SABMiller recently announced the acquisition of Greenwich-based Meantime Brewing Company for an unspecified sum. This is the first time a major brewer has swooped for a ‘new wave’ craft brewery in the fast developing UK craft beer market. The acquisition comes hot on the heels of SAB’s rivals, Carlsberg (the 4th biggest global brewer) announcing a collaboration last month with US craft outlet Brooklyn Brewery on a project to establish a new brewery in Norway. It no doubt also helped smooth the way that the current CEO of Meantime, Nick Miller, is a former Managing Director of SABMiller.
Such consolidation is inevitable. The major global brewers have seen the important European beer market badly flat-lining in recent years, while craft beer goes from strength to strength. This reflects the changing needs of consumers who want a more premium, distinctive drinking experience – one they feel is not being offered to them by the mainstream brewers. For example, Mintel’s data shows that 35% of UK beer drinkers think ‘it is hard to taste the difference between many beer brands’.
Whereas in the 1990s and 2000s, younger (mainly male) drinkers were defined by which major beer brand they drunk, today’s Millennial generation pride themselves on their experimentation, discernment and sophistication. Simply put, it is no longer cool to for younger 20-something drinkers to be a Carling or a Foster’s drinker, but rather to drink a new double IPA that none of your friends have heard of.
The SAB-Meantime deal is also mutually beneficial. Meantime has done a great job of building its brand in the UK (particularly London), but SAB can help it take the next step and cash in on export opportunities in wider Europe, where Greenwich’s London-centric branding is likely to play particularly well. Meantime – which is responsible for well-respected brews such as Yakima Red – will help SAB to develop craft-style products in what will soon become its centre for innovation. This gives SAB valuable expertise and credibility as it seeks to reach out more to the craft consumer.
Craft beer was previously a US-centric movement, where it has grown steadily since the early 1990s and come to account for 19% value of the total US beer market in 2014 according to figures from the Brewers Association. However, in recent years the trend has quickly gravitated to Europe (as well as other parts of the world).
The UK – like Sweden and the rest of the Nordic countries – has been a frontrunner in this European craft beer development and Meantime is being rewarded for getting in on the ground floor. Unlike more recent upstarts such as Brewdog and Camden Town Brewery, Meantime started way back in 1999 and has steadily developed a strong London bar presence as well as impressive national supermarket listings. Meantime also brews Sainsbury’s “Taste the Difference” range.
Will this open a flood of other M&A as the other major brewers react? Possibly. AB InBev has already acquired a handful of regional breweries in America, and the UK is an ideal gateway to Europe. If so who will it be? It certainly won’t be Brewdog, whose ‘equity for punks’ scheme is seeking to raise a further £25m in investment by selling shares to the general public, and therefore insulating them from ‘having to sell out’. Camden is a more obvious target, although it has also joined in the crowdfunding craze as it seeks to build a new brewery for its Camden Hell’s lager.
And what will the consumer think? Doesn’t a major brewer buying a craft brewery – lauded because of their small-scale brewing passion – seem something of a sell out? After all, craft evolved to get away from the large scale, sales-led bureaucracy which led to the homogenisation of the global beer market. Therefore, will it mean that Meantime will become tainted by its association with the second biggest brewer in the world?
New research from Mintel shows that the situation is not clear cut. For example, 24% of UK adults ‘would be interested in trying a craft/craft-style beer from a large brewer’, while 21% ‘would not be interested’. However, the learnings from other craft beer markets – like the US and Australia – is that being owned by ‘big business’ has done little to harm the profits of micro-breweries. Most modern consumers just want good beer, an attitude echoed by the fact that 28% of UK adults ‘do not mind which company produces the beer as long as it tastes good’. Secondly, few apart from beer aficionados, tend to know (or much care) who owns a beer brand – as long as it tastes good.
Jonny Forsyth, Global Drinks Analyst at Mintel, was previously 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.
