Musings on the Goose Island Deal

There are plenty of good-natured April Fool postings circulating through the blogosphere this morning. This is not one of them.

You will recall that Goose Island was purchased last month by Anheuser-Busch InBev, for a total of almost $39 million, $22.5 million to Goose Island plus $16.3 million to minority owner, Craft Brewers Alliance, Inc. Reactions, predictably, were mixed, with some, like this Chicago Tribune staffer, bidding a farewell to the beers they have long enjoyed, others, such as Michigan’s Stu Stuart, mourning what they now see as the brewery’s inevitable demise, and still others, such as the legions of fans posting on Greg Hall’s Facebook page, believing it’s a deserving reward for years of slogging it through the jungle that is the Chicago beer market.

As a writer about beer who has logged almost as many years in this business as have the Halls, John (father) and Greg (son), I am beset by mixed feelings. On the one hand, I would personally welcome the arrival of many millions of dollars and the freedom it would entail, while on the other, I question very strongly the honourability of Anheuser-Busch InBev when it comes to protecting the jobs of Goose Island workers, the involvement of Goose Island in the Chicago community – always a matter of importance for the Halls – and, ultimately, the character of the beer over time.

But that’s not why I’m typing this post. Rather, the raison d’être of this missive is the delivery of the following message: GET USED TO IT!

The craft beer business is booming, counting now for almost 5% of the market in the United States and still experiencing phenomenal growth, even as the overall beer market contracts. It’s only logical that this will cause some larger breweries to wish to acquire smaller ones, and it’s going to happen more and more.

Right now, Sapporo, the large Japanese brewer, is shopping around for a brewery in the States. With the creation of their new craft and import arm, Tenth and Blake, you can bet that MillerCoors has some interest. And I expect several others are in the hunt besides.

It’s called the maturing of the market and it’s as inevitable as death and taxes. Some bought breweries will fall from favour and, eventually, lose relevance. Others will be given the reins and will thrive and prosper. But purchased they will be, and hackles they will raise, and outraged blog posts they will generate.

While all of this is going on, just remember that some 500 new breweries are right now in the planning stages, on top of the 1700 or so already in production. And that’s a lot of beer.

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11 Comments

Filed under beer blogs, beer industry

11 responses to “Musings on the Goose Island Deal

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  3. Mike

    That there is enthusiasm and even excitement about beer on the beer rating sites and among American bloggers is almost certainly true. However, as, I assume, you are aware, the “boom” in sales came about when the American Brewer’s Assocation redefined their marketing term (“craft beer”) to include more breweries. I would not call that a “boom.”

    And, I would also suggest that you think about the following: that while industrial beer sales in the US are falling, the “craft” segment is basically standing still – and, if you eliminate the main brewery the BA changed its rules to allow in, that segment would amount to just a little over three percent.

    • stephenbeaumont

      Actually, Mike, that’s incorrect. The BA altered its definition to keep Boston Beer within the fold, rather than invite it into the tent. This issue was that by exceeding 2 million barrels of sales, BBC would have been removed from the craft beer stats. With the moving of the line to six million, the BA retained their volume in the craft beer stats.

      At the same time, Goose Island and the Craft Brewers Alliance are explicitly excluded from the craft numbers due to their ownership arrangements.

      • Mike

        Stephen, you call it “keep within the fold”, I call it juggling the numbers. Six million barrels is NOT a small brewery, regardless what the BA may think. As the BA, as I understand it, does the marketing for its members, it is clearly within its interests to redefine its own definition in order to demonstrate to its paying members that it is, in fact, performing well.

        That the percentage of industrial beer has been dropping for years, yet the BA can only increase the small brewery share by redefining what a small brewery is, proves my point that there is no boom in small brewery sales, despite the excitement in the circles I described.

        When CAMRA came on the scene in the 1970s, they did not need to redefine “Real Ale” or pander to the extremists to succeed. There is a lesson to be learned there, but few in the American small brewery movement seem interested.

      • stephenbeaumont

        No question the BA adjusted the maximum production number to retain the BBC within the ranks of craft breweries, Mike, but that is not what spurred the growth in craft beer sales in the US. BBC was part of that market in 2009, so the redefinition only kept the brewery’s sales and growth within the sector, rather than artificially enhancing it with the addition of extra production. In fact, those 2009 numbers, which also showed growth, did so despite the exclusion of Redhook, Widmer and Goose Island, which were taken out of the segment when the Craft Brewers Alliance was formed.

        And BTW, CAMRA didn’t redefine “real ale” because they invented the term!

  4. Mike

    Stephen, perhaps our views are not as far apart as I first thought. My only point is/was that with industrial beer share shrinking, if the small breweries share stayed stable, their market share would rise. If, however, their sales were “booming” their market share should be going up substantially. That it is not doing.

    You wrote: “And BTW, CAMRA didn’t redefine “real ale” because they invented the term!” Correct. And who invented the term/marketing phrase “craft beer”? Yes, exactly the same group that then redefined it when something inconvenient happened.

    • stephenbeaumont

      Relatively speaking, Mike, their sales are booming and their market share is going up. Check the BA stats, which even the organization admits are incomplete — owing to the rapid growth of the segment — and which specifically exclude the CBA (Goose, Widmer, Redhook). Growth of over 1 million barrels is nothing to sneeze at, and in terms of overall market share, craft is now pushing 5%.

      And actually, the term “craft” was adopted first by the beer media and some breweries and only later by the BA. I know, I was there.

      • Mike

        Stephen, I’m sorry to say that I have very little trust in the BA and their statistics. Why? As we agree (I believe), they redefined “small” to a ludicrous degree for the sole purpose of keep Sam Adams figures in their statistics. And their reason for doing so was equally ludicrous.

        If they are willing to be dishonest about their statistics on one level, why should I believe them on a different level?

        I did not know that about the “craft” designation, but I find that a dishonest way of describing non-industrial beer. Whether a product is made with craft is a personal evaluation and to describe an entire industry with that word is just not honest.

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