Consolidation Fever

Peter Culos - Relax, it’s happened before.

The recent sale of Elysian Brewing to AB-InBev put an exclamation point on a trend that has the craft beer faithful in a tizzy. Is the great craft beer sell off nigh and a return to corporate beer only a matter of time?

Today’s craft brewing industry is maturing. Some have been in business for 20 or 30 years now. For privately owned businesses, there usually is an exit strategy.Sometimes that means offspring taking over the business. Sometimes it doesn’t. Maybe you want to cash out on your hard earned work, or you need to keep expanding your business to stay competitive. That will take cash too. Those pressures explain why a small brewery will accept a buyout offer from a big corporate brewer, a large regional brewer, or a private equity firm.

History predicted all of that.

I just finished reading a review copy of North Jersey Beer: A Brewing History from Princeton to Sparta by Chris Morris. From the mid nineteen century until Prohibition, the Newark, NJ area was a major beer-brewing center. Scores of German immigrant-run small breweries were popping up like crazy. Those breweries were, in effect, the craft breweries of the day.

Morris chronicles the dizzying history of breweries, buyouts and consolidations that occurred in the late 19th century right up to and through Prohibition. For instance, the Paterson Consolidated Brewing Company formed in 1890 in response to a London syndicate looking to acquire American breweries. The Braun, Sprattler & Mennell, Graham, and Burton breweries banded together and reaped the advantages of consolidation. Krueger’s Brewery, a Newark, New Jersey icon, sold out to a syndicate in 1882 and, with the cash, began buying smaller operations like crazy. Those are two of many examples.

Many of the small breweries that opened their doors in the 1850’s were selling out or being gobbled up by the 1880’s and 90’s.It’s just a natural progression. The thing to remember is that the cycle continued as small breweries were still opening the whole time.Until Prohibition that is. With only a few breweries ready to start making beer after the repeal, the die was cast for the little guy.

So, barring another dry spell, the craft beer industry should be just fine. The industry has matured and has entered this startup and consolidation cycle. Let’s just have the grace to accept the changes.

Oh, and don’t worry about that Prohibition thing either.

The Author:

Peter Culos is the editor of “Beer Bites,” Jersey Bites’ coverage of breweries, bars and good beer in the Garden State. Peter was first introduced to the novel idea that beer could actually have flavor during several visits to the UK. He’s been riding the craft beer bus ever since. It has been called the ultimate social lubricant and Peter’s philosophy on beer is, “I’d rather split my last good beer with a friend than drink the whole thing by myself.” Besides beer, he also likes history, dogs, Jeeps and painting. Life is short. Drink good beer.

The views and opinions expressed herein are those of the author's alone and do not necessarily reflect the views of Ora Media, LLC, its affiliates, or its employees.

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