Molson Coors Beverage is buying Atwater Brewery, a craft beer manufacturer, the companies said in a statement.The transaction is expected to be completed within the next couple of months. Terms were not disclosed.
Atwater will be part of Tenth and Blake Beer Company, the U.S. craft division of Molson Coors. The company's craft portfolio includes Jacob Leinenkugel Brewing, Saint Archer Brewing and Revolver Brewing.
Molson Coors said it plans to continue selling Detroit-based Atwater throughout its existing markets while expanding its reach across the Great Lakes region. In addition to beer, Atwater also makes hard seltzers and craft spirits.
As beer makers grapple with a slowdown in their iconic brews, one area they have tapped into for growth is craft. While the increase in craft sales may not be as robust as a few years ago, it continues to far outpace outpace beer overall. Beer volume slipped 2.3% in 2019, its fourth straight year of declines, led by a 3.6% drop in domestic brews, IWSR said, while craft beer consumption increased 4.1%.
This growth is a major reason why big beer companies such as Molson Coors and its competitors continue to snap up these upstarts known for clever names and new flavors brewed using ingredients typically not associated with beer.
AB InBev announced in August that it acquired Platform Beer, a fast-growing regional brewery founded in Cleveland in 2014. Then, three months later it purchased the 68.8% stake it didn't own in Craft Brew Alliance for about $321 million. And last year, the Boston Beer Company, the manufacturer of Sam Adams, announced it would buy craft-beer maker Dogfish Head Brewery for $300 million in an effort to keep pace with "an intense amount of consolidation among many craft breweries in the U.S.," most notably the sale of many of them to large international beer giants.
The decision by Atwater to sell itself to Molson Coors is as much a reflection of the challenges facing Big Beer as it is those in the increasingly crowded craft beer space. This segment had more than 7,300 craft players in 2018, nearly double the amount in the U.S. four years earlier, according to data from the Brewers Association.
With so many brewers around, it's no longer enough just to be in the craft space to guarantee success. A growing number of craft players are going out of business or finding it hard to compete or find the financial firepower to expand their distribution into other regions where a local competitor already is entrenched in the area. This was the primary reason Atwater decided to sell itself rather than forge ahead on its own.
"The competition has gotten a lot stiffer," Atwater owner Mark Rieth told The Detroit News. "Our growth required capital and craft beverage expertise. All (Molson Coors wants) to do is support us and bring our brand to the next level."
Molson Coors has been overhauling its portfolio to reflect a consumer shift away from its classic brews, such as Miller Lite and Molson Coors, toward spirits, craft beers or ready-to-drink products like hard seltzer. As part of the Atwater purchase, Molson Coors is adding the craft maker's hard seltzers and craft spirits to its existing offerings.
After another quarter of falling sales in the U.S., which accounts for two-thirds of its revenue, Molson Coors announced sweeping changes to its business in October that included cutting hundreds of jobs, a change in its corporate structure and a decision to drop the word "Brewing" from its name and replace it with "Beverage" in an effort "to better reflect its strategic intent to expand beyond beer and into other growth adjacencies." It also is testing a La Colombe cold brew with the addition of an alcoholic malt in four markets, and in November it purchased a stake in L.A. Libations, a nonalcoholic beverage incubator.
While these changes could indicate that beer is no longer a key focus of Molson Coors, a company spokesman told Food Dive last week that is not the case. Molson Coors is "doubling down" on its core brews even as the company simultaneously broadens its portfolio to make sure it can respond to a shift in consumer trends. In just a few short months, Molson Coors has made major changes to its portfolio, highlighted most recently by the Atwater acquisition. But like its competitors, it can't afford to ease up, meaning further deals in craft and other niches in alcohol are inevitable in 2020 and beyond.