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Who cares if Anheuser-Busch InBev buys more craft brewers? - Comment

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This week, Anheuser-Busch InBev bought another US craft brewer, Devils Backbone.

AB InBev bought Goose Island in 2011

AB InBev bought Goose Island in 2011

Two years ago, this news would have sparked a slew of interest. When AB InBev went on its 2014 craft brewery spree in an M&A-packed 12 months that saw it pick up Blue Point Brewing, Elysian Brewing Co and 10 Barrel Brewing Co, trade media - ourselves included - covered each buy with analysis, comment and follow-ups. This time around, not so much. It was the same for AB InBev's previous swoop, Colorado's Breckenridge Brewery in December.

Even craft beer drinkers, some of whom denounced earlier acquisitions in spectacular fashion, are staying relatively quiet. 

A line from the blog Beervana this week was typical: "This is getting to be a boring novel in which all the chapters repeat. There's nothing to say that hasn't been said in the earlier chapters."

Which suggests then, that, when it comes to the public-relations battle, AB InBev has won. A company castigated for buying up beloved beer brands and, according to the bloggers, turning them into diminished cash-cows by dint of cost-cuts and margin squeezing has settled the debate by boring its detractors into submission. 

After all, the sheer number and regularity of AB InBev's craft beer buys has been overwhelming. Starting with Goose Island in 2011, the craft portion of AB InBev's craft and European imported beer unit, The High End, is now approaching 1m barrels a year, according to a back-of-the-napkin calculation by the Brewbound website. About half of that is the nationally-distributed Goose Island but, taken together, the unit commands enormous clout in craft beer. (To compare, Boston Beer's volumes last year were 4.2m barrels).

Is AB InBev about to do to its competition what it has done to its critics? Will it steamroller them into submission?

If so, and it is a likely strategy from a company that already owns the biggest-selling beer in the US and controls a portion of the industry's route-to-market through its owned-distribution network, then the plan appears to be the following: position Goose Island as the national craft beer while using the smaller brewers as a network of local brands that will eventually - after future acquisitions - cover the whole country. (When I visited Blue Point Brewery in Long Island last year, I was told that the unit will ramp up production but remain a mainly New York state brand.)

The combined clout of The High End unit - with Goose Island leading the way - will come in useful as the US craft beer scene becomes more competitive. Expectations are that a shake-out will send a lot of the smaller brewers to the wall as high growth in consumer demand slows and costs rise. Analysts from Rabobank I spoke to last week said that the crowded middle-ground of brewers - those a few notches below Boston Beer and Yuengling - are "under pressure to get big while they still can or stay local and hunker down".

They also said they are keen to see if after the shake-out, consumers will care whether their beer is made by the remaining independents or the "big guys who portray themselves as craft".

From the reaction to the Devils Backbone buy, it seems increasingly likely that they won't.


Sectors: Beer & cider

Companies: Anheuser-Busch InBev

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