These are seismic times for the beer industry as smaller craft brewers find themselves on the shopping lists of the big players – notably AB InBev (ABI), which has been buying up small rivals on an almost weekly basis.
This is a well known trend and is most prevalent in the US but what is less well known is the slow down in growth that is now being experienced by many of the well established American craft brewers.
According to some interesting research from analysts Bernstein five of the top 10 (by volume) craft brewers have gone ex-growth over the past 12 months. (Note that Bernstein uses the US Beer Marketers’ Insights (BMI) numbers rather than the Brewers Association (BA) stats as the latter excludes craft brewers that are wholly or partly owned by large brewers).
Such has been the impact of the big guns’ shopping activities that five of the top 12 craft brewers are now wholly or partly owned by these large brewers. Of the top 10 brands only Sierra Nevada, Lagunitas, Goose Island, Bell’s and Stone were still growing in double-digits in 2015. Of these, only Goose Island and Sierra Nevada were growing faster than in 2014.
With the challenge of slowing growth the founders of the first generation craft brewers have big decisions to make. Many of them are turning to bigger operators as a route to both freeing up some personal cash and to fund future growth.
The fact of the matter is, the real growth is coming from those brewers that are now in the hands of the bigger operators. We’re talking Ballast Point, which grew 125% in 2015 and is now owned by Constellation Brands, Founders grew 40% and is owned by Mahou-San Miguel Group, Lagunitas increased sales by 32% and is owned by Heineken, while Goose Island advanced 27% and has been owned by ABI since 2011.
There is absolutely no doubt that the first generation of US craft brewers have done a miraculous job in resurrecting beer not only in America but globally – to the point that craft in the US now accounts for 14% of beer sales by volume and 20% by value.
Along with this has been the explosion of newer brewers – there was a mere 93 in 1983 whereas at the end of 2013 there were almost 4,300. This has resulted in a particularly fragmented market with most players extremely small and only around 200 enjoying any sort of scale.
The result is that the top 10 largest craft brewers have seen their total market share decline from 50% to 38% over the last six years. This should not be seen as too much of a worry (for drinkers at least) as the newcomers coming into the market are undoubtedly adding vitality.
But what will be of concern to many beer drinkers is that ABI’s buying spree now places it third in the table of the largest US craft brewers – behind Boston Beer and Sierra Nevada. With its appetite for craft seeming to be ravenous right now and money not particularly an object it looks set to have an increasing impact on craft brewers in the US – predominantly the bigger guys.
The ramifications will undoubtedly be felt in the UK and other countries that have taken their brewing and beer drinking cues from the progressive American market. These are exciting and challenging times indeed.
Glynn Davis, editor, Beer Insider