Holy shit, craft brewers! What a year you had. You topped 4,000 breweries in the U.S., something that hasn’t happened since the 1800s, produced more craft beer than the world has ever seen and a few of you, you know who you are, even sold out to Big Beer, laughing all the way to the bank (and we can’t really blame you, can we?) Like they say, “Mo’ Money, Mo’ Problems”, and with the craft beer industry doing bigger business than ever, big business issues like mergers and acquisition eclipsed the tried and true trademark dispute news. Let’s take a look back at this year’s biggest beer news headlines.
Meet the new boss, same as the old boss, just bigger: AB InBev and SABMiller have officially merged to form a new unnamed entity. Some members of the media have been dubbing it “MegaBrew,” but all loyal readers of Craft Brewing Business know that we had the name pegged months ago: Beer Voltron. There is little left to say at this point considering people have been talking about it nonstop since the rumors got hot and heavy in September. But talk people must.
While we can’t seem to zero in on whom exactly these brewers are and aren’t (which just adds to the mystery!), reports are floating around the Internet that a lawsuit from 19 Oregonians, three Californians and one Washingtonian (some of them craft brewers) is seeking to stop Anheuser-Busch InBev from buying SABMiller (thus forming the dreaded Beer Voltron). The suit argues the acquisition would create an unfair marketplace for other beer companies, which is a pretty solid argument.
As you’ve no doubt heard, while craft breweries continue to acquire or be acquired, the folks at Big Beer had their own business transaction in mind. A-B InBev and SABMiller are close to combining, Voltron-style, to tower over the beer world as a single giant robot. Once these talks surfaced last week, the reaction came in from all over concerning the topics you’d expect: How will this affect the market — locally and globally? What will this do to distribution? How will this affect future craft beer acquisitions and the overall future of the beer world?
2015 is officially the year the craft beer industry trimmed its hair, got a fresh shave and tucked in its shirt. The latest big money move in the indie industry’s year of growth: Heineken announced the acquisition of a 50% shareholding in the Lagunitas Brewing Co., the fifth largest craft brewer in the United States by volume. For Heineken, the transaction provides the brewing giant the opportunity to build a strong foothold in the craft brewing category on a global scale, and for Lagunitas, world domination is possible — or at least some crazy expansion opportunities.
During the whole Beer Voltron merger hoopla, craft beer mergers and acquisitions seemed to take a break. Had to be at least 48 hours or so. Anyway, we are back at it: Constellation Brands has announced an agreement to acquire San Diego-based Ballast Point Brewing & Spirits for approximately $1 billion. The partnership with Ballast Point provides a high-growth premium platform that will enable Constellation to compete in the fast-growing craft beer segment, further strengthening its position in the highest end of the U.S. beer market.
Even though the Brewers Association has a stated goal of craft beer gaining 20 percent market share in the overall beer industry (currently sitting at 11 percent as of 2014), the industry’s challenge isn’t really hitting that target. The real challenge is answering the new questions that are just now emerging from the uncharted territory the industry’s success has created. One issue that will remain top of mind going forward is quality. A growing industry, especially one made of small businesses, will have its bad pints, and the BA is trying to spread training and awareness so that the whole industry batch isn’t spoiled. Some initiatives here include the formation of a quality subcommittee, the release of a Quality Systems book (coming this fall) that will be distributed to all BA members and the potential addition of a quality assurance ambassador who would travel the country and provide on-site education.
For those of you cave-dwelling readers of Craft Brewing Business, the 32nd annual Craft Brewers Conference & BrewExpo America (CBC) took place in Portland, Ore., last week. Over 11,500 noncave-dwellers attended. The CBB crew was there in full force, and we have both written and video proof. Be sure to comb through the archives of anything you missed. As we settle back in to our regular, non-trying-100-beers-a-day lives, we empty out our notebooks of some of the notable numbers and other notes from the Brewers Association state of the industry presentation. We already listed a couple highlights last week, but here is everything else. In short, the industry is still dominating.
Congressmen Earl Blumenauer (D-OR-03) and Chris Collins (R-NY-27) introduced the CIDER Act. The Act, HR 600, would amend the section of the tax code that deals with wine and related beverages, 26 USC § 5041, to support the growing number of craft and entrepreneurial cider makers, and tailor IRS rules to reflect variations in craft ciders across the country. It was first introduced into the House in 2013. Let’s break down how alcoholic cider is a unique beverage — both in product and taxes. …
There is a popular piece of legislation that may actually change the excise tax regulations in the country, lessening the burden on craft brewers. Getting here has been a process, but the entire industry seems ready to compromise on this bill. And if this legislation gains traction and gets through Congress, most craft brewers by the BA definition will benefit — but not all. And that’s the tricky thing here: Getting Congress involved in legislation that cuts taxes for craft brewers means more-officially defining a “small producing craft brewer.” And this process is less sensitive to industry criteria and relationships. This bill would reduce the federal beer excise tax on the first 60,000 bbls produced by domestic brewers that produce fewer than 2 million bbls annually to $3.50 per barrel.
That groan you hear this Monday is the craft beer-loving world, back at work and dealing with its Great American Beer Fest hangover. Or maybe that’s just the CBB team. Anyway, I assume most of you were there to both promote your beer and to try a bunch of great beers you can’t normally try at home. I also assume that you only half remember everything that happened. Well, us too, but that’s what photos are for, right? Let’s scroll through some highlights and random photos to jog our memories and relive this year’s GABF.
We break from your regularly scheduled craft beer-centric business news and insight to look at what some beverage industry deep-thinkers believe is the next “craft beer boom” — craft spirits. Now, let’s be clear, craft beer still is the current “craft beer boom,” and doesn’t really show signs that it is slowing in its world domination trajectory. On average, a new brewery opens its doors every single day in the U.S.; craft brewers now account for one out of every 10 beers sold in the U.S.; higher learning institutions are adding brewing minors, certificates and even four-year programs. Craft beer’s ongoing success has the created opportunities for like-minded travelers in adjacent craft beverage industries, specifically craft spirits — or so thinks Steven Earles is the CEO of Portland-based Eastside Distilling.
Great stories stand the test of time. If you’re hungry for even more excellent brewing business content, check out our Best Of archives for 2014 and 2013.