Merge and Acquire This!

As the sixth leading nation in beer consumption per capita, Australia clearly makes a lot of beer. And about half of that beer comes from the Foster’s Group. So it’s no wonder London-based SABMiller, in a hostile offer, scrounged deep in their couch cushions and came up with over $10 Billon. Foster’s board, incidentally, told SABMiller to put its lowball bid on the barbie. The price tag seems like a steal in the wake of what Belgian-Brazilian InBev eventually coughed up to buy A-B—roughly $52 Billion—after their initial hostile offer was rejected.

As the big boys’ sales remain flat, they will continue to look into buying breweries in other markets. Hence A-B’s  acquisition of Goose Island earlier this year. But such a sale was, and I believe will remain, rare. Almost no craft breweries are publicly traded. Yeah, there’s Craft Brewers Alliance (HOOK), makers of Widmer Bros, Redhook, and Kona (and had previous affiliations with aforementioned Goose Island), as well as Boston Beer Co. (SAM), but by and large the big boys will continue to cannibalize, well, other big boys. When Anchor and Anderson Valley were put on the market by their respective owners who were trailblazing veterans of the microbrewing industry, they must’ve rejected offers from the larger brewers. Likewise, I wouldn’t be surprised if larger craft breweries such as Sierra Nevada and New Belgium entertain behemoth-sized buyout offers from offices in St. Louis/Belgium or Milwaukee/London. And maybe, in fact quite likely, some will follow in Goose Island’s webbed footsteps. Just looking at the list of the 50 largest American breweries, I identify eight of the top 20 that I wouldn’t be shocked if they sold.

But if there are 2,500 breweries operating by the end of 2012 or thereabouts as the Brewers Association laid out, at least 2,450 of them will remain D.I.Y. or die trying. You think industrial brewers are going to be interested in Lawson’s Finest Liquids, purveyors of Maple Nipple Ale? Unlike our friends at Foster, Lawson’s isn’t Vermonter for beer. Nor are they scouring Texas Hill Country for a commercially viable beer named Commercial Suicide that they can brand as the Jester King of Beers.