Wednesday, March 30, 2011

The Goose That Laid the Golden Egg

Once upon a time there was a farmer who kept geese. One of the farmer's geese was very special because it laid golden eggs. Every morning, the farmer would collect the eggs from his gaggle of geese and put the golden egg aside to be taken to the bank. Having convinced themselves that the goose itself must have a large nugget of gold inside it, the farmer and his wife killed the goose, only to find that it was a goose like every other.

Ok, it's not exactly a classic retelling of Aesop's Fable, but since the news came out on Monday that Fulton Street Brewing, which trades under the name Goose Island, was to be sold to Anheuser-Busch that story has been lodged in my cranium. As seems to be the norm when a successful craft brewery gets bought out by one of the multinational brewing corporations, the histrionic caterwauling on Twitter and in the blogosphere hit epic levels.

I find myself unable to join in such knee jerk excess for two main reasons. Firstly I have never had a Goose Island beer, though I guess I will have to see if I can find some in the coming weeks to see what all the fuss is about. Secondly, I am not convinced that A-B InBev is some evil corporate monster. Let me clarify that by saying that all businesses are just that, businesses. They are neither good nor evil, but rather methods of making money, and at the end of the day nobody in their right mind starts a business without wanting to make a living out of it.

Perhaps I am too willing to give A-B InBev the benefit of the doubt, but the story of the goose that laid the golden egg is rather apt here. Let us assume that the management of AB InBev actually know what they doing, though of course it is easier to believe that they are a coven of warlocks casting spells to make people buy their beer, it suits the narrative so much better. Do you honestly believe that they are sitting there thinking, "good god man, Goose Island shits gold, let's kill the bastard and have all the gold for ourselves"? Strangely enough, I don't think they are. They probably are thinking, let's buy the goose and have the gold for ourselves, but I think they would want to keep it alive.

Given that the chain of command within Goose Island will be John Hall reporting directly the CEO of Anheuser-Busch US, I suspect that nothing much will change on the beer front. Of course being part of a multinational brewing behemoth has its advantages for Goose Island such as capital investment and expanded distribution, which can only be good for the beer drinker.

Whilst talking about the beer drinker, I think it is petty minded to decry John and Greg Hall's decision to sell to Anheuser-Busch as "selling out". These guys have invested money, time and no small amount of care into the business and brands they have built, if they are willing to trust themselves to the world of AB then that is their decision and we should respect their right to have a big pay day for their labours. Perhaps it would have been different if the purchase had been a hostile takeover, but it looks as though all parties involved in the sale are happy with it.

It does seem though that the multinationals are intent on buying up craft breweries, what with MolsonCoors in the UK buying Sharps, so the question becomes "who next"? Personally I think the likes of Sierra Nevada and Sam Adams are too big to be of interest to the multinationals, so you are looking at the medium sized regional craft breweries, and I wouldn't be surprised to see several of them being bought out over the next year or two. The question is by whom, and for that answer, I would hazard a guess that looking at distribution deals will be a key pointer.


  1. Rather than guessing what the transaction will look like five years from now I'm just hoping I live that long.

    But about Sierra Nevada . . . I think Budějovický Budvar produces more beer. And has been of interest to multinationals, right?

  2. Poor choice of words really. I just don't think that Sierra Nevada and Sam Adams will be bought out by the multinationals in the near future, not saying it won't happen at all.

  3. I like Goose Island - Honker's was one of my gateway beers and i *love* thier IPA - but you know what? I'm gonna wait and see what happens, too. Maybe i'm mellowing in my old age.

  4. Hope we don't lose too many more small brewers. Guess you have to make money, at the end of the day.

  5. Stan,

    A thought comes to mind. How many countries is Sierra Nevada exported to and what percentage of their production is shipped overseas (I am assuming legally here rather than grey market)?

    With Budvar, it is about 50% of production, shipped to about 50 countries, which may make it a more attractive proposition than Sierra Nevada.

    Budvar production is only about 30% greater than Sierra Nevada.

    I wonder if you could also argue that the Budvar brand is more valuable than the Sierra Nevada in an international context?


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