- Anchor Brewing, best known for Anchor Steam beer, will be acquired by Sapporo Holdings for about $85 million, according to Bloomberg. The deal is expected to close by the end of August.
- The purchase is the latest move by the Japanese beverage company to expand its presence in the U.S., and will provide it with its first American brewing facility. Their other North American breweries are in Canada.This expansion may help offset the slowdown in Japanese beer consumption, which has been on a steady decline in the last decade.
- This deal is the latest push by a large beer company to scoop up smaller craft breweries.
Craft brewers are facing an increasingly crowded market, and many are turning to deep-pocketed large beverage companies to keep them afloat. The sale of San Francisco-based Anchor Brewing to Sapporo is the latest example.
Anchor Brewing was the 22nd-largest domestic craft brewing company in 2016, according to the Brewers Association.They produced 135,000 barrels of beer, but sales dropped 4% compared to 2015. Sapporo states that Anchor’s annual sales were roughly $33 million in 2016, making the purchase price roughly 2.5 times that amount.
Sapporo has a lot to gain by purchasing Anchor Brewing with a relatively inexpensive price tag. San Diego-based Ballast Point was sold to Constellation Brands for $1 billion in 2015. That craft beer company produced about 277,000 barrels that year, roughly twice what Anchor Brewing produced.
Sapporo, already the top selling Asian brand beer in the U.S., will now be able to brew its beer on American soil. Before this purchase, the beer-makers only North American brewing facilities were in Canada. In addition, they will be able to expand the exportation of Anchor's brands internationally. Perhaps most important, Sapporo will have the gravitas that comes with owning a craft brewery that was established in 1896 and is well-known in the beer space. This carries more weight than purchasing a flashy upstart that has been around less than a decade.
Anchor Brewing stands to benefit in this deal, as well. Sapporo has the manufacturing, marketing and distribution power to expand Anchor Brewing’s reach in the market. The key will be to keep the brand authentic, so it doesn’t appear to be another corporate sell out.
Purchases of craft breweries have cooled off in 2017, as evidenced by the selling price of Anchor Brewing. This could be a reflection of the craft market reaching a saturation point— it's not longer enough to be a craft brewer, you also need to have a product that is cool and tastes good. The number of breweries in the U.S. has increased from 1,447 in 2005 to 5,005 at the end of 2016. Many of those new breweries are tied to craft beers.
Craft beer growth slowed to 4% by volume last year. That’s the first time it hasn’t increase by a double-digit percentage point since 2004. Large beer makers could see this as a prime time to scoop up smaller craft breweries facing new challenges in a crowded market. They would likely be able to purchase these breweries for a fraction of what they would have fetched even two years ago.
It’s simply easier for them to buy a brewery, as opposed to investing the R&D to create their own craft beer. They get to take advantage of the trend with a known product, and not risk the losses if their version is a flop. Watch for more craft breweries to go the way of Anchor Brewing.
Pete Coors, vice chairman of Molson Coors, defended the decision by companies like his to enter the craft beer space through acquisitions.
"There is no law against it. Why wouldn't it be okay?" he told Food Dive in April. "You can do three things — you can buy, borrow or you can build. Well, we think it's cheaper to buy than to build or borrow. So we're going to do what is economically most viable for our company."