Curmudgeon's "Opening Times" Column - July/August 2018
It’s a fact of life that most successful start-up breweries will end up being bought by bigger competitors
THE PAST few years have seen a growing trend of successful craft breweries founded in the modern era being acquired by the major international brewers. We have seen such well-known brands as Goose Island, Lagunitas and Ballast Point being taken over in the US, plus Meantime and Camden in this country. As “Opening Times” went to press, there were reports that Heineken was planning to buy a stake in craft favourites Beavertown.
This has resulted in widespread disappointment, even a sense of betrayal, amongst craft beer fans. Selling out to “the man” is, for many, hard to forgive. On the other hand, if the owners are offered well over the book value for their company, they can’t really be blamed for seizing the chance of a comfortable retirement. It also contains an element of railing against fate. It may be regrettable, but it’s simply a fact of business life that the most likely outcome for a successful start-up is to be taken over by a larger competitor. Very few go on to spread their wings and fly independently in the way that BrewDog has done.
There’s a strange reluctance to recognize any merit in beers produced by the major breweries. In the 70s and 80s, CAMRA was very critical of the market dominance of the then “Big Six”, but it always accepted that they did produce some excellent real ales. Yet many craft fans are unwilling to touch anything in which the big boys have had a hand. But surely it’s entirely possible for a big company to produce a good beer, just as a small company can make a poor one. This comes across as an exercise in cutting off your nose to spite your face.
This wave of takeovers is significantly different from those that occurred in the British brewing industry in the 60s, 70s and 80s. Then, the prime objective was to get hold of smaller competitors’ tied estates and distribution networks. Promises may have been made about maintaining production at original sites, and keeping brands going, but they were rarely worth the paper they were written on.
The more recent ones, however, are about acquiring beer brands, not outlets, and so there is much more of an incentive to maintain the brand equity. Inevitably, in many cases, it will end up being eroded over the years by changes in recipe and production methods, but if they’re not careful the buyers end up destroying the value of their own purchase. It’s also hard to see the takeover of a start-up only a few years old as quite as much of a loss as that of a business that has been established for several generations and become part of its local community.
Every small business start-up has a life-cycle, and there will come a time when the owner wants to move on. Most micro-breweries eventually just shut up shop because the owner has become too old, or unwell, or has lost interest, or isn’t making a worthwhile profit. If you look at the micros from the first couple of decades of CAMRA, few are still in existence in any form. Companies like the remaining family brewers, who have been in existence for a hundred years or more, are very much the exception, not the rule.
Brewing remains an industry where, compared with many others, the barriers to entry are very low, as shown by the fact that over 1,500 new breweries have been set up in this country in the present century. The loss of some favourites may be regretted, but we are likely in the future to see the cycle of cool new start-up turning into corporate acquisition repeated over and over again.