Big deals lead concerns of craft beer industry
Big brewers were on everyone’s mind at the Craft Brewers Conference & BrewExpo America.
While the craft beer industry proudly wears descriptors such as independent, traditional and micro on its sleeve, big brewers were on everyone’s mind at the Craft Brewers Conference & BrewExpo America in Philadelphia earlier this month. Deals, specifically the pending $100 billion merger between Anheuser-Busch InBev and SABMiller, were the hot button issue of the convention as smaller breweries try to sort out what the union might mean for America’s constantly growing and shifting beer landscape.
“Deals are what’s on everyone’s mind, and I think it’s because people don’t know how to feel about them,” says Paul Gatza, director of the Brewers Association.
In the past few years, large brewers such as AB InBev, Heineken and Constellation Brands have scooped up smaller breweries, enticing them with big money deals that provide more access to distribution, ingredients and innovation. But these deals aren’t just acquisitions; private equity firms have also stepped in to manage multiple small breweries, and some brewers have decided to offer equity in their companies through employee stock ownership programs.
All of this creates a climate of uncertainty in an industry that differs from others in that reaching a big deal or creating a national brand is not always viewed as a goal. Craft is not allergic to success; its traditions, ties to the community and emotional investment in the products make craft brewers cautious of “selling out.” Gatza says they also fear blowback from their beer drinkers when they announce a big deal since some consumers feel betrayed when a company decides to sell. The biggest fear among craft brewers, however, is how the AB InBev/SABMiller merger will affect distribution. Pease says if the merger is left unchecked without protections, it will result in a very tilted playing field in the beer industry, one that will result in reduced access to markets for the association’s members.
“Our members are not afraid to compete,” says Bob Pease, president and CEO of the Brewers Association. “Right now, the interesting dynamic in the beer industry is what we call consumer pull. It’s the beer drinker demanding all these varieties, flavors and experimentations. As long as that is left unfettered, we will do just fine. But what we see happening is the largest global brewer trying to change the dynamic of the beer world to what we call supplier push, where one supplier provides to its distributors one portfolio of beers.”
With AB InBev purchasing a number of distributors within the past year, Pease says the craft breweries are worried they will be closed off from the market. To combat this, the association is working with the US Department of Justice and other regulators on a deal that suits all the involved parties.