BeerBorg

By creating Big Craft Breweries, apparently.

http://www.businessinsider.com/craft-br ... eer-2016-2

This definitely changes the face of the craft beer scene. I think it's a good tactic, since a merger is very different from an acquisition. Both Victory and Southern Tier create very good beer.

But the gauntlet has definitely been thrown.

I'm not sure I am totally happy with craft breweries buying each other as that's a loss of some independence but it's better than the alternative.
I can't blame them for trying to even the playing field.

Beer-lord wrote:I'm not sure I am totally happy with craft breweries buying each other as that's a loss of some independence but it's better than the alternative.
I can't blame them for trying to even the playing field.

These two combined produce about 250,000 barrels per year. They're still pretty small, even compared to a lot of the craft breweries.

bpgreen wrote:

Beer-lord wrote:I'm not sure I am totally happy with craft breweries buying each other as that's a loss of some independence but it's better than the alternative.
I can't blame them for trying to even the playing field.

These two combined produce about 250,000 barrels per year. They're still pretty small, even compared to a lot of the craft breweries.

There's that, but more important, I think, is that it makes a statement. You have to at least think that these guys are on the same page and can work together, as opposed to being swallowed by a whale.

This is an interesting dynamic emerging in the craft beer world. I don't personally feel like this is counter to craft beer in any way. Size alone is not the enemy. What is counter is taking the 'craft' out of beer, producing for the masses for the lowest price/highest margin. I even waiver slightly with the purchase of some breweries by the big guys. I don't like it, but as long as the company maintains their roots they can take advantage of the excess capacity and distribution of the big brewers. Smaller guys merging seems to be the better alternative. It would allow them to pool resources in order to increase their reach. The bigger company can better secure capital for expansion and leverage distributors, and when the small guys can actually compete with ABInBev and the others, the consumer wins.

Small local breweries are popping up by the dozens, dozens of dozens, everywhere. The merging of craft breweries will definitely help those breweries, but the big picture is everybody will have to compete against the local guy and/or regional folks that simply don't have the distribution expenses.

I think everybody is slowly dividing into two groups: The bigger guys that are expanding and trying to keep costs down... And the smaller guys who are trying to expand but can run locally at a higher profit margin. One struggles to grow while the other struggles with money.

A local brewer sells his stuff cheaper than the bar down the street. That guy has to mark it up to make a profit. Lagunitas is on tap their too, but I'm sure at a far lower profit. It's a long reach to get that on tap here in WV and even at that the local IPA is obviously far, far fresher.

JimH wrote:This is an interesting dynamic emerging in the craft beer world. I don't personally feel like this is counter to craft beer in any way. Size alone is not the enemy. What is counter is taking the 'craft' out of beer, producing for the masses for the lowest price/highest margin. I even waiver slightly with the purchase of some breweries by the big guys. I don't like it, but as long as the company maintains their roots they can take advantage of the excess capacity and distribution of the big brewers. Smaller guys merging seems to be the better alternative. It would allow them to pool resources in order to increase their reach. The bigger company can better secure capital for expansion and leverage distributors, and when the small guys can actually compete with ABInBev and the others, the consumer wins.

I mostly agree. The problem I see with the big guys promising to let their acquisitions stay true to their roots is that it’s an easy promise to break if the execs/shareholders want to. It’s a nebulous idea and a brewery’s character is hard to define. Who knows how many brewing experiments get nixed in favor of known profitability once AB InBev gets the final say? The nice thing about this deal is that they’re holding hands and jumping, not pushing each other off into the brave new world.

alb wrote:...The problem I see with the big guys promising to let their acquisitions stay true to their roots is that it’s an easy promise to break if the execs/shareholders want to...

I agree that a couple of smaller breweries merging is a different situation than a brewer selling to a large corporation.

Many corporations are barely able to plan a couple quarters ahead. At some point the efficiency experts, the six sigma guys, are gonna come in. The brewery will work "smarter". Managers will be turned around a couple times. Maybe the brewery will be making something similar to what they made before and maybe not. It's just a numbers game to the corporation. Is there more money in having the mass market beer on the shelf than the craft beer?

Good points from alb and the professor. The merging of two small craft breweries into one not-so-small craft brewery shows a totally different philosophy than megabeer buying a small craft brewery. The former is still dedicated to the craft, while the latter is pursuing a place in a niche market for the sake of more profit. And the bottom line trumps everything in that case.

Naturally, a small, independent brewery wants to make a profit; that's what businesses do. But if they're putting that actual craft of brewing first, they'll keep producing and marketing their popular styles while R&Ding new styles, or new wrinkles to certain styles.

I don't really consider this a merger, as such. It sounds like they are raising a corporate umbrella over them both. They will be a fraternity of sorts. The company I work for has 2 corporate sisters. We all three share the umbrella corporation logo, policies regarding human resources, and information database, etc., but our missions are different and we operate independently day to day. It's a question of strength in numbers.

It's kind of an exciting time. I'm sure there will be breweries that I adore that will fall, but things like this make me proud of the innovative character of independents. And I have no fear that it will ever go back to "the bad old days" of only mass-produced light American larger.