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Fervent Few

The Fervent Few — The Evolution of Acquisitions

Craft Brewery acquisitions used to cause huge waves across the beer community—but after a couple of recent buyouts hardly raised an eyebrow, we decided it was time to revisit the topic. This week we asked the Fervent Few what they think of partial investments, how private equity fits into the acquisition puzzle, and if their feelings on acquisitions have evolved since the last time we talked about them.

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Steve Rimington: “My view doesn’t change whether it’s 30 or 70%. As soon as the first Big Beer investment is made, I aim to move away from their beers, on principle. At the point Big Beer benefits to any degree from their operations then I have to step back as I’m not prepared to fund predatory or morally poor business practices.

Private equity is different in my opinion. While it is minority ownership, the brewery continues to be ‘craft’—and to live or die in my eyes—based on the quality of the output. Provided private equity firms are not putting the brands they own together to ‘manage their market,’ then I’m happy to continue to purchase by choice. If that control changes, or the quality drops (usually because of PE’s typical attempt to cut costs), I’ll spend elsewhere. I mean, it’s not as if there aren’t great smaller breweries coming through, and that’s how I want it to continue.”

Andrés Muñoz: “I think a big part of why M&As may go unnoticed is because of the smoke and mirrors that go into many of them (as well as the general lack of knowledge from consumers). I stay pretty informed on beer business news and I literally learned a month ago that Terrapin was owned by MillerCoors—or should I say, Tenth and Blake Beer Company. I think an average consumer seeing that would think, ‘Oh, just two small breweries merging,’ or something along those lines. Mahou San Miguel falls into that as well due to the lack of name recognition in this market.

I personally do not care if a brewery gets acquired or merges with another. If I already liked the liquid and said liquid remains the same, zero complaints. I recognize that these are businesses and this is part of a business. Any brewer that says they'll never ‘sell out’ just hasn't been offered the right amount of money. Same with PE: most businesses require outside investors, especially in the early stages or in growth periods. The goal is to make money, folks. It isn't that complicated.”

Shane Pearson: “I don’t think most people care one way or the other. Some do. It’s not a large percentage, and they can speak with their pocket book. As a brewery owner, I care as much as it impacts my business and businesses like mine. The reason is simply market dynamics, and it gets old seeing very large companies market themselves as small, independent breweries. Once purchased, the formerly independent brewery becomes just a brand in the conglomerate’s portfolio.

The large conglomerates sell a lifestyle image that connects with people who picture someone making beer by hand at a brewery vs. mass industrial production, which is not seen as cool by lots of people. It’s like how good companies try to slap ‘organic’ on anything they can because people assume the label means it’s better.

The other thing that irks people is the post-sell marketing spin about how an acquisition is a ‘partnership’ to try and avoid the beer-industry backlash. That is the most fake marketing ever. At this point there have been so many different forms of investment and buyouts that they are mostly background noise unless a hyped brewery is acquired, and it comes as a surprise. Even then, the backlash will subside and many people will go back to drinking what they like and rationalize why. Last I saw, Bourbon County still sells well every year, even as Goose Island make more and more.”

Chris Cohen: “I'm totally stoked for entrepreneurs who work their asses off and then get a big pay day. I don't own a brewery, but as an entrepreneur myself, I get it. To me, there are a few scenarios that make it truly painful when a brewery is purchased: 1) When the owner had staked his/her whole public personality and the brewery's brand on being independent, and maybe even talked smack on other breweries that had previously sold out; 2) When the brewery is purchased by a company that is known to be a bad actor in the marketplace and perhaps even continues to use its oversized influence to harm smaller beer makers or craft beer in general; and 3) When it's one of your local favorites, and now the money they make is going to be siphoned off to some billionaire investor group that couldn't care less about your town and the local workers at the brewery.

Have no doubt, the idea that ‘it's all about the liquid’ is complete bullshit—that's exactly what the marketing and strategy folks at the Big Beer companies of the world want to hear you saying. There are plenty of breweries out there making amazing liquid, and when you're standing at the bar or in front of the fridge at the store deciding which beer to get, you are indeed making a small choice about what you value. That makes it sound like a higher-pressure decision than it really is, and it's not that complicated—there's tons of great beer out there for you to choose from, and you can do your own line-drawing regarding your values pretty easily (it's particularly easy for folks like us who know a ton about all this stuff). You don't need to turn it into a litmus test or judge the exact percentages of ownership from every infusion of private equity in every brewery.

For instance, as a bar owner, I only serve beer from breweries I consider to make excellent liquid, and I lean heavily toward only serving from breweries that are fully or mostly independent. That said, I'm not going to stop pouring Firestone's special releases because they're owned by Duvel. Duvel is a legit beer company that I admire in its own right. I'm not going to stop pouring beasts from The Bruery because they sold a majority stake to Castanea Partners, a private-equity firm in Boston. I'm stoked that Patrick Rue got a well-deserved payday and I still dig the unique stuff The Bruery puts out. I don't love the idea of The Bruery's profits flowing off to a bunch of millionaires or billionaires in Boston, though, and that is part of my decision making.

I admire the hell out of the Brewers Association and all they do for the industry, but I don't feel obligated to 100% agree with their line-drawing when it comes to what I pour at my bar. That said, I do consider their ‘independent craft’ seal to be a very important data point for consideration. I certainly agree with their refocusing on ‘independence’ rather than on the undefinable and easily misappropriated ‘craft’ marketing term.

What remains one of the most frustrating elements of this debate is the lack of transparency around ownership, and the efforts that Big Beer companies (and perhaps private equity firms) make to hide their ownership of breweries from the general public. People have limited attention to give and a variety of interests; most do not or cannot care enough to learn all these details about the beer biz...or to even learn about why they should care. The BA's independent seal is the closest thing to transparency we have right now. In any case, craft beer has become a mature market sector rather than the punk-rock free-for-all it was until recently. That early period for craft beer was a lot of fun, but we all know that at the small, local level, there's still lots of activity and innovation. While the bigger business trends are important for the direction of industry, we all have nearly endless independent options to vote for with our money...or not.”

John Conner: “Personally, I'd rather support a brewery that is independently owned rather than one that has been bought out by a major corporation. I still believe that the effects of AB InBev's acquisitions have not been good for the world of craft beer (think of how uniform so many tap lines are now, most of which are breweries that are owned by either AB InBev or another major corporation). However, I also have no interest in preaching to someone who has a different opinion about this; some people care about it, others don't as much, and that's fine by me. I want to enjoy the beer I drink, and part of that is knowing that I'm not supporting a corporation like AB InBev, but I also respect that others see it differently.”

Robbie Wendeborn: “This M&A shit is all about rapid growth for some (Karbach Brewing Company is a good example here), or survivability in the case of Avery, which was way overextended and wasn't growing the way they thought it would after their bank-funded expansion.

At my core, I'm basically a pro-union socialist, so as long as the workers are treated well, I don't really care where the money is coming from. In the ideal scenario, every business would offer its employees a way to acquire equity in the company through their labor, that's why I'm really in love with the ESOP model that so many craft breweries have.”

Have your feelings on brewery acquisitions changed? You can join the Fervent Few and chat about it with our community of beer enthusiasts—all while supporting the great content that Good Beer Hunting creates.

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