REAG expects craft breweries to consolidate at an accelerated rate in 2015 after unprecedented industry expansion. From 2006 to 2013 craft breweries in the United States increased from 1,460 to 2,822, respectively, according to data compiled by the Brewers Association.
The two main drivers of mergers and acquisitions among craft breweries in 2015 will be:
- Large, multinational participants that will continue their efforts to acquire craft brands
- Smaller craft breweries that will consolidate with each other in order to compete more effectively
In recent years, multinational players such as Anheuser-Busch and Miller-Coors have intensified their efforts to acquire premium craft brands and regain market share lost to smaller brewers. What was once expected to be a short term market shift to craft beer, has shown real staying power among consumers. The result, Anheuser-Busch, Miller-Coors, and other large players are desperate to capitalize more fully on the craft beer revolution by continuing to add quality craft brands to their portfolios.
As these efforts intensify, we expect some small to mid-sized craft breweries to be acquired by the large iconic companies. But, we anticipate other, smaller, regional breweries to oppose this trend for fear of alienating their near cult-like, loyal customers. However, as the large players continue to increase their holdings in the craft beer category, price pressures will follow. These price pressures will force smaller craft brewers unwilling to “sell-out” to the large brands to begin to consolidate and reduce costs. The result will be fewer companies owning more brands in an increasingly competitive space.
As every industry matures and becomes diluted by too many participants, it consolidates. This trend will grip craft brewers in 2015. If you are the owner, partner, or shareholder of an independent brewery, and are responsible for positioning your business for future success, it’s time to take a hard look at your strategic options.
For more about how REAG can help, please contact Scott D. Mashuda, Managing Director of REAG, by e-mail at sm******@re**.com or by phone at (412) 894-3244.
