Blogs

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Attorneys

Big Beer Mergers, A Sign of Things to Come

November 13 2015

By: Mark E. Ellinghouse

By now you’ve undoubtedly heard about Anheuser-Busch InBev’s recent purchase of SABMiller, creating the largest brewery conglomerate in the world. The purchase is but one more in the increasing history of brewery mergers, perhaps a sign that the long-rumored consolidation of the brewing industry is in full swing. Unfortunately, most companies can do little to stop market consolidation because the buying power of these “super breweries” yields incredible influence in the brewing industry. The question is: what can local craft breweries do to minimize the effects the beer industry’s latest trend?

One initiative few breweries have executed is the development of strategic partnerships and joint ventures. In such a scenario, two or more breweries agree to combine forces and share resources, market opportunities, and related information. This allows each brewery to retain its independence, preserving its “local” and “craft” identities, while enjoying the benefits of increased market exposure and opportunity. In a world where big beer keeps getting bigger, and an industry that takes pride in local breweries, a strategic partnership or joint venture may be the best of both worlds.

A recent example demonstrates the value of a strategic partnership or joint venture. In September, Lagunitas and Heineken announced their joint venture. The move allows Lagunitas to gain traction in the global beer market and Heineken to tap into the local craft beer scene through Lagunitas’ impressive local reputation. Committing to this relationship is a risk for both brands, but both must believe that their shared strengths outweigh the cost and risk of the investment. These two companies in particular have less to lose. They will unlikely suffer too much harm if the venture fails because both companies have established market power. Smaller breweries considering these initiatives must be much more careful, as these ventures may unnecessarily risk a growing brewery’ identity. Although it’s early to say whether this move will benefit either or both companies, it’s an encouraging step towards the expansion of craft brewing without sacrificing its independence or “craft” label.

For more information on this joint venture, click here.