3-Tier System Under Siege by AB InBev

November 6, 2014

Not only is AB InBev guzzling up craft brewers all over the country, they are also buying the related brewpubs, effectively removing the middle tier and setting themselves up as retailers as well. So much for the so-called protections of the 3-tier system.

AB InBev to Acquire Oregon Craft BrewerPurchase of 10 Barrel Brewing Is Company’s Latest Move to Tap U.S. Craft-Beer Industry

Wall Street Journal

By Mike Esterl

November 5, 2014

Anheuser-Busch InBev NV said Wednesday it is acquiring 10 Barrel Brewing Co., the latest move by the world’s largest brewer to tap the small but fast-growing U.S. craft-beer industry.

Bend, Ore.-based 10 Barrel expects to sell about 40,000 barrels of beer this year, according to AB InBev, which didn’t disclose financial details.

Annual U.S. beer consumption totals roughly 200 million barrels. Nearly half of that is brewed by Belgium’s AB InBev, whose globe-trotting brands include Budweiser, Corona and Stella Artois.

But big, mainstream brands have seen volumes slip in recent years as Americans drop mild-tasting lagers to experiment with India Pale Ale and other styles sold by smaller regional craft brewers. More than 300 such breweries opened their doors last year alone.

Sales of 10 Barrel have roughly doubled in the past year, according to a person familiar with the matter. Its top-selling beer is Apocalypse IPA, accounting for nearly half of its volume.

AB InBev announced in February it was acquiring Patchogue, N.Y.-based Blue Point Brewing Co., which sold about 60,000 barrels last year. It didn’t disclose financial terms of that deal, either, although some industry observers pegged the price tag at around $25 million.

The brewing giant also acquired Goose Island, Chicago’s largest craft brewer, in 2011 for $38.8 million.

Recent M&A deals have priced some regional U.S. craft brewers at more than $1,000 a barrel, according to a person familiar with multiples. The vast majority of the country’s roughly 3,000 craft brewers remain privately or family owned.

AB InBev said it expects to close its 10 Barrel acquisition by the end of 2014. In addition to buying the company’s brewery in Bend, it will also acquire 10 Barrel’s two existing brewpubs in Bend and Boise, Idaho, and a third brewpub scheduled to open in Portland, Ore. in early 2015.

First Beverage Group acted as financial adviser to 10 Barrel.

Read more & watch the CNN video: