AmBev buys local craft brewer Colorado

Who would have thought that the takeover of a Brazilian craft brewer by AmBev would have a fall-out as far away as Belgium? In early July, the Brazilian beer and beverages behemoth AmBev bought the local craft brewer Colorado for an undisclosed sum, thus continuing its new strategy of buying premium craft beer brands amid stagnant sales volumes in South America’s biggest beer market.

Already in February this year, AmBev, which is the Brazilian unit of AB-InBev, took over the domestic craft brewer Wäls and integrated it into its higher-end Bohemia beer division.

Surprisingly, the takeover of the award-winning Colorado brewery caused unexpected reverberations in Belgium. Only in May Colorado had launched a saison beer called Marguerite (6.7 % ABV) in Brazil, in collaboration with the St. Feuillien brewery located in Roeulx. As is custom with brewing collaborations, Colorado was to do a special release beer with St. Feuillien in Belgium. St. Feuillien presumes that nothing will come of this now.

Colorado is based in the interior of Brazil’s Sao Paulo state and exports its beers, often flavoured with coffee, honey or nuts, to France and the United States, amongst others. Analysts say that in 2014, Colorado, which was founded in 1996 by the grandly-named businessman and enthusiastic spokesman for good beer, Marcelo Carneiro da Rocha, had revenues of about USD 5.9 million. Beer output was estimated to be 20,000 hl.

In June this year, Brazilian media reported a rumour that Mr Carneiro was seeking a buyer for his brewery to help him fund his expansion plans. This did not go down well with Brazil’s beer lovers. The online commentariat sneered that Mr Carneiro should not give this as a reason because he stems from a wealthy family himself. What he did not say was that he may have felt compelled to align himself with AmBev because Colorado’s growth had hit a glass ceiling, better known as Brazil’s on-trade sector which is tightly controlled by the country’s major brewers through exclusivity contracts.

Perhaps by gaining access to AmBev’s distribution and network of tied bars, Colorado could spark the rise of craft beer? There are several hundred microbreweries in Brazil, but their total market share is only around 1.5 percent (or 1.9 million hl), observers say. AmBev controls about 68 percent of Brazil’s beer market, which stood at 128 million hl in 2015.

In an effort to appease Brazil’s craft beer consumers, AmBev followed the AB-InBev script, familiar from AB-InBev’s purchase of U.S. craft breweries like 10 Barrel and Elysian in the United States: Mr Carneiro will continue to run the brewery and the implication is that Colorado will be allowed to operate as an independent subsidiary.

AmBev’s appetite for craft breweries is not limited to Brazil. In May this year, it bought Colombia’s largest craft brewer, the Bogotá Beer Company, whose beer output the website Hop Amigo put at 40,000 hl, for an undisclosed sum.