Molson Coors lined up the purchase of Sharps in the UK earlier this month

Molson Coors lined up the purchase of Sharp's in the UK earlier this month

When Molson Coors lined up its purchase of Sharp's Brewery in the UK this month, talk turned predictably to the demise of regional brewers in the shadow of multinationals. But, as Larry Nelson argues, this is far too simplistic - and lazy - a conclusion to jump to. After all, examples of such buys around the world have shown that bigger can often be better.

At first glance you might dismiss it as a story of minimal interest, an acquisition on the margins of a multinational’s company’s vast array of commitments. If that's how you feel, though, then you need to consider afresh Molson Coors UK’s purchase of a British microbrewer, a transaction that highlights a number of trends in the industry.

Earlier this month, Molson Coors splashed out to the tune of GBP20m (US$32.4m) for Sharp’s Brewery, a cask ale producer that has been positioning itself as an up-and-comer in the increasingly crowded British beer market. For its money, Molson Coors gained 70,000 barrels in volume, a modern brewery with some headroom for expansion, and, most importantly, a brand – Doom Bar, a golden-coloured bitter with a modern-ish image.

Doom Bar has potential for growth, for the usual reasons – expanded distribution backed by increased marketing. Molson Coors chief executive officer, Mark Hunter, has noted that the potential for bottled Doom Bar has yet to be recognised, and that once the brand is established in the UK it could be ripe for export elsewhere.

Hunter also pledged to protect the traditions of Sharp’s, in particular keeping the brewery operational and the brands brewed in Cornwall. It’s also worth noting that the reaction of Sharp’s staff has been highly favourable to having Molson Coors’ deeper pockets backing their future prospects.

Recognising what might be described readily as over-dependence on the fortunes of the Carling lager brand in the UK, Molson Coors has been broadening its portfolio of late, beginning by importing into the UK speciality beers such as Zatec and Casteel Cru from mainland Europe. In 2009, it acquired Cobra Beer out of administration and reinvigorated the brand by returning it to its marketing roots, celebrating the happy marriage of lager and spicy Indian food.

Previously Molson Coors was acquiring speciality brewers in Canada. The first was in 2005 with Creemore Springs, a pilsner producer in Ontario; in 2009 it added Granville Island, the Vancouver-based brewer that’s front-and-centre in one of the city’s most frequented tourist districts.

The strategy is in step with its competitors. With InBev’s acquisition of Anheuser-Busch came the vanquished American’s direct and indirect stakes in a number of the country’s microbrewers. As part of the fruits of the evisceration of Scottish & Newcastle, Heineken is now owner and proud operator of Caledonian in Edinburgh.

There’s also a variation on the theme. Lacking discernible competition at the beginning of the new Millennium in its home market, Carlsberg created its own craft beer culture, launching first the Semper Ardens range, before going on to sustained success with the Jacobsen beers and subsequent brewery. Carlsberg also became a beer importer, bringing attractive brands from around the world to the attention of the Danes.

What’s at issue here has to do with the consumer’s perceptions of big brewers paddling in – or swamping – microbrewers in their home markets. For example, on-line comment regarding Molson’s takeover of Creemore Springs in 1995 was vitriolic; the material festers to this day for the consumption of the casual beer fan.

The Sharp’s acquisition received a less-than-enthusiastic response from the Campaign for Real Ale (CAMRA), a 100,000-plus strong UK consumer group that prides itself on being not only the modern-day protector, but also the saviour of cask ale for some 30 years now.

CAMRA’s immediate reaction was “regret” that Molson Coors was buying Sharp’s, citing concern over the future of the brewer’s other brands, and the continuation of brewing in Cornwall. (For those unfamiliar with CAMRA, it can be safely surmised that it is very, very big on tradition. Each brewery and every brand is sacred.)

The reaction was odd, in that CAMRA has been an implacable critic of what it perceives as the apathy of British national brewers to the fortunes of cask ale. It infamously characterised nationals as the “gravediggers of cask ale” a decade past in that year’s edition of their Good Beer Guide. It’s also worth noting that CAMRA welcomed Molson Coors’ revived interest in cask ale at that time, albeit in the most grudging of fashions, taking a swipe at national brewers’ collective neglect of once dominant brands such as Bass, Boddington’s and Tetley’s.

Hunter moved to soothe such concerns, pointing to its work in Canada with Creemore Springs and Granville Island. Creemore is looking at a capacity expansion at – yes – its existing small-town site.

But CAMRA has a point, too: multinationals don’t make it clear that they own and operate these smaller ‘boutique’ brewers. The press release announcing the Granville Island deal illustrates the point – it was Creemore Springs that ‘acquired’ the business, with Molson Coors’ ultimate ownership left to the very last sentence. (Canadian journalists weren’t fooled. The Globe and Mail, Canada’s national newspaper, headlined its account “Molson buys Granville Island brewery”).

Leaving aside the perpetual question of whether tradition motivates purchase – the short answer is no – what we have is a clear trend for multinationals buying smaller producers and operating said acquisitions as stand-alone producers/products. It’s a reasonable surmise that Molson Coors may well look outside its Big Three markets to acquire boutique brewers. After all, this is a company fairly itching to expand its geographic footprint.

Secondly, the good old days of national cask ale brands are dead. John Smith’s is the last pre-Beer Orders ale brand with marketing support, and there’s not much to suggest that it has a rosy future.

That Molson Coors is involved in cask ale is better news than the beer style’s supposed champions recognise. A national brewer taking note of ale’s growth of late, and a willingness to invest in its future, can only hearten other producers.

The real challenge may be making Doom Bar a good bar call. The brand derives its name from the “infamous” sandbank at the mouth of the Camel Estuary in North Cornwall. Who knew? Best of luck to copywriters who try to explain that to the thirsting masses.