Why AB is Buying Up Craft Breweries...and Why You Shouldn't Be Too Concerned.

News today that Anheuser-Busch InBev NV has agreed to buy Seattle's Elysian Brewing Company has, once again, rattled the craft brewing community as it follwos closely on the heels of the acquisition of 10 Barrel and, a couple of years ago, Goose Island.

This has arisen me from my stupor and prompted me to do an actual blog post which, ironically, follows my remembrance of Jack Joyce with whom I once had an extremely interesting conversation about the big breweries and craft beer.  The crux of the conversation was this: macro brewers could, if they wanted, brew outstanding craft beer: they have ultra-modern brewhouses, amazing brewing talent, access to the very best ingredients, fantastic distribution networks and the resources to invest in craft beer.  So why don't they?

Jack's answer was that their corporate structure, all centered around mass sales was not conducive to growing a new beer or brand.  The corporate culture insists on clear sales goals and to displace Bud Light on shelves and tap handles any new beer had better taking off flying.  There is no patience for slowly establishing a beer or brand.  Not to say their efforts have not been somewhat successful - Blue Moon and Shock Top are two moderate success stories but ones that have not really broken into the craft market.

So what does acquisition do that in-house cultivation doesn't?  First and foremost it solves the impatience problem.  By buying an established and respected brand you already have a proven winner to show the bean-counters and share holders. 

Which is why I am not worried about this that much.  They have learned that they cannot replicate craft brewing within the macro brewing corporate structure.  This has been a lesson that has taken some time to learn but I think has sunk in.  I think the attitude is, therefore, not to try and bring these craft brewing companies into the corporate fold, but to let the operate independently - to continue to do what they do and help them grow with capital infusions and improved distribution.  If you can't beat them, join them (or have them join you).

I don't know how long the corporate restraint will last, but it is quite possible that it will continue to last for a long time if the Goose Island experience is any guide.

Time will tell, but for now, I personally have no qualms reaching for a 10 Barrel or Elysian beer.

P.S. My apologies for the lack of blogging - it has been a combination of: becoming chair of the econ department, writing an economics textbook and a major family health event that has caused a lot of adjustment and changes (all is well - no worries).