Heineken just bought FEMSA, are there more acquisitions and mergers coming in 2010/2011?
I think you will see some larger regionals chomp up some smaller craft brewers in need of equity but with a great product. Look for those brewers who expanded too fast, injected too much capital at the wrong time to lean on companies with cash
I feel like the big boys are attempting to grasp the craft craze organically but i dont think they will be successful and eventually will QUIETLY buy regional craft breweries or at least majority stakes in them.
This has all ready started to happen in the UK, where Marston's has been buying smaller companies. They recently purchased Refresh UK (which was the trading name for both Wychwood and Brakspear) and all ready owned Bank's, Jennings, and Ringwood. For them, they get a stable of great brands being produced in small breweries (which they do not close, like many of the larger companies) and can reduce costs on deliveries, bottling, and advertising.
I think a lot of the strong American Crafts will not sell to Large Brewerys but yet sell to other Crafts. Similar to what Sarnac and Otter Creek are doing right now. While they are owned by the "same" company they are still operating individually allowing for more purchasing power for supplies and a wider range of distribution!
This is how I think many of the smaller fish are going to begin to compete with the big boys....team up together and break distribution borders!
DosBeerigos - I hope this will happen. But in the end money talks so it will be interesting to see after the recession, how much the big boys will fork over to win the bidding war and fluster the plans crafts have to win the distribution war.
FOOD FOR THOUGHT - Dont you think if there is a great distribution system for craft beer, many local craft breweries will get priced out. I feel like since i cant get the crafts I love when i travel i usually try others. If i could buy my favorite everywhere i would never have the chnace to experiment.
Quite possibly, by nature we are animals of habit. Although I think real beer lovers continue to try new things over and over....I dont know about you but i have my favorites but often find myself looking for that next beer that is even better....
I doubt that many craft breweries will get priced out of the market, even if a large-scale distribution system is created in the USA.
For an example, look to the UK market. There are several large-scale distribution systems (particularly, WaverleyTBS - which stands for The Beer Sellers) and few local breweries are put out of business. For many, the opposite actually happens and the distribution increases their national presence and sales. From talking to several of those brewers, their distribution is determined by capacity more than any other factor. In other words, they can only brew so much beer and better distribution equals more demand ... and, as we all know, higher demand equals higher prices.
To be honest, the only small craft breweries that I could see being put out of business are the ones that cannot compete quality-wise, or those that have poor business plans.
DrThad, I couldnt agree more. YOu are hearing more and more about smaller breweries having to expand and grow. Some can, and sadly some can not. If the product isnt there from a quality level then nature will take its course. It would be nice to see distribution lines open up, but realistically as you said the amount of beer distributed would be limited. Once again we would be stuck.
Realistically, what we have noticed and industry analysts have noted is that craft breweries are on the rise. Well when there is an increase in supply, eventually you will see a lot of breweries recognize that at economies of scale - the model becomes more profitable. While I'd like to say all craft breweries are in it for the beer, at the end of the day people have to put food on the table and send the kiddies to college.
I would encourage you all to think about how consolidation happened in other markets and see if this resembles any today. Maybe the early half, but still I think you will see some mergers in the near future.
While mergers are going to happen. I hope that they are mergers within the Micro-Industry creating a Macro/Micro.
We are already seeing the collaborations popping up all over the place. If a team of Dogfish and Stone were to join they could help out other smaller breweries around the US that make good beer but might not have the funds to expand their brew houses.
Stone was talking about opening up in Europe...I think they have the funds...
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