View Full Version : Are You Tasting the Pith? - Translating Big Craft

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21-12-2015, 21:03
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As the KLF said in 1987, "What The Fuck Is Going On?".

I saw ABInBev's two recent acquisitions described as a rampage on Facebook - it's hardly a rampage, but it is significant. And it's also unlikely to be the end of it - more acquisitions (or mergers, if you prefer) will come, that's for sure. But what's really going on here?

Much has been made of the big players suddenly realising that they have been left behind, but left behind in what sense? Craft beer has finally become cool, but the big brewers don't care about that. They genuinely have no desire for craft beer credibility, what they want is to somehow revive their falling market share and hard pressed margins.

It's true that the more craft breweries that are acquired by the big players, the less route to market there is for anyone else. There is only a finite (and shrinking) amount of bar space, and no matter how many craft bars open, the linear mileage of bar top is shrinking, getting more crowded.

It's also true that, historically, great beers have been ruined by accountants gradually cutting corners, reducing the quality of the ingredients, dropping %abv to pay less duty but not passing the saving on - all tiny things that gradually add up to royally bastardise a once great beer. Ask Pete Brown about Stella Artois. I'm not so sure that this is the particular tactic with this round of acquisitions, and we'll return to why shortly.

I also made a throwaway comment on the back of the Ballast Point acquisition that (a) they'd overpaid massively (recouping in 30 years or so at current size) and following on from that (b) how's everyone's hop contracts looking? Because the thing is, Ballast Point aren't going to remain static, they are going to grow hugely. Maybe the quality will stay the same, maybe it won't - that's not the issue right now. Ballast Point - and Goose Island, and Camden, and whoever else gets hovered up - will grow massively, and will need lots of hops to do that. Lots of hops grown expensively under license, that will only get more expensive, even as more acreage is planted.

Ironically, this could be the thing that sees Big Craft prosper. Big Craft wants to acquire small breweries with big ideas, big reputations and crucially, big margins. I'm guessing that a tipping point has been reached in the boardrooms where no more savings can be made, products cannot be squeezed any further to reveal greater margins. One of my mantras as a retailer was don't cut costs, add value. If people can taste that a product is superior, they will happily pay more for it. Sure, in global terms, that's a niche market, but that's where the growth is, and that's what Big Craft is all about.

So my prediction is that breweries aren't being bought up to be dumbed down, run down and closed down, but are genuinely being bought to grow and produce flavourful craft beer on an industrial scale. Sure, there will be a monopoly created as Big Craft takes up more of the available bar space, and swallows up all the hops that little craft needs. But Big Craft is storming the barricades and launching a counter-attack on the revolution.

And what do we think about that?

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