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UPDATE: US: Craft brewer Fordham defends A-B tie-up

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The chief executive of Fordham Brewing Co. has said that it was vital for the US niche brewer to join forces with Anheuser-Busch in a growing but competitive craft beer segment.

Fordham CEO Bill Muehlhauser was speaking after the brewer said it would team up with the Budweiser brewing giant to buy rival craft brewer Old Dominion Brewing Co.

Fordham and A-B have formed a joint venture Coastal Brewing Co. to seal the acquisition of Old Dominion, a craft brewer based in the state of Virginia.

Over the last decade, craft beers have enjoyed a renaissance among US beer drinkers with sales rising 12% in 2006. However, more brewers, including the giants of the US beer industry, are looking to tap into that growth and traditional craft brewers are looking at ways to grab share of a competitive segment.

Muehlhauser told just-drinks today (5 March) that Fordham and Old Dominion beer brands stand to benefit from A-B's "Cadillac of a distribution system".

"It's difficult for small brewers with limited budgets to fund marketing and advertising. How you get beer to market gets more difficult as the market becomes more competitive," Muehlhauser said.

Fordham will hold a 51% stake in Coastal, which Muehlhauser will head as managing partner. A-B will hold the remaining 49% share and take charge of distributing brands including Fordham Copperhead and Old Dominion Ale.

Muehlhauser said the Coastal venture was only formed to secure the takeover of Old Dominion and that no further acquisitions are planned. He added that the venture would first focus on growing sales in Maryland, Virginia and Washington D.C. before expanding into other markets along the east coast of the US.

The combined sales of Old Dominion and Fordham stand at around 30,000 barrels a year. The combined capacity of the two breweries is around 90,000 barrels.

"We have a lot of room to grow before we start knocking out walls," Muehlhauser said.


Sectors: Beer & cider

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