Tag Archives: craft beer mergers

One Beer Article You Need To Read And Why, 11/29/16

There are so many stories surrounding brewery mergers and beer distribution that it can be hard to keep up with what is the most important things to remember.  This article does a great job of showing how the two issues are connected and how each exacerbates the problems caused by the other.  The one thing that I think is most clear from this article is that beer franchise laws are one sided screw jobs for most breweries in this country because most breweries are too small to buy their way out of these contracts.

When the brewers who self-distribute bring buy kegs we bought sometimes we’ll talk.  Often, we get around to discussing distribution and distributors.  One thing I’ve found is that many of the small distributors don’t want to self-distribute for too long.  It is hard, even if you hire a driver or two.  Also, at that point, you are running your own distribution wing instead of concentrating on the beer.  Some like doing that and some don’t.  Regardless, it should be up to each brewer to decide.  In other words, there should be no self-distribution cap.

For those that want a distributor, they ask me which distributors do I like dealing with the most.  The answers are easy, but I won’t go into them here.  Suffice it to say, the two or three I always mention are the smaller houses that a small brewery won’t get lost in.  The problem for breweries is this: If you sign a distribution contract and after a period of time it becomes clear the relationship isn’t right for you, you are screwed.  The franchise law was set up at a time when there were more distributors than brewers, so the laws were set up to protect the distributors.  Now, that equation has flipped, but the laws are still built to only protect the distributor.

This is where the breweries fighting the most for a lift of the self-distribution cap and I disagree.  I think it is more beneficial for more of the breweries in North Carolina to have legislation to make distribution contracts fairer for both sides (and cut the excise taxes in NC).

Here is the other advice I give brewers when we talk and they ask: Self-distribute as long as it is fiscally and physically possible.  If you are a brewery with a small distribution footprint, you will probably lose money going with a distributor.  You will pay less than the 30% or whatever the going rate is right now for a distributor’s cut in paying a driver or two and having a couple of trucks.

Another thing I like about his article is that it tried to look at the effects of the mergers and buyouts from the perspective of the smaller breweries.  Many times, the issues in craft beer are seen through the lens of the larger craft brewers that many people know.  However, the vast majority of craft brewers in this country are small.  They majority of breweries in this country are microbreweries meaning they produce 15000 barrels a year or less as defined by the Brewers Association.  These mergers and how they affect distribution won’t disrupt your Boulevard, Stone, or Ballast Point availability, but if a smaller brewery gets lost in the distribution shuffle it can affect whether you get their beer or if they even survive.

One Beer Article You Need To Read And Why, 11/18/16

There is nothing people in any industry like to talk about more than their industry and themselves.  Every industry has its own little ecosystem of trade talk and gossip.  Most importantly, every industry has this need for self-reflection that can border on navel gazing.  Craft beer is no different.  If you get enough craft beer people (2 or more) in a room at some point the talk will turn to today’s era of mergers and acquisitions.

I like this article that discusses the recent buyouts of a couple of Texas breweries because it doesn’t take a position on the good or evil of these buyouts.  It looks at these buyouts in the context of the national trend of buyouts in a dispassionate way that focuses on this as the way craft beer is now doing business.

I will admit that I am not a fan of these buyouts.  As the article suggests, I am one of the people drawn to craft beer because brewers are independent and local.  However, I also try to focus on the liquid in the glass.  The beer being good is what is most important.

For me, whether I liked the brewery’s beer before they sold out will dictate whether I’ll continue to drink it after they sold out.  I liked Boulevard’s beer before they were bought by Duvel, so I continue drinking Boulevard.  I didn’t like Goose Island before they were bought by AB-InBev, so I don’t drink them now.

An interesting test case will be Ballast Point and how scaling up production will affect their product.  Initially, some of the product hasn’t been affected by increased production.  However, some of their flavored beers have.  Pineapple Sculpin is still as good as it was before, but the Watermelon Dorado was not good.  It tasted like they melted a vat of watermelon Jolly Ranchers and dumped it in during the whirlpool.

Back to the article, it does a good job of giving the many reasons a brewery will allow itself to be purchased.  There are two common reasons, neither of which are evil.  The first is the brewer/owner is old and wants to step away from the brewery but has no succession plan.  They know if they leave, the brewery could cease to exist.  So, to keep the brewery going and those people employed, the owner sells out to a bigger brewery.  The second reason is the need for capital.

For a brewery to expand their footprint through increased production and greater distribution that requires capital.  Building new production facilities cost money and sometimes the easiest way to get that is to allow a bigger company to invest.  Also because of their size, the bigger companies have greater distribution channels that will allow your beer to be sold across the country.

These acquisitions are now a part of the craft beer landscape and we all need to figure out how to navigate it.  However, just as there are people who still won’t listen to “corporate rock” there will be craft beer people who will never buy or sell a beer owned by any of the big beer companies.

Five Beer Articles You Need To Read And Why, 7/17/15

The reason there was no blogging yesterday is insomnia sucks.  I actually got a few hours of sleep last night, so let’s do this.  Today we have merges, beer laws, and one of the worst opening sentences I’ve ever read for something in the New York Times. (Editorial note: my tone today reflects my lack of sleep.)