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Is A-B Eyeing The Craft Brewers Alliance?

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abib craft-brewers-alliance
In a provocative article today, the business-oriented website, TheStreet.com, which describes itself as the “leading digital financial media company,” pondered whether Anheuser-Busch InBev might possibly be considering buying the Craft Brewers Alliance (CBA). The piece, by Miriam Reimer, entitled Anheuser-Busch Takeover Target: Craft Brewers Alliance?, certainly had the wags wagging on the blogosphere today.

There’s a great reminder of just how insignificant craft beer is to the business world in the opening paragraph, which refers to the CBA as that “little-known craft beer maker.” Compared to the big two, that’s understandable, but given that the brands in CBA are some of craft’s biggest players, it’s also pretty funny and humbling. But it’s good to remember that what many of us take so seriously is just a very small sliver of a much bigger pie.

At any rate, the idea of ABI buying the CBA was floated by Washington Street Investments president Bryce Peterson. Despite stating that “such speculation is premature,” he had no problem engaging in it himself. The thinking is, apparently, that ABI “might think it’s smart to buy a strong brand in the craft area and use its incredible distribution and marketing strengths to grow the acquired business.” Which sounds good on paper, but that’s exactly the reason that Anheuser-Busch earlier invested in the CBA brands individually, before their merger in 2008. When craft beer was beginning it’s latest growth trend, A-B distributors started wanting to carry some, too, and that drove A-B to partner with RedHook and Widmer to satisfy that demand. As a result, I’m not sure what buying the remaining 64.4% of CBA that ABI does not own would accomplish. The bulk of the article is given over to share prices, quarterly sales, and other business analysis. It’s interesting, up to a point, but all the numbers don’t seem to manage to answer the basic question of what advantage there would be for ABI. Plus, isn’t ABI still trying to trim the fat to pay for buying Anheuser-Busch?

The article concludes with a poll, asking readers to answer the question posed by the title: “Yes — Anheuser-Busch sees long-term potential in Craft’s growing corner of the market” or “No — Anheuser-Busch wouldn’t bother with such a small-time player.” What’s surprising is that as of this evening better than 17% thought “no.” They obviously are oblivious to A-B’s history. I’ve never seen a niche market too small for them try to own or destroy … ever. And InBev is even more ruthless than A-B was, so it’s hard to imagine them not going after craft beer in some fashion. Whether it will be by buying the CBA, at least at this point, is still an open question.

UPDATE 8.26: Author Miriam Reimer did a follow-up article to this one, Anheuser-Busch Thirsty for Craft Brewers, Poll Says, focusing on the poll at the end of it. She contacted me about the piece, and we spoke on the phone for a good half-hour, quoting me briefly in the article on page 2.

Dan Aykroyd For Schlafly Beer

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Paul A. Ner, who writes By the Pint, tweeted a fun photo of SNL alum and Blues Bro Dan Aykroyd holding a bottle of Schlafly Pale Ale.

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Nice, I’m convinced one of the ways to pull more people into the craft beer world is through celebrity endorsements, not paid ones, just by seeing more and more famous folks drinking craft beer. Somewhere I have a current TV show star drinking a Drake’s IPA through a straw. I’m going to have to dig that up.

It reminds of a famous marketing strategy I learned about in college, perhaps one of the first stealth marketing campaigns. The Lacoste brand — the one with the crocodile on polo shirts — did well in Europe but not in the U.S. So in the late fifties and early sixties they began sending free shirts to famous people; movie stars, politicians, etc. Low and behold the shirts starting showing up in magazine, newspaper and newsreel photos of the celebrities and sales began to take off. Perhaps we should do something similar, maybe a Flickr pool of the famous drinking craft beer.

Local Union Blasts BevMo Over Employee Treatment

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Wow, this is certainly an interesting development. BevMo, the company where I was the beer buyer for nearly five years in the late 1990s, is coming under fire by the United Food & Commercial Workers Union, Local 5, for their treatment of employees. They were never exactly great to their employees. Like almost every big or growing American company, they squeezed a lot out of their workers, expected long hours from salaried employees. Don’t get me wrong, I liked a lot of things about the job, and met a great many good people — though a fair number are no longer there — but it was demanding in a way that was beneficial to the company, but necessarily to the well-being of the people doing all the actual work. I know that’s a fairly common scenario, but it must have grown even worse, because for a Union to step in and go after BevMo the way they are suggests a level of poor treatment above and beyond the average company.

According to the BevMo Can Afford to Do Better website set up by UFCW-5, they launched a campaign last week against BevMo “[o]n the heels of the company’s August 1 announcement eliminating full time jobs across the chain and under [the subsequent] BevMo rules resulting in the loss of health benefits for the new part time employees, the workers are fighting back.”

BevMo Can Afford to Do Better

BevMo! currently operates 104 superstores, located in California & Arizona. In March 2007, TowerBrook formally announced its acquisition of BevMo! TowerBrook is a private equity firm with $2.5 billion under management. TowerBrook pursues control-oriented private equity investments in large and middle market companies and has committed to making BevMo even more successful. According to BevMo’s CEO, Alan Johnson, sales in 2000 were around $100 million and in 2009 reached well over $500 million. Since Towerbrook’s acquisition of the company, BevMo has opened 40 new stores with plans to open 100 more over the next few years. Clearly, BevMo CAN AFFORD TO DO BETTER.

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A press conference was held earlier today at Embarcadero and Clay streets in Oakland to explain the campaign to the public. The demands of the workers were laid out, as follows:

  1. Restore Full Time Positions
  2. Restore Health Benefits
  3. Initiate a Wage Increase Immediately
  4. Restore the 401(K)
  5. Union Recognition by BevMo

They’ve also set up a Facebook page about the campaign. And they’ve released a video outlining it, as well.

Hmm, I wonder if they’ll start calling for a boycott?

Anchor Sale Completed

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It appears we’re in for a day of beer business news. Anchor Brewing Co. today is officially Anchor Brewers & Distillers, LLC, with the deal to purchase the brewery and the Anchor spirits division now completed by the Griffin Group. They’ve also announced a strategic partnership with Berry Bros. & Rudd, the UK’s “oldest wine and spirits merchant,” which was founded in the 17th century.

From the press release:

“Today marks a major milestone, culminating our work with Fritz Maytag to maintain the time-honored legacy of Anchor Brewing Company in San Francisco,” said Tony Foglio, Chairman of Anchor Brewers & Distillers.

Keith Greggor, CEO of Anchor Brewers & Distillers continued, “In addition to fostering the culture of craft brewing and artisan distilling in San Francisco, there is an undeniable affinity for Anchor beers and spirits around the globe. To support this interest, we’ll be advancing our commitment internationally through a partnership with Berry Bros. & Rudd.”

With a primary focus on the spirits portfolio, Anchor Brewers & Distillers has established a strategic partnership with Berry Bros. & Rudd, Britain’s oldest wine and spirits merchant with a history that spans over 300 years. Through the strategic partnership, Anchor Brewers & Distillers will introduce two of Berry Bros. & Rudd’s award-winning spirits not currently available in the US exclusively in San Francisco in the Fall 2010.

“This is an ideal partnership for Berry Bros. & Rudd as Anchor Brewers & Distillers shares our passion and dedication for fostering the heritage of hand-crafted, premium spirits brands, while also making them available to a growing global market,” added Jeremy Parsons, CEO of Berry Bros. & Rudd Spirits.

With the closing of the acquisition and the partnership with Berry Bros. & Rudd, Anchor Brewers & Distillers is further reinforcing its intention to establish a “Center of Excellence” in San Francisco for craft brewers and artisan distillers from around the world. Much like Berry Bros. & Rudd’s No. 3 St. James’s Street in London, whose doors first opened in 1698, the Anchor Brewers & Distillers “Center of Excellence” will serve as an epicenter of development, education, entertainment and innovation, all designed to further contribute to the culture and heritage of craft beer and artisan spirits.

“Throughout Anchor’s history, quality, tradition and innovation have been cornerstones to its success. There has been an evolution of Anchor’s ownership over the last 140 years with each owner contributing to the ongoing legacy of Anchor,” added Fritz Maytag. “Tony and Keith share that commitment wholeheartedly, as well as a commitment to evolving the Anchor legacy by partnering with companies like Berry Bros. & Rudd that have embraced those same values for over 300 years.”

In addition, the San Francisco Chronicle has more details in Anchor Brewing acquisition is official, in their business section.

A Done Deal: NAB Buys Magic Hat & Pyramid

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The deal that was rumored late last month is now completed. North American Breweries has bought the Magic Hat, Pyramid and Portland breweries. The deal includes three breweries, five alehouses and one retail store.

From the press release:

According to Rich Lozyniak CEO of North American Breweries, the new beers add craft brewing credibility, and variety to the beers currently offered by the company. “We are really excited to add Magic Hat, Pyramid and MacTarnahan’s beers to North American Breweries. All three brands have a rich history of craft brewing that helps us gain acceptance in that tight-knit community,” said Lozyniak. “By having more beers to offer our customers, wholesalers and retail accounts, we can better compete with the multi-national mega brewers who dominate the U.S. beer industry.”

Along with the new craft beer offering, North American Breweries also imports and sells Imperial, Labatt Blue and the Labatt family of beers. Out of its Rochester brewery it makes and sells the historic line of Genesee beer, Dundee Ales & Lagers, the Original Honey Brown Lager and Seagram’s Escapes.

“The industry has taken a turn away from the mega brewers. We have a collection of regional and heritage brands that position us well among today’s beer drinkers,” said Rich Lozyniak. “At a time when the overall beer industry is in decline, we’re growing across brands which essentially created a great opportunity to collaborate with some of the best craft brewers in the business.”

According to the company, the heritage and brand position of Magic Hat, Pyramid and MacTarnahan’s will be closely guarded. “The credibility that these brewers have developed in the craft beer segment is key to our success. We will work hard to carefully maintain and grow what was passionately created by people who love to drink and brew beer.”

The new brands mean the addition of three new breweries, one each in: Portland, Oregon; Berkeley, California; and Burlington, Vermont. Magic Hat is the 10th largest craft brewery in the country, while Pyramid is the fifth largest. Both companies have a strong following of loyal consumers who love the craftsmanship that go into each unique beer.

Together Magic Hat, Pyramid and the Portland Brewing Co. (MacTarnahan’s) employ about 600 people. Currently, North American Breweries has approximately 500. “We’re a hardworking group of people with a strong track record of brewing beer, building brands and executing in the marketplace,” said Lozyniak.

Interestingly, the press release also includes NAB’s plans and their promise, presumably to consumers and fans of the brands they’ve purchased. That’s not something I’ve seen before, and it suggests they understand how brand perception effects how a particular brand performs, especially to beer geeks in the craft beer world.

North American Breweries’ Plans for Magic Hat, Pyramid and MacTarahan’s

  • The beer will remain the same: it will be brewed by the same people in the same breweries, using the same recipes, ingredients and commitment to artisanship as it has always been.
  • All breweries, Alehouses and the Artifactory will remain open. They provide a unique opportunity to sample and showcase the company’s best beers and brewing capabilities. Through the retail locations, we can talk to customers about the beers they want us to make.

North American Breweries’ Promise

  • We will communicate regularly and openly to our employees and at times — the media — about our business.
  • We put a very high value on our people and believe they are key to helping us compete with the mega, multi-national brewers who dominate the U.S. beer industry.
  • We will grow our brands by introducing them to new consumers and in new geographies through a focused sales and distribution effort.
  • We believe in working with one another to make our company great. We regularly adopt best practices company-wide.

De Koninck Sold To Duvel

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Not sure how I missed this, but late last week, Duvel Moortgat announced that they had acquired De Koninck. I learned about it from Stephen Beaumont, but the press release has all the details:

Duvel Moortgat nv has reached agreement on the acquisition of 100% of the shares of the Brouwerij De Koninck group. With this acquisition, Duvel Moortgat expands its portfolio of specialty beers; it also aims to reinvigorate the De Koninck beer brand.

Brouwerij De Koninck is located in the heart of Antwerp and has a unique bond with the city. The De Koninck “Bolleke” is most popular in Antwerp and the surrounding area as well as in the Netherlands, but it also enjoys strong brand recognition throughout Belgium. Brouwerij De Koninck started its activities in 1827 when Jozeph De Koninck bought a coach house on the border between Antwerp and Berchem, currently known as “Afspanning De Hand”. These premises were converted into a brewery in 1833. Since then, the image of a hand has been immortalized in the brewery’s logo. Over the years, the Van den Bogaert and Van Bauwel families succeeded in building De Koninck into a valuable brand with a solid local reputation.

Bernard Van den Bogaert states: “This acquisition is a logical step. Because of the small size of our brewery, we have experienced a lack of commercial strength and distribution channels. During the last couple of years, Duvel Moortgat has proven that it possesses the right experience. And the fact that the two breweries have maintained an excellent relationship for generations adds an extra dimension to this acquisition.” Brouwerij De Koninck experienced its greatest success during the nineties, achieving a yearly production level of 130,000 hectoliters. As a result of a shrinking beer market and a strong decline in the pale ale segment, today less than 50% of that volume remains. Duvel Moortgat is also acquiring significant real estate, mainly located in the Antwerp region. This comprises the brewery site, about seven other properties and 63 cafés, including Antwerp icons such as “Den Engel” at the Grote Markt and the “Boer van Tienen” at Mechels Plein. The acquisition also includes beer trader Brouwerij De Valk, based in Wijnegem. De Valk has grown to become a key supplier in the Antwerp region, delivering to hundreds of cafés and restaurants on a daily basis.

Michel Moortgat (CEO of Duvel Moortgat) states: “We are very pleased to be able to incorporate Brouwerij De Koninck into the Duvel Moortgat Group. The “Bolleke” is not only a strong brand but also a quality specialty beer that fits perfectly into Duvel Moortgat’s range (Duvel, Chouffe, Maredsous, Liefmans, Vedett, Bel Pils). Our international distribution, including our own branches in Belgium, the Netherlands, France, the UK and the USA, provides an ideal operating base to progressively develop De Koninck. It did not take us long to reach agreement: family values and traditions are concepts that both breweries feel strongly about.”

De-Koninck
The De Koninck brewery in Antwerp.

Widmer’s Craft Brewers Alliance To Buy Kona Brewing

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The Oregonian is reporting that the Craft Brewers Alliance (essentially Widmer, with RedHook and distribution of Goose Island and Kona) will purchase Kona Brewing for $13.9 million. Under the terms of the agreement, Kona will become a “wholly owned subsidiary” and Mattson Davis will remain at the helm, with brewing for the mainland continuing to be done at Widmer and RedHook breweries.

Craft Beer Numbers Up Again Mid-Year

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Good news again this year for craft brewers. The Brewers Association has released the mid-year numbers and they’re positive again this year despite a rocky economy. Volume sales grew 9% over the same period last year and sales dollars are up 12% for the first six months of 2010 as compared to 2009. Last year those same stats were 5% and 9% respectively.

From the press release:

Craft breweries continue to grow despite many challenges, and currently provide an estimated 100,000 jobs and contribute significantly to the U.S. economy. Barrels sold by craft brewers for the first half of the year are an estimated 4.6 million, compared to 4.2 million barrels sold in the first half of 2009.

“While craft brewer sales volume climbed 9 percent in the first half of 2010, overall U.S. beer industry volume sales are down 2.7 percent so far,” noted Paul Gatza, director of the Brewers Association. “There is a movement by beer lovers to the innovative and flavorful beers created by America’s small and independent craft brewers. More people are starting to think of craft-brewed beer first when they buy in restaurants, bars and stores.”

The other great news is the number of new brewery openings, which continues to rise, too. 100 new breweries or brewpubs have opened over the last year. Picking up the press release again:

The U.S. now boasts 1,625 breweries—an increase of 100 additional breweries since July of 2009—and the highest number in 100 years. A century ago in 1910, consolidation and the run-up to Prohibition had reduced the number of breweries to 1,498.

“Entrepreneurs across the land are creating jobs by opening new microbreweries and brewpubs, and we are also seeing many homebrewing hobbyists going pro by starting what have been referred to as nanobreweries,” Gatza added. “Super tiny microbreweries or brew pubs, that make beer for a very localized network of taverns and stores, are starting to become a trend, primarily in the states that allow self-distribution as a means of getting beer to market.”

Mid Year Graph

North American Breweries Close To Deal To Buy Magic Hat & Pyramid

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Beer News is reporting, via Harry Schuhmacher, that the Magic Hat/Pyramid Breweries is very close, possibly days away, from announcing that they’re being acquired by North American Breweries, the entity created to take over Labatt’s distribution in the wake of the Anheuser-Busch / InBev merger. NAB also owns the Genesee and Dundee beer brands. Check out the full story at BeerNews.org.
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