Industry News

Why Golden Road Agreed to Be Acquired

Last fall, when Anheuser-Busch InBev acquired Los Angeles-based Golden Road Brewing, critics of the deal characterized Golden Road as a “built to sell” operation. They pointed out that for a new brewery, it was unusually big, both in production and distribution area.

Tony Yanow, one of Golden Road’s founding partners, says the “built to sell” rumors are untrue. He contends that being acquired wasn’t discussed until after A-B made an offer, which was too good to turn around. A-B gave the brewery “a really good valuation”, and promised to keep its employees on the payroll with opportunities for advancement.

The fast-changing craft beer industry was another reason to agree to the deal. Yanow said, “In a world where the amount of shelf space is not growing, but the number of breweries is growing so quickly, it’s a fight to get your beer [into major retailers],” He added that the challenges will grow as the industry consolidates and the big players strengthen their grip on distribution networks and retail accounts.

The Friday Mash (Divestiture Edition)

Thirty-four years ago, AT&T agreed to be broken up into seven regional phone companies. Over the years, the “Baby Bells” recombined; and Southwestern Bell, the last surviving Baby Bell, renamed itself—you guessed it—“AT&T.”

And now….The Mash!

We begin in Chicago, where Walgreen’s sells Big Flats 1901 for $2.99 a six-pack. The contract-brewed beer has an overall rating of “Poor”—along with some funny reviews—on BeerAdvocate.com.

Kefir beer might be a healthier option for those with stomach ulcers. Scientists in Brazil found that rats that were fed kefir beer were less prone to inflammation than those that were fed regular beer.

Glassblower Matthew Cummings thinks beer deserves better glassware than the shaker pint. His Pretentious Beer Glass Company turns out odd-looking vessels designed for particular styles.

Vilde Haye, an Israeli boutique brewery, has launched a series of beers inspired by an imaginary klezmer orchestra. Each beer in the series has a “mascot,” a shtetel musician with a back story.

Mexican beer is growing faster than craft beer, thanks to America’s growing Latino population. There’s room for more growth as Anglos become aware of brands like Modelo and Tecate.

Brewbound.com lists the top ten craft beer stories of 2015. They include mergers and acquisitions, veteran craft-brewing figures stepping down, lawsuits, and the popularity of hard root beer.

Finally, Frank Winslow, Yards Brewing Company’s Director of Quality Assurance, explains why most beer bottles are brown but some are green, and why Corona might contain hop extract rather than actual hops.

The Wednesday Mash (Countdown to Christmas Edition)

Ludwig is on Christmas break, and won’t be back until January 4. Maryanne and Paul will be filling in for him. In the meantime, Ludwig left a plate of cookies, his heartiest Season’s Greetings, and an early version of…

The Mash!

We begin in Chicago, where Patti Wetli of DNAInfo.com takes us back to the Great Chicago Beer Riot of 1855. Hundreds of armed Germans stormed the city’s courthouse to protest the enforcement of liquor laws they considered anti-immigrant.

Queen City Q, a Charlotte-based chain of barbecue restaurants, has taken Anheuser-Busch products off the menu in protest of A-B’s allegedly pressuring distributors to stop handling craft beer.

Long Island’s Barrage Brewing Company has released two beers for Seinfield fans. They’re infused with Snickers and chocolate babka, foods that starred in the sitcom.

In Montreal, some cab drivers are competing with Uber by selling beer and cigarettes to passengers. Those sales are illegal, but the cabbies argue that Uber’s business model is illegal, too.

TravelPulse.com has compiled a scorecard of major U.S. airlines’ craft beer selections. Alaska and Delta Airlines lead the pack, Spirit Airlines ranked last, and Southwest Airlines showed the biggest improvement.

A federal appeals court has upheld an Indiana law that requires convenience stores to sell beer at room temperature. Liquor stores, which bar under-21s from entering, are allowed to sell cold beer.

Finally, Sierra Nevada Brewing Company’s Beer Camp will return next year. The first stop on this six-city national tour will be Tampa on June 4. Sierra Nevada and 30 regional breweries will also brew a series of collaborative 12-packs.

More Acquisitions News

Reuters reports that New Belgium Brewing Company has hired the advisory firm Lazard Middle Market, which has worked with other craft breweries exploring a possible sale. According to people familiar with the matter, New Belgium’s valuation could exceed $1 billion, the price Constellation Brands paid for Ballast Point Brewing Company.

Meanwhile, Anheuser-Busch announced that it has acquired Arizona’s leading craft brewer, Four Peaks Brewing Company. Known for its Kilt Lifter Scottish-style ale, Four Peaks becomes the sixth brewery in A-B’s craft division, The High End.

The Friday Mash (Xanadu Edition)

On this day in 1271, Kublai Khan of “stately pleasure dome” fame renamed his empire “Yuan,” officially marking the start of the Yuan dynasty of Mongolia and China. The yuan is modern-day China’s monetary unit.

And now…The Mash! 

We begin in Japan, where a local firm has teamed up with an Amsterdam-based renewables company to develop eco-friendly plastic beer bottles. They’re made from plant sugar rather than fossil fuels.

As competition grows more fierce, breweries are hiring artists, graphic designers, and even branding firms to create packaging that wins shelf space and attracts customers.

“Beer before whiskey” is risky, but not for the reasons you think. People drink faster as intake increases, whatever the beverage; and whiskey’s higher alcohol content compounds the effects.

Last weekend, Vancouver’s Storm Brewing unleashed its Glacial Mammoth Extinction beer. It’s Canada’s first beer above 25 percent ABV, and it isn’t cheap: a bottle will set you back C$1,000 ($730 U.S.).

Craft brewing’s success has created a problem: a shortage of cans, especially the 16-ounce cans that many crafts prefer to distinguish their product from national-brand beer.

Debrett’s, a British etiquette authority since 1769, has published a guide to proper beer-drinking. Among other topics, it covers proper pouring and tasting and how to behave decorously at the pub.

Finally, James Grugeon of Brisbane, Australia, is crowd-funding a brewery with a social purpose. Half the profits of his Good Beer Company will be donated to a conservation society trying to save the endangered Great Barrier Reef.

Ballast Point Cashes In for $1 Billion

No question about it. Acquisitions are craft beer’s number-one story in 2015. Today brought news that Constellation Brands, which owns Corona, Modelo Especial, and other Mexican beers agreed to buy San Diego-based Ballast Point Brewing Company. The price tag: $1 billion, or roughly $6,000 a barrel based on Ballast Point’s current-year production.

Constellation’s CEO, Rob Sands, found Ballast Point attractive because its beers are so profitable. Sculpin IPA typically sells for several dollars more than other brands of India pale ale, and Ballast Point’s revenue per barrel is nearly 25 percent higher than the craft beer industry’s average.

Ballast Point beers are currently available in 30 states. Constellation, which has relations wish large retail chains such as Kroger Company, intends to take the brand national.

The Friday Mash (Fantasia Edition)

Seventy-five years ago today marked the premiere of Walt Disney’s Fantasia. The animated film opened to mixed reviews, but it is now considered one of the classic animated films of all time.

And now….The Mash! 

We begin in Great Britain, where a 2002 law granting excise tax breaks caused a proliferation of breweries. The country has more than 1,300, and ranks first world-wide in breweries per capita.

Football fans will soon see something new in Bud Light commercials. The National Football League has changed its rules to allow the use of game footage involving active players.

In Oregon, the craft brewing and newly-legalized marijuana industries have something in common: a proliferation of start-up businesses.

Guinness will soon become an all-vegan beer. The brewery will stop using isinglass, a by-product of the fishing industry that’s used to clarify the beer and make yeast settle faster.

Boston-area entrepreneur Adam Oliveri has started a boutique beer distribution business. His Craft Collective has already signed distribution contracts with 16 craft breweries from the Northeast.

How dangerous is a “beer belly”? Depends on one’s fat distribution. Otherwise slim people with a beer belly run a much greater risk of serious health problems than obese people with one.

Finally, San Diego Beer Week isn’t just an opportunity to taste great beer. It also gives new breweries a chance to introduce themselves. More than half of San Diego County’s 115 breweries are less than three years old.

The Friday Mash (College Football Edition)

On this day in 1869, host Rutgers College defeated the College of New Jersey (now known as Princeton University), 6-4, in the first-ever intercollegiate football game. How much beer was consumed before and after the game is lost to history.

And now….The Mash! 

We begin in Richmond, Virginia, which is floating $23 million in bonds to finance the construction of a second plant for Stone Brewing Company.

Pro wrestler “Stone Cold” Steve Austin, who chugs cans of beer in the ring, has teamed up with El Segundo Brewing Company. The new beer is called Broken Skull IPA.

A start-up company in Belfast has invented a a beer-making machine called the BrewBot, which takes care of temperature and liquid pumping on its own.

Statistician Dr. Nathan Yau, using the website Flowing Data, figured out the most efficient route for taking a beer-tasting road trip around the continental U.S. The itinerary is 12,299 miles long.

Cara, a Canadian beer bar chain, has rescinded a dress code that forced Bier Markt’s female servers to wear revealing dresses. Some believe Cara was violating Ontario’s civil-rights laws.

South Korea’s exports in general have fallen but its beer exports are strong, partly because Iraqi Kurds and young Chinese drinkers prefer a beverage with a lower alcoholic content.

Finally, struggling presidential candidate Lindsey Graham flubbed his stint tending bar before taking part in a debate in Colorado. Graham, whose father tended bar, served up a pint with 15 ounces of foam.

The Empire Strikes Back

The mega-merger between Anheuser-Busch InBev and SABMiller will give the combined business a 30-percent share of the world’s beer market and control of eight of America’s top ten brands. And, according to Time magazine correspondent Brad Tuttle, it will pose a serious threat to the growing craft beer sector. The big brewers’ campaign against craft is being waged on several fronts.

Big Beer’s first line of attack on craft brewers is “crafty” beers such as Blue Moon and Shock Top. Critics call these products “crafty” because many, if not most, consumers are unaware that they’re made by big breweries.

The big breweries are also buying craft breweries whose products have a following, such as Goose Island, Elysian, 10 Barrel, Golden Road, and Blue Point. Even though there are 4,000 breweries in the U.S., Tuttle points out that strategic acquisitions of key craft breweries make it much more difficult for other craft brewers to succeed.

Advertising is another weapon in the mega-brewers’ arsenal. The craft-bashing Budweiser commercial that ran during the last Super Bowl, poking fun at hipsters who fuss over pumpkin peach ale, is the most notorious.

The big brands still dominate distribution, and the three-tier system isn’t going away anytime soon. In some states, such as Colorado, A-B InBev has bought distributors outright—a practice that may lead to antitrust investigation by the Justice Department.

Finally, consolidation helps offset the big brands’ sagging sales growth by cutting costs. Advertising is one such cost. A-B InBev and SABMiller spend billions on sports sponsorships to promote their brands. Now that the two companies are no longer competing, they’ll have more negotiating power with the sports industry and will demand lower fees for their “official sponsorship” status.

Judge Rejects BA’s Definition of “Craft Beer”

Last week, U.S. District Judge Gonzalo Curiel rejected, at least for the time being, the Brewers Association’s definition of craft beer: production under 6 million barrels a year, less than 25-percent controlled by a big brewer, and using “only traditional or innovative brewing ingredients.”

G. Clay Whittaker of The Daily Beast argues that Judge Curiel has in effect given every brewer in America the green light to describe its beer as “craft.” (Which is ironic considering that Anheuser-Busch InBev, during Super Bowl 49, ran an ad making fun of the entire segment.)

Judge Curiel gave the plaintiff, Evan Parent, the opportunity to amend his complaint, which might eventually lead to a legal definition of what craft beer is. Then again, the phrase “craft beer” could go the way of “the Champagne of bottled beers,” an advertising slogan that expresses a meaningless opinion about the product.

Powered by WordPress