Too much of a good thing can be, well, too much. Anheuser-Busch InBev (BUD -0.85%) has been chugging down so many pint-sized craft breweries that it is giving itself a bad hangover from the binge, and now it's fired 90% of its high-end craft beer salespeople.
Having acquired 10 craft breweries over the past few years, each with its own sales force, a national distribution giant like Anheuser-Busch might find the positions superfluous and the jobs expendable. Along with the 380 people let go in the great purge, the high-end craft beer division is also undergoing a reorganization. The division's president told Forbes A-B wasn't going to be making further acquisitions in the space, but rather would grow its portfolio organically.
That's certainly the most favorable spin to put on it, and there is more than a grain of truth to the assertion. But having gobbled up so many craft brewers in such a short time span, A-B InBev may have drunk its fill: Buying more breweries at this point will mean diminishing returns.
A beer binge hangover
There can be no question there is a blowback building up in the craft beer industry over the continued buyouts by megabreweries and sellouts by craft breweries. Case in point: Constellation Brands (STZ 3.69%), which paid $1 billion for Ballast Point Brewing, just had to take an $87 million impairment charge on the value of the brewery's trademarks. It said it noticed some negative trends with the brand, as well as in the craft beer industry as a whole, and the $223 million carrying value of Ballast Point's trademarks had to be written down to a new, lower fair market value of $136 million.
Part of those "negative trends" was the failure of newly introduced products to catch on, which signals a deeper problem. One of the arguments used by the megabrewers when scooping up these small, regional brands is their ability to bring the specialty beer to a wider national audience. Yet it's entirely possible that a brewer that is popular in a niche, regional market may not be able to make that transition to other parts of the country. San Diego-based Ballast Point just might not resonate as well in, say, Bangor, Maine.
Taking mass craft in a new direction
Anheuser-Busch isn't giving up on craft beer -- that's for certain. In the interview with Forbes, the president of its high-end division pointed to its opening a Latin-themed craft beer brand and brewpub in Miami called Veza Sur. The brewpub is a joint effort between A-B's 10 Barrel Brewing, which it bought in 2014, and Bogota Beer, a Colombian brewer that A-B acquired when it bought SABMiller, which at the time owned 99% of the Colombian beer market.
Because the brewpub won't be immediately recognizable as being owned by Anheuser-Busch, it will serve to further confuse the difference between true craft beer and mass craft, and amounts to an attempt to further ameliorate concerns about the acquisitiveness of mass brewers.
It is part of a strategy A-B began last year when it opened a Goose Island Vintage Ale House in London and announced plans to open a string of the craft-beer-inspired pubs based on the Goose Island brand, which itself began as a brewpub in Chicago in 1988. The beer giant has also acquired craft brewers, like Wicked Weed, that have their own brewpubs operating.
It's clear Anheuser-Busch InBev has had its fill of buying craft beers, but the brewpub scheme suggests it is returning to its approach of trying to create its own "craft-y" brands (as it did with Shock Top), but also indicates there is a limit to how far mass brewers can grow in craft beer simply by buying up the industry.