| Big Beer Responds Macro Brewers Move in on The Craft Movement by Bob Montemurro A couple of years ago MillerCoors LLC, the joint venture between SABMiller and Molson Coors, quietly launched its craft and import division Tenth & Blake. While some thought the division destined for failure the unit posted double-digit growth in the last year and continues to grow through a roster of brews including Belgian White Blue Moon and Leinenkugel's, not craft beers to some but obviously craft to many. Well hold now because there's more. SABMiller now houses niche beers like Fat Yak and Beez Neez through the Matilda Bay brewery, following its $10 billion acquisition of Foster's last year. Yes, that Foster's - the "Australian for beer" guys. And don't forget our old friend AB InBev, maker of Budweiser, who as far back as 2006 saw the need for a craft connection when it began distributing Goose Island. Following that up in March last year, AB InBev acquired the famed Chicago brewer, maker of Belgian abbey ale Pere Jacques and Honker's Ale, an English-style beer with a fruity aroma, for near $40 million. Why you might ask. Well, one selling point for craft beer is that it is a higher-priced and high-margin luxury that consumers are willing to pay for as they seek unique, localized and regional products with a story behind them. Support for craft beers also has the halo of helping out local businesses, a plus during tough economic times. In short it was a good move for the big brewers on many levels. Still, acquiring craft brewers can pose a commercial conundrum for the beer giants, the brands might no longer be considered craft and fans may turn their back on them for "selling out." Some of the beer giants have publicly acknowledged that sustaining the brand's heritage has been and will continue to be key to its success. They plan to emphasize this point as they continue to expand led by Molson Coors' pledge to double production and distribution of most of their craft brands. SABMiller has taken a different tack to circumvent this puzzle through its deal with Belgium's Van Steenberge brewery, which has links to a monastery and sells St Stefanus beer. SABMiller isn't taking an equity stake in the brewery, but will instead provide its global distribution network to boost the brewery's sales. At least that's the case right now. No one would be surprised if this eventually became yet another take over. Another way the big brewers are dealing with the craft beer phenomenon is by setting up their own home-grown craft brewing divisions that use nontraditional ingredients. For example, Carlsberg, opened Backyard Brewery in Falkenberg, Sweden, this year to experiment with new brews. The result is they are due to roll out a craft-style amber lager called the Lawn Mower in November, replete with grassy notes. The biggest craft breweries are fending off the giants with innovation of their own. Boston Beer Co., the U.S.'s biggest and oldest craft brewery, said two Samuel Adams beers will be distilled into whiskeys, giving it exposure to the growing spirits market. The maker of beers like Finnish rye-and-juniper-flavored Norse Legend says craft distilling follows the sector's traditions and meets consumer demand for artisan products with local provenance. It's too early if all this will help or hurt the grassroots craft brewing movement. Right now the best we the consumers can hope for is an increased variety of unique and flavorful beers. ------------ |
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Cheers! See you next time to "speak about beer". Bob Montemurro |
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