Craft Beer Billionaires are Changing the Game

There’s no reason craft can’t continue to grow and have more clout in the marketplace by acquiring other craft breweries or building more production breweries using a combination of bank loans and private equity. Colorado-based Oskar Blues Brewing Company is now pursuing both models after expanding to North Carolina and soon to Austin, Texas. In between, Oskar Blues purchased Perrin Brewing Company in Michigan. This follows on the heels of a deal to sell a majority interest to private equity group Fireman Capital.

Does that mean Oskar Blues is no longer craft or that its beers are no longer creative? I’m OK with this evolution as long as the prices don’t also start jumping – and especially if breweries closer to drinkers result in fresher beer.

Brooklyn Brewery is building a huge new facility on Staten Island – in part to increase exports to Europe. Does that mean it’s no longer Brooklyn or a craft brewery?

Firestone Walker sold to Duvel Moortgat of Belgium, which also owns the Boulevard and Ommegang brands in the U.S. The combined total barrelage of these four is less than the output of the Sierra Nevada brand per year. So are they no longer craft?

Ultimately it means that demand for craft continues to grow at an amazing pace, but that the ground rules for how independent brewers battle for market share with major corporations – and where – are evolving rapidly.

There are some interesting angles. Heineken cut a deal with Magee for the privilege of doing battle against newly enlarged ABI around the world using American craft as a growth vehicle. ABI, meanwhile, is using its macro Stella brand as a premium alternative around the world to its strategy of promoting lagers like Budweiser. Given that the world seemingly cannot get enough of American craft, it will be interesting to see how privately-owned Heineken fares with its new strategy versus the publicly-traded behemoth. And it will be interesting to see how many of Heineken’s breweries around the world start producing Lagunitas brews in order to increase velocity.

Americans, apparently, can’t get enough of American craft. Everybody wants to be in California, which is bourgeois with bling as opposed to the latter-day hipsters found in so many other craft strongholds. California is where all three of the newest billionaire brewers who sold last year started. Lagunitas is even building a second facility in a state where craft brewers – some of whom have sold to ABI and MillerCoors – can’t get their beers across state lines such is the demand within them. Look for Sweetwater Brewing Company of Atlanta, which managed to stay independent in a 2015 private equity deal, to become the first brewer to go from the East Coast to the West, quite possibly to California.

What is the everyday craft consumer – Joe and Jill 4-Pack – to do? For those antagonized by the sudden emphasis on money in what has always been a capital-intensive business, well, there’s always the local brewpub and/or brewer’s tap room. Homebrewing is also a prime alternative.

One thing for sure is that flavorful, creative beers loaded with quality ingredients are here to stay, because beer drinkers know them when they taste them. Taste along with American hops have turned the tide. The renewed competition with macro brewers, who are experts at delivering fresh beer, and the increase in prices might even put more pressure on all independent brewers to use “best by” dates. If asked to pay premium dollars for beer, it’s unacceptable for the consumer to bet on a beer’s freshness. Better fresh delivery by wholesalers and brewers ought to be a silver lining amongst all that gold.