fill in the missing regional pieces, likely in southern and mountain states, and the portfolio may soon be full for this round of buying. Studying ABI’s success with Goose Island, international players ranging from Heineken to Constellation and others continue to circle crafts, making pricey strategic deals leading to a whole new vision for the future of global beer.
Beyond the big companies, a quieter force continues to exert influence on craft brewing: private equity. Run by privately financed fund managers, some with beer industry experience but many without, the PE set continues to lock up or buy into craft breweries looking for some financial breathing room, often with little public awareness. Usually founded with a specific sunset date in mind, the mandated sale of the privately purchased interests in the breweries may not make waves for another five to 10 years, when they go on the selling block. But as Alan Newman once famously said about PE, including the folks who eventually took control of his brewery, Magic Hat, private equity guys enter the room walking backwards, with their eyes firmly focused on the exit.
Aside from the continued consolidation of the top 50 breweries, the number of American craft breweries continues to balloon at record rates. No longer content to settle for the one in, one out model, new brewery openings now outpace closures by nearly 10 to one.
With more than 4,000 craft breweries in operation and several thousand more in planning, talk of a craft beer bubble continues at all levels. Some industry pioneers seem to steady themselves by decrying the brash newbies, casually suggesting comparisons to the mid-’90s when bankers, lawyers, doctors, and others jumped into microbrewing with dollar signs in their eyes. That comparison, while superficially attractive, seems inapt and emblematic of a disconnect with the consumers the small brewers are drawing.
Once compelled to fight for distribution, space on trucks, tap handles, and cold box real estate, today’s small brewers are more akin to the local bars that used to dot city landscapes. Each serves a specific population, sometimes a hyper niche, whether it’s beer nerds, middle of the road new drinkers, hopheads, or sour fanatics. With the emergence of the taproom model, all prior estimates of craft brewing’s ceiling are off. Assuming they focus on producing and serving high-quality beers—a big assumption today—these local outfits will continue to draw loyal customers, encouraging others to start their own local taprooms. Craft brewing continues to change, adapt, and evolve. And that will never change. ■