Rumors-did AB/InBev buy Northern Brewer and Midwest?

[mashani]

Well if Evily agrees with me, I must be right!

She is an "insider" now ya know. And we haven't banished her from the Borg.

[evily]

Well if Evily agrees with me, I must be right!

She is an "insider" now ya know. And we haven't banished her from the Borg.

Should I be worried???

[RickBeer]

"No, you help us meet our female quota" said Donald Trump.

I would take you over an old guy in Texas any day...

[FedoraDave]

I haven't bought any ingredients/equipment online for quite some time. I prefer my LHBS, which isn't so local, BTW; it's a 45-minute drive at highway speed just in one direction. But the ability to get tailored measurements for my recipes means less waste, obviously. And there's something more; I can actually talk to the guys there and get their opinions and advice. They've helped me immensely in that regard, and if nothing else, it's given me more confidence to maybe go out on a limb and experiment or widen my horizons with a recipe or procedure.

That's something you just can't get with an online supplier.

So my only real question in all of this is: How (if at all) is this going to affect the on-site retailers? They were competing with NB and all other online suppliers anyway, so how is this going to be different for them?

[RickBeer]

I think it depends on what AB InBev brings to the table. They clearly can't add Ecommerce expertise, since they don't have any. They COULD add buying power, the amount of grains and such that they buy clearly would allow them to extend that power to Northern/Midwest, which would allow them the ability to undercut prices while still maintaining or improving margins. They COULD add unique recipes, and even use their own recipes while still not disclosing the contents and using a commercial yeast instead of their proprietary yeast. They COULD open retail stores in select markets, undercutting existing LHBS, but most of them are small anyway and AB InBev doesn't need/want to open a bunch of low performing stores UNLESS they see it as a ticket into a brewer's mindset. And most importantly, they can/will add capital, which will allow Northern / Midwest to expand as they wish whether it be facilities, staffing, software/technology, etc. As an marketing consultant, I'm drooling at the prospects (although not rooting for AB InBev).

Dave, you mentioned a bunch of advantages that you see you get from your LHBS that an online supplier couldn't give you - tailored measurements and opinions and advice. Since this is my area of expertise in my real world job, let me challenge both of those.

You can order exact measurements of anything you want from many online suppliers. For example, Adventures in Homebrewing will sell you, to the tenths of a pound, any grain they sell. Now, a tenth of a pound is 1.6 ounces, so if you want 2 ounces of something you need to buy 3.2 ounces. And, while I do agree with you that it's satisfying to measure it yourself at the LHBS, I wanted to point out that you can buy tailored measurements from many online suppliers. By the way, you can have them mill it or not, and mix it all together or package each grain separately.

Second, opinions and advice. Many online stores have highly trained personnel that can give you that. Of course, not every rep would have that training, but they do have them. I often email Adventures in Homebrewing's owner and ask him questions. While that's not necessarily accessible to everyone, they, and others, do have the ability to ask questions and get opinions and answers. Yes, it is not the same as doing it in person, but it is available. They don't have a chat, others do. I've found that in the physical store, maybe 1/2 of the personnel can answer questions that I ask (and most of my questions aren't close to the questions that Borg members ask/discuss on this forum). The other 1/2 don't have the knowledge because of inexperience, lack of homebrewing experience (different from experience in the store), etc. I know who to ask, and who to avoid.

Lastly, cost. Assuming that the LHBS and the online supplier are comparable in price (many LHBS are higher than online suppliers), there is the added cost of gas locally vs. shipping for the online supplier. In your case, a 45 minute drive at highway speed is probably 2 gallons of gas each way, that's $8+ today. I use a gallon each way to Adventures, so that's $4 for me and they ship in Michigan for $5, so I am saving money (if my time has no value) and getting the satisfaction of measuring my own stuff. Again, I'm not saying that cost should be a determinant of who you buy from, just pointing out that gas is a cost and shipping is a cost.

That said, being there in person (retail) has advantages over Ecommerce, there is no doubt about it. Depends on the company, and what you are comfortable with. My wife hates online shopping, preferring to waste her time (my words, not hers) going to a store (and then likely returning most of her purchases) vs. online shopping.

Just pointing out that many online suppliers can provide what you mentioned AND are in fact an LHBS also, so they deserve our support especially as compared to Northern / Midwest / AB InBev which many seem to be saying they will never buy from again. Clearly you should go where you are comfortable, but know that what you seek others can provide.

Outside the brewing world, many online suppliers have the ability to provide recommendations / advice that you could never get in the retail world, or at least not at that price, or not easily. One example is Crutchfield for audio products. Their knowledge and support is unlike any you will find at your local Best Buy, and many audio stores closed years ago. And their prices are competitive. They have economies of scale to provide the support that a Best Buy can never duplicate.

[FedoraDave]

You make good points, Rick, and your expertise is appreciated. The economics may be comparable (although I don't pay $4 for a gallon of gas; more like $2.50 or so), but I still prefer the hands-on feel of physically going to the store.

I can get my guys to measure, mix, mill, however I want my grains, so that's a wash as far as comparing to online stores that do the same. And I enjoy browsing the store while they fulfill my order. Sometimes we get into a conversation, or I'll start chatting with another customer. It's like an old-fashioned country general store, and it lends a sense of community to our hobby, which, you'll have to admit, is often a solitary venture. It's real easy to start a conversation with a homebrewer, too. Just ask, "What are you brewing?"

Another advantage, for me, is my schedule. I shop at the LHBS on my Saturday off, and I brew every Sunday, so I do have to plan ahead somewhat, so I can buy supplies for the next two, sometimes three batches. But I'd have to adopt a different planning strategy to shop online, to allow time for shipping. Yeah, it can be done, but I've already settled into a pattern, and I'm slow to change sometimes.

[RickBeer]

The economics may be comparable (although I don't pay $4 for a gallon of gas; more like $2.50 or so), but I still prefer the hands-on feel of physically going to the store.

45 miles each way = 90 miles

90 / 22.5 mpg (estimated) = 4 gallons

4 gallons x $2 = $8

I assumed you drove both ways...

[Dawg LB Steve]

I use a gallon each way to Adventures, so that's $4 for me

Sounds like you need a more economical mode of transportation, I don't think I use 2 gallons of gas driving from Plymouth to Ann Arbor each year when I am up there.

[RickBeer]

I use a gallon each way to Adventures, so that's $4 for me

Sounds like you need a more economical mode of transportation, I don't think I use 2 gallons of gas driving from Plymouth to Ann Arbor each year when I am up there.

32 miles roundtrip. If I take my truck, that's basically 2 gallons of gas. If I take the Fusion Hybrid, it's 1 gallon. Depends what other errands I am doing.

[RedBEERd]

I'm SURE there's an app for this stuff, right?

[BlackDuck]

Most of the commenters were clueless that Farley sold out years ago to private equity and that is who sold to InBev.

Yup, According to a Bloomberg article posted yesterday, that private equity firm that you mention was actually Northern Brewer. This is the quote from the article "Three years ago, Northern Brewer acquired Midwest Supplies, its largest rival." So it seems like AB/InBev didn't really purchase both companies in separate deals. One purchase of Northern Brewer got them both brands.

[RickBeer]

Most of the commenters were clueless that Farley sold out years ago to private equity and that is who sold to InBev.

Yup, According to a Bloomberg article posted yesterday, that private equity firm that you mention was actually Northern Brewer. This is the quote from the article "Three years ago, Northern Brewer acquired Midwest Supplies, its largest rival." So it seems like AB/InBev didn't really purchase both companies in separate deals. One purchase of Northern Brewer got them both brands.

A private equity company, that owns a few other companies, bought Northern. Then they bought Midwest, and folded that under Northern, so yes - it looks like Northern acquired Midwest, but the private equity company in fact did it.

When a PE firm buys a company, they have one goal - cashing out. It's just a matter of timing and method. Go public and keep milking the company with management fees and of course future appreciation of your ownership stake, or sell to another buyer, which is what they did in this case.

[Beer-lord]

Was buying beer today and saw the AB distributor stacking beer and had a long chat with him about craft beer. He's a huge craft drinker and said he sees things starting to crash slowly again. Too many beers in the market all at once and he thinks people are going to get hurt. So I asked him if AB is helping to put a hurt on some and he said the didn't feel that way.
I asked about the Midwest/NB purchase and he said he thinks that's a mistake but that maybe they are trying to understand where the next money maker will come from.
The talk then went to SpaceDust and then we became BFF's.

[BlackDuck]

A private equity company, that owns a few other companies, bought Northern. Then they bought Midwest, and folded that under Northern, so yes - it looks like Northern acquired Midwest, but the private equity company in fact did it.

220, 221 whatever it takes!!!

[Inkleg]

A private equity company, that owns a few other companies, bought Northern. Then they bought Midwest, and folded that under Northern, so yes - it looks like Northern acquired Midwest, but the private equity company in fact did it.

220, 221 whatever it takes!!!

If you guys need me I'll be at the gym or the gun club.