Recently ABI announced they had purchased a small, but quickly growing craft brewery, 10 Barrel. 10 Barrel is located in Oregon and sells only in that state, and in Washington and Idaho. 10 Barrel products are highly popular in all three states.
If one takes a step back and looks at today’s ABI, just what does one see? In addition to being the largest brewer in the world and in the US, ABI is also the largest distributor. Their business model consists of importing brands, like Stella, from around the world. They contract brew beers, including Becks and Kirin. They put together and run the Craft Brewers Alliance. They have purchased other craft breweries, including Goose Island, with more to come.
What you have is a company that brews, distributes, contracts, imports, and works JVs in beer. If it was legally available to ABI they would retail beer, too. ABI touches as many tiers in the beer industry as they possibly can and continue to expand their reach in all directions. ABI is as fully integrated a beer company as is possible.
MC just announced that while it, too, touches many of the same areas that ABI does, it has little interest in expanding its model in distribution outside of the Denver operation. It was not too long ago that Coors owned distributors in California and Idaho, plus other operations bought, run, and then sold through their Ford Street Management group. MC is also into crafts with 10th and Blake, and has prospects of adding JVs when the time is right.
We all know that in the past two years, Constellation brands, along with Crown, bought not only the Modelo importing rights to the US, but also one of their breweries in Mexico. Even with Crowns’ success, their entry into the middle tier is not in their business model. It is not unreasonable; however, to think they too, will expand their business model in the coming years.
Gold Coast Distributing, located in Miami, has agreed to be purchased by the Reyes Holdings. The 27+million cases sold by Gold Coast will now make Reyes, already the largest MC distributor in the US, second in line to ABI as the largest beer distributor in the US.
Reyes Holdings cover three companies with over 22 billion in revenues. This includes food services, distribution for McDonalds, and these distributorships. Reyes has been able to establish large and key operations in three of the largest volume states: California, Florida, and Illinois. They are also in other states, and are adding to their footprint in key states regardless of the cost.
The question now is: what is next for Reyes? Will Reyes, like MC or ABI, start purchasing small but highly successful craft breweries? They can expand these products all through their distribution system without any issues. Think of the focus and support they could provide, but how would other crafts look at Reyes as a distributor partner?
It is only a matter of time before someone like Reyes, L Knife, or JJ Taylor buys controlling interest in a brewery. Given the direction of the industry, rest assured these companies are looking into breweries. Only you can control your future…