AB-InBev buys another craft brewer
It must be a fun job being a business scout for AB-InBev. All you have to do is visit craft breweries and drink lots of beer in order to sweet-talk their owners into selling their brewery. Or so I imagine. The latest craft brewer to have succumbed to an offer by AB-InBev is the 10 Barrel Brewing Company, located in Bend, Oregon.
Being one of the country’s fastest-growing breweries, 10 Barrel was one of only four U.S. breweries to win three medals at this year’s Great American Beer Festival, the largest beer competition in the world, it was reported.
“For the past eight years, we’ve been brewing beer, drinking beer and having fun doing it” said co-founder Jeremy Cox, who will continue to lead 10 Barrel along with his partners, co-founder and brother Chris Cox, and Garrett Wales. “We are excited to stay focused on brewing cool beers, get our beers in more hands, and make the most of the operational and distribution expertise of Anheuser-Busch,” said Mr Cox.
Founded in 2006 as Wildfire Brewing, 10 Barrel expects to sell approximately 40,000 barrels (47,000 hl) of beer in 2014. Apocalypse IPA, the brewer’s most popular beer, accounts for nearly half of the company’s total volume.
In addition to the Bend brewery, the acquisition will include the company’s existing brewpubs in Bend and Boise, Idaho and a Portland brewpub scheduled to open in early 2015.
AB-InBev’s purchase of 10 Barrel is expected to close by the end of 2014. The terms of the agreement were not disclosed.
10 Barrel’s beers sold in Oregon, Washington and Idaho have surged in popularity in recent years. In Oregon alone last year, 10 Barrel nearly doubled its sales to 16,100 barrels from 8,647 barrels, according to Beer Marketer’s Insights.
AB-InBev is “buying one of the hottest up-and-comers in one of the epicentres of the craft movement,” Beer Marketer’s Insights said in a report on the sale on 5 November 2014.
AB-InBev has expanded its craft beer portfolio through acquisitions, including its 2011 purchase of Chicago’s Goose Island brewery for USD 38.8 million. After buying Goose Island, AB-InBev took over Blue Point Brewing, based in Patchoque, New York, which brewed about 60,000 barrels in 2013.
AB-InBev is also a part-owner in Portland-based Craft Brew Alliance, a holding company for Redhook Ale Brewery, Widmer Brothers Brewing, Kona Brewing Co. and Omission Beer.
To us at BRAUWELT International, this recent acquisition by AB-InBev confirms that Big Brewers are attracted to these small(ish) craft brewers because of their brand appeal and their lack of distribution – which to the Big Brewers translates into a positive, namely “national scalability”. As I pointed out in a BRAUWELT International report (“Doing the beer shelf shuffle” BRAUWELT International no. 5, 2014, pp. 262–269), AB-InBev likes its craft brewers to be small and without a complex distributor network (made up of say Miller, Coors, MillerCoors, Independents and AB-InBev distributors), which would be cumbersome and costly to untangle.
What we have seen happen at Goose Island and what will probably soon happen at Blue Point is that AB-InBev will quickly grow the brands by having them produced at its breweries across the U.S. in order to push them into the AB-InBev distributor network quickly. Observers think the same treatment will lie in store for 10 Barrel.
As could be expected, most of the commentators on the deal expressed shock, disappointment, and even anger over 10 Barrel’s decision to sell out. I find this rather bewildering because it takes some arrogance to deny craft brewers the pursuit of an exit strategy. Craft beer aficionados, especially those of advanced years, may like to see all craft brewers obeying the same commandments, one of which reads: “Thou shalt never sell out to a Big Brewer.” It may even pain them to realize that many people only got into the craft beer business with the dream of cashing out. But let’s get real: There are so many reasons for becoming a craft brewer. You do it for the love or beer, for the fun or for mammon. All of these are perfectly legitimate reasons. Whatever some consumers and craft brewers think craft beer is all about, it is ultimately a business. Much as they might love it to be, it’s not the Salvation Army.
