ABInBev, the beer industries corporate raider, has finally made its intentions known, not that this is unexpected. On these pages over the years, we have discussed just this turn of events. It really was not a question of if; but a question of when ABI was going to make its move. Now we know.
As this procurement will be a week old when you read this blog, all the various scenarios necessary to make this acquisition a reality will have been written, published and discussed. As occurred when InBev was able to take over AB, the entire beer industry was changed almost overnight. Expect the same thing to happen once again, just more of the same.
While it is unclear as to just how all the details will unfold in the ensuing months, we do know that MillerCoors will no longer exist in its current form. MolsonCoors will once again be in play for the US market. Will this be a good thing or not such a good thing? Consider that just before this announcement of ABInBev and SABMiller, MillerCoors announced the closing of the Eden Brewery. The brewery announced that this closing was due to the huge loss of volume MC had experience over the last several years. Expect that this brewery will ultimately be dismantled and sold in part. This brewery equipment in today’s craft environment will bring many interested buyers. Laid off employees at this brewery will land at many craft breweries albeit making much less in salary and benefits, but none the less, still producing high quality beers. Again, adding to further losses for ABI, Miller and Coors.
What will be most interesting is just how this will play into the middle tier of the US beer industry? We already have blurred lines with distributors in their abilities to represent their brand lines. How many MC houses currently have ABI brands like Stella, Becks or Spaten? Now how is this going to work in conjunction with Miller brands? At least for a few years, will Miller be spun out as a standalone operation? Will ABI, when acquiring crafts as they have recently, roll these into Miller or ABI? Where will they be assigned for distribution?
One question that comes to me most often is just how big will crafts become in the US market? Up until this past week, one could look at the Pacific Northwest as a template for crafts and use those states as an indicator of how big crafts might grow. With this consolidation of ABI and MC, it just might be the best overall scenario for crafts.
There is no indication that sales losses for both ABI and MC will abate anytime soon. Line extensions or new products for either one have not worked to any great degree. Expect these trends for both to continue.
There will be much discussion in the coming weeks and months on this topic, but rest assured, it will happen in one way or another. When you lose the volume both of these companies have, something must, and will give. History repeats itself, it always does. Remember the four most beautiful words in our common language are: I told you so!
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