Adapt or DIE

Over the last 10 years, craft beer has experienced an incredible renaissance. Beers that were once novelties, relegated to obscure shelves at local stores, now fill entire sections. But, just like the stock market, with phenomenal growth comes inevitable correction, which means that economic factors will lead some breweries to close or seek other options to remain viable. Today, it’s quickly becoming the norm for craft brewers to form coalitions, merge with other breweries or sell to the big breweries.

Greg Koch, craft beer advocate and cofounder of Stone Brewing Company in San Diego, secured $100 million in April from a group of independent investors; the money will buy “minority, non-controlling” stakes in craft breweries. His finance platform, called “True Craft,” is designed to help craft breweries avoid being bullied into selling out to big breweries.

“They can make their own decisions about their future,” Koch told industry magazine BevNET. “They can stay independent. They can get financing and flexibility that they need to flourish, while keeping their soul and control.”

In March, Colorado-based Oskar Blues Brewery used a similar tactic to add Tampa’s Cigar City Brewing Company to its portfolio. Through Boston private equity firm Fireman Capital Partners, Oskar Blues has been able to bring Cigar City under the same umbrella as Perrin Brewing and the Utah Brewers Cooperative outfit that includes the Wasatch and Squatters brands. The coalition strengthens each brewery individually, allowing them to retain their identity while providing financial security and access to production facilities at Oskar Blues’ Colorado and North Carolina breweries.

In February, prominent East Coast breweries Southern Tier Brewing and Victory Brewing Company announced they were merging to become Artisanal Brewing Ventures. Both breweries will retain their identities and creative control, they’ll join forces in marketing and distribution.

“Like-minded brewers, such as Victory and Southern Tier,” said Victory founder Bill Covaleski in an interview with TapTrail.com, “can preserve our character, culture and products by standing together. Allied, we can continue to innovate and best serve the audience who fueled our growth through their loyal thirst.”

There’s also a growing presence of big brewers for craft beer. It’s a sticking point for many craft beer drinkers who fear “Big Beer” will ruin craft breweries’ innovation and imagination. Breweries that sell to Big Beer are often reviled by the craft beer community. Yet despite the accusations of “Sellout!” all over the Internet after such a sale, connoisseurs still line up for Goose Island’s Bourbon County Brand Stout. (Goose Island sold to Anheuser-Busch InBev in 2011.) A slew of craft brands have been bought by non-craft breweries, such as Constellation Brands’ score of Ballast Point Brewing, Heineken’s purchase of a 50 percent stake in Lagunitas Brewing Company and, most recently, MillerCoors’ grab of Georgia’s Terrapin Beer Company.

How will the buying and selling affect the craft beer industry? The jury’s still out, but for the short-term, it means more brands will be more available to more beer-lovers. How could easier access to good beer be a bad thing?

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