Brewery mergers and acquisitions. Maybe they're not so bad?

Like any industry, some M&A activity will be great for the consumer, and some won't. Brands and certain beers will dissapear over time as they get replaced or drop out of the portfolios of these larger companies for lackluster performance.

Speaking of Goose Island, their Rare Day event this past week was one of the better run events I've ever participated in. One of the benefits of being owned by a company like ABInbev (having work for them many many years ago) is they know how to plan and execute on events.

 

I agree with your post.

Some folks are concerned that the bigger corporations can exercise influences like limiting shelf space and tap space to the smaller craft breweries. IMO this is a valid concern. Having stated that I am of the opinion that as regards craft beer 'the horse is out of the barn' and therefore beer consumers will make efforts to purchase the beers they want despite the efforts of the bigger corporations to 'box out' the smaller craft beers from certain retail venues.

IMO the bigger corporations should exercise some level of constraint in their marketing and sales efforts since any efforts which are perceived as being heavy handed can be counterproductive to their businesses; there will be some beer consumers who will refuse to purchase their beers since they will view them as being evil businesses.

Cheers!

 

I agree with both points 1 and 2 but as long as Big corporations own our beloved craft breweries the almighty $ is the primary objective. I fear in order to achieve profits companies must cut corners or run lean as they can, this is where I fear quality will slip and we will see the quality of these breweries slip. I will admit I still think Bourbon County is top notch but I fear it is a matter of time.

 

In the modern American capitalist system, yes, the corporation is king. One of the results of this is that has become nearly impossible for upstart independent businesses to thrive in many industries and the only way to work in a field and put food on the table is to become a blip on the map of some multinational corporate monstrosity.

Craft beer holds the promise of being a great equalizer within the beverage industry. That is one of the many reasons I love it so much; the potential for individuals to build viable businesses for themselves within the current global economy. Unbridled M&A threatens this and drags the industry back into the corporate model where many small companies have to choose between allowing themselves to be swallowed by the beast or withering away, to borrow from your metaphor.

 

I have very mixed feelings with all of this. I have friends that own breweries. I would love to see them get rich. However, The downside is that I would not consider it a local business that factors into what I buy. Local is not my main reason for buying, but it does have an impact.

 

In a vacuum I'd prefer to support small and local, and I don't love some of the business practices of the huge conglomerate brewers. But at the end of the day, when I'm in the beer store, I am thinking about what I feel like drinking and how much it costs, and really nothing else. Similarly, I am fairly appalled by the practices of factory animal farming, but if I'm hungry and in the car, I will crush some McDonald's and not think twice about it. Perhaps that makes me a hypocrite or lazy, but frankly, my life is plenty hectic and full of important things to worry about, and I simply don't have the energy to care passionately about who owns the brewery that brews the beer I like to drink. But I truly understand both sides of this and certainly don't begrudge anyone who feels this is an important issue that is worthy of their time and energy.

 

It kind of depends. If the beer stays the same, than there isn't really a problem unless the problem lies with who owns the brewery. If you dislike the brewery's owner(s) and how it runs its business, than I doubt you will spend money on their beer, no matter how good it is. Same reason people may not like a company even if it has a good product. It's totally up to how the buyer feels about the situation. Elysian was recently (earlier this year) purchased by Anheuser-Busch. I have not had Elysian's beer before the purchase or after it, so I have neutral feelings towards it. I can see how fans of Elysian would feel otherwise if their favorite brewery was bought up by a major corporation, regardless if the beer stays the same.

 

Absolutely perfectly stated. This is exactly my sentiment. Its refreshing to be supporting small businesses and entrepreneurs in a society largely dominated by large monopolies that stifle innovation and treat employees like slaves and customers like dollar signs. I for one will continue to support the small guys instead of breweries consumed by these giants who are only going to look towards maximizing their profits at the expensive of their employees and the quality of their product. I agree there can be some benefits, but at what expense? Sure Goose Island has a greater budget to work with but what have they really innovated or made better since A-B purchased the brewery? Not much. Has the quality of the product gotten any better? Id say a resounding No. And how about the price point? Keeps going up...

 

I think one of the beauties of craft beer is the passion of the brewers. I love to see a brewery brewing beers the way they want to, because they love doing it. Sure, beer ultimately comes down to taste, but I also love to see a brewery’s passion behind what they are producing. I may be a craft beer fundamentalist of sorts, but I care who brews the beer and the drive behind why they are brewing it. If money and corporate greed is the driving factor, then you better believe at some point the quality will drop or the beers produced will simply lack their original flare, which is akin to what MjBrewhouse states above. I get it; there are many benefits to mergers and acquisitions, but there are also many downsides. I definitely appreciate what thepenguin has to say above, when he mentions the effect of M&A’s on small start-up breweries. This is why I am not a proponent of all these M&A’s, in general. Sometimes, like with Duvel and Ommegang or FW, I get it and don’t see too much of any foreseeable problems, but in general, I tend to oppose the act.

 

I pretty much agree with everything in the post. The one area that I think would suffer is innovation. A local company where the brewer is in complete control is free to make a batch of any kind of off the wall project they want just to see if it works. I would think AB or other large companies would concentrate their resources on pale ales ipas and barrel aged stouts that they know will make money.

 

What comes out of the bottle is my first, last, and only concern regarding this issue. If the quality stays constant I don't care who owns the brewery and frankly think it is a bit naive to get upset if some behemoth buys your beloved little brewery, because in most cases, your beloved little brewery would like to become a behemoth.

 

Mergers and acquisitions do have some benefits such as increased distribution, sometimes but not always, better prices, and along with distribution there is better availability in bars and restaurants. Beyond this there is more to consider, at least for me, such as the way a company treats its employees. The company's business practices I also believe are an important issue. For me I just don't care what's in the bottle, I look beyond that. I do agree that when a brewery mergers or acquires another brewery they are in it for the long run. I work for ABInBev, they do see long term benefits in buying up craft breweries but I'm not convinced that ABInBev sees that customers want and enjoy quality beers. They talk a lot about "the craft beer trend," so they are just looking to ride it and I believe, exploit it.

 

I think the issue for some of us is that when this becomes the norm, our beloved little (not to mention new and local) breweries become fewer and fewer because the dynamic shifts to create market conditions that aren't favorable to newcomers or smaller operations. It's not like we haven't seen it before.

Personally, I LOVE Ballast Point. I simply want it to be possible for a new brewery to open tomorrow and in 30 years, through hard work, smart business decisions and creating a brand that people grow to love and identify with, have a chance of seeing the same kind of success as Ballast Point.

 

Pretty close to this. Where I have a choice of a Lagunitas or BP of the recent big examples, or something else I might enjoy about as much, will choose the non-"big beer"; but I won't flat out avoid them. I think for consumers, especially initially if not longer, it can be a good thing. But for all, it might not be so good initially.

One of the things could be jobs or pay for the employees of the original brewery. Want your Grapefruit Sculpin in $.25 cheaper? Maybe quality will change a bit, or bulk buying will help, or maybe a couple jobs go that can be handled at corporate level. What are a few jobs to a big company if it means a better bottom line? What are a few jobs to the terminated employees?

For quite a few smaller breweries, they indicate a care for their employees, and I'd have to think that in most cases, no matter how disingenuous they might be, they probably still care more than a corporate owner. Taken on an individual basis, seems small. But who is benefitting on the buying side, and by how much, to compare with what the employees may be losing (which could be as much as 100%)?

(This obviously doesn't just apply to breweries...)

 

And local breweries will drop certain beers or go out of business over time due to lackluster performance...

 

I appreciate your concern. IMO, it will always be possible for a small breweries to open as long as people have the passion and ability to make it happen. Microsoft didn't prevent small software companies from starting up.

 

As a former accountant I understand the logic and so would have to agree with you. The skeptic in me worries that the big boys, as part of their buying, may cut corners in order to recoup some of their upfront and long term expenses. Will this have an effect on quality is anyone's guess. I have not heard that this has happened but the possibility is always there.

I guess the brewing is no different from any other industry.