Boston Beer may have been passed twice now in the craft beer revolution. The first pass came from their craft brewing peers — all 5,300+ of them — that continue to grow and expand and innovate in the market in which Boston Beer helped to create and then dominate, all while Boston Beer has seen interest lag.
The second pass, posits Rich Duprey on investment analyst website Motley Fool, has come from the forces of Big Beer — from AB InBev to Heineken to Constellation Brands — which have steadily acquired a ton of craft breweries to grow their offerings while setting the market price for such acquisitions. Boston Beer may have stood on the sidelines too long to make similar diversifying acquisitions.
Yet as Boston Beer President Martin Roper recently recognized, all those acquisitions have served to inflate the market value of the craft brewers that remain. At an analyst conference last month, Roper noted that while there are still acquisition candidates out there, “they’re overpriced.” He also pointed out that although they have made a few bids over time, they always got outbid, and price paid is a key criteria for it to consider making a purchase.
Yet might the brewer have been better off spending a little more than it wanted to on a small craft brewer and introducing a potential growth label to its portfolio rather than spending money repurchasing its own stock?
It does make us wonder how different these craft beer acquisitions might feel today if the large-and-in-charge craft brewer was the one investing in those breweries primed to take that big leap. If you’re interested in such things, definitely head to the Motley Fool to read the full perspective.