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Brewing Locally? Think Globally: A New Perspective on Acquisition

For most American industries, 2008 was a devastating turning point. The Great Recession weighed heavily on our businesses, especially our local businesses, with one surprising exception: craft breweries. 

In 2008, there were about 1,500 breweries in the United States. Today, there are over 7,000 – and a stunning portion of them are locally owned. 

And yet, the beer industry has also consolidated since 2008. A series of massive acquisitions resulted in the creation of ABInBev, a Belgo-Brazilian behemoth that currently controls almost 30% of the global beer market

So, is brewing the last bastion of American manufacturing? Or is it just another globalized industry?

Where The Craft Breweries Came From

The sudden resurgence of local brewing in the United States is one of the most surprising and welcome underdog stories in America’s recent history. Breweries like Anchor, Sierra Nevada, Boston Beer, New Belgium, Bell’s, Summit, and Boulevard blazed the trail for this fast growing segment of beer.

Entrepreneurship and artistry fueled the growth of small breweries. Before craft breweries boomed, the beer market was starting to look a little stale. Large companies focused on mass-producing the most affordable beer possible, neglecting niches in the market like EPAs, IPAs and Sours.

When the great recession hit, entrepreneurial brewers began to fill those niches. This kicked off an explosion of innovation as home-brewers across the country concocted new products and pushed them to the market. 

Where They Are Going

Oftentimes, the skills required to start a business are different than the skills needed to sustain a business, especially when markets become uber-competitive.

As more and more microbreweries entered the market, competition between brewers intensified. The artists who invented popular craft beers suddenly carried the responsibilities of a business owner, often without an education in business management. In other instances, entrepreneurial owners found themselves ready to move on to their next venture. 

Regardless of cause, many independent breweries have been acquired by large beer companies like ABInbev or MolsonCoors. Notable acquisitions include ABInbev’s acquisition of Goose Island, Bluepoint Brewery and 10 Barrel Brewing, and Golden Road Brewing.

It’s difficult to overstate how negatively the public has reacted to these acquisitions. One journalist compared the acquisition of Goose Island to the story of David and Goliath, “if David gave up the fight and joined the board of Goliath, Inc.”

Sentiment aside, how does acquisition actually affect local breweries? Perhaps more importantly, how does it impact the communities around them?

The Bright Side of Acquisition

People often fear that acquisition will undermine the value of local breweries – it’s assumed that corporations will stifle innovation, undermine product quality and divest from the local community. In reality, the opposite is often true. 

Take Goose Island for example. After acquisition, ABInbev and Goose Island’s founders partnered to improve Goose Island’s quality control, enhancing the quality of their existing products. With ABInbev’s support, Goose Island was able to drastically increase their experimentation with barrel-aged brews; this innovative product line is a crowd favorite locally and nationally. 

Acquisition has also been economically beneficial for Chicago – not only has Goose Island expanded its production, it now employs considerably more people in the Chicago area.

Additionally, Goose Island still fosters a local sense of community. Chicagoans still get to enjoy their local taproom, watch White Sox games at the brewery and connect with one another in the process. 

The Takeaway

We all love our local businesses. Instinctively, many of us shutter at the thought of big corporations (The Evil Empire!) acquiring our favorite craft brewery. But from a practical perspective, the costs of acquisition mostly exist in our minds. 

Acquired breweries can still be just as innovative and beneficial to a community as an independent brewery – especially if that independent brewery was on the edge of bankruptcy prior to acquisition. 

As the covid-recession continues, many more craft brewers will probably be sold to large beer companies. Don’t cast judgement too quickly when these deals take place. In time, they might prove beneficial for everyone – even the pickiest beer drinkers.

Salute amici!

#business #bars #taprooms #breweries #acquisition

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