Crafty Business - Big Beer May Soon Buy Up Your Favorite Craft Brewery

Oct 15

posted by Dr. John Gironda in Niche Markets | 9 Comments

The craft beer industry has experienced explosive growth in the last 10 years. According to the Brewers Association, craft beer has gone from a 5.9% dollar sales share of the U.S. market in 2006 to a 24.84% dollar sales share in 2016. This growth hasn’t gone unnoticed by the giant “megabreweries”, which have seen sales of their beers flatten or even decrease in recent years. This rise in craft beer consumption has led to a number of major industry shakeups such as the merging of Anheuser-Busch and Belgian beer giant InBev back in 2008, as well as AB InBev’s subsequent purchase of SABMiller in 2016.

Recently the big breweries’ strategy has been to simply buy up popular craft brewers. For instance, AB InBev has now acquired 10 craft beer brands including Goose Island and Blue Point; while Constellation Brands, the makers of Corona, bought San Diego craft brewer Ballast Point in late 2015, and MillerCoors purchased a majority ownership stake of the Terrapin Beer Company in July of 2016. 

This trend has been met with backlash by many craft beer enthusiasts and industry members alike. For example, after North Carolina craft brewer Wicked Weed announced its sale to AB InBev in May of 2017, it drew harsh criticism from numerous customers and was subsequently stripped of its voting rights in the NC Brewer’s Guild. The issue has drawn attention once again as popular South Florida craft brewer Funky Buddha was purchased by Constellation Brands on August 10th of 2017. 

Where do you come down on the issue? Do you think this recent trend in the industry is a good thing? Will it change your view of your favorite craft brewer if they were bought up by the “big guys”? Please share your thoughts in the comments section below.

John Gironda, Ph.D., is an Associate Professor of Marketing in the Huizenga College of Business and Entrepreneurship, Nova Southeastern University. He can be reached at jgironda@nova.edu

This entry was posted on October 15, 2017 at 12:44 PM and has received 2084 views. There are currently 9 comments. Print this entry. Download attachment.

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• #1 by Maria on 11/1/17 - 1:45 PM

  

  Very true. Most successful craft breweries have been bought already by big companies. Just look at Funky Buddha in South Florida. Great topic.

• #2 by Jacob Jones on 11/1/17 - 7:05 PM

  

  I feel like the growing industry of the craft beers is great, not only from a fan of craft breweries, but also because it breaks up the sales shares of the large breweries. No one likes monopolies or oligopolies, so the creation of many smaller breweries is great. I do not like that these large breweries are buying up the craft ones, but I feel it is inevitable. It would make me change my view a little of my favorite craft brewery, but I would still buy it.

• #3 by Devon Osborne on 11/3/17 - 6:21 PM

  

  I definitely enjoy the feel and atmosphere of smaller, local breweries. Now that I live in Massachusetts, I have had the chance to go to some local breweries with my family and it's great, there's always so many beers to choose from. I would worry that when the bigger companies bought out the smaller ones that it would change the way business was done or how the beer was crafted. I find that the smaller ones take more time with crafting beers and not just concerned about mass production.

• #4 by Austin Cranz on 11/4/17 - 4:17 PM

  

  I definitely have noticed a major increase in the popularity of craft breweries. Many modern breweries have been opened in the Fort Lauderdale and Miami areas recently. I personally do not like that the bigger brands are buying up all the craft breweries. Ofcourse, in terms of business, that's how things work sometimes. It may need to be regulated if things become too much of a monopoly. For now, it may just have to be dealt with, even if some of the craft breweries become less quality after a big buyout.

• #5 by Shane on 1/31/18 - 12:54 PM

  

  Nice write up. These buyouts are inevitable. And, I am happy for the breweries that are so successful they get to sell and profit. Unfortunately, I will not drink beers that sell out to AB InBev. AB InBev works in many ways(state legislatures) to stifle competition and hurt the local little guys. I cannot support their efforts by buying their beer.Thanks for shining a light on this issue.

• #6 by Ricky B on 2/12/18 - 4:42 PM

  

  It is disappointing to see much larger beer companies purchasing smaller craft breweries; this lessens the selection of marvelous beers to choose from and propagates the formation of monopolies. Monopolies can lead to power imbalances and in result little product variety; this can result in sharp spikes in price of various beer products as they are only provided by a few companies. In addition, small breweries, to an extent, epitomize the specific culture of the area from which they are based. In larger companies acquiring these smaller breweries, they are impeding upon tradition and destroy the close relationship established between smaller breweries and the populace which they serve.

• #7 by Collin on 2/16/18 - 2:41 PM

  

  With large industries buying up smaller breweries, it could be seen that the quality and craftsmanship of these craft beers isn't there anymore. Many small breweries make sure to preserve this quality that they started off with. I'm afraid that by largely distributing these beers, the quality could be lost.

• #8 by Jay Patel on 2/16/18 - 11:38 PM

  

  I think that this post really highlights the nature of competition in the alcohol industry. Very informative!

• #9 by nicholas curci on 3/1/18 - 1:56 PM

  

  This blog is a great analysis of the consolidation taking place within the beer industry. I also see the effects of this monopolization that you mention as well. However, some will still argue that the authenticity of a "craft brew" will remain the same even if the ownership trades hands, but unfortunately this will never be the case. Why should my Narragansett Lager taste like Bud Light? I packed 'Gansett in my cooler for a reason. Why would I go to great lengths to cut up all those orange garnishes for a Blue Moon if they're just going to go to waste on a Bud Light? Nothing against Bud light, business is business, but hopefully smaller breweries will understand the concerns of their customers and remain true to their roots and ignore the large checks that major brands may be offering.