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Where Does the AB-InBev Craft Project End?

It’s been a while since AB took over a craft brewery but today, they struck again, taking over a Texas brewery we’d never heard of but…

Here’s a quickly hacked together map of the US states where AB-InBev has acquired breweries so far:

Map of the US with AB-InBev acquisition states (Washington, Oregon, California, Texas, Illinois, Virginia, New York, Arizona, Colorado) marked in yellow.
SOURCE: Adapted from Wikimedia Commons.

(Note: that’s Alaska and Hawaii tucked in underneath for tidiness as is the norm for discrete maps of the US.)

Can you see a strategy emerging? We’re not sure we can, not quite yet, but there might be a vague correlation with states where people have relatively higher incomes. If what’s driving their decisions is that, combined with a reach for geographical coverage — which would make some kind of sense — then we’d be placing bets on the next target being a fast-growing brewery in the Upper Midwest (Minnesota, North Dakota). After that… Maybe they’ll just go all in and aim for a presence in every state?

So, that’s the US (where — just a reminder — we’ve never been and only know-about through books and articles, so cut us some slack) but what about Europe? As far as we can tell their only craft beer acquisitions so far have been in the UK (Camden), Italy (Birra del Borgo) and Belgium (Bosteels, which is debatable). Here’s (very roughly bodged) how that looks:

Map of Europe with Italy, Belgium and the UK highlighted.
SOURCE: Adapted from Wikimedia Commons.

In some ways, this is easier to read: these are simply the countries where you might say, in one form or another, ‘craft beer’ is a big ‘thing’ right now. So, in terms of where might be next: France just topped 1,000 breweries ahead of schedule; Germany is definitely having some kind of craft beer moment, although it’s complicated — what is the German version of Camden? Assuming some of these countries go through the same explosion the UK has, leading to a slew of brand-savvy and rapidly expanding craft breweries, here’s a guess at how it might look in two or three years time:

Europe map with Germany, Spain, France, Italy, Norway, Sweden, the UK, Poland and Ireland all highlighted.

Add to that the purchase of indie distributors here and there (France, the UK) and the very odd acquisition of a US homebrew supply firm, what else can they be up to other than an attempt to build an entirely AB-InBev owned craft beer infrastructure?

In which case, might they not also fancy a magazine or two? A festival-conference operation such as Craft Beer Rising?

And some BrewDog style bars of their own, too? Draft House might look tasty in the UK, especially given the involvement of Luke Johnson, famous for taking over, expanding and selling off firms like Pizza Express and (beer related) Belgo.

Whatever happens the next few years are going to be interesting and, frankly, we’re interested to see the finished product.

11 replies on “Where Does the AB-InBev Craft Project End?”

I have two comments. The first: I believe people read more into the strategic element than exists. As the Cigar City weirdness illustrated, you can bet that for every announced acquisition there are many “in talks” and probably a load of collapsed deals that we never hear about. I’m not sure it’s as organized or tactical as we might think. It’s more of a seller’s than a buyer’s market.

But second: you’ve never been to America?! First, you must come; but also, you write with a commendably fluid familiarity. I would never have guessed!

A US acquaintance wrote that this is all about having enough brands to fill a few fridges, which adds to AB’s distribution strength to propose a scenario where distributors strong-arm retailers (remember that the US has a bizarre/Byzantine regulatory regime for beer distribution) to favour AB brands, of which there are lots. Consumers get the illusion of plenty of choice, while true indie brewers get squeezed out. That makes a lot of sense to me.

In Europe, the distribution business is rather different and it’s about buying brands. AB already owns several in Germany, remember, including Becks, Löwenbräu, Spaten and Franziskaner.

Those are also mostly states with big populations that already have a strong craft scene, or in the case of Texas and Arizona, with a massive amount of scope for cornering the market early. Looking at that map the question remains as to when they will add Ohio and Pennsylvania.

“these are simply the countries where you might say, in one form or another, ‘craft beer’ is a big ‘thing’ right now”
I’d qualify that: “these are simply the countries with large populations where you might say, in one form or another, ‘craft beer’ is a big ‘thing’ right now.”
In the Nordic countries, “craft” (hate that term) beer is huge. In Sweden, with a population of 9 million people, we now have 250 breweries, compared to 20 in the 90s. Most of these are “craft” breweries. As far as I know the situation is similar in Finland, Norway, and Denmark.

What we’re sorely missing is cask. I only know of two breweries making it (Nynäshamn and Ocean; the latter is thankfully in my hometown Gothenburg, so I can drink their cask ales in the one pub serving it).

AB InBev’s bagman for European breweries is an old mucker of mine. I spoke to him last September and he said there’s nothing in Ireland even close to having the size and market presence they’re looking for, so you can safely turn us grey again on your map, I think.

No breweries with ambitious expansion plans? No prospect of a well-funded Camden-type operation popping up? Just conscious that, these days, two years is no time at all.

I think the market here is just too small and underdeveloped. In the last two years the craft segment has gone from 1% to 3%. Even in two years’ time I doubt those numbers will be attractive enough for the big fish.

the last two years the craft segment has gone from 1% to 3%.

So its tripling every 2 years. Not bad.

All this activity – it usually focuses on obtaining the whole basket for a venue. Ie offer as much of the portfolio a bar requires. So if that’s through own brands it’s ideal scenario – make more margin etc etc whilst always ensuring leverage of No. 1 brand ie Bud or Carling or whatever is no 1 volume producing beer in portfolio. Then in addition buy in other drinks offerings wines, spirits, ciders, beers to distribute to account. Thereby ensuring the likes of competitors are squeezed out totally. In supermarkets it’s all about obtaining most shelf space and they’ll even do this by creating beers they don’t even think will sell that well or is a deemed ‘hot’ gap fill category, just in order to take shelf space away from a competitor. Radlers in Uk anyone….

Bigger breweries have mergers & acquisitions teams (probably in the finance department!) constantly looking for new potential. It’s part of their strategy. Just look at Linkedln.
Of course this isn’t just applicable to beer….but lots of other categories. No one wants a monopoly though eh? And when is enough for these mega-companies?

Tied in with all of this is a companies ability to increase and decrease pricing across its full portfolio to trigger strategy with competitors.
Another interesting dimension in March 2015 AB-Inbev’s top shareholders were behind a €40 billion Kraft Foods and HJ Heinz Co merger which was completed July 2015. Read piece re further understanding on where this slots in.

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