AB-InBev buys Goose Island Beer as Busch family relinquishes last board seat
AB-InBev buys Goose Island Beer as Busch family relinquishes last board seat
AB-InBev buys Goose Island Beer as Busch family relinquishes last board seat
Anheuser-Busch InBev NV's U.S. unit agreed to buy fast-growing Chicago brewer Goose Island for $38.8 million, one of several moves by the company to ratchet up its investment in high-end beers.
The Budweiser maker has been seeking to capitalize on rising consumer demand for small-batch "craft" beers and other high-margin brews, amid tepid sales of mass-market lagers.
In addition to buying Goose Island, the company said it plans to increase by double-digit percentages this year its advertising spending on its Shock Top wheat ale, Belgian import Stella Artois, Landshark Lager and other specialty brews.
"We really needed to step up our efforts in the high end," Dave Peacock, president of Anheuser's U.S. unit, said in an interview Monday.
Goose Island Beer Co., founded in 1988, has become a popular name in Chicago and other parts of the Midwest with such labels as Honkers Ale, 312 Urban Wheat Ale and Matilda.
Craft beers like Goose Island's represent just 5% of total U.S. beer-industry sales volume, but the category commands higher margins and its total volumes rose 11% last year, according to the Brewers Association, a Boulder, Colo., trade group.
Meanwhile, total U.S. industry volumes slipped about 1% last year, according to newsletter Beer Marketer's Insights, as big brands like Bud Light and Miller Lite experienced sales declines. Mass-market beers have suffered in part from high unemployment among their core customers.
Anheuser agreed to pay $22.5 million to buy the 58% of Fulton Street Brewery LLC—the legal name for Goose Island—owned by its founders and investors. Anheuser also agreed to pay $16.3 million for the 42% of the company that is controlled by Craft Brewers Alliance Inc., a publicly traded brewer in Oregon.
Goose Island's founder and president, John Hall, will stay on as Goose Island's chief executive officer and oversee an expansion of its brewery. The deal is expected to close in the second quarter.
Anheuser executives have built a relationship with Goose Island since 2006, when the larger company's wholesaler network began distributing its brands. "We see them as a perfect fit," Mr. Peacock said. "We've gotten to know the people and become very familiar with the brands. They are one of the more innovative [small brewers]."
The deal carries some risks for the two sides, because some loyal craft-beer drinkers eschew brands that are associated with large brewers. However, many beer drinkers are unaware of, or don't mind, ties between big brewers and specialty brands.
Anheuser's U.S. sales volumes fell about 3% last year, though the company boosted profits thanks to higher prices and cost-cutting. Anheuser, based in Leuven, Belgium, is the world's largest beer maker by revenue and is the leading brewer in the U.S.
The company isn't alone among big brewers trying to take advantage of the increasing popularity of specialty beers. Last year, MillerCoors LLC, the No. 2 U.S. brewer, created a subsidiary called Tenth & Blake Beer Co. to focus on craft brews like its Blue Moon and imports such as Peroni. Through the unit concentrates on building its own brands, Tenth & Blake recently agreed to provide financing to help the founders of a Georgia craft brewer, Terrapin Beer Co., acquire control of the brewery.
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