AB InBev, the world’s largest brewer has announced today that it is buying Camden Town Brewery – the small, but prolific London craft brewer. Although the financial details are under wraps, Mintel’s expert analysts weigh in on the deal…

jonny_forsythJonny Forsyth, Global Drinks Analyst

The announcement that AB InBev (ABI) are buying Camden Town Brewery explains why the company recently announced the sale of Meantime, which did not make much sense when the news first broke.

It is also an extension of ABI’s US strategy of buying up key regional craft beer brands, which began with the purchase of Goose Island back in 2011 and has escalated in the last year.

The UK craft beer market is much less developed than the US. For example, craft beer is worth around 1-2% of the total UK beer market compared to 11% in the US, according to the Brewer’s Association. However, UK craft beer is buoyant with one in five Brits drinking craft beer in the 6 months to October 2015, and – Sweden apart – the UK has emerged as the key craft beer market in Europe.

SABMiller snapped up Meantime earlier this year, with the other obvious UK target being Camden which has managed to scale itself up within the London area. Camden will now be looking at stronger distribution and sales in the wider UK and abroad.

What will consumers think of such a deal? After all, isn’t the whole point of “craft” that beer is made by smaller beer companies? Well, not quite. Mintel research in both the UK and US shows that most consumers just want quality beer – whether made by large multinationals or tiny local microbreweries. In fact, as many as 29% of UK adults state that they do not mind which company produces a craft/craft-style beer as long as it tastes good.

The vast majority of people also have no idea about these types of deals – even though they are plastered all over the media. The only backlash tends to come from a minority of craft beer hardcore drinkers who do keep abreast of such maneuvers and do care enough to vote with their feet. Fortunately for major brewers, they are a relatively small niche.

Chris WissonChris Wisson, Senior Drinks Analyst

After only being established in 2010, this represents a wonderful deal for the Camden Town Brewery and fits in with AB InBev’s global strategy of snapping up smaller craft brewers. The sale makes a lot of sense and some would suggest has been on the cards for a long time given the brand’s understandable attempts to become a large company from the outset.

But does the sale matter to consumers? It would certainly seem so as the brewery’s founder, Jasper Cappaidge, discovered when he bravely put himself forward for a Twitter Q&A session. While attempting to reassure consumers that the quality of Camden’s beer would not change, Cappaidge was harshly accused of selling out and misleading those who had invested in the brand’s crowdfunding drive earlier in 2015. Perhaps this shouldn’t have been a huge surprise, as many craft beer drinkers are highly partisan and drink craft beer for what it stands for as well as the taste.

Camden Brewery has played up to its London roots and many of its drinkers appear to feel let down by the sale. That Cappaidge was also one of the five names behind the summer 2015 formation of the United Craft Brewers – an organisation aiming to safeguard craft principles – is unfortunate and actually suggests that this has been a rapid sale.

However, in the UK, 70% of drinkers prioritise the taste of drinks over who produces them, and wider distribution should find Camden Brewery’s beers appealing to the same type of beer drinkers who have driven the success of premium-positioned beers such as Peroni. However, Camden will also lose some of its customers for whom craft principles are paramount. Indeed, upcoming research from Mintel shows how 35% of drinkers agree that brands cannot be ‘craft’ if they are acquired by larger companies, with only 14% disagreeing. While consumers such as these will bemoan the sale and loss of the brewery’s independence, it is only likely to register with ardent beer drinkers, suggesting that Camden will continue to grow in the coming years.

This is unlikely to be the last acquisition of this type we see in the coming years. Other successful London breweries such as Kernel, Beavertown and Fourpure have already probably fielded similar takeover attempts, with London breweries being particularly ripe for export given the strength of the London brand, not to mention the strength of local demand. However, the large brewing companies will also be keeping a close eye on the growing success of other regional brewers (i.e. Thornbridge, Purity), who are unlikely to be short of admirers if (and some might argue, when) they do decide to sell up. However, while the ‘craft’ term is becoming ever more nebulous, one thing will always remain true for many beer drinkers: taste is king.

Hear Chris discuss AB InBev’s purchase of Camden Town Brewery live on Share Radio here.

Jonny Forsyth, Global Drinks Analyst, is responsible for researching and writing all of Mintel’s UK drinks reports. He brings ten years of experience working in the marketing industry, with roles at Starcom Mediavest, AB-Inbev, and Trinity Mirror. He is a regular contributor in global and national media outlets such as BBC, CNBC and Bloomberg.

Chris Wisson, Senior Drinks Analyst at Mintel, researches and writes reports on the UK drinks industry. He was also responsible for setting up Mintel’s Toronto office which opened in May 2014. Prior to joining the company, he worked for M&S/Park Cakes as a Bakery Merchandiser and as a Business Analyst at Moët-Hennessy. Chris has been quoted in a variety of industry and national publications such as BBC Online, the Financial Times and the Guardian.

 

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