On November 5 the owners of 10 Barrel Brewing Co. announced that they will be selling the company to Anheuser-Busch. There are a couple of things different about how this acquisition is playing out in the media than the February purchase of Blue Point Brewing Co. The Blue Point purchase coverage had a few comments about the deal, and there was a set of mostly negative Facebook posts from concerned customers, with a few positive congratulations sprinkled in. The commentary on Blue Point’s Facebook page were plentiful but not a rush.
With the 10 Barrel news, I am seeing that no one posted comments at the bottom of the media stories when they first came out. Concerned beer drinkers took to 10 Barrel’s Facebook page en masse, with 477 comments as I type this blog in just a few hours since the news release. The majority of comments vilify 10 Barrel’s owners. Like the Blue Point sale, there appears to be a strong sense of local betrayal, as posters on both Blue Point’s and now 10 Barrel’s Facebook pages declare hypocrisy of the local claims when shown in the reflected light of large brewer corporate purchase. Both small brewers were discussed on their pages as sellouts. It looks like the 10 Barrel posts also have some supportive congratulatory posts, which there wasn’t as much of after the Blue Point sale. For some beer drinkers, they take who makes their beer and who owns the brewery very personally; other beer drinkers don’t share the same value of small company and local ownership and keeping the profits and greater share of economic activity in the community or region.
That is not what is on my mind, however. I am thinking about why these deals don’t happen more often. One big obstacle is the distribution footprint complicates matters. Anheuser-Busch cannot just transfer the distribution rights from one wholesaler to an A-B house. In the case of Stein Distributing in Boise, it is an A-B house that already has 10 Barrel. There is no transition or disruption evident for Stein. But what about where 10 Barrel is in a MillerCoors or other house? One example is Graybeal Distributing in Pendleton, Oregon. The value of 10 Barrel’s distribution rights in that territory owned by Graybeal may have just gone up.
I am looking at the Vermont distributor for 10 Barrel and find an example of how complicated these deals can be. Calmont Distributing in Berlin Barre, VT has an absolute puzzle of brands it distributes. It is a MillerCoors house that appears to have some but not all brands from Constellation and Pabst and other imports and crafts, including 10 Barrel. It also appears to have Bass and Stella Artois owned by Anheuser-Busch InBev. I am speculating that it had those brands before InBev bought Anheuser-Busch and there was never an agreement to transfer them to the Anheuser-Busch wholesaler in the area. It is a complicated portfolio and shows how brewers, even the largest global brewer, doesn’t have the strength to move its brands whenever it wants. That 10 Barrel is small with a limited number of distributors to work with may have made this deal more attractive to A-B than one with a more established brewery with a more complicated footprint.
It can be argued that craft brewer expansions from single breweries in the west to second breweries in easternmore parts of the country/world started this trend for reasons of being closer to where beer drinkers buy there beer. Another piece of this deal on my mind is the apparent regional approach Anheuser-Busch is taking to compete with the craft sector. With middle-of-the-country Goose Island, Long Island’s Blue Point and now Bend and Boise’s 10 Barrel now part of the portfolio, it looks like A-B is developing its own version of a regional brand footprint strategy. I have been watching Pabst’s approach to market, and they appear to have a head start on this regionalization of brands. Pabst owns many heritage brands that many associate with certain parts of the country–Pabst, at the recent National Association of Convenience Stores Show, marketed Rainier as “Seattle’s Beer,” Old Style as “Chicago’s Beer,” Stag as “St. Louis’ Beer,” Ballantine IPA as “Newark’s Beer,” and National Bohemian as “Baltimore’s Beer,” among others like Schlitz and Lone Star and Pearl. It is an interesting approach as the large brewers attempt to connect regionally or pinpoint specific cities.
Paul Gatza November 5, 2014