Tuesday, August 4, 2015

Handicapping the Anheuser-Busch California Brewery Acquisition Targets

Inside this building, A-B executives are no doubt plotting
to acquire at least one California brewery
There's plenty of well placed speculation Anheuser-Busch (A-B) is actively seeking to acquire a California brewery, as they continue to invest in the fast growing "craft" beer market. If A-B acquires one of your favorite brewery, I think you should have no fear. Goose Island seems to be doing fine since A-B acquired them with no perceptible drop off in quality. While the jury is still out on the Blue Point, Elysian and 10 Barrel acquisitions, it's a reasonably good bet these acquisitions will have similar results as with Goose Island. In face, with A-B's considerable resources behind them, it's quite possible the beer from A-B acquired breweries will actually improve. Industry consolidation is a fact of life, so let's try to have a little fun with it. So without further ado, here are my fearless predictions of fifteen California breweries and their likelihood they get acquired by A-B.

Firestone-Walker Brewing Company (0.1%)
If A-B was eyeing Firestone-Walker as a takeover target, Duvel Moorgat beat them to it.

Sierra Nevada Brewing Company (0.2%)
Awfully hard to see this happening.  Enormous clash of corporate cultures, Ken Grossman doesn't need the money, and given some of Grossman's business partnerships have gone south, hard to imagine he would willingly agree to take on A-B with so many obvious conflicts needing to be resolved. In addition to all that, Sierra Nevada would command a pretty high price tag well above what A-B may be willing to pay.

Speakeasy Ales and Lagers (2%)
It could happen. I just don't think it will happen.

21st Amendment Brewing (2%)
In recent tweet, Budweiser declared,"Nobody cheers for the guy who bring a watermelon wheat beer". Those reading tea leaves thought this was an ironic signal from A-B that an acquisition of 21st Amendment, known for their popular "Hell or High Watermelon Wheat", was imminent.  No so, said 21st Amendment co-founder Shaun O"Sullivan, who quickly quashed that speculation, saying the brewery had no intentions of selling to A-B. Hard to see 21st Amendment back tracking on that, but then, stranger things have happened.

Gordon Biersch (2%)
Would be really complicated given Gordon Biersch's brewpub business and contract brewing operations. Plus Gordon Biersch focus on only traditional Germanic styles means they don't brew any of the currently hot beers like session IPA's and only would do so over Dan Gordon's dead body. With all due respect to Gordon Biersch, this isn't a brewery A-B would be all that eager to acquire.

Karl Strauss Brewing Company (2%)
A reader on my Facebook page suggested Karl Strauss. An intriguing choice, but that more I think about it, a situation very similar to Gordon Biersch.

Bear Republic Brewing Company (2%)
A-B could accomplish plenty with Bear Republic's flagship Racer 5 IPA.  Bear Republic expansion plans have been stifled by water resource issues in Sonoma Country so could thrive with A-B's vast brewing capacity available to them.  Other than that, it's hard to see this family owned business selling to A-B.

Green Flash (2.3%)
A strong, steady brand A-B would likely find desirable but Green Flash owners Mike and Lisa Hinkley don't strike me as ready or willing to sell.

Drakes Brewing (2.4%)
Owners John Martin and Roy Kirkorian have a good thing going in San Leandro and are well respected and ingrained in the California craft beer community. Its hard to see them making this seemingly idyllic life a lot more complicated by selling to A-B. A solid brand in the Bay Area but not as well known elsewhere, it probably isn't high on A-B list of acquisition targets either.

Anderson Valley Brewing Company (3%)
This long time, old school craft brewery was acquired from its founder by Trey White in 2010, who might be willing to part with it for the right price.  How interested A-B would in a steady, but not always spectacular brewery is another matter, as well as whether the Anderson Valley bucolic rural cultural vibe would mesh well with A-B's corporate culture.

Stone Brewing Company (4%)
Forget about Stone CEO Greg Koch's usual bluster against fizzy lagers, the guy likes selling lots of beer and building a brewing empire. So if he thought selling A-B would be necessary further that, he'd have no problem jumping on board. Which is why I think it's likely he won't since Greg Koch is building an empire just fine on his own.  Koch also strikes me as one of those guys who really likes being in charge which would no longer be the case if he sold to A-B.

Lagunitas Brewing Company (5%)
Tony Magee does a lot of weird, hard to believe things. Selling his business to A-B seems totally bizarre, even by his standards.  Still, I wouldn't put it totally past him and you would have to think A-B would want to buy such a strong brand, even though it would be a pricey acquisition. There are many sides to Tony Magee and being a hyper-capitalist is clearly one of them, so Magee selling to A-B isn't that far-fetched.

Now it starts getting interesting.  The next three breweries stand out in my mind as far and away, the best acquisition candidates for A-B.

Saint Archer Brewing (20%)
This brewery isn't even three years old but with three million in funding, Saint Archer has been blowing through California with an aggressive distribution expansion. Coupling craft beer with extreme sports, you'd have to think A-B would be looking hard to acquire the fast growing business that would give it instant access to two hot trends.

Anchor Brewing (20%)
Former Sky Vodka executives Keith Greggor and Tony Foglio who bought Anchor Brewing from craft beer icon Fritz Maytag in 2010 are no strangers to large corporate beverage conglomerates and would seem to be more comfortable fit with A-B than the home brewers turned businessmen who run most other breweries.  It also helps that Anchor's flagship beer is a cold fermented beer dating back to the late 1800's. Remind you of another classic American beer? Anchor is a solid brand with lots of mainstream appeal, yet plenty of craft beer cred.  The combination of Anchor Brewing and A-B seems rather effortless.

Hangar 24 Craft Brewery (33%)
The more I think about Hangar 24, the more I think it's the most logical choice. Hangar 24 reminds me an awful lot like A-B's last acquisition, 10 Barrel Brewing, with its young ambitious management, a significant barrel-aging program, and a balanced line-up mix of accessible lawn mower type beers, hop monsters, and experimental brews. With a strong presence in both Southern and Northern California, A-B would kill those two birds with one stone. Hangar 24 has plenty of growth potential and would probably be cheaper to acquire than Anchor. Hangar 24 is my leading pick.

So there you have it.  It's worth noting that given the percentages, I figure there's a 73% chance A-B will acquire either Saint Archer, Anchor or Hangar 24.  But even for the top pick Hangar 24, there's a 67% chance A-B will acquire a different brewery. So whatever the CA brewery A-B ultimately acquires is still pretty wide open.

Let the rampant speculation and the arguing begin!


  1. Good and interesting post. The SD beer tweets are saying St Archer is being bought by Molson Coors. Not AB, but close.

    1. Thanks, I did find a few news stories online to that effect. Sort of validates my prediction, but of course, it is just a rumor.