This post begins my fifth year of blogs. As a follower, you know that I have been around the beer industry for a long time. During these many decades I have seen a myriad of changes, some went well, others not so well.
For years, MBA classes have taught students that a key ingredient to success is learning how to manage change. That said, one might think that being in the beer industry as of late, would put that philosophy to the test. Change seems to be the norm.
Looking back on all the changes during my years in the industry, without exception, when one company acquired another, the statements: “business as usual” or “we anticipate no changes” where often made. Sound familiar? The only time that I remember the above statement NOT being made was when Philip Morris bought Miller Brewing.
Most of the changes from acquisitions created damaging results, e.g. Stroh Brewing’s purchase of Schlitz Brewing; Alan Bond’s purchase of G. Heileman; Paul Kalmaitz procurement of Pabst and others. These are just a few examples of purchases that did not have favorable results.
Outside of Philip Morris’s buying Miller Brewing, another acquisition that did work well was when Barton Beers (now Constellation) got Modelo from Gambrinus. Gambrinus, however, was able to buy and save Shiner, which is now a major craft.
This brings us to 2016, where a number of beer companies have been purchased or participated in a JV with another companies. Many established and successful crafts sold all, or part, of their companies. Only time will tell if these will work.
Distributors seem to be more successful at making these buy-outs work. Consider Reyes buying Windy City, which as to date, has been a great success for both companies. Glazer’s, too, continues its purchase of other operations with successful results.
This year will provide the largest acquisition that the beer industry yet seen, when ABI and SABMiller are consolidate. Much has been written about this union and will most likely continue to be a hot topic of discussion.
Recent hearings in Washington concerning this transaction focused on the perceived control that ABI will have in the US. When questioned about this deal, Carlos Brito of ABI stated over and over that there will be no changes in the US for ABI. Another “business as usual” statement.
Looking at this deal from afar, what you see is that Brito is correct. By selling the Miller brands to MolsonCoors, market share will remain the same for both companies. If that is true, then what is the big deal all about?
It is not about owning Miller, or the access to market for crafts and imports, or even owning brewpubs. It is about the “business as usual” statement which should be more concerning to everyone.
Just this past December, ABI bought three craft breweries and their brewpubs. Two are located in the US. Once ABI closes on SABMiller, expect ABI to accelerate this model with more crafts to buy, more distributors to buy, more brewpubs to buy and run, more and more of the same. ABI wants to control as much of the three-tier US market as they can, and with the SABMiller deal, it makes it easier for them to do so.
Regardless of what Brito or anyone else states, its business as usual, tell the truth, it’s easier to memorize….