Winning move by the world’s largest brewing company, or colossal mistake?
Last week, Anheuser-Busch InBev announced it will purchase Craft Brew Alliance, a network of seven breweries and one cidery. A-B InBev now owns 32 percent of the Alliance and has a year to buy the remaining 68 percent, a deal that will require the approval of investors and federal regulators.
If this acquisition goes through, beer drinkers will be one step closer to what Stone co-founder Greg Koch calls “the illusion of choice.”
His point: even now, some bars and restaurants offer many beers from different breweries, all of which are owned by a single conglomerate. The Alliance alone would add two national brands to A-B InBev’s portfolio — Kona and Widmer Brothers — plus smaller players Redhook, Omission, Appalachian Mountain, Cisco and Wynwood, as well as Square Mile Cider.
Some of those are small breweries, but this is not small beer. In 2018, AB InBev’s non-Budweiser brands — led by Goose Island, Shock Top, Elysian and Golden Road — sold 1.99 million barrels of beer. That same year, the Alliance sold 757,000 barrels.
Still, this is a risky move. Consider the aforementioned Shock Top. Introduced in 2006, the Belgian-style wheat beer was a huge hit — until it wasn’t. Between 2014 and 2018, sales plunged more than 50 percent, from 900,000 to 430,000 barrels.
In fairness, A-B InBev has scored more successes than failures. But beer is a volatile industry now, and established breweries like Kona are under siege by a host of upstart neighborhood operations, plus popular beer alternatives like hard seltzer. There are no guarantees Craft Brew Alliance will prosper under new ownership or, for that matter, under old ownership. Between 2014 and 2018, total sales dropped by almost 98,000 barrels.