AB InBev Acquisitions and Where They Will Look Next

Who knew Anheuser-Busch InBev (ABI/Budweiser) was such a lover. After years of playing the cold-hearted, uncaring, starch-shirted executive, ABI now is like The Grinch. You could say that going into the business of love, ABI somehow found its heart. Looking to hook up with someone young and sexy, ABI is spreading its love in acquiring craft breweries. There are some leading areas where they will go but more on that later.

It all started with a shy dance in 2011, when after recognizing theirsagging bottom line in beer sales, ABI purchased Goose Island. For years ABI’s business plan was so routine and mundane, the most fun they ever had was rolling out commercials with  horses and dogs, as well as the occasional new, tasteless beer.Image result for budweiser horse and dog images

But then the beer market changed. Bud sales dropped faster than Ronda Rousey and craft beer started eating up that precious shelf space. Business meetings inside ABI bunkers suddenly got very serious and purchasing successful craft breweries became the newest strategy. The idea of course, was to move the Budweiser brands along with their new products and eventually get a stranglehold on distribution.

Ironic isn’t it, that ABI can no longer compete in the very same field in which they are a leader, and instead of being someone that would build it, brew it and sell it-ABI will buy it. While considering more acquisitions, ABI is basically pleading no contest in acknowledging this, only to say, “Move along, nothing to see here.”

As if they found the fountain of youth, ABI’s confidence has skyrocketed over the last two years. After Goose Island, here are their craft beer conquests:

  •         Blue Point Brewing- Long Island, N.Y., February, 2014
  •        10 Barrel Brewing- Bend, Or., November, 2014
  •         Elysian Brewing- Seattle, Wa., January, 2015
  •         Golden Road Brewing- Los Angeles, Ca., April, 2015
  •         Four Peaks Brewing- Phoenix, Ar., December, 2015
  •         Breckenridge Brewing- Littleton, Co., December, 2015

ABI isn’t interested in  stealing a business or a hostile takeover but rather, they are a sweet-talking Romeo that wants to shower the brewery with bouquets of cash. ABI appears smitten with their new loves but don’t let them fool you, they know not to get emotional. These are totally business deals.

ABI is actively casing the joint, the country that is, looking for its next mark and to understand them is to see where they’ve gone, and anticipate where they are going next

From all accounts though, the brewery sellers are more than pleased with the result, not only because of the money, but also with their increased equipment and easy access to raw materials-mostly hops. And seemingly, ABI is allowing the breweries to continue doing their own thing.

However, not all unions are balloons and carbonation bubbles. For instance, former Elysian brewing co-owner Dick Cantwell originally bought in to the buyout but was outraged with the famous ABI “peach pumpkin” hipster beer ad. He promptly resigned from Elysian. (I’m guessing, however, it’s much easier to fall back on your principles when you’re a multi-millionaire.)

What Does Ab InBev Look For In A Brewery?

ABI is actively casing the joint, the country that is, looking for its next mark and to understand them is to see where they’ve gone, and anticipate where they are going next.

There are a number of requirements but mostly ABI is looking for a brewery that: has experienced success, is in a large market or beer-concentrated area, is able to increase distribution from a central location and has the potential for growth.

Who Is Out On The Big Beer Sweepstakes?

Not every discussion with a brewery is a meeting and not every meeting is an offer, and I’m sure ABI met with numerous breweries for each one they’ve purchased. It’s good business for them to have had a long list of potential clients, instead of courting just one or two.

For example, Cigar City of Tampa, Fl. confirmed last year that they had met with ABI but later said they were happy to remain independent. There was renewed buzz recently about the same rumor which brought the same denial. This is much different though than saying you actually turned down a deal. Despite its large population, Florida is not a great craft beer state so my guess is that an offer was never made.

Texas would also seem to be a real possibility with someone like Austin Beerworks but I would say no to that as well. Austin has a great beer image and there are also the large metro areas of Dallas/Ft. Worth and Houston, but Texas and surrounding states are too large and barren to cart beer across. Beer is heavy and the return on investment isn’t great enough when considering the miles necessary to cover it. Texas is out.

So Who Will AB InBev Hit On Next?

(disclaimer: the following information is based on neither rumor or fact, and entirely is speculation)

You’ll note from the purchases that ABI now has a presence in the huge beer areas of the country like the Pacific Northwest and Denver, Co. Southern California and the desert states are covered, and Goose Island has blanketed the Midwest. The northeastern U.S. is represented by Blue Point.

Also, with the highly-awarded Vienna Lager as their flagship beer (as good as advertised), DB’s lager-focused brewery is a perfect fit for ABI.

I see ABI sparking somewhere in the eastern/southeastern part of the country where the states are no longer beer wallflowers. My top three picks:

1)    Devils Backbone Brewing (Outpost), Lexington, Va.-

Having opened in 2008, Devils Backbone is in the heart of arguably the newest bustling beer market in the country and is quickly becoming a major regional player from its home in Virginia. The three-time GABF “Brewery of the Year”, DB distributes into Maryland and the District of Columbia, and a deal in 2015 allowed DB to branch into North Carolina.

A $7 million expansion recently allowed DB to raise its production from 60,000-90,000 bbl with an eye towards 150,000. DB appears perfectly situated for huge growth.

Though not in a major metropolitan area, DB has connectivity to push beer north, east and south, and with an already established distribution plan, it will have the ability to distribute further up and down the Atlantic coast. Blue Point distributes south to Washington, D.C., where the two distribution lines could connect.

Also, with the highly-awarded Vienna Lager as their flagship beer (as good as advertised), DB’s lager-focused brewery is a perfect fit for ABI.

2)    Port City Brewing, Alexandria, Va.-

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photo by Indy Beer Sleuth

As if their four medals at the 2013 GABF weren’t enough, Port City is fresh off of its three medal performance as well as receiving “Best Small Brewery” and “Best Small Brewer” awards at the 2015 GABF. Without question, Port City’s national star is rising.

Having just opened in 2011, Port City is distributed in its home D.C. area, as well New York and North Carolina producing less than 15,000 bbl. On perhaps the small end for what ABI is seeking but with its perfect location, Port City easily could make strong growth up and down the coast with ABI’s ownership.

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photo by Indy Beer Sleuth

(I was fortunate to have been at their medal-returning throwdown in September 2015, and I was blown away by their entire beer lineup.)

 

 

3)    NoDa Brewing, Charlotte, N.C.-

Since opening also in 2011, NoDa has experienced rapid growth, thanks in large part to their 2014 World Beer Cup gold medal IPA, Hop, Drop ‘n Roll. An $8 million expansion into a new production facility in late 2015 was expected to raise NoDa’s production to 15,000 bbl.

The so-called “Crown Jewel” of Charlotte’s burgeoning craft beer scene, NoDa is suited for easy distribution in all directions. A new, speedy canning line will help push distribution even faster.

Whatever side of the dance floor you are on in this AB InBev tunnel of love tour, the acquisitions will continue to be made but I really don’t think there is anything to fear from ABI…yet. Until ABI really ramps up its purchases and becomes the distribution bully it may want to be, I’m not worried that the craft beer world has changed.

After all, love is in the air.

Cheers!

Rick

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