Looking at the Goose Island/Anheuser Busch Deal
By Chuck Sudo in News on Mar 28, 2011 7:00PM
This morning's news that Goose Island was being purchased outright by Anheuser-Busch for $38.8 million was followed by an outcry of opinion the likes of which hadn't been seen since ... well, since A-B bought its initial 40 percent stake in the Goose Island five years ago. The initial response was fierce and furious, vacillating between concerns the beer would now taste worse because it was owned by a Belgian corporation, what the deal means for Goose Island as a brand, A-B in its efforts to control the beer marketplace, and consumers, and cries of the loaded term "sellout," as loaded a term if ever there was one.
Or did Goose Island, which had been looking at a new influx of capital for months so they could expand, simply find a willing partner in a company whose workings they already knew? Outgoing brewmaster Greg Hall spoke with Time Out Chicago's Heather Shouse and indicated that autonomy mattered with the deal as much as the influx of capital:
"[A]s we found people who had the money to help us, they all wanted control and we didn’t want to give up control for obvious reasons. Then our friends at Anheuser-Busch, who’ve done a great job helping build our brand, called and said ‘let's talk.’ We said ‘Before we talk we want to make sure you know we want to keep brewing in Chicago, management in Chicago, decision-making in Chicago and we want to grow brands and add capacity.’ And they said ‘Great, that works for us.’ They’ve told us they’re committed to us because of who we are. I sat across the table from Dave Peacock [president of AB USA] and said ‘Why Goose and not Sam Adams or someone like that?’ and he said ‘We like your beers, brands and innovations, what you’re doing and want to do with beer and food and we like that you’re in Chicago.’"
But who knows what will happen down the line. Maybe A-B will take a look at that management structure and decide that maybe it needs a little influx of ideas directly from St. Louis. All we have right now is Hall's take on the meetings. And the sky didn't fall in 2006 when Goose Island gained entry into the A-B distribution network.
But this deal could make Goose Island as a brand become something like other A-B affiliated craft brewers like Widmer Brothers or Red Hook, with a core line of entry beers and seasonals to draw in the casual beer drinker and keep them there. Goose Island faces the prospect that their beers will be competing for shelf space with other InBev/A-B brands like Stella Artois, Leffe, and Hoegaarden. Not that they already weren't, mind you. But under the control of one larger beer company, who's to say that, as an example, 312 starts losing market share to, say, Stella, A-B suggests to Goose Island that maybe the wheat ale should be best marketed as a regional specialty? Or that the recipes for the seasonals are brewed for other markets at A-B brewhouses without the care and attention that Goose Island would put into them. It's speculation at this point, but that doesn't mean that it can't happen.
InBev/A-B and its main competitor at SABMiller both know that the true growth in the beer industry in recent years has been coming from the craft breweries and brands. From a business perspective, it makes sense that A-B would want to have Goose Island fully in the fold as they and SABMiller look to escalate the Beer Wars, collecting craft brewery distribution rights and smaller breweries like it's an arms race. Which it is, just for your retail dollar.
That will serve as a nice segue to our next concern - how will this sale be passed off to the consumer? The three-tier distribution system is already tainted by the money and marketing departments of the Big Two beer conglomerates. How much extra will you wind up paying for that twelve-pack of 312? And what about the specialty lines like the Bourbon County Stouts and the "Three Sisters" sour ale line? How much of a price increase could consumers be paying for those? Hall told Shouse that Matilda has increased its sales by 100 percent in each of the past five years. Don't think A-B hasn't seen that spike in the ledger.
There are other issues to consider, which Karl has eloquently listed over at Guys Drinking Beer. One that we echo: how will the Goose Island brewpubs now function without the company's retail arm behind it?
We disagree with the cries that Goose Island "sold out," or that this was a hostile corporate takeover; they're as risible now as they were five years ago. We know the definition but contend that, in order for the takeover to be hostile, one party has to be an unwilling participant. From all indications, Goose Island sought this out and found what they were looking for in the devil they already knew.
Ultimately, only time will determine whether this was a good deal or no. In the meantime, those of you who want to immediately protest the deal with your spending dollar have way more local options than you did five years ago. Chicago's local craft beer community is booming in a way few could have anticipated.
It's a brave new world.