My Thoughts on the Beavertown-Heineken Announcement

In various social media many in beer commentary or the industry have weighed in on the impact of the purchase by Heineken brewery of what appears to be a sizeable minority stake in Beavertown Brewery, the London, U.K. craft brewery founded a half-dozen years ago by Logan Plant.

Without taking anything away from the vision and leadership of Logan, the fact that he was related to Robert Plant (of Led Zeppelin) helped create buzz in the early years; it didn’t hurt certainly. Whether Robert funded or guaranteed loans to the business I cannot say, but the connection was a cool thing that helped the overall image certainly.

And Beavertown has always made excellent products by all reports with innovative packaging design and marketing. It thus functioned as a lodestar for the burgeoning London group of craft breweries in particular. Many customers and retailers invested hopes and faith in the business as a classic start-up that shined by its independence.

In the wake of the Heineken deal Logan stated that planned expansion required significant new investment. After examining various financing options the sale of a stake to Heineken made the most sense, in part because it is family-controlled despite its behemoth size, and since it has the technical expertise to facilitate Beavertown’s increase of capacity.

Heineken also has a stable of some 3000 pubs in Britain via its Star holding, essentially outlets for Heineken’s beers.

Beavertown’s distribution could avail that network in the future but the decision to use it is at the option of Beavertown, not Heineken. So far no decision has been made.

In the last dozen years or so, in the U.K. and North America, a passel of well-known craft breweries has been acquired by a sizeable international brewery. Heineken itself bought full control of Lagunitas in California after taking a partial position. A stir arises each time this happens in craft circles, and now again.

The phenomenon is not new. Creemore, a lager specialist in Ontario, was bought by what is now Molson-Coors about 20 years ago. Before and since then various small breweries were purchased by large American ones or brought into various joint venture arrangements. The idea often was to give the smaller player access to the larger’s distribution network.

I’ve followed the craft brewing sector with great interest since its start. But I was a pre-craft beer fan as well and budding beer connoisseur with a library of books and thirst to learn more, which I did through travel, attending conferences, and further study. There was always a beer scene, it was just smaller, and different, yes, but not that different.

I yield, therefore, to no one in my respect for the sector, the risks its founders took, the risks its current practitioners face every day, and their often stellar products.

But when I started this interest (mid-1970s) size and scale were irrelevant to quality. Many large brewers made fine products, some made middling, or poor. It was the same for the medium-size and small breweries that existed. Products of high grade were sought out irrespective who made them.

That said, because most large brewers in North America tended ever more to a uniformity in product type and characteristics, it fell to new, necessarily small entrants to restore older beer traditions. So good beer became mainly associated with them, and an affection developed for the little train that could. But this was the driver for a process, not an end unto itself. Those who made especially good products and had good business stewardship grew quickly, Sierra Nevada is the classic example but there are many others.

Hence, the beer was and for most, I think, remains the point. Beavertown’s beers will continue, there is no reason to think they will change, just as Creemore lager hasn’t changed or Lagunitas IPA. Or Goose Island IPA. Not significantly anyway, which is all that counts. In some cases too these deals result in better beer, better technically and in stability.

If Beavertown beers remain good and creative, more will get to buy them than now. If not, more will get the chance to say no. After some 40 years of telling big beer, “you need to make better beer”, it’s got the message. We need to take “yes” for an answer. The fact that big beer has chosen to enter the field by acquisition is neither here nor there. First, it takes two to tango, the vendors of an equity stake are as much in it as the purchaser.

Second, there are literally thousands of small breweries in North America and the U.K. left to be the next pre-buyout Beavertown, Lagunitas, Elysium, etc. Or if you will the next Sam Adams, Stone, or Sierra Nevada.

For those who philosophically won’t deal with a post-Heineken Beavertown – certainly their privilege – there is almost a countless number of sourcing options.

The upshot is a win-win-win-win. Win 1: Logan Plant gets a payday for his hard work and vision.

Win 2: The public will get greater access to his beers, probably internationally ultimately.

Win 3: The thousands of remaining, fully-independent breweries have new marketing opportunities, i.e., to those who won’t support Beavertown going forward.

Win 4: There is increased employment for the to-be-expanded Beavertown business and the knock-on effects.

This is the business cycle in operation and in truth it was not different in the past. In the majority of larger American cities before WW I independent breweries grouped together in consolidations to survive or were assembled for buy-out by a foreign party (often English flotations).

Domestic raiders, as then termed, many from outside brewing initially (e.g., E.P. Taylor, Paul Kalmanovitz) bought out countless breweries in the U.S. and Canada in the mid-20th century.

The history of U.K. brewery consolidation is on record.

A few early brewers survived by virtue of product specialization, e.g. Guinness (and its great advertising), or by becoming a raider, or by a high degree of technical competency (Carlsberg and Tuborg, say), or in some cases due to unusual politics – Pilsner Urquell in the formerly Communist Czechoslovakia. But they all started out like a Beavertown, young and ambitious and looking for ways to grow and stay in the game.

 

 

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