Start a business, sell out, cash in, retire to the South of France and spend your days dabbling in viticulture. It’s the capitalist dream and the entire raison d’etre for many a brand. Well, if you’re a booze brand, maybe not the last one – bit of a busman’s holiday.
But more than in many industries (with the notable exception of tech and its many subsectors), mergers and acquisitions have come to exercise a massive influence on alcohol (say what you like about banking stereotypes; the inverse is almost certainly true too…).
Head-turning acquisitions are de rigueur in the drinks business; investors follow M&A activity in the industry with a keenness matched only by the kind of blog-following wag to whom the chance to bitch about the sacrilege of a craft brand selling out is infinitely more precious than share price.
Over the past decade or so, the business of selling out has been a curiously consistent trend – particularly in craft beer, as corporates have rushed to get their hands on a piece of the sexy, shiny craft pie.
Most of the these deals have been wildly unsurprising. Not that that’s stopped craft hipsters going apoplectic at the mere rumour of VC or Big Brewery money getting within a disused railway arch of their favourite brewery (see: Beavertown). Heaven forbid that their toil should go financially rewarded. But this was always going to happen. I imagine that anyone who saw BrewDog drive a tank down Shoreditch High Street and believed they were doing it Cos They’re Just Big Characters watched on and congratulated themselves for also saving the lives of so many fairies with their applause.
I digress; the point is the predictability of the recent craft gold rush. An exciting new market segment, initially dominated by plucky independents making quality product. There was never a chance that craft would remain out of the reach of big money. And what I’m really getting at is that that rush also has a natural limit. And that prompts me to ask: whither M&A in 2019?
EVEN FROSTY JACK’S IS SELLING
Last year still saw a fair few significant deals. Fourpure realised the craft dream and got bought out (note the distinction from sold out) in a joint acquisition deal apparently aimed at conquering APAC. Diageo did some more distillery-gobbling, while the biggest deal worldwide was in Southeast Asia, where ThaiBev completed a whopping takeover of Vietnamese brewery Sabeco in a deal that went relatively under the radar in Europe. Perhaps less expectedly, a French co-op bought out Aston Manor, whose portfolio includes Frosty Jack’s – although I’m not holding my breath for a Stella-style cidre rebrand).
But, while 2018 had its share of Big Deals, for pundits like me at least, the big one for 2019 has probably already happened. I am, of course, referring to the buyout of Fuller’s brewing business by Asahi. Comparisons to Young’s abound, but there was a sense of finality with this one that’s not quite been apparent with the buyout of other independents.
For the most part, the theme has been simple diversification. Asahi’s acquisition of Meantime Brewing in 2016 filled an obvious craft gap in the business’s portfolio. The buyout of Fuller’s and Dark Star is an obvious extension of that, spreading Asahi’s reach around the UK both at the bar and on supermarket shelves. The megabreweries seem to have made their move; AB InBev got in there early when it acquired Goose Island in 2011 and has now cemented it as a go-to not-a-lager keg option all over the UK. When SIBA talks about multinationals misappropriating the craft label, you know the brands they’re talking about.
THE END OF THE GREAT CRAFT GOLD RUSH?
But the Fuller’s acquisition is different. To me it feels like a settling of the recent frenzy that’s characterised M&A in the alcohol industry, both in the UK and internationally. The megacorps each have their flagship brands to guarantee a crafty-looking presence on the bar.
In the UK, at least, it might just signal the end of the great craft gold rush. And I think there are a few benefits to that. Firstly, it’s more likely to leave brewers focused on the business of brewing great beer in a marketplace that’s characterised more by craft values than clamour around selling out. Secondly it leaves the industry once more in search of the next big thing. Not pink gin. Really big thing. That’s quite exciting – and M&A activity through the rest of 2019 is likely to point it out.
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