[ibru]

I have been a small business owner since 1990. In those 25 years we enjoyed a steady growth to where I have made a pretty good living the past 15 or so years. It has not come without sacrifices. I worked 10-12 hours a day during the week and almost every Saturday. My salary would have put me below poverty and many months I'd write out my check and stick it in my drawer until the business had enough in the bank to cash it (thank God for my wife!). I'm sure many of the craft brewer have owners with a similar story.

When I was in my late 50s I started to think about an exit plan as I wanted to do things that I didn't have time to do. Finding some one to sell the business to was a task that took several years. It's not that easy to find some one who has the money (or has access to it) and willing to work more than 40 hours a week with no benefits. A couple years ago I was fortunate enough to find a young man who is now half owner and soon to be, hopefully, full owner. As a result I will have a better retirement.

Do I like it that InBev is buying up craft breweries? Absolutely not. However I do understand owners needing an exit plan. If the owner wanted to retire, what does he do, just close the doors?? I wouldn't call that greed at all, greed is what Uncle Sugar is going to take from the sale.

The attorney that I used to facilitate the sale used to say that there are three times when a business is sold, when you WANT to sell, when you HAVE to sell and when your heirs sell it. Two of them are not good.     

[theDarkSide]

Unless you know these people personally and what their motivations are, how do you know they don't have dignity and integrity?  Maybe they are doing it for the money and want an early retirement.  Who the hell wants to work until they die or retire when their so soar and slow they can't enjoy it?

If some go into the brewing business with the plan to sell in a couple years for a big score, then maybe the craft beer business is better without them. 

This is what I tell everyone who asks if I want to brew professionally...nothing ruins a great hobby more than making it your job.  Maybe if I was younger and just starting out, I'd feel different.  And maybe I'd be out there looking for my big scrore

[morticaixavier]

My concern with this pattern is two fold:

the more 'craft' breweries the big guys have in their tent the easier it is for them to control the market. Right now new breweries have a chance to get a spot, however small, on store shelves because the market want's an alternative and until recently the big guys have not had one to offer. They do have money and resources though. if they can not only give lots of cool free stuff but can also fill those 'alternative' spots on the shelves it becomes increasingly difficult for a new guy on the scene to make a mark.

second, When you are a company as large as AB/Inbev you MUST cut costs in order to increase profits. and you MUST increase profits (note to less careful readers, I'm talking about INCREASEING profits not simply MAKING profits) There are two ways to cut costs, cut labor costs or cut materials costs. given that Budweiser has dropped from ~17 IBU in the 1970's to ~6 today you can see where they chose to cut costs.

the idea that you can't run a business and be obsessively concerned with quality is just false. Look at Russian river. But you can't run a multinational mega brand commodity business like AB/Inbev and be obsessively concerned with quality.

I'm sure that these small breweries are told that the quality will remain the most important thing and nothing will be done to change their creations. But once the contract is signed, the check cashed, that beer will have to meet quarterly profit expectations. if that means using 5% less hops because focus groups say they don't notice a difference then that's what's going to happen, this year, and next year again, and the year after that, and so on and so on. it's the death by a thousand cuts.

I don't care that these breweries are selling out. Because I think that the small sector of the market that made craft brewing what it is, the customers that want something new, amazing, interesting, and quality will continue to look for that. so these buy outs are just opening up a spot for the next Vinnie Cilurzo, or John Kimmich, or Patrick Rue, or whoever is ready to make that next shining star.

I DO WORRY about these buyouts because it could be used as another tool to manipulate the 'free' market in a way that will make it harder for the next Cilurzo, Kimmich, or Rue to even get on the shelf. However, I am hopeful that there are enough smart business people running bottle shops and tap rooms to give the new guys a chance.

[beersk]

Well, I've never fit in with the mainstream crowd. I've had arguments about selling out with my dad, a long time musician, as well. He says, "If you had the opportunity to play drums on tour with a big name country band, would you?" I say, hell no, I hate that crap. I play what I like to play because I do it for the music, not the money. I'd open a brewery because I thought I could bring good beer to the market and beer would be my main focus, then profit. If you make good beer, the profit should eventually follow. Selling out ideals (a real and dignified thing) to money (a fake and made up thing) is no excuse. Obviously, I'm in the minority in thinking one should have dignity and integrity. Ha!
There's no integrity when one has dollar signs for pupils. But hey, this is why I'll probably never open my own brewery and money isn't something I strive for in life. As long as I can make a comfortable living, I'm happy. But I'm weird that way, too.

I respect your ideals but agree with Jeff. Professional brewing is a business and not a hobby. IF, and I stress IF, you can be successful AND maintain the ideals and aspirations of a homebrewer then what a wonderful world that would be.

True. I'm not sure I'd ever want to do that though. I really enjoy business models like New Glarus, who have no interest in expanding out of their own state. They aren't struggling to make a good profit, I'm sure. They claim that they can't even keep the shelves in Wisconsin full, why would they expand? It's just a different view and it's all about the beer, not the money. The money will follow with good beer.
If I were to open a brewery, it'd be small, probably a brewpub with no interest in distributing other than kegs to local bars.


Good points from ibru, darkside, and Jonathan.

[HoosierBrew]

My concern with this pattern is two fold:

the more 'craft' breweries the big guys have in their tent the easier it is for them to control the market. Right now new breweries have a chance to get a spot, however small, on store shelves because the market want's an alternative and until recently the big guys have not had one to offer. They do have money and resources though. if they can not only give lots of cool free stuff but can also fill those 'alternative' spots on the shelves it becomes increasingly difficult for a new guy on the scene to make a mark.

second, When you are a company as large as AB/Inbev you MUST cut costs in order to increase profits. and you MUST increase profits (note to less careful readers, I'm talking about INCREASEING profits not simply MAKING profits) There are two ways to cut costs, cut labor costs or cut materials costs. given that Budweiser has dropped from ~17 IBU in the 1970's to ~6 today you can see where they chose to cut costs.

the idea that you can't run a business and be obsessively concerned with quality is just false. Look at Russian river. But you can't run a multinational mega brand commodity business like AB/Inbev and be obsessively concerned with quality.

I'm sure that these small breweries are told that the quality will remain the most important thing and nothing will be done to change their creations. But once the contract is signed, the check cashed, that beer will have to meet quarterly profit expectations. if that means using 5% less hops because focus groups say they don't notice a difference then that's what's going to happen, this year, and next year again, and the year after that, and so on and so on. it's the death by a thousand cuts.

I don't care that these breweries are selling out. Because I think that the small sector of the market that made craft brewing what it is, the customers that want something new, amazing, interesting, and quality will continue to look for that. so these buy outs are just opening up a spot for the next Vinnie Cilurzo, or John Kimmich, or Patrick Rue, or whoever is ready to make that next shining star.

I DO WORRY about these buyouts because it could be used as another tool to manipulate the 'free' market in a way that will make it harder for the next Cilurzo, Kimmich, or Rue to even get on the shelf. However, I am hopeful that there are enough smart business people running bottle shops and tap rooms to give the new guys a chance.

While I don't remotely begrudge brewery owners selling to retire with a nest egg, these are exactly my concerns, too.  I choose to vote with my dollars, and when I buy beer my dollars don't support ABInbev's obvious strategy.

[RPIScotty]

I really would like to open a bottle shop. I'm not sure of the legality but I'd love to have a SABCO size system and sell bottles as well.


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[tommymorris]

I really would like to open a bottle shop. I'm not sure of the legality but I'd love to have a SABCO size system and sell bottles as well.


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I think it would be awesome if brewers could sell at the farmer's market. I am not sure if licensed brewers can do this. Probably not since it's off premise sales. It would be awesome if home brewers could sell at farmer's markets. Even if there was a small license fee I think some home brewers would pay it. That would connect home brew with the local food movement in a nice way IMHO.

[theDarkSide]

I really would like to open a bottle shop. I'm not sure of the legality but I'd love to have a SABCO size system and sell bottles as well.


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I think it would be awesome if brewers could sell at the farmer's market. I am not sure if licensed brewers can do this. Probably not since it's off premise sales. It would be awesome if home brewers could sell at farmer's markets. Even if there was a small license fee I think some home brewers would pay it. That would connect home brew with the local food movement in a nice way IMHO.

In NH, brewers can sell at Farmer's Markets (I think Maine and Vermont too).  One brewery started out only selling his beer at a farmer's market only.

[curtism1234]

Their most popular beer is vanilla porter which is disgusting. Overall, their beer is average in my opinion.

These types of vanilla porters have a window. Fresh, it's not very good. 3-6...maybe 9 months and the vanilla really shows. After that, they seem to fall apart again.

As to the breweries selling to the large companies, I think often it's the case of the owners cashing in on their hard work of 20+ years. You saw rambunctious 40 year olds build these breweries years ago and today they are in semi-retirement mode. They can get themselves a huge paycheck that will set them for retirement, not many negative changes for the company, and the founder still stays on as the figurehead of the operation.

In the short and midterm, it's business as usual. Long term, it may not be the best; but it's hard for any company to operate long term.

[pete b]

I really would like to open a bottle shop. I'm not sure of the legality but I'd love to have a SABCO size system and sell bottles as well.


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I think it would be awesome if brewers could sell at the farmer's market. I am not sure if licensed brewers can do this. Probably not since it's off premise sales. It would be awesome if home brewers could sell at farmer's markets. Even if there was a small license fee I think some home brewers would pay it. That would connect home brew with the local food movement in a nice way IMHO.

In NH, brewers can sell at Farmer's Markets (I think Maine and Vermont too).  One brewery started out only selling his beer at a farmer's market only.

My friend sells hard cider and cider syrup at farmers markets in Massachusetts. They are a licensed cider maker. They also sell at local stores in mostly western mass and at whole foods.

[reverseapachemaster]

second, When you are a company as large as AB/Inbev you MUST cut costs in order to increase profits. and you MUST increase profits (note to less careful readers, I'm talking about INCREASEING profits not simply MAKING profits) There are two ways to cut costs, cut labor costs or cut materials costs. given that Budweiser has dropped from ~17 IBU in the 1970's to ~6 today you can see where they chose to cut costs.

This is true if you can no longer expand your market share but these acquisitions are about expanding market share. They don't need to cut costs on a wildly profitable business. At some point in the future, if craft beer fades into obscurity, perhaps these acquired craft brands become diluted. I agree with the line of thinking that ABI's ultimate goal is to retake control of tap handles and shelf space by creating a single package of macro plus craft that can be sold to distributors and retailers and squeeze out the competition with the illusion of diversity.

I generally disagree that ABI cuts their product to save cash. They go to great lengths to brew beer in a non-cost effective manner, such as mashing for four hours and using beechwood to clear the beer when they could just as easily centrifuge or filter in less time. The reduction in IBUs was not done with cost in mind but with consumer preference. As Americans consumed more sugar from the 1940s forward the preference for sweeter beverages went with it and AB products followed suit.

I can't begrudge the business owners who decide to sell. It's nice to think about the philosophical stance of protecting the craft but by the time you're at the top of a brewery the size of Goose Island or Breckenridge your job has no connection to a craft. You're just managing a business. You aren't brewing. You aren't designing new recipes. The bigger the company gets the more removed from the production you get. It's far easier to take a profit on something that feels like any other management job and get your uninvolved equity holders a payout and go do something else.

[denny]

As homebrewers we can be all about the beer.

Once you open a brewery you had better be focused on making a profit. If you don't, the doors will get padlocked, all assets auctioned off, and you are a Homebrewer once again.

Way to nail it, Jeff.

[hopfenundmalz]

second, When you are a company as large as AB/Inbev you MUST cut costs in order to increase profits. and you MUST increase profits (note to less careful readers, I'm talking about INCREASEING profits not simply MAKING profits) There are two ways to cut costs, cut labor costs or cut materials costs. given that Budweiser has dropped from ~17 IBU in the 1970's to ~6 today you can see where they chose to cut costs.

This is true if you can no longer expand your market share but these acquisitions are about expanding market share. They don't need to cut costs on a wildly profitable business. At some point in the future, if craft beer fades into obscurity, perhaps these acquired craft brands become diluted. I agree with the line of thinking that ABI's ultimate goal is to retake control of tap handles and shelf space by creating a single package of macro plus craft that can be sold to distributors and retailers and squeeze out the competition with the illusion of diversity.

I generally disagree that ABI cuts their product to save cash. They go to great lengths to brew beer in a non-cost effective manner, such as mashing for four hours and using beechwood to clear the beer when they could just as easily centrifuge or filter in less time. The reduction in IBUs was not done with cost in mind but with consumer preference. As Americans consumed more sugar from the 1940s forward the preference for sweeter beverages went with it and AB products followed suit.

I can't begrudge the business owners who decide to sell. It's nice to think about the philosophical stance of protecting the craft but by the time you're at the top of a brewery the size of Goose Island or Breckenridge your job has no connection to a craft. You're just managing a business. You aren't brewing. You aren't designing new recipes. The bigger the company gets the more removed from the production you get. It's far easier to take a profit on something that feels like any other management job and get your uninvolved equity holders a payout and go do something else.

A guy who was in our club and then opened his own brewery says it is a great way to kick the brewing habit. He has guys who brew. He is busy trying to sell beer and run the business.

[narvin]

And why is it so hard to run a small business these days?  Local family businesses used to be a common way to support your family, and not a lottery ticket where you hope to get bought out before you're run out of business. Could it be because of these anticompetitive practices by large companies?

The FTC releases a yearly summary report, and they're available on their web site for the entire 20th century.  Anyone who thinks the free market in the US means unfettered capitalism should go back and see the history of strong regulation that we had (past tense).

[Backman]

As a Camden Town employee (with absolutely no input in the decision to sell) I find this article by a former employee captures pretty much how most of us feel about it. If I could have decided, we hadn't sold, but I fully understand the owners decision in the end.
http://www.pencilandspoon.com/2015/12/camden-town-brewery-and-ab-inbev.html


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