Should Craft Brewers Be Frightened of What This New Survey Says?
Actually, the results are quite hopeful.
Rich Duprey (TMFCop) Sep 21, 2017 at 7:33AM
Who cares who makes your beer? So long as it tastes good, that's what's important. That's pretty much the argument Anheuser-Busch InBev (NYSE:BUD) makes when scooping up a craft brewery, and it's the case being made by analysts at UBS (NYSE:UBS) following a survey of 1,200 beer drinkers.
According to Business Insider, "Craft beer's argument for not selling out is totally flawed," and after reviewing the UBS survey's results, it says mega brewers like Anheuser-Busch and Heineken (NASDAQOTH:HEINY) "can win in craft with M&A." The problem is, the takeaway by the analysts and BI is completely wrong.
A mighty thirst for beer
Big Beer has been on a crusade to buy its way into virtually the only sector of the beer industry that's shown real, consistent growth. Anheuser-Busch is the most obvious example of it, buying 10 craft brewers over the past year, but Heineken also bought Lagunitas, Constellation Brands (NYSE:STZ) bought Ballast Point Brewing for a shocking $1 billion and then just doled out a presumably much smaller sum for Funky Buddha Brewing, and recently Japanese beer giant Sapporo bought original craft brewer Anchor Brewing.
After years and years of enjoying double-digit growth rates, the craft beer segment saw growth shrivel to 6% as millions of barrels of beer were removed from the equation. To be considered craft, the Brewers Association requires a brewery produce 6 million barrels a year or less, be independent, and use only traditional ingredients and adjuncts in the brewing process. Once A-B or Constellation acquires you, your production is no longer counted toward the total.
Craft brewers have long been a tight-knit group that has fought alongside one another to get distribution and has their beers showcased on store shelves or on tap at bars and restaurants. But what was once a unified front has become frayed as the biggest brewers in the industry began writing checks with lots of zeros on them.
Suddenly, once stalwart opponents of Big Beer buyouts were now signing away their breweries in a bid to cash in.
There is certainly nothing wrong with these brewers selling out to their big rivals. They've put plenty of financial and sweat equity into their labor of love, and now they have a chance to profit handsomely and bring their beer to more people.
But that's a far cry from saying beer drinkers don't care who makes their beer. In fact, the UBS survey proves just the opposite.
It really is more than just about taste
The figure UBS and Business Insider touted was that 45% of the respondents didn't think it mattered who made their beer, which was then ratcheted up to "In other words, almost half of Americans don't care at all if a trendy craft beer is owned and produced by AB InBev, the maker of Bud Light, or a small craft brewer completely independent from industry giants."
However, what they're ignoring is a majority of beer drinkers do care who makes their beer, with 30% actually passionate about it, saying it was an extremely important issue.
That's what the Brewers Association is tapping into with its new label program to help craft brewers identify themselves to the 56% of beer drinkers who say it's at least somewhat essential that a beer purported to be craft actually be made by a craft brewer.
In fact, Anheuser-Busch InBev is beginning to recognize that who owns the brewery does matter. After having bought out so many craft brewers, the beer giant just reorganized its high-end craft beer division and fired 90% of the sales force. Ostensibly some of that is the result of having acquired so many sales people from so many brewers that they became redundant, but it also stems in part from the blowback being received by the very beer drinkers who supposedly don't care.
On the outs
Bars and restaurants are removing labels of brewers who sell out, festivals are dropping sponsorships from breweries that were once mainstays of the circuit, and people are switching beers to those that remain true craft. Constellation Brands recently had to write down the value of its Ballast Point acquisition after realizing negative trends in the beer.
Indeed, the reverberations have been such that Anheuser-Busch says it's not going to be buying any more craft breweries and will instead work on achieving organic growth with the portfolio it's assembled.
Forty-five percent of beer drinkers not caring who makes their beer is a large percentage, but it's not half, and saying AB or Heineken won't suffer if they ignore what the majority of beer lovers are saying certainly seems a misguided and dangerous takeaway.
Recent BUD News
- Tilray Brands, Inc. Reports Q3 Fiscal 2024 Financial Results • GlobeNewswire Inc. • 04/09/2024 11:00:00 AM
- Adobe Stock Drops Following Below-Estimate Projections, Cardlytics Surges with Unexpected Profit, and More News • IH Market News • 03/15/2024 11:30:55 AM
- Fisker’s Shares Take a Hit Amid Speculation of Bankruptcy, Altria Divests from AB InBev to Fund Stock Repurchase Initiative • IH Market News • 03/14/2024 11:39:32 AM
- Form IRANNOTICE - Notice of disclosure filed pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 (Exchange Act Section 13(r)). • Edgar (US Regulatory) • 03/11/2024 08:19:58 PM
- Form 20-F - Annual and transition report of foreign private issuers [Sections 13 or 15(d)] • Edgar (US Regulatory) • 03/11/2024 08:17:39 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 03/08/2024 10:04:53 PM
- Airship AI skyrockets with DOJ contract; Carrier Global sells Fire Industrial division for $1.43 billion, and Latest News • IH Market News • 03/06/2024 11:01:03 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 02/29/2024 01:56:15 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 02/29/2024 01:47:26 PM
- U.S. Futures Dip as PCE Data Looms; Modest Gains for WTI and Brent Crude in April Contracts • IH Market News • 02/29/2024 11:13:07 AM
- Snowflake Stock Plummets 20.3% After CEO Transition; C3.ai, Okta, and Duolingo Surge Post-Strong Quarterly Reports, and More • IH Market News • 02/29/2024 11:09:45 AM
- AB InBev publie les résultats de l’exercice et du quatrième trimestre 2023 • Business Wire • 02/29/2024 02:36:00 AM
- AB InBev Reports Full Year and Fourth Quarter 2023 Results • Business Wire • 02/29/2024 01:30:00 AM
- AB InBev Named Olympics Games Partner • Dow Jones News • 01/12/2024 02:36:00 PM
- International Olympic Committee and AB InBev Announce Worldwide Olympic Partnership • Business Wire • 01/12/2024 01:30:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/22/2023 11:11:56 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/19/2023 11:44:26 AM
- Illumina’s Grail Divestment, Arm’s China Layoffs, IBM’s Software AG Acquisition, and More • IH Market News • 12/18/2023 10:51:50 AM
- Michelob Ultra Partners With Lionel Messi to Announce Being Named the Official Global Beer Sponsor of CONMEBOL Copa América USA 2024™ • Business Wire • 12/08/2023 02:00:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 11/15/2023 09:55:55 PM
- Anheuser-Busch on Pace for Largest Percent Increase Since November 2022 -- Data Talk • Dow Jones News • 10/31/2023 03:14:00 PM
- Tuesday’s Wall Street Highlights: Pinterest, BP, Wolfspeed, Arista, Lattice, Pfizer and more • IH Market News • 10/31/2023 11:24:04 AM
- Trending: AB InBev Backs Guidance Despite Further Bud Light Woes in US • Dow Jones News • 10/31/2023 10:50:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 10/31/2023 10:06:58 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 10/31/2023 10:04:57 AM
North Bay Resources Announces Successful Equipment Test at Bishop Gold Mill, Inyo County, California • NBRI • Apr 23, 2024 9:41 AM
Epazz, Inc.: CryObo, Inc. solar Bitcoin operations will issue tokens • EPAZ • Apr 23, 2024 9:20 AM
Avant Technologies Launches Advanced AI Supercomputing Network and Expansive Data Solutions • AVAI • Apr 23, 2024 8:00 AM
BestGrowthStocks.com Issues Comprehensive Analysis of Triller Merger with AGBA Group Holding Limited • AGBA • Apr 22, 2024 1:00 PM
Cannabix Technologies to Present Marijuana Breathalyzer Technology at International Association for Chemical Testing (IACT) Conference in California • BLO • Apr 22, 2024 8:49 AM
Kona Gold Beverages, Inc. Prepares for First Production Run Set to Launch May 17, 2024 • KGKG • Apr 22, 2024 8:30 AM