Dogfish Head Sells Out
- Thread starter Marshal Jim Duncan
- Start date
It is a smart move by them. They have a lot of debt on their balance sheet. They know that this next three years of competition will not be mom and pop players, but rather big firms with already established marketing and wholesale markets investing in established brand names. All these craft brewers will have to compete with the big boys like InBev if they are going to survive and this influx of capital should be a good thing if they use it for expansion of the brand.
Whether it's smart or not? I'm agnostic. You're wrong about "all these craft brewers will have to compete with the big boys like InBev if they are going to survive" though, of that I'm certain.
Really? I am wrong? Seems like you are stating a fact there. I will admit I might be wrong, but I don't think I am. To support my point AB InBev has bought at least 4 craft breweries in the last three years including Goose Island and Elysian. Just this last month they bought Golden Road. Craft breweries will have to compete for tap and shelf space that major distributors like InBev already have locked up in a market that is becoming more and more crowded with small craft breweries. A major european distributor bought Boulevard Brewing in 2013 and has other "craft breweries" in its sights this year. Bloomberg actually wrote an article asking the questions of will crafts survive the big boys. http://www.bloomberg.com/news/features/2015-06-25/can-craft-beer-survive-ab-inbev- My AB InBev stock keeps going up while craft brewers struggle to make payroll and take on massive debt like Dog Fish Head did.
Anecdotal examples and the fact that Bllomberg has to have content to fill its publications and commenting on an obvious trend of AB InBev purchasing smaller brewers proves you're correct?
I tend to agree with you.
Regional craft breweries can still make plenty of money without looking to go national/international and compete head-to-head with the likes of InBev....and that will continue to be true, IMO.
Currently there are > 3,000 craft breweries in the U.S. Ten years from now, if there are fewer than 1,000, I'll buy you a case of your favorite InBev brew.
The smaller breweries will continue to operate without a lot of direct impact from this trend. I worry about larger craft breweries, though. More and more of them could be targeted for acquisition and if enough money is offered it is hard to blame the owners for taking it, especially if they have a lot of debt. I'm worried about the Sierra Nevada/Deschutes/New Belgium-sized breweries being tempting targets for the ever-expanding megaswill companies. If the Inbev/SAB-Miller deal is allowed to happen then maybe that will at least pause things because that will be a massive merger to deal with for several years.
There are 2 new brewery's built every day in the US. There are plenty of opportunities for the "local" brewery/bar if that's is what they want to be. However, if they want to be a regional/national brand, that's a whole 'nother potential black hole. Distributors have more sku's than they can handle and can only push so many on a limited amount of taps. We will see some sales transactions for reasons other than needing operating capital. Take Lagunitas for example. They recently sold 50% to Heineken. Why? World wide distribution opportunities. Most parts of the world have a 2 step distribution unlike the US 3 step. The suppliers, ie Heineken, SAB, Inbev, own the distribution and to get into these countries, you really need to be tied in to one of them. Tony, the owner of Lagunitas wants to expand into Mexico as well as other countries so Heineken was a logical partner. The deal with Heineken will not affect the US market for Lagunitas and Tony will continue to run the show. BTW, if the Inbev/SAB deal goes through, the US Miller/Coors will be sold to Molson/Coors to run the US operations.