As reported earlier this week, Anheuser-Busch InBev has formally announced plans to takeover SABMiller, a transaction that would consolidate roughly one-third of the world’s beer supply under the parasol of a single manufacturer.
In response to the news, Brewbound reached out to a handful of brewers of various sizes, asking for their take on what a possible deal might mean for the American beer landscape, and how it would impact M&A activity and distribution. And while those interviewed offered varying opinions, they all shared in common a lack of concern.
Mike Stevens, co-founder and CEO of Founders Brewing, said that at that scale, the company would just be an entirely separate animal.
“I think they just become a whole different player on a level way out into the stratosphere that kind of separates us, I’d say, even further,” said Stevens. “I see it as kind of a non-impact factor to what we’re doing in the craft industry.”
By that, he believes the company would likely still dabble in acquiring craft breweries, but would also have to shift most of its focus away from the craft space and adopt a more global perspective.
“I think this now probably forces them to look at a business model that satisfies that entity,” he said. “How the craft industry plays into that model, I would say the scale and size and scope they’re looking at, it becomes even less and less significant.”
Founders, the nation’s 17th largest craft brewery by volume, itself sold a minority stake to Mahou San Miguel, the largest brewer in Spain, at the end of 2014.
Bill Covaleski, founder of Victory Brewing, echoed a similar lack of anxiety, arguing that today’s craft consumer base is too savvy and would actually be less likely to deviate from its craft-centric buying habits as a result of such a mega-merger.
“I kind of feel like when you create a behemoth company like that, there’s going to be a lot of people giving it the hairy eyeball who might not want to be involved with that,” he said. “I do feel there’s a very informed consumer out there these days and that consumer prefers not to do business with the largest entities. Given those trends, I would say there’s some really dark clouds ahead for a large entity like that.”
One thing that could potentially raise some eyebrows and questions in the future, though, is how a deal between the world’s two largest beer companies could impact the distribution landscape in the U.S.
“Obviously consolidation on the wholesaler front, that can complicate things a little bit,” added Stevens. “Where we used to have three options – independent, MillerCoors or ABI – now we’ve got two.”
David Johnson, chief operating officer at Los Angeles’ Fireman’s Brew, said as a result, one thing worth paying attention to is if wholesalers change what brands they’re keen on picking up.
“At least from my experience over the last seven years here, it seemed like the MillerCoors distributors were more open to bringing on craft bands that weren’t in their fold,” said Johnson. “Early on, the Budweiser houses didn’t want anything to do with brands that weren’t owned by their parent company.”
But, Covaleski added, “It’s not a foregone conclusion they can pool all their wholesalers together to be a consolidated effort.”
Regardless, such a deal will undoubtedly draw the eye of the U.S. Department of Justice, which could force brand divestments in accordance with anti-trust laws.
A-B InBev would likely be forced to divest its interest in MillerCoors (a joint venture between SABMiller and Molson Coors), which would allow Molson Coors to acquire the 58 percent of the joint venture that is currently owned by SABMiller.
The acquisition of the outstanding stake would occur in two parts: upon a change of control, Molson Coors would be guaranteed the right to purchase 8 percent of the joint venture. A purchase price would be set by a group of investment banks and the company would secure permanent management control of MillerCoors. Molson Coors would then be allowed to make the first and last offer for the remaining 50 percent.
Per U.K. law, A-B InBev now has until October 14 to make an official offer.