The Kirin/Brooklyn Brewing announcement ticked a business part of my brain today, so I’m coming out of “Talking about acquisitions” retirement. The conversation around these events has changed a ton since INBev rocked the beer drinking world and bought Goose Island, but it’s still an interesting climate that, when observed from a business perspective, is only about to get weirder.
Let’s not forget that the SAB/INBev merger just fucking happened. That’s huge in the beer world for a number of reasons: Miller/Coors is back to being Miller/Coors and Anheuser-Bush now (supposedly) will have a real fucking hard time buying any new breweries. Basically, one of those giants is essentially held at bay in the buying department, while the other is entirely incentivized to start snatching breweries up in the spirit of healthy business competition.
I would be very surprised if Miller/Coors didn’t start a little spending spree of their own right now. Between them and INBev, they have invested the most in their own, let’s call them “high-end” to not disrupt the craft purists, brands, but still don’t quite have the portfolio of INBev. Now that INBev is most likely in a spending freeze, this is Miller’s chance to bolster their “high-end” portfolio and give them a better competitive more punch in that category.
That’s an easy prediction. The next one may be a little more out there since I don’t have an intricate knowledge of laws, but to say Anheuser-Bush won’t be expanding their brands at some point would be irresponsible. Even without buying power, they have some pretty strong names under their belt. I can’t see why they wouldn’t start developing entire new “brands” (a la Shock Top) with the brewing knowledge they gain from newly acquired friends Elysian, 10 Barrels, Goose Island or any of their other buys.
This would allow them to expand their portfolio without the DOJ shoving an investigative probe up their urethra. I don’t know what kind of timeline this would have to happen on, but it’s the only way I can see them growing their “high-end” category without serious roadblocks. They absolutely have the facilities and capital to pull it off and absolutely would give them a reason to build new facilities that will make them even more ubiquitous in the US. Competition demands it. Craft beer continues to grow and their business continues to shrink so they are going to be forced to find a way to play in this realm.
Then let’s not forget the likes of Constellation brands. They still have room to buy, as well as other international brands or capital investment firms. It’s only going to be a matter of time until craft conglomerates start happening, if not already. Look at Osker Blues. They may have had a majority stake sold to an investment firm, but I imagine they’re looking to fight on the same level as the big boys and will need capital (money) in order to do that.
Lagunitas is starting to absorb domestic breweries around the country and I imagine there will be others eventually doing the business equivalent of joining forces just to combat AB and MC and their abilities to get insanely good supplier contracts for their raw materials. I mean, pricing should be the number one thing on people’s minds for the foreseeable. Sure, distributor shenanigans like shelf placement and other strong arm tactics get the average beer Joe all fired up, but when it comes to the general (read: non beer evangelist) public’s buying habits, price is going to be a major factor. Small breweries just can’t get the pricing benefits of these gigantic behemoths which means if their beer sucks, they’re double fucked because they can’t afford to price themselves down while AB MC LA SN OB and all the other acronym companies have massive production volume advantages.
So what does all of this mean? It means nothing. Literally. I’m Michael Fucking Jackson sitting in a movie theater eating popcorn and smiling while the industry continues to evolve. This is just one consumer’s prediction, and I have no insider information; but I do know the beer industry is a business and if I was running a larger beer company with capital to burn, these are the moves I would be thinking about making.
Strap in, hunker down and swing by my place for some popcorn. The show is just starting to get good.