How Do We Interpret Anheuser Busch’s Proposed Acquisition of Craft Brewer Blue Point Brewing Company?

bluepointbrewery

by Andrew Chalk

On Wednesday 5th February Anheuser-Busch InBev (AB) announced an agreement to acquire Blue Point Brewing Company of New York. The deal values Blue Point at $24m and is expected to conclude in the first quarter of 2014.

Blue Point Brewing Company is a leading craft brewer, producing over 40 beers sold in 15 states, mainly along the U.S. east coast. AB is the world’s largest brewer, with 48% of the U.S. market. Blue Point sold around 60,000 barrels in 2013. AB sold 98.8 million barrels in the U.S. in the same period.

Why would AB want to acquire such a minnow?    

The conventional wisdom is that craft beer is hot and AB wants a craft beer brand to use in markets where craft beers appear to be making inroads into Budweiser sales. According to this mantra, AB thinks that craft beer is a fad, and this is essentially a holding operation before sales of Budweiser resume their increase in market share and the consolidation of the beer market in the U.S. resumes.

However, I just received an email from Tait Lifto, former Brand Sensei at Deep Ellum Brewing Company and now Chief Sales Sensei of Rabbit Hole Brewing (heaven knows what his title would be if he were a librarian). He refers to market data that Budweiser sales have fallen 29% over the last 5 years. Furthermore, and this is the clincher, at many bars craft beers are now outselling Budweiser and other national brands. If this phenomenon becomes widespread, the endgame for Budweiser is clear. It is going the way of beers like Milwaukee’s Best Premium that nobody buys. Despite advertising budgets of half a billion dollars a year, Budweiser has collapsed as a brand. This is a telling statement of how powerful the craft beer phenomenon really is. We are living through a sea-change in consumer beer spending.

In this light, AB’s purchase of Blue Point is an attempt to buy an eventual winner. Rather than emasculating Blue Point (they can’t afford to) they want the existing principals to run it. They expect Budweiser will continue to wither and die, and they will acquire more craft brewers in the near future, likely with distribution in other parts of the country.

We live in interesting times…

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1 Comment

Filed under Andrew Chalk

One response to “How Do We Interpret Anheuser Busch’s Proposed Acquisition of Craft Brewer Blue Point Brewing Company?

  1. James

    We now see some of the same tactics Starbucks employed, if you cannot beat them own them, and the general trend in the drinks business of consolidation and globalization.
    One would hope that these companies would see the worth in leaving alone the gems they purchase, but sadly they want nothing more than labels.

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