Culture

BREAKING: Anheuser-Busch InBev purchases Karbach

This story will be updated throughout the day, please check back for updates. We will also tweet updates from @HoustonBeer.

Update 3:00pm: Karbach has yet to respond to requests for comment. Meanwhile, we were able to reach Scott Metzger, Freetail owner, who was able to clarify the ramifications for Karbach as far as the Texas Craft Brewers Guild is concerned: “The Guild does not allow voting members who have any non-craft brewer ownership. They can be associate, non voting members.” Finally, due to conditions attached to the recent merger between ABI and SABMiller, the Department of Justice will have a chance to review this buyout, even though it is under usual thresholds. Whether they will exercise that right remains to be seen.

Update 9:00am: ABI has announced and confirmed that Karbach will join their High End division. As stated in the original story, this is a major disappointment for Houston beer.

Original Story:

Rumors are swirling that a Texas brewery is on the verge of being acquired by global beer behemoth Anheuser-Busch InBev. Houston Beer Guide has been unable to confirm on-the-record the identity of the acquired brewery, but has received media confirmation that the announcement will be made today, around 9:45am. Similar rumors have surfaced in the past, but they appear to be louder, more consistent, and more concentrated than ever before, and the media source confirms fears we’ve had for a while: ABI’s next “High End” purchase will be in Texas. While we continue to chase this story, we’d like to briefly discuss why we think this is has the potential to be a huge moment.

The brewery would presumably join ABI’s High End division, which also includes prior acquisitions such as Goose Island, Elysian, Four Peaks, and Breckenridge. The five breweries ABI has acquired since January 2015 have produced, on average, about 60,000 barrels annually each. Recent acquisitions and public acquisition targets have fallen in the around 30-100k barrel range, so any local acquisition will likely follow suit. Similarly, it’s reasonable to rule out some of the more rural breweries that dot Texas’ countryside, as past acquisitions have shown that ABI prefers urban breweries with taprooms. These characteristics fit a small handful of Texas breweries, so the rumors, as one may expect, are fairly focused, though, again, not confirmable at this time by HBG.

In general, ABI’s acquisitions have followed a fairly constant market penetration goal, with expansion that has covered the Midwest, Northeast, Northwest, Southwest, and mid-Atlantic. ABI has shown a propensity to only target breweries in states where they do not already have a High End presence. An acquisition in Texas would make sense in this context, allowing further map coverage. In addition, Texas has a very strong network of ABI-centric distributors, such as Silver Eagle in Houston, Ben E. Keith in Dallas, and Brown in Austin. Since ABI already has a large macro brewery in Houston, established ties and relationships here would provide even greater leverage for their craft acquisition strategies.

Needless to say, such an acquisition would be heartbreaking to craft lovers. While many drinkers view such acquisitions with a “meh” attitude, the realities of the destruction caused by ABI’s purchases are real. There should be no doubt that ABI’s desire to own all beer production globally represents an anti-competitive and dangerous goal. There are countless examples (some examples linked below) of ABI using its influence to stagnate the growth of craft, including by buying distributors or leveraging their influence with distributors to hurt craft, by influencing legislation or, through their acquisitions and subsequent price-cutting or pay-for-play, by a “Trojan horse” strategy of acquiring more shelf space and a greater number of tap lines.

The best indicator of a free market is choice. When consolidation occurs, it benefits the consolidated – ABI would increase their already massive foothold in Texas, and the purchased brewery would see, as has already been the case for the other High End brands, their name everywhere. Soon, the brewery’s name would be known by casual drinkers not only in Texas, but also in stadiums and concert halls all over, wherever a “Craft Beer” sign can be placed over a set of tap handles all pouring from the same company. But when consolidation occurs, it hurts the consumer. When choice is decreased, the consumer has to “settle” rather than opt for his or her first choice. For some, this means nothing. For some, this means sacrificing a connection to a local brand that is no longer local.

It is worth stating that not all consolidation is the same, and ownership matters. When one starts a business, they do so to make money. However, in craft beer, we all like to think there’s something more noble in the intentions as well. After all, there’s more than one way to make money, and taking a payday from the most vicious anti-craft macrobrewery is only one option. As in the past, we have no choice but to wish the acquired brewery the best of luck in their future endeavors, but we won’t settle, and won’t drink another drop of their beers, regardless of how good they are. This is a sad story for Texas beer.