Big beer buying craft breweries not all about recipes: Sen. Blumenthal urging scrutiny on consolidations

Published on Tuesday, 15 August 2017 20:32
Written by Angie DeRosa

Staff Writer

HARTFORD - U.S. Sen. Richard Blumenthal met with several owners, co-founders and partners representing craft breweries across the state Monday afternoon at Thomas Hooker Brewery’s Colt Taproom to discuss the battle between craft breweries and their big beer competitors.

Blumenthal has urged close scrutiny of consolidation in the beer industry, calling on the U.S. Department of Justice to ensure mergers of top companies do not get in the way of America’s craft brewers-a local industry in Connecticut that is continuously growing.

The discussion comes in the wake of Anheuser-Busch InBev-the company behind Budweiser-purchasing SABMiller in 2016 and merging the two. AB InBev was already the largest brewing and beverage company worldwide before the merge and remains so.

The company has been under scrutiny for the last two years after being investigated by the Justice Department in October of 2015 for buying beer distributors and preventing them from selling its competitors beers.

This past May, they were criticized for participating in anti-competitive behavior after purchasing the entire supply of South African hops from SAB Hop Farms, which made it unavailable to any other craft brewers in the United States.

Similar claims were also made more recently when the company purchased Minnesota-based Northern Brew-the biggest homebrew-supply chain in the country-and bought a stake in the beer rating website RateBeer.

Mike Larson, co-founder at Alvarium Beer Company in New Britain, said for Alvarium specifically the distributer side doesn’t affect them. He said what they are concerned about is the raw materials, like the equipment and hops, and how these moves by the big companies will drive up prices.

Blumenthal has worked to create antitrust laws and other policies and procedures to oversee the merging of such to ensure the market is fair.

Larson said at the event in Hartford Monday, Blumenthal asked the different representatives of the breweries in the state what they come across as problems so he can continue to work to safeguard the brewing jobs in Connecticut.

With new craft brewers popping up, new kinds of beer are constantly being put on the market-Pale Ales, Indian Pale Ales, Dark Lagers, Belgian Styles and so on. To keep up with the competition, big beer companies have attempted to create their own, but not being able to successfully market their renditions made them rething their strategies.

Now big beer companies are buying up many craft breweries, which add to the distribution problem for some of the state’s small brewers.

For example, today AB InBev owns 10 beer brands that were once independently owned.

Many times this affects smaller, craft breweries because big beer names are able to get beer distributors and retailers to drop local products to get their bottles on the shelf instead, like what was seen with AB InBev.

Due to this craft brewers sell mainly out of their tap rooms because the competition in retail space is too much for them to afford.

In a way this can be used to their advantage by putting an emphasis on hyperlocal brewers, and also works as part of the solution to combat big beer companies.

Each year the number of breweries in Connecticut has steadily increased, now with almost 50 craft breweries in the state when just six years ago small breweries was in the single digits.

“It comes down to the local consumer, if people are buying more and more (local product),” said Larson. From his experience working in the craft beer industry, he thinks more and more people are looking to buy local and support small businesses.

The Brewers Association-a nonprofit organization for small and independent craft brewers-recently implemented an “independent craft brewer seal,” to help distinguish beer made from craft brewers versus non-craft companies.

To obtain the seal, craft brewers must meet a number of required criteria, including a brewery must be small-producing less than six million barrels per year-and independently owned.

Larson said Alvarium will soon bare the seal on all their bottles.

According to the latest data from The Brewers Association, the craft beer industry in Connecticut had a $569 million economic impact in 2014.

Overall, craft beer makes up $23.5 billion with 10 percent sales growth in 2016 nationwide.

Angie DeRosa can be reached at 860-801-5063 or aderosa@centralctcommunications.com



Posted in The Bristol Press, Bristol, General Business, General News on Tuesday, 15 August 2017 20:32. Updated: Tuesday, 15 August 2017 20:34.