Is It OK Not To Be OK With Brewery Takeovers in 2016?

A few years ago if a big brewery took over a small one, it was a disaster — (almost) everyone agreed. But now, is the consensus in the process of swinging the other way?

In yesterday’s News, Nuggets & Longreads round-up we mentioned in passing that New Zealand brewery Panhead had been taken over by Lion and that people generally seemed fine with this. This prompted Luke Robertson, who is based in Australia and blogs at Ale of A Time, to drop us an email. Quoted with his permission, here’s a chunk of what he said:

To me it feels like people don’t want to be lumped in with the stereotypical angry beer nerds. So as a result everyone comes out in 100% full support without a hint of any concern. I mentioned to a good friend yesterday that I think everyone is trying to outdo each other in that aspect. With blindly positive cheering and clapping. The more positive, the better; regardless of what you actually feel.

Deep down I think there is a lot of concern. Panhead are beloved and the founder is a great guy who has built a great and unique brand with the beers to back it up. While Lion have handled their acquisitions amazingly well in both Aus and NZ, I think if people were pressed on the issue they wouldn’t be as in support as they are in public… I may be way off base but the lack of dissenting opinion, or anything that isn’t ‘Yay isn’t this awesome?! GO BEER!’ is beginning to all seem a bit fake.

Second guessing whether what people say is sincere, unless you know them personally and well, is a mug’s game, but we have certainly noticed the same shift in the (ahem) ‘discourse’ and felt uneasy about it.

The Small is Beautiful party line goes something like this: big breweries taking over little ones is never good news; those breweries lose their character and the beers get more boring; and overall consumer choice is reduced as those beers become more ubiquitous. (We have some sympathy with this view.) And the most extreme critics — the angriest of the beer nerds — argue that it’s all part of a global conspiracy to crush or at least control the threat of craft beer. (Which can sound a bit hysterical but that doesn’t mean there’s not something in it.)

Let’s wait and see if the beer changes before we complain, goes one of the well-established, more neutral lines of argument. This is might be good news, goes another, because takeovers can increase the availability of a beloved brand, and might also improve quality and consistency. (On which more in a later post.) And these kinds of deals get craft beer into more outlets and so spread the word, advance the cause.

What we’ve been hearing in the last year or so, though, as the pace of acquisitions has stepped up, is something else: an expectation that drinkers won’t just accept takeovers, or cautiously welcome them, but will be delighted by them.

At the same time, anyone who does have concerns is dismissed as immature, or as a god-damned tree-hugging hippy who should go and live in Soviet Russia if they hate capitalism so much. (Sorry, straw-manning there. But only a bit.) Dissent is hysteria — we got in on the act with this two paras up, for goodness’ sake — and dissenters are loons.

Maybe this is just a natural turn for the conversation to take — the result of fatigue after a decade or two of evangelising, whooping, branded T-shirt-wearing hop-tattoo craft beer tribal triumphalism. And perhaps there’s some old-fashioned hipsterish contrarianism in it, too.

"Likes Mainstream because liking mainstream is non-mainstream" hipster meme.

At any rate, if we were in charge of PR for a multi-national brewing firm we’d be delighted. The outstanding question is, would we also be taking credit? Would we be looking at a bill for lobbying and ‘influencing’ — a sponsorship deal here, a blogger outreach event there — and thinking, ‘Well, that was money well-spent’?

19 thoughts on “Is It OK Not To Be OK With Brewery Takeovers in 2016?”

  1. I believe in seeing the results first.
    Although most people are concerned about the change in beer quality, the anxiety is actually caused by the lack of trust in consumers: any deterioration in the product (quality) could be scrutinised and disapproved by consumers. Still, if there were any such deterioration, consumers’ decisions to refrain from purchasing the product will be affected by the benefits of wider availability and lower prices.
    For me, the real concern is how bringing some ‘craft’ products into ‘mainstream’ will affect the competitiveness of the many more small breweries with potential but limited distribution and relatively higher prices…

  2. I think you’re overlooking the sheer scale of breweries in this discussion. If a brewery got taken over a few years ago, the concern was the loss of some of the few decent beers you could get. Now for any brewery which is sold, dozens seem to appear. Choice is increasing irrespective of what the macro market does.

  3. I’ve got a post about this lined up, although as usual I’m a bit behind the times – I’d noticed, and been puzzled by, the generally positive reaction to Camden selling out, but I hadn’t realised mandatory positivity had come this far!

    This is probably terribly old-fashioned and ask-your-Dad, but it seems to me that what you’ve got when Large Brewery buys Small Brewery is one less brewery, with the smaller brewery surviving as a brand. And an unscrupulous owner can do terrible things with a brand, particularly a brand that’s backed by a previous history of quality. Look no further than Stella – awful beer but a very strong brand, and still trading on the beer it used to be.

  4. Put me in the deeply sceptical camp. Not that small business is automatically great. Camden were outsourcing brewing and fighting legal battles against smaller brewers before they sold put,already doing everything we’d expect from a multi national

  5. My view on this is that, pretty much all brewers are in this to make money.

    The things that a brewer has to do to build a brand which is worth acquiring are increase scale, range, distribution and build a reputation for quality – all of which are good for the drinker.

    So some breweries selling up to the big guys and having a bumper payday massively encourages everyone else to try to put great drinks in front of me.

    Fantastic news !

  6. Isn’t one aspect of the problem how little people, including beer writers, know about business? Folk come to the question with a number of forms of preference and bias about the role of the industrial aspect of brewing and the role of money. Business leaders are either evil gougers or boy geniuses. Small is ethical, big is sordid. The supply chain for craft is too intermixed for toggle switch judgement. The malt comes from massive firms. The cargo containers filled with export kegs are shipped by massive firms. Not to mention that the craft business plan usually projects growth and a comfortable retirement. Good beer has always rewarded itself with change, scale and generous profit. Brands and labels come and go. Acquisitions are normal. The assumptions of the decade of craft were either false hope or just bad PR. The fundamentals have consistently played out differently.

    1. Fundamentally, there’s a dialectic thang going on. And not just in the beer business, eh? Economies of scale and the drive to consolidation versus innovation and disruptive models. At any one time we needn’t see a balance, nor a victory. There’s no sense in which one side or the other is “right”. It comes in waves. It’s about the money. It’s about intangibles. The pendulum swings like a pendulum do. These are the fundamentals.

    2. I agree Alan. It’s part of a broader problem that companies are “bad” when large even though the opposite in fact is true, that scale efficiencies bring us everything from cheap supermarket goods to cheap holidays. It’s a romantic myth that small concerns are superior, they aren’t, they are just smaller, but that gives them advantages too: versatility, vision, the “taking a chance” a bigger conservative company often won’t take. And the downsides exist too of being small, too well-known to mention. But the big can fall too. They do need to respond to market trends. Look at Heinekn 20 years ago when it went all malt. That was very perceptive of them. Maybe had Budweiser done that it would be going from strength to strength. Big can do anything it wants for product quality. In 1900 industrial brewers made what we would call craft beers today… It’s not size that counts but keeping up with the market and not veering off course too far. Small errors will be tolerared, e.g. Coke/New Coke of 15-20 years ago, but it’s a different world now. Coca-Cola has to be very careful IMO in the next 10 years because the anti-sugar feeling is very strong today. It has to make the right moves for the future.

      Gary

      1. So, not superior. Except superior in terms of “versatility, vision, the “taking a chance””. With special “downsides” because they’re small. But big concerns have their own special downsides because the’re big. So.

        It’s something of a category error to characterise businesses as bad or good by virtue of their size. I’m sure there are any number of small brewers who are out and out crooks, and making crap to boot. Cheap beer on supermarket shelves is in many ways a good thing (as are cheap flights – but we all know the downsides here). An impoverished beer culture is a bad thing. Restriction of consumer choice by exploiting a market dominance is a bad thing.

        The idea that “scale efficiencies” are an unalloyed ‘good thing’ is a bit of Ideology. Another myth.

  7. What I react against is when people start having a go at the owners for ‘selling out’ as if it’s some sort of betrayal. I don’t buy beer to support any business. I buy it because I like it and hopefully the price I pay is a fair one. That does not entitle to me to any sense of ownership over that business. I am generally happy for people if they’ve managed to build up a business, risking money and putting a lot of work in, I don’t see why anyone should begrudge them getting paid out.

    But that doesn’t mean I can’t be concerned about what a buyout means for the individual brewery or the beer market in general.

    1. Rob — that’s a fair distinction. Think we’d probably agree. Having said that, it is legitimate to call out anyone who has themselves been preachy and self-righteous about independence for years beforehand.

      1. Bailey said “it is legitimate to call out anyone who has themselves been preachy and self-righteous about independence for years beforehand.”

        Yes, the day a certain Scottish brewery inevitably sells up, will be a most amusing day.

        Alex

  8. My view is to applaud the business success and the seeming economic health of the “craft sector”. It is a direct positive for the owners/founders and mostly a well deserved reward for years of graft -the Nirvana of financial security. Can’t blame ’em…

    But also feel sad for the loss of authenticity & independence.

    I won’t generally buy big industry beers, be they macro-lager or craft acquisitions for the big brewer brand mantelpiece. No great loss as there are enough solid & reliable small breweries to choose from.

    I’ve also noticed a growing positive spin put in big beer in recent years. They’ve bought the “communicators” to some degree. Just look to the travesty of faux-independent writing that is EBBC. The whole “let there be beer”/”beer for that” coattail riding grimness, and the sudden rise of Pilsner Urquel as a darling of the twitterarti. (Sure, not a bad beer, I’ll drink it, but it isn’t exactly something to write home about. And the tank stuff is a total quality minefield.)

    Anyone who thinks big business is somehow suddenly everybody’s friend is fooling themselves.

  9. What irritates me about this discussion is that it is so often cast as one of pure subjectivity. We can’t know whether consolidation is good or bad, so we throw highly emotional arguments around to amp the subjective valence.

    But we can know. We know that beer is beer, whether it’s made a barrel or 500 at a batch. We know that companies are businesses subjected to the amorality of markets. We know that big breweries make beer preferred by the masses and that little breweries become repositories for quirkiness–and are responsible for keeping dying (read: not mass market, relatively unpopular) styles alive.

    I wrote a screed on this now quite some time ago (http://beervana.blogspot.com/2015/01/a-consolidation-dialectic-or-why-buy.html), and I’m surprised we’re still having the same discussion.

    1. Don’t be surprised. It’s an ideological thang. It’ll carry on until that goes away.

  10. Well, for me it is only the beer. If I like it and it meets my needs, I don’t care who makes it provided they operate a legal business and aren’t known to treat people badly. I am therefore in the wait-and-see camp for these buy-outs. For instance, if I learned that a beer formerly not pasteurized now is, if I lived in the local market of the brewery bought out, I probably wouldn’t buy it. Beer should be as fresh as possible and if sold locally doesn’t generally need pasteurization. So a change like that, or some other change, would concern me.

    I don’t necessarily accept though that big breweries brew for the mass market and small ones for the nerds. Some small breweries brew very unexciting if not standardized adjunct beer. My sense is big breweries brew they way they do for cost reasons, not just market perception. If that wasn’t so, why would Bud sales have declined over the years and craft grown? Why would AB-InBev be buying up small breweries? Because they perceive a demand which ends by altering their behavior.

    Anyway I don’t buy by the producer, but by the beer.

  11. I discussed this issue in a blogpost back in January.

    In the old days, brewery takeovers were always bad news for the drinker, because the objective was to obtain the tied estate, not the brands. You just had to hope they could find another generation of the Crudgington family to keep the old place ticking over. Having said that, there were some breweries, such as Swales of Manchester, whose drinkers rejoiced when they were taken over by Boddingtons because their own beer was so bad.

    Nowadays, any acquiring brewer must have at least some interest in the brand, even if you fear they will eventually end up dumbing down the beer and trashing its reputation. No takeover is purely a spoiling act.

    I can’t help thinking that some beer fans have a very naive view of business here. It has always been the case that big companies will acquire promising smaller ones, in any market sector. And nobody starts a business with no regard whatsoever to commercial reality (unless they’re spending Daddy’s money). And, as far as I know, no craft brewery has yet fallen victim to a hostile takeover – the owners have always been willing sellers.

    At the end of the day, every start-up brewery ends up with one of these fates:

    (a) goes out of business due to unprofitability
    (b) closes down because owner loses interest or retires
    (c) is taken over by a larger brewery
    (d) becomes massive itself
    (e) finds long-term equilibrium on a modest scale due to sale to new owners or passing on to another family member

    (e) does happen, and it’s good news when it does, but it’s relatively rare.

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