Oh Where Oh Where Has My Craft Brewery Gone?

By Glenn DeLuca

For BeerNexus.com

And the simple answer is…to greener pastures, as in the owner(s) just sold for a
nice sum. I mean that’s the American way isn’t it?  But why do we feel betrayed when
AB/InBev buys Goose Island or when they buy Blue Point or when they buy 10
Barrel or when they buy Elysian. What about Founder’s possibly selling a 30% stake
to Spanish brewery Mahou San Miguel or Boulevard selling to Belgian’s Duvel
Moortgat (which also owns Ommegang).

We have seen this before with the Craft Brew Alliance (CBA), initially the merger of
Redhook and Widmer Brothers in 2008 and the addition of Kona Brewing in 2010.  
The CBA is different as it was two established craft brewers deciding they would be
stronger if they worked together. And yes they also set it up as an independent
publically traded craft brewing company, where others could purchase shares,
allowing them to raise capital, which is why AB/InBev owns 32+%. We might have
thought this innovative approach of getting partners and raising capital but keeping
the lion share of control might be copied but none so far as I know.

Southern Tier out of NY and SweetWater out of Atlanta both recently sold a partial
share to private equity/investment firms. This could be even more risky than selling
to another brewery, as investment companies are only interested for one reason; if
they can make money. That’s not to say that AB/InBev is looking to lose money on
its acquisitions, but investment companies have a history of stripping as much out of
a company to get them profitable and in many cases they’re buying distressed
companies that they’re trying to turn around, which isn’t the case here.That’s
happened before with one of my favorites, The Saint Louis Brewery, maker of
Schlafly, that sold 60% of the company to a private equity firm in 2012.

So why all this activity now? Well craft beer sales have been on the rise and the
“Bigs” have been shrinking. Although AB created other brands like Shock Top and
Coors created Blue Moon, it’s a lot quicker and easier to just buy one that has done
all the groundwork and created a following to work your way into the craft beer

Typically when we like and support a product it’s natural to have some negative
feelings or uneasiness because we don’t know if the future quality and creativity will
be the same. The path will more than likely be altered; that’s a given; it could be to
the better but not necessarily.

Let’s be cynical; craft breweries are starting up all over the place and I’m sorry but
only those extremely naïve think it’s because they love beer. Sure many of them do,
but it’s a burgeoning business that’s been expanding rapidly and there’s money to
be made.  How many brewers don’t brew their own beer but rather contract brew.  
That’s not necessarily a bad way to start, but I think some are trying to create a
name that’s worth something so they can cash in.

We have more than one brewery here in NJ that doesn’t have a distributor and
basically plans to sell all beer on premise. Definitely an interesting approach and
yes many distributors are not necessarily the easiest to deal with.  I’ve had the
hardest time trying to get one of my favorites from Mendocino Brewing, Red Tail Ale,
because they’re distributor went bankrupt and then they went through two more and
it appears they will only bring in their mixed 12 packs. In fact both Mendocino and
Olde Saratoga were bought years ago, but this was a much different circumstance.  
Both had undertaken expansion plans bigger than they could handle and were left
little choice but to sell.

I think we should be more concerned if the older established craft breweries (Boston
Beer, Anchor, Sierra Nevada, New Belgium) that really helped build the industry and
are the backbone/leaders/staples of the industry begin to be acquired. That’s when I’
m going to stand up and take notice.  But if you’re favorite craft brewery got bought,
isn’t the real issue going forward how their beer tastes?  Isn’t that why we like it?

I was lucky to be able to taste Mendocino’s Red Tail Ale almost 25 years ago and
was thrilled when they began producing it on the east coast so I could get it. It’s still
the delicious beer I remember, so keep drinking it. The same with Schlafy, which I
visited in 2009, and continue to buy a six when I’m looking for a change or they have
something interesting.  So if our fav changes the formula and the taste changes
then we start drinking another craft brew. You could easily drink a different one
each day for a month to look for one you like. And if you have a favorite that doesn’t
get bought and they change their brewer or formula or approach and we’re not as
happy with their product, that’s no different; my taste buds aren’t happy campers.
Similar to a favorite restaurant that changes the chef and the food’s not the same.

Another point to consider is without their buyout, Boulevard may never have been
big enough to expand and make it to Jersey and we may not have had the chance
to try their lineup of excellent brews. So in that case, so far, selling has helped the
brand, and us.

So although it’s interesting to watch the maneuvering it’s really not much different
than other industries. Now if we really want to pay attention and get excited what we
should be concerned about is the number of $10 4 packs in the store and the
decreasing number of reasonably priced six packs.  That’s where craft beer
popularity and expansion really takes a toll on each and every one of us.

Glenn DeLuca writes about beer and culture of drinking. He may
be reached by writing webmaster@beernexus.com.

***   ***   ***
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