It’s now over six years since Molson Coors acquired Sharp’s Brewery, setting off a series of buyouts of craft beer brands by multinational organisations. More recently, Anheuser-Busch’s $100 billion merger with SABMiller has highlighted the consolidation taking place in the beer sector, and, with other brewers like Heineken buying into the craft movement, raised questions about the spirit of craft beer.
Earlier this month, Tony Magee, the founder of California’s Lagunitas Brewing, was forced to deny that the company had ‘sold out’ following its takeover by Heineken. He said: “Some who don’t fully understand [the acquisition] may say it is selling out. Truth is that we… are now ‘buying in’. Money has value and equity has value too. I am using Lagunitas’ equity to buy deeper into an organisation that will help us go farther more quickly than we could have on our own.”
Amid concerns that the craft movement might have been falling flat, it was a relief to see signs of promise in C&C Group’s full-year results, published this morning. Though group revenue fell and volumes declined, the Irish drinks firm recorded impressive growth in its craft and premium portfolios.
Premium propositions – such as Heverlee Belgian lager and Menabrea Italian beer – increased volume by over 60% in the last year, with plans to grow them even more in the 12 months ahead. With growth like this, it’s no surprise that big brewers are buying into craft beer.
The challenge lies in convincing consumers that, by being bought out by one of the world’s biggest brewers, their favourite craft beer maker isn’t ‘selling out’ or diluting its brand. If the big players can put up as robust a defence of their acquisitions strategy as Magee did, then there should be hope that craft beer sustains this level of growth for several more years to come.
Here are some more reasons why.
Heineken takes over Lagunitas
Heineken agreed to buy out the remaining shares in California’s Lagunitas Brewing Company earlier this month, two years after acquiring a 50% stake. Since acquiring half of the company in 2015, Heineken has helped Lagunitas Brewing to expand its international presence, including launches in new markets such as France, Mexico, Italy and Spain. It has also extended the brand’s availability in existing markets like the UK, Canada, the Netherlands and Japan.
The time was ripe for Heineken to take full control; Lagunitas Brewing has consistently outperformed the US beer market, where craft offerings now make up roughly 11% of all products.
Heineken’s craft credentials:
Anheuser-Busch acquires Wicked Weed
At the start of May, Anheuser-Busch added Wicked Weed Brewing – a craft beer maker based in North Carolina – to its craft business arm The High End. The five-year-old company, which has created more than 500 different beers since its foundation, is now best known for its west coast-style IPAs, its Belgian blonde and a range of barrel-aged sour and farmhouse ales.
It’s the latest craft brewery to be targeted by Anheuser-Busch – by far the most acquisitive company in the craft beer space. Alongside mainstream brands like Budweiser and Beck’s, and the reinforcements that come from a streamlined SABMiller, Anheuser-Busch seems intent on creating the strongest possible position for itself within craft beer.
Anheuser-Busch’s craft credentials:
Camden Town Brewery expands
One name left off that list of Anheuser-Busch’s craft credentials is Camden Town. The UK-based brewery was acquired by AB in December 2015, shortly before the deals for Four Peaks and Breckenridge were announced, in a flurry of seasonal activity that saw the company acquire three craft beer makers in a couple of days. This week, Camden Town Brewery invested £30 million in a new brewing facility in the UK.
The environmentally friendly site in London covers a total area of 50,000 square feet and is ‘the largest investment in London’s brewing industry for three decades’. It will enable Camden Town to keep pace with increasing demand for its beers, which include its flagship lager, Camden Hells.
The facility, in Enfield, is eight miles northeast of the company’s existing brewery in Kentish Town, which will still be used as a test site for innovation, special brews and collaboration beers. The new brewhouse will have capacity to scale production to 400,000 hectolitres a year, and the investment will increase the size of Camden Town’s brewing team by 50%.
It’s a welcome sign that the industry is growing volumes organically, and not just consolidating between two or three major firms.
Asahi enhancing its premium business
Japanese brewer Asahi has benefitted most from the fallout of the AB-SABMiller deal; in October, it acquired brands including Peroni and craft beer maker Meantime from Miller Brands, followed by a deal for Anheuser-Busch’s beer business in much of Central Europe – including operations in the Czech Republic, Hungary, Poland, Romania and Slovakia – in a deal worth €7.3 billion. The company wants to improve its presence and Europe and risked being marginalised by the recent acquisitions from Heineken and AB.
© FoodBev Media Ltd 2017