I had mentioned a few years back that consolidation would be a larger issue in the coming years, especially since though their has been organic growth of smaller brewers eating into the larger brewers markets, it has been the mid-size brewers are now starting to take their money off the board.
1. Market Share & Consolidation
In 2011 we saw AB-Inbev buy into Chicago Brewer Goose Island for $39 Million which is 58% of the company. Which in real terms values the company at $67 Million.
In October 2011 we saw Molson-Coors Tenth & Blake division bought into Athens Georgia Brewer Terrapin Brewing . The Tenth & Blake division is an interesting one to watch as it is definitely aproaching the craft beer segment carefully. According to Terrapin it was the ability expand their beer production.
In a not so small takeover SAB-Miller took over the ownership of Fosters after the company demerged the beer & wine divisions. It wasn’t a shock to many, it was just a matter of which of the big boys wants to buy into the 50% share of the Australian beer industry. In what is kind of ironic Coopers Brewing in Adelaide is now the large Australian brewery.
Consolidations and mergers happen when there is viewed a gap in the market that one company is doing well in, and though we beer nerds all think Craft Beer will take over the world we have to be realistic that small brewers in brewpubs and small boutique beer sheds are not going to take on the might & marketing power of the big boys. Look at any one of my recent Top Beer Website rankings and you will see that its not Craft Brewers in the top 10, its the ABInbevs and Molson-Coors.
One of the top searches for people clicking on my blog is for Coors Twins. Somewhere in branding or something I have the twins in their tight top.. and yeah I’m sure they are quite disappointed when they click onto my site.
In Australia there was a beer called Blue Tongue that was a small craft brewer owned or setup by a Marketing Executive. Its basically a tasteless mainstream beer that was bought out by Coca Cola Amitil and SABMiller. When my dad told me that Coke bought a brewery I was quite surprised then when I saw Coke Trucks with Beer on them it made sense, ‘DISTRIBUTION’. You can imagine the cost of transport, labour and kegs to small brewers, but to someone like Coke its part of their daily business anyway.
There are certain breweries looking to move their business closer to markets where they see growth. New Belgium from Fort Collins is looking to expand East to either Asheville NC, or Philly Pennsylvania. Stone Brewing in San Diego is looking to setup shop in Europe, but they have been talking the talk for several years now, so who knows if they are being serious or just playing up the hype.
One of my favorite larger craft brewers is Sierra Nevada as we can get their special bottles here in Australia which is like a fucking beer desert here, and they are looking for new facilities outside of their existing Chico California site. I had read previously about Grossman talking about a move across the other side of the US so this move is not surprising.
3. Vendor Agreements
If we look at the wine industry as a guide to how beer could or will end up we can view the products that are more sale-able than others will be more apt for shelf space. One of the core issues in craft beer is to attain a product such as Sierra Nevada Pale Ale, New Belgium Fat Tire, Brooklyn Lager that I safely call ‘Rent Beers’ as they help the companies pay the rent and staff to be able to make their other beers. You will find Rent Beers in airports, mainstream bars and areas that are less likely to have specialty Pumpkin beers.
Supermarkets need products that we need and buy regularly, and Costco for instance is one example of a system setup and designed for Fast Turnaround of items that fly off the shelf. Stock that is going to sit there for a month is not a popular product, and these are not the ones which retail outlets will supply. Once the supermarkets have certain products that they can readily and easily sell then the agreements are in place and its hard to break into that market if your brewery is not established.
Though we love our specialty bottle shops, our walk in visits to brewpubs, it is the large volume sales that helps to secure the financial viability of the business. Though I have seen a number of 700 craft Breweries in the works, I sure hope its not that many, as we will see greater consolidation of breweries and shelf space in the coming years.
4. Specialty Beers / Releases will Increase
Look at the end of the day this is the kind of beers we hang out for and can’t wait to try, debate with mates and Blog or Video bitch about it. It is quite funny how beer prices are creeping up for the specialty beers, but beer people don’t seem to mind, they pay for it especially when its RARE or limited. These beers are not the money makers for the brewers but the fun beers that they love making. So when brewers have their ‘Rent Beers’ they can make their specialty beers.
We have seen so many brewers now release not only there IPA, but Belgium IPA’s that are often similar just with a different yeast strand. We will see Sour Beers, new versions of the Imperial Stouts with strange ingredients. As all the rules are off now, and we can make whatever beer we want.
5. Brewers are Rock Stars
It is quite funny now that we love the brewers and now make them into this demi-gods that make the Magic Potion. I remember meeting Vinnys wife early last year when I was at his brewery and whats funny is that I wonder how many people would know who I’m talking about without even mentioned the Brewery or last name. We know the marketing prowess of the Scotish brewer from Aberdeen and the Dogfish Sam guy. These will continue to increase as we talk about brewers by their first names.
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I would love to see more brewers expand on taste perceptions, so instead of a clean beer put out some bottle conditioned beers, or trial beers that may not work, but are annualized so each year its partly different. What beer has that Wine doesn’t is that the beer is going to taste the same Year in Year Out where wine is dependent on the weather, soil and the wine makers skill in making another version. Beer is one that should taste the same time and time again, but it would be great to see brewers experiment with different herbs, or flavors in batches of beer. I remember having a Chilli Porter at Ballast Point last year and I was initially going to bypass it but then thought no fuck it, I will try it and it ended up being one of the favorite beers of the trip.