The global craft beer revolution

Dr Ina Verstl

Brauwelt International

Sydney 2016

10,000 craft breweries world-wide

Alltech

Top 10 countries withcraft breweries

What is a craft beer?

For the consumer:

• ‘real’, ‘pure’, with no chemicals or preservatives added

• authentic story that can be researched online

• more flavoursome, different and special

• priced as super-premium

Appeal of craft beer

Challenges to Big Beer

• U.S. in structural decline

• Western Europe in structural decline

• Russia in decline

• Brazil, China in cyclical decline

• Mexico, Africa and Asia are growing

Challenges to Big Beer

• further market fragmentation

• new entrants

• more competition

• brewers’ mainstay brands becoming more and more irrelevant

• market share loss

Challenges to Big Beer

Big Brewers and craft beer

“The big breweries are off-trend there, volumes are declining but it's still a very small and slow decline - it's only about 1% a year - it's a death by a thousand cuts.”

Investment research firm Morningstar

Oct. 2015

Craft beer revolution in the U.S.

Craft beer revolution in the U.S.

Brewers Association

U.S. craft beer segment by styles

Craft beer revolution in the U.S.

Craft beer is hurting Big Brewers

AB-InBev‘s beer shipments in U.S.

Beer Marketers Insights

Pareto‘s rule: 20% of vol = 80% of profit

Top 15 global beer brands

Rabobank 2016

Craft beer takes over

2013

Craft beer dollar sales in the U.S. in 2015, by city

Statista

Build or buy?

For MillerCoors Blue Moon and Leinenkugel are craft beer brands

Beer Marketers Insights

Banking over brand building - TCCC

Banking over brand building - TCCC

• 2014: Monster Beverage (USA)

• 2014: Tonicorp dairy (Ecuador)

• 2014: Keurig Green Mountain (USA)

• 2015: China Culiangwang (China)

• 2015: Suja juices (USA)

Serial acquirer: AB-InBev has bought the most craft brewers (2011-2015)

Country Date Acquirer* Acquired FoundedUK February 2011 Molson Coors Sharp’s, Cornwall 1994USA March 2011 AB-InBev Goose Island, Chicago 1988

Australia 2012 Lion (Kirin) Little Creatures 2000Ireland January 2013 Molson Coors Franciscan Well, Cork 1998

Australia April 2013 Asahi Cricketers Arms, Melbourne 2005

USA October 2013 Duvel Moortgat Boulevard, Kansas 1989Norway November 2013 Hansa Borg Nøgne Ø 2002USA February 2014 AB-InBev Blue Point, New York 1997

USA May 2014 AB-InBev 10 Barrel, Portland 2006USA December 2014 Mahou San Miguel Founders, Michigan 1997USA January 2015 AB-InBev Elysian, Seattle 1995Brazil February 2015 AmBev** Wäls, Minas Gerais 1999Colombia May 2015 AmBev** Bogota Beer Company 2002

UK May 2015 SABMiller Meantime, London 1999USA July 2015 Duvel Moortgat Firestone Walker, California 1996

Brazil July 2015 AmBev** Colorado, Sao Paulo 1995USA September 2015 AB-InBev Golden Road, Los Angeles 2011

USA September 2015 Heineken Lagunitas, California 1993USA September 2015 MillerCoors Saint Archer, San Diego 2013

Australia September 2015 Asahi Mountain Goat, Melbourne 1997

Canada October 2015 Labatt** Mill Street, Toronto 2002USA November 2015 Constellation Brands Ballast Point, California 1996

USA December 2015 AB-InBev Breckenridge, Colorado 1990

USA December 2015 AB-InBev Four Peaks, Arizona 1996UK December 2015 AB-InBev Camden Town, London 2010

Craft beer deals: heady pricesAcquirer Acquired Price (estimated)

AB-InBev Goose Island USD 38 mio

AB-InBev Blue Point USD 24 mio

AB-InBev 10 Barrel USD 50 mio

AB-InBev Elysian USD 60 mio

AB-InBev Breckenridge USD 70 mio

AB-InBev Four Peaks USD 70 mio

Duvel Moortgat Boulevard USD 100 mio

Duvel Moortgat Firestone Walker USD 250 mio

Heineken Lagunitas USD 500 mio

Constellation Brands Ballast Point USD 1000 mio

Big growth in small beers

Beer Marketers Insights

AB-InBev entering all tiers

Craft, crafty and corporate craftbeer brands

Definition of craft beer

- Ingredients

- Size

- Ownership

Ownership becomes key

Steve Hindy, the founder of Brooklyn Beer, mused on 18 December 2015 on BeverageDaily.com:

“I think the interesting numbers to look at in the next decade will be independent craft versus big company-owned craft beer. We’ll see how that plays out. We’ll see if independence really matters to the consumers.”

„Independence is the new craft“ BrewDog

“Nailing our colours to the mother fucking mast” BrewDog 22 December 2015

“We [at BrewDog] believe independence is massively important to great beer. We believe the lack of [an] overbearing parent company is key to being able to make fantastic beer. We believe that the evidence massively shows mega corporations taking over former craft brewers is horrifically bad for the beer, for the consumer, and for the industry overall. And we love all 3 of these things.”

www.beermonopoly.net

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