The Great Craft Beer Swindle

With news from the US of yet another takeover of a much-loved local craft brewer by a multinational, how long can it be before we see the same thing happen in the UK?

On Saturday, walking up a hill in the middle of nowhere with barely any mobile reception, we attempted to continue a conversation on Twitter on this subject — a mistake, with hindsight. This post is an attempt to set out our thoughts a bit more clearly, though they’re still just ponderings.

Britain’s ‘craft revolution’ (if you accept that we had one) began either in around 2005 (Thornbridge, BrewDog), or in the early 1970s with the emergence of CAMRA and microbreweries (Selby, Litchborough, Godson, &c.), depending on how you look at it.

But if the aim of companies such as AB-InBev is to buy themselves cool — which is what we think they’re attempting to do with Elysian, though it’s hard to judge hipness from afar — then stolid Butcombe, for example, founded in 1979 but feeling a hundred years old, surely isn’t what they’re after.

For the same reason, our gut instinct is that the takeover of Sharp’s by Molson-Coors in 2011 was not quite the same thing — that, we think, was about acquiring a single big-selling, old-fashioned brand (Doom Bar) rather than an attempt to gain credibility. But maybe we’re wrong.

We also think they’re only likely to be interested in brands which are well-recognised across the UK, or at least across an entire region — we reckon Britain is too small for the kind of city-by-city approach being taken in the US.

2008 vintage Brewdog bottles.BrewDog is an obvious plum, and that’s a company whose management have already convinced themselves that there’s no conflict between anti-corporate rhetoric and an ongoing partnership with Tesco.

Industry watcher Melissa Cole has suggested Meantime might go to SAB-Miller at some point and that wouldn’t be a bad bet. Though its hardly a firm at the cutting edge of cool any more (which, to reiterate, has little to do with the quality of the beer) it’s well-established, operating on a decent scale, and, thanks to a decade of presence in supermarkets, is reasonably well-known.

Then there’s Innis & Gunn. Though few beer geeks seem keen, it persists in maintaining its foothold in the craft beer market — someone, somewhere might think they’re hip.

Camden Hells logo.Most other breweries we can think of with slick branding and accessible flagship brands that aren’t brown bitters — Camden, Thornbridge, Williams Bros — seem less likely, but for some reason, we keep thinking of Purity. An outside chance, maybe, but perhaps worth a flutter.

One final thought: perhaps before the multinationals get involved, we might first see Greene King or Wells & Young invest in (or swallow up) a couple of smaller ‘craft’ brands, once they’ve grown weary of trying to create their own plastic equivalents?

The title of this post, in case you didn’t get it, is a reference to the almost un-watchable Sex Pistols film The Great Rock’n’Roll Swindle — really a statement by Malcolm McLaren on the idea of ‘selling out’.

Main image adapted from ‘Wheel of Fortune’ by BuzzFarmers via Flickr, under Creative Commons.

22 replies on “The Great Craft Beer Swindle”

I wonder whether the duty relief makes UK craft breweries a less attractive proposition than a similar deal in the US? Moreover, many US craft brewers are so large in comparison to ours that they still have pretty decent economies of scale. Not sure how UK craft breweries would compare…

(The Sharp’s thing was interesting because it was a win-win: they bought volume and – to a certain degree – some credibility. )

It’s going to be inevitable. At some point a brewer is going to want to expand and not be able to finance it, and a multinational is going to be looking for a way into the craft business without having to mess about with a microsystem and being able to run it at arms’ length apart from the inevitable pressures of scaling and marketing. I believe that it’s happened on a small scale all ready and that investment companies and funds are looking and may have experimented with it.

It’s bound to happen.

If there’s one thing that’s better than being at the coal face brewing fantastic, exciting beer from 6am to 7pm 7 days a week, it’s cashing a cheque big enough to afford to sit at the bar any time you like drinking someone else’s fantastic, exciting beer and never having to look at a mash tun ever again.

Would the one thing even better than that be someone coming in with enough investment and distribution that you scale up enough to still make your own fantastic, exciting beer but employ enough people to do all the donkey work?

(Thinks: I’ve been in Drygate a few times and seen people working in the brewery but afaik never spotted a Williams brother amongst them.)

It’s all about margin and where the margin is. The processing of commodities into higher value processed product.

Once the cheap beer was bitter and the margin was in lager. Now the lager shifts in knock down prices in Tesco and there is this small niche of high margin grog sold to the young affluent. Of course the big players are seeing margin and wanting a slice.

The thing is, the appeal of craft beer is not it’s taste, it’s authenticity, it’s so called higher quality. It’s the exclusiveness. The customer is paying more for a product that informs them they are more discerning. The drinker is not a common boozer if they are necking pricey A rather than cheap B.

Once everyone is doing that, it is no longer exclusive and so the cycle moves on to the next fad.

I think *some* people drink craft beer for those reasons, but most people I know simply think it tastes better than lager and is colder/more reliable than cask ale. Its probably worth an extra 50p over the cask ale, but no more than that.

Some people just like the taste of grapefruit in their beer.

“It’s going to be inevitable”

“It’s bound to happen”

The problem is we don’t have enough reliable data to indicate a trend towards it happening, or even the odds of it happening at all. Yet for some reason, we’re certain it will. I wonder why?

A friend of mine looks incredulous when people speculate over, say, the plot and characters of the next Star Wars film based on a minute long trailer. It’s fun to speculate, but my friend is right to be sceptical. We’ve little to nothing to go on.

We’ve had little tremors here and there, the occasional indication or event that suggests that something like this might happen (and for what it’s worth, on your criteria of probability, Meantime and Purity are good shouts), but it’s just as likely that a total Black Swan Event will happen, throwing the entire industry on its head.

What we have to consider, as you sort of suggest, is not who is interested in buying, or who is willing to be sold, but *why* this might occur at all. I think it’s because there’s a growing gap in the level of conviction in the continued success of the current boom.

“The problem is we don’t have enough reliable data to indicate a trend towards it happening”

Yes we do. Breweries are businesses and when a market is flooded with many businesses then consolidation is inevitable. It doesn’t matter what the business is, that’s largely irrelevant.

To some extent larger brewing companies have already bought craft breweries eg Marstons which bought Ringwood and Wytchwood.
A reason why some of the more successful newly established breweries may come on to the market is due to their funding by investors who have been able to claim tax relief on their investment in such companies.After the shares have been held for a qualifying period capital gains tax advantages accrue on their sale,as they also do to the working directors and shareholders, with the result that a sale may become attractive for reasons other than pure trading reasons.

I often wonder whether a bigger brewery such as St. Austell or even Fuller’s would be considered a viable target by ABI or MolsonCoors. I would have to think they were maybe too big or established already but I could be wrong?

The opposite I would say. Fullers or St Austell are not big enough. The big guys deal in household names: Budweiser, Carlsberg, Stella. Outside London, Fuller’s is the brewer of one moderately well known cask ale and that’s about it.

Sharps is the exception that proves the rule. But pre-Sharps, Molson Coors were in an odd position compared to Carlsberg or InBev. They only had one big brand – Carling – and apart from that a load of third-rate brands that nobody cares about. Coors Light? Stones Bitter? So their strategy differs in that it’s based on building up smaller brands.

Heineken and InBev, on the other hand, as far as I can see are still all about selling increasing amounts of a decreasing number of different brands.

Fullers and St. Austell are pretty big, especially compared to some of the recent US craft acquisitions. Fullers and St. Austell kegs and bottles even make it to Northern Alberta (where I currently live) so they’re pretty well known around the world, compared to say, Boulevard or Elysian.

Wes – we pondered this. Our conclusion was that the British brewing industry has traditionally been dominated by pub ownership as a model, which does not seem to be of interest to the big international breweries. The regional breweries that have survived have got substantial pub estates which are unlikely to be as appealing to AB Inbev etc (but would potentially appeal to pubcos if they weren’t already over committed)

Perhaps if a regional wanted to sell up they’d split the business and sell the brands one way and the estate another.

Events over the past few years have shown that beer market trends are very hard to predict – I doubt whether anyone five years ago would have expected many of the things that have actually happened. For example, the “new brewery bubble” shows no signs of bursting yet.

As has been said above, the international brewers have no interest in acquiring pub estates and it’s hard to see what long-term benefit they might gain from taking over “craft” breweries, given that so much of craft’s appeal, at least in the UK, is tied up with it being innovative and authentic. It would be very easy to trash a beer’s reputation. I get the impression that craft beer in the US is much more big business.

My expectation is that rationalisation and consolidation will eventually take place in a “black swan” way that we can’t really foresee at present.

If the owners of regional breweries wanted to see up the most likely route would be to arrange friendly takeovers, as Gales did with Fullers, with a reduced brand portfolio remaining. Most of those that have survived until now seem to have a fairly strong commitment to it, but relatively few have strong, widely-recognised free trade brands.

I don’t think ABI and their shareholders give a toss about buying a bit of cool, they are just interested in maintaining their return in what has become (for them) a declining market. If you think for a second that they will maintain any integrity in their recent acquisitions, guess again – see Leffe, Hoegaarden, Stella et al. The accountants are unable to conceive of scaling up production and maintaining quality, because you can get a better and faster return by scaling up and cutting costs.

Does it really matter who finances who? What matters is what the beer tastes like.

This is one of those things that separates the hipster trend followers from the genuine beer enthusiasts.

From what I was once told by “sources close to the situation”, the time when SAB Miller might have bought Meantime passed several years back.

AB-InBev couldnt buy Butcombe, because the Liberation Group based in Jersey already just did, and they may well shake things up abit, especially if Liberation beer finally gets a decent foothold on the mainland

and why is what GK do plastic in any way when it comes to craft beer ? its a microbrewery setup within the main brewery that produces small batch stuff, some of its not bad, some of it could be better, some of its what on earth were they thinking. no different to any of the other “big” brewers playing with micro brewery kits, Brains, Thwaites, Adnams to name but a few.

the metropolitan beer brand comes from GKs craft microbrewery, Jasmine infused tea beer isnt something you normally associate with Greene King, and they are selling it in Tesco alongside Punk IPA, cant get more craft than that.

so why would GK bother buying up a craft brewery for a brand, that instantly loses its street cred amongst craft beer hipsters once its under their control anyway

and GK dont on the whole buy breweries, they buy pub chains who occasionally come with breweries attached and then immediately close the brewery, occasionally releasing beers from the collected trademarks…seen any Ridleys IPA recently?

Local news and this may signify another trend in brewing or perhaps cynically maximising progressive beer duty, Copper dragon (if they made the only beer I would be a teetotaller, truly the blandest twig water) have launched or have they. My point is takeovers are fine and to be expected but cynical rebranding is in my opinion, appalling and I ain’t even a millennial.

Good thoughts, but “plastic”, well not really, since the regional traditional brewers know all about good beer of course and provided part of the inspiration for the newer generation. It is more genuine I think that the oldies issue beers in new styles under new badges or divisions than buying up newer participants.

Comments are closed.