Look Out Craft Breweries - Here Comes BMC...

[gr8shandini]

I for one will not be purchasing Terrapin from here on out (I actually like their beers). It's the same as when Goose Island got bought out, I quit buying form them too.
. . .

I just don't get the rabidly anti-BMC mentality. The article said that "MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin . . ." If you like their beer, why would you turn your back on the original owners who still own over 75% of the company?

No offense to anyone here, but that sort of attidude kind of reminds me of fans of [insert underground music scene here], where they'll talk smack about the masses who "just don't get it," then when one of their favorite bands becomes a mainstream hit, they'll bitch and moan about how they "sold out." I have a feeling that if the BMCs only ever produced a variety of tasty, well made beers, there would be a homebrew scene that was really into light American lagers and folks would be gunning for < 3 SRM instead of 70+ IBUs.

 

[Montanaandy]

If we go back to the old microbrew designation (am I dating myself here), we defined small as < 15,000 barrels/year. This eliminates Boston Beer, Sierra Nevada, New Belgium, Widmer, Deschutes, Magic Hat, Bells, Goose Island, Alaskan, Stone, Brooklyn, New Glarus, and a whole host of others. If you simply eliminate the top 10 craft breweries, who are not small by any reasonable definition of the word, you've eliminated the growth in craft beer. We are seeing less a boom in craft beer than we are seeing a boom in sales and volume by several rather large breweries that simply aren't Anheuser-Busch, MillerCoors, or Pabst.[/QUOTE]

While it is true that the larger "craft" breweries account for a significant portion of the growth in the sales of craft beer, I believe that the true majority of the growth is occurring beyond the larger "craft" breweries that you mentioned and is happening at the local/regional level. Many microbreweries in CO have either recently expanded or are planning an expansion. The same is true for MT. Supply often cannot keep up with demand at this point in time. Have you been to GABF recently? When you have enough great small local/regional breweries in attendance to break the hall down into regions, you know that the true growth in craft is not just from the larger brewers.

 

[carlrobinhood]

They still gain market share, is a considerable profit. This is no longer the case. BREW market is the only craft beer market, is profitable and gain market share by leaps and bounds (some estimates, the end of the next decade craft beer accounted for 30% market share of about 7% or so from now). Goose Island to buy or purchase (tied for AB / InBev pre-acquisition), such as the establishment and respect of craft brewing, will become the new standard. I personally believe that this strategy will not succeed long term -

 

[Homercidal]

Let's face it. Starting a NEW craft brewery is EXPENSIVE!

Smaller breweries who want to distribute more widely, or expand their facilities see the Big Breweries $$ as a path to expansion. The Big Boys see the craft brewers as not only having the craft brewery facilities, but the recipes, brewers, and name and recognitions to go with it.

It's a WIN-WIN for both of them.

There is nothing EVIL about it. It's simply making a sound financial decision.

Also, not only are the larger craft brewers getting bigger, but there are MORE and MORE smaller brewpubs and microbreweries opening up all over. Each of them will be introducing more and more people to the wonderful world of that is the craft beer experience. Then they are likely to grow, and craft beer in general grows, creating more opportunity for more brewpubs and micros to pop up all over.

Our small town, Big Rapids will soon have 2 brewpubs. I fully expect Cadillac to have at least one viable brewpub in the next few years.

While I think it would fantastic if all Craft beer brewers remained small, or didn't sell portions of their business to larger brewers, at some point as they grow they require expansion, and distribution. My hats off to those who try to do it on their own, but I understand how some would accept the investment offered by the larger companies.

And when it comes down to it, what's important, the size of the brewery, or the quality of the beer they make?

 

[Montanaandy]

I just don't get the rabidly anti-BMC mentality. The article said that "MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin . . ." If you like their beer, why would you turn your back on the original owners who still own over 75% of the company?

No offense to anyone here, but that sort of attidude kind of reminds me of fans of [insert underground music scene here], where they'll talk smack about the masses who "just don't get it," then when one of their favorite bands becomes a mainstream hit, they'll bitch and moan about how they "sold out." I have a feeling that if the BMCs only ever produced a variety of tasty, well made beers, there would be a homebrew scene that was really into light American lagers and folks would be gunning for < 3 SRM instead of 70+ IBUs.

I guess that I question why Terrapin would entertain a 25% initial investment (the most that MC can have at this point) unless they were planning on selling out eventually. Honaker at Goose Island is 67, had enough and wanted out so that is why he sold a stake in GI. Yes they can certainly improve distribution, bookkeeping, etc. as mentioned by the MC executive but...

You mention the band analogy and I believe that it is apt. When bands or performers that I admire and listen to do "sell out" and allow their songs to be used to sell sneakers, cars or whatever, they do lose cred in my eyes. Doesn't necessarily mean I won't listen to them ever again or won't buy their records. Same with Terrapin or other brewers that are owned in part by BMC. It will be something that I take into consideration when faced with what I want to purchase and from whom. All things being equal (both produce a good beer) I will go with the smaller, little guy just about every time. That's just me though...

 

[Zamial]

I just don't get the rabidly anti-BMC mentality. The article said that "MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin . . ." If you like their beer, why would you turn your back on the original owners who still own over 75% of the company? .

It is the principle of the matter for me. Miller/Coors just got done having there way in our states govenor's office. It is now next to impossible to start up a brewery in the state of WI. Not that I am planning to or was planning to open a brewery/pub but now it is simply a waste of time to entertain the thought. It was a great move by a corporate mega to stomp out any new compition that may arise, just in time for their 12th and Blake line. Bud is not much different and neither are American owned anymore. I flat out refuse to support BMC in any way. If Terripin, Lienkugles, Goose Island, ect want my money they can buy back the % that is owned by BMC as far as I am concerned or never see my dollars, it is that simple.

No offense to anyone here, but that sort of attidude kind of reminds me of fans of [insert underground music scene here], where they'll talk smack about the masses who "just don't get it," then when one of their favorite bands becomes a mainstream hit, they'll bitch and moan about how they "sold out." I have a feeling that if the BMCs only ever produced a variety of tasty, well made beers, there would be a homebrew scene that was really into light American lagers and folks would be gunning for < 3 SRM instead of 70+ IBUs.

For me the anti-BMC is not to be trendy, I am not trying to impress anyone nor do I care what 99% of the general population thinks of me, I want to drink what I brew or another local craft brewer has made. Local being relevant to where I happen to be at the time. This is also true for food. When I travel I hardly ever eat at a fast food place. I do a little research and planning and go to places that are unfranchized "mom and pop" places (sometimes brew pubs) So my question to you is: Do you perfer a handmade, grilled over a charcoal fire, burger with a hand sliced from the block cheese or one that went through multiple machines and has a cheese that is chemically closer to plastic than it is to dairy? From were I am there is not much difference to this than to the beer world.

 

[Clanchief]

I just don't get the rabidly anti-BMC mentality. The article said that "MillerCoors recently purchased a minority stake (less than 25 percent) in the GA-based craft brewer Terrapin . . ." If you like their beer, why would you turn your back on the original owners who still own over 75% of the company?

No offense to anyone here, but that sort of attidude kind of reminds me of fans of [insert underground music scene here], where they'll talk smack about the masses who "just don't get it," then when one of their favorite bands becomes a mainstream hit, they'll bitch and moan about how they "sold out." I have a feeling that if the BMCs only ever produced a variety of tasty, well made beers, there would be a homebrew scene that was really into light American lagers and folks would be gunning for < 3 SRM instead of 70+ IBUs.

TLDR version - I greatly prefer supporting, small, independent businesses over the massive, multi-national conglomerates which have a long term negative impact on consumer choice.



For me it's a question of not wanting to directly or indirectly support something that I feel is an overall negative to the beer industry. Monopolies in general are bad for the overall economic model from a consumer perspective - having options means price points can go down at the same time as having quality go up. With the craft brewing industry (and as so many have pointed out the difficulty of defining that I'll stick with the current state of Illinois definition which is <15000 barrel per year) we see a curious trend where people are showing they are willing to pay more for quality. It also becomes a statement of not wanting to support the bigger company, and instead buying from small, local businesses. Personally, I prefer to get my meat from a small local butcher, and I go to farmer's markets whenever I can instead of getting my produce at Jewel or Wal-Mart or wherever else you may go grocery shopping. Supporting small, local businesses is important to some people - including me. When those same small businesses sell a large stake in their company to a direct competitor, who by the nature of their company is the exact opposite of the ideal I'm looking for in my shopping experience...Well, I make the choice to take my business elsewhere most of the time. For example, I live in Chicago, and won't buy Goose Island anymore. They still make some good beers (Sophie and Matilda are both great beers), but I'd rather support small, local brewers instead. The people who run Goose are still going to get paid - AB InBev have put enough money behind them to distribute and produce larger batches of beer so they'll find a way to keep money rolling in. I also worry about what will happen if their profitability goes down a bit. Will their partners start becoming more insistent that they follow their brewing methodology, lowering costs and increasing the profit margin? If they are hesitant to do so, with their partner threaten to cut their massively available distribution market? Having that big of a stake in a company means you get a vote, and when that vote is an independent corporate entity with their own goals, it could clash with yours. As a consumer, I prefer to simply support small businesses as much as possible. I understand that I can't always do this, but if I can, then I do.

 

[gr8shandini]

It is the principle of the matter for me. Miller/Coors just got done having there way in our states govenor's office. It is now next to impossible to start up a brewery in the state of WI. Not that I am planning to or was planning to open a brewery/pub but now it is simply a waste of time to entertain the thought. It was a great move by a corporate mega to stomp out any new compition that may arise, just in time for their 12th and Blake line. Bud is not much different and neither are American owned anymore. I flat out refuse to support BMC in any way. If Terripin, Lienkugles, Goose Island, ect want my money they can buy back the % that is owned by BMC as far as I am concerned or never see my dollars, it is that simple.


For me the anti-BMC is not to be trendy, I am not trying to impress anyone nor do I care what 99% of the general population thinks of me, I want to drink what I brew or another local craft brewer has made. Local being relevant to where I happen to be at the time. This is also true for food. When I travel I hardly ever eat at a fast food place. I do a little research and planning and go to places that are unfranchized "mom and pop" places (sometimes brew pubs) So my question to you is: Do you perfer a handmade, grilled over a charcoal fire, burger with a hand sliced from the block cheese or one that went through multiple machines and has a cheese that is chemically closer to plastic than it is to dairy? From were I am there is not much difference to this than to the beer world.

I didn't know that about WI, and I would be pissed about that, too.

But the notion that Terrapin beers went from good, wholesome, and local to mass produced swill the second they signed over a minority share to MC is ridiculous. To continue the music analogy I used above, if a local indie label signs a distribution deal with Sony, does that mean every new record they make is crap?

 

[gr8shandini]

Clanchief,

Personally, I try to buy mom-and-pop as much as possible, but you have to admit that it's much easier when you happen to live in a city like Chicago rather than in the vast swaths of the country where they're pretty much non-existant. I'm currently stuck way out in the sticks in Southern Maryland and there's no such thing as a local butcher shop or farmer's market. There are a couple of decent liquor stores that carry good beer, but the selection is limited and the turnover isn't great, so you often end up with year old bottles. So you can see why I'd be thrilled if InBev came down here and "forced" some Goose Island on the local distributors.

 

[msarro]

I didn't know that about WI, and I would be pissed about that, too.

But the notion that Terrapin beers went from good, wholesome, and local to mass produced swill the second they signed over a minority share to MC is ridiculous. To continue the music analogy I used above, if a local indie label signs a distribution deal with Sony, does that mean every new record they make is crap?

It depends, actually. Nickelback could produce Bethoven, but if the record company they've signed with decides that it won't sell, they'll turn them down. They won't publish something they don't think will sell with a meaningful return on their investment.

The same thing would happen here. If they have a 25% stake in exchange for using their distribution channels, they can remove those distribution channels anytime they want by saying, "Nah, we don't like it that way."

 

[Zamial]

I didn't know that about WI, and I would be pissed about that, too.

But the notion that Terrapin beers went from good, wholesome, and local to mass produced swill the second they signed over a minority share to MC is ridiculous. To continue the music analogy I used above, if a local indie label signs a distribution deal with Sony, does that mean every new record they make is crap?

I am not saying the beer itself changed. I am saying where my dollar being spent did. I site Lienkugle's Big Eddy-RIS. I hear it is a fantastic beer and a good example of the style. I personally have seen it, walked right by the display and I have never tasted it because it is made by a company that is partially owned by BMC. I do not drink BMC products knowingly. Am I missing out? maybe but there are plenty of other great RISs to try/drink.
I do not wish ill on the Lienkugles brewery but I do wish they would get out of bed with BMC. The only way I have to tell them this, is with my lack of buying their product.

 

[Homercidal]

I didn't know that about WI, and I would be pissed about that, too.

But the notion that Terrapin beers went from good, wholesome, and local to mass produced swill the second they signed over a minority share to MC is ridiculous. To continue the music analogy I used above, if a local indie label signs a distribution deal with Sony, does that mean every new record they make is crap?

Sometimes a good artist goes big time and the management interferes with the recording and production and suddenly the artist is not who they once were.

Other times management has access to some amazing producers and the artist suddenly has a means of really expressing themselves AND a way to get his music out to more people who might not have heard of them otherwise.

I think it comes down to whether or not management "interferes" with the artist, or embraces their uniqueness and helps them get their music out to the people.

Then there are musicians who don't WANT to get their music out. They want to remain obscure and hidden. And there are some listeners who will stop listening to a musician simply because their music is now distributed through a major label. They only support the EAC label.

 

[Montanaandy]

It will be interesting to see how many breweries go to the "dark side" when MC comes calling and waving $$$$$ at them for a stake. It will also be interesting to see which breweries/markets that they target. I could easily see them pursuing New Belgium (large) O'Dells, Avery, Breckenridge, Great Divide (mid-sized) but would be very surprised to see any of them aligning with BMC. That would not go over well in CO where people are pretty knowledgeable about their beer and passionately support smaller breweries.

 

[Clanchief]

Clanchief,

Personally, I try to buy mom-and-pop as much as possible, but you have to admit that it's much easier when you happen to live in a city like Chicago rather than in the vast swaths of the country where they're pretty much non-existant. I'm currently stuck way out in the sticks in Southern Maryland and there's no such thing as a local butcher shop or farmer's market. There are a couple of decent liquor stores that carry good beer, but the selection is limited and the turnover isn't great, so you often end up with year old bottles. So you can see why I'd be thrilled if InBev came down here and "forced" some Goose Island on the local distributors.

Living in Chicago definitely has advantages in terms of availability of craft beers. That said, I go out of my way to buy local Chicago-land beers whenever possible. Other than my beers, you will routinely find things like Two Brothers, Half Acre, Flossmoor, Revolution, Metropolitan, and others from the area, apart from my homebrew. The furthest I like to go is Kalamazoo and get some Bell's, mainly because I have a lot of friends there and it's supporting their local economy. That's not to say that I NEVER buy from others, but I try and support local. You're in Southern Maryland. Aren't they any breweries there? I understand you may not have stores where you can get a great selection, but surely you have local breweries you can support. Or even Northern Virginia. That whole area is fairly geographically compressed. It seems to me that there has to be somethings close. You should also lobby your liquor stores to carry better quality, locally sourced, craft brews. If you tell them you'll buy them, and then follow up and do so, that helps. If you have a local homebrew club, and you can get everyone to do the same, it's even better.

Also, I feel like it's so important to support those types of businesses specifically because of what you say. People simply choosing comfort and convenience over quality is one of the biggest problems with American consumerism.

 

[Clanchief]

Sometimes a good artist goes big time and the management interferes with the recording and production and suddenly the artist is not who they once were.

Other times management has access to some amazing producers and the artist suddenly has a means of really expressing themselves AND a way to get his music out to more people who might not have heard of them otherwise.

I think it comes down to whether or not management "interferes" with the artist, or embraces their uniqueness and helps them get their music out to the people.

Then there are musicians who don't WANT to get their music out. They want to remain obscure and hidden. And there are some listeners who will stop listening to a musician simply because their music is now distributed through a major label. They only support the EAC label.

This is a good way of describing the situation. Aside from the support that I want to give to the David's of the world over Goliath as a customer, there comes a point where management will probably interfere to one degree or another, and change things to their liking. I know what the liking of BMC is, and I can unequivocally say that it is not in line with mine. So, no money is going from my pocket into their till. At least not knowingly.

 

[Steelers77]

For me the anti-BMC is not to be trendy, I am not trying to impress anyone nor do I care what 99% of the general population thinks of me, I want to drink what I brew or another local craft brewer has made. Local being relevant to where I happen to be at the time. This is also true for food. When I travel I hardly ever eat at a fast food place. I do a little research and planning and go to places that are unfranchized "mom and pop" places (sometimes brew pubs) So my question to you is: Do you perfer a handmade, grilled over a charcoal fire, burger with a hand sliced from the block cheese or one that went through multiple machines and has a cheese that is chemically closer to plastic than it is to dairy? From were I am there is not much difference to this than to the beer world.

Amen brother!

Look, I really do like Terrapin. I actully love their Rye Pale Ale and based my own off of it. That being said, I just don't agree with them taking money from one of the big three. I feel as if they needed financing they could have went out and leveraged themselves to get the capital they needed. You didn't hear about Sam from Dogfish, or Greg Koch from Stone running to BMC to get money for expansion.

 

[Montanaandy]

Amen brother!

Look, I really do like Terrapin. I actully love their Rye Pale Ale and based my own off of it. That being said, I just don't agree with them taking money from one of the big three. I feel as if they needed financing they could have went out and leveraged themselves to get the capital they needed. You didn't hear about Sam from Dogfish, or Greg Koch from Stone running to BMC to get money for expansion.

I was thinking along the same lines when I was contemplating this thread/the state of the craft brew market at present. I have no doubt that DFH, Stone, Firestone Walker, etc. have been approached by BMC. Time will tell whether or not any of them take the bait.

There is the Craft Brewers Alliance model which is composed of Kona, Widmier & Red Hook. Goose Island used to be a part of this until they sold lock stock and barrel to AB/InBev this year. AB/InBev owns 32% of CBA. CBA members make use of AB/InBev's distribution strength. Perhaps this will be the way that BMC ultimately controls the craft market. Create CBA type of arrangements throughout the country which merge leading craft breweries and make them wholly owned subsidiaries.

 

[Glossolalia]

Well Gloss, I worked at Bell's when they were brewing in 40gal Groen soup kettles... which was a huge step up from the 15 gal kettles Larry started with. I know Larry, I know John Mallett, these guys are serious about beer... as are Geoff and Marcy Larson (a couple of damned nice folks right there) of Alaskan. To suggest that they are "rather large breweries that simply aren't Anheuser-Busch, MillerCoors, or Pabst" is pretty damned insulting. Larry Bell, the Larsons, Ken Grossman and the folks at Sierra Nevada were there at the start of this thing and made the industry what it is today. We all owe them a debt of gratitude... don't belittle them for their success!

Oh, I don't belittle them for their success at all. It's well deserved. Their success has absolutely no bearing on whether I continue to consume their beer at all. I'm simply stating that the definition of "craft beer" has become so loose that it simply has become "not them" (Bush, MillerCorrs, Pabst). Some people want to push the idea that consuming craft beer is somehow more moral or lofty than consuming non-craft beer. I really can't see how. It mostly comes down to a matter of taste--a subjective criterion--when it comes to the bigger guys. "Craft beer," as currently defined, is simply a sales pitch/a business model. There's nothing wrong with that. It's just I sometimes get sick of the moralizing, and the spreading of numbers that are clearly rooted in BS.

 

[Glossolalia]

While it is true that the larger "craft" breweries account for a significant portion of the growth in the sales of craft beer, I believe that the true majority of the growth is occurring beyond the larger "craft" breweries that you mentioned and is happening at the local/regional level. [/QUOTE]

But it's not. Well, at least, not yet. That's sort of my point. Crunch the numbers.

 

[Montanaandy]

While it is true that the larger "craft" breweries account for a significant portion of the growth in the sales of craft beer, I believe that the true majority of the growth is occurring beyond the larger "craft" breweries that you mentioned and is happening at the local/regional level.

But it's not. Well, at least, not yet. That's sort of my point. Crunch the numbers.[/QUOTE]

Sure it is, at least in my neck of the woods (the West). When local/regional breweries are constantly expanding facilities + production and still cannot meet local/regional demand immediately after expansion and are already planning their next expansion, when local/regional breweries are restricting sales to local/regional consumers because they cannot produce enough product to sell nationally, that is indeed indicative of growth occurring at the local/regional level. This is why BMC has such interest in the craft beer segment. The MC incubator (10th & Blake the area near Coors Field where it is located) is in Denver. You don't think that they see what is going on in terms of craft beer locally in Denver, Ft. Collins, Boulder?

Now I can only speak with some authority for CO, MT because that is where I do business but the situation appears to be the same in OR, WA, & CA each time I visit. The beer scene in San Diego has been strong for years and keeps getting stronger. In Los Angeles, Golden Road just opened and they are projected to break New Belgium's first year sales records. They expect to be up to 60,000 barrels annually within a short period of time. Sure sounds like growth to me...

 

[Homercidal]

Amen brother!

Look, I really do like Terrapin. I actully love their Rye Pale Ale and based my own off of it. That being said, I just don't agree with them taking money from one of the big three. I feel as if they needed financing they could have went out and leveraged themselves to get the capital they needed. You didn't hear about Sam from Dogfish, or Greg Koch from Stone running to BMC to get money for expansion.

Except with extending their debt, they would get ZERO other benefit. By receiving money from the bog boys, they get enhanced distribution (AKA shelf space) and a MUCH greater chance at paying back the debt.

I have not seen the terms of their agreement, but it's possible that Miller (or whoever) has extra capacity, and would make an excellent opportunity for Terrapin to expand production without building. A HUGE COST SAVINGS! And one that would not necessarily entail obtaining a large loan since the physical expansion would be minimal.

It's so much easier to sit back and play brewery owner when you don't actually have any stake in the company.

 

[emjay]

But it's not. Well, at least, not yet. That's sort of my point. Crunch the numbers.

I also have an extremely hard time believing this. Where did you get this information? I'd love to see your source(s).

 

[gr8shandini]

. . .You're in Southern Maryland. Aren't they any breweries there? I understand you may not have stores where you can get a great selection, but surely you have local breweries you can support. Or even Northern Virginia. That whole area is fairly geographically compressed. It seems to me that there has to be somethings close. . .

I wish that that were the case, but to paraphrase George Clooney in O Brother Where Art Thou?, "this place is a geographical oddity; two hours from everywhere." I'm out near the tip of a long peninsula between the Patomic and Patuxent rivers. There are no highways down this way and the two lanes down here have plenty of traffic lights (for god-knows-what reason) and 45 mph speed limits that are well enforced. We've got a mediocre brewpub here (which I frequent), but the nearest places to get real brews are DC, Annapolis, and Baltimore, which are all two plus hours from me.

So it truly is difficult to get to anywhere decent in a reasonable amount of time, even in parts of the mid Atlantic region. Now imagine how bad it must be for some poor schmuck in Utah or Wyoming who has to haul his ass all the way to Colorado to support a "local" brewery.

 

[FantasticBastard]

I tasted a couple of Terrapin brews at a Taco Mac in the Atlanta area last month. There were not worthy of my $5 for a pint IMHO, so I moved on to something better like Bell's Two Hearted Ale and Sweetwater IPA.

Good for Miller. They can have their crappy beer to go along with the rest of their line.

Totally agreed. Sweetwater is vastly superior in my mind. Terrapin has a pretty loyal fan base here though.

 

[Steelers77]

From what I've read they are producing 18,000 bbl and had demand for 30k bbl. The way I look at it is if you have that type of demand and believe in your company why do you have to strike a deal with MC for expansion? They could have just made a deal with a contract brewery or MC (if they do indeed have excess capacity) for the interim until they secured financing and moved into a larger brewery. I just don't see why you would do a deal with MC when you have the demand to expand on your own.

I realize shelf space and distribution are an issue but I really think that is all changing. If the demand is there retailers will put your beer on the shelf it's just that simple. I know you are going to say it's not that simple but in the end it really is. The tide is turning and the demand is there so soon enough it will just be bad business if you don&#8217;t support the craft breweries. Well at least in Wisconsin.

In the end it is their decision and we are just casual observes looking in, speculating. But it does bring up the debate and it is a good one.

Cheers!

 

[Montanaandy]

Except with extending their debt, they would get ZERO other benefit. By receiving money from the bog boys, they get enhanced distribution (AKA shelf space) and a MUCH greater chance at paying back the debt.

I have not seen the terms of their agreement, but it's possible that Miller (or whoever) has extra capacity, and would make an excellent opportunity for Terrapin to expand production without building. A HUGE COST SAVINGS! And one that would not necessarily entail obtaining a large loan since the physical expansion would be minimal.

By extending their debt they retain complete control of their company and the decision making process. I am certain that the contract is structured to allow MC to purchase 100% of the company if they so choose.

It is not like MC is telling Terrapin, "here's the deal. We will buy 25%, enhance your distribution and sales and just leave you alone.". No, they want to grow Terrapin so that it becomes a money maker and they can add it to their portfolio. MC is publicly traded and is beholden to shareholders and share prices. They have to find a way to grow and make money and this is frankly a pretty smart way to go about it.

MC is taking the Microsoft approach. Take the vast amount of cash that you earn from the sales of your flagship product (Windows = BMC beers) and use it to purchase other innovative companies because you are unable to do so in house.

 

[Montanaandy]

I wish that that were the case, but to paraphrase George Clooney in O Brother Where Art Thou?, "this place is a geographical oddity; two hours from everywhere." I'm out near the tip of a long peninsula between the Patomic and Patuxent rivers. There are no highways down this way and the two lanes down here have plenty of traffic lights (for god-knows-what reason) and 45 mph speed limits that are well enforced. We've got a mediocre brewpub here (which I frequent), but the nearest places to get real brews are DC, Annapolis, and Baltimore, which are all two plus hours from me.

So it truly is difficult to get to anywhere decent in a reasonable amount of time, even in parts of the mid Atlantic region. Now imagine how bad it must be for some poor schmuck in Utah or Wyoming who has to haul his ass all the way to Colorado to support a "local" brewery.

While I would agree there are not nearly as many micros in WY & UT as in CO, there are a few really good ones (Snake River in Jackson + Wasatch in Park City & Uinta in SLC). Further, I wish that I was one of those "poor schmucks" that could afford to live in Jackson Hole or Park City.

 

[gr8shandini]

Point taken, Montana. I was just trying to say that it's easy to be idealistic about being a "locavore" when you live in a place where everything you could want is within a few blocks of your apartment versus a more remote area.

 

[Montanaandy]

Point taken, Montana. I was just trying to say that it's easy to be idealistic about being a "locavore" when you live in a place where everything you could want is within a few blocks of your apartment versus a more remote area.

No harm, no foul.

Believe me, living in MT, I understand what it means for some to live in areas where they are cut off from many amenities that are taken for granted by most of us.

Fortunately, what we may lack in some areas here (population for example, which is not necessarily a bad thing) we are rich when it comes to beer and the beer culture. Much of that is an accident of geography - we grow the barley here and in nearby Canada, the hops come from neighboring WA, our water is pure. We also are in a strong beer region with CO leading the way and the "Napa Of Craft Brewing" close by in Boulder/Denver/Ft. Collins...

 

[Weizenwerks]

The craft brew market is the only beer market that is currently profitable and it is gaining market share by leaps and bounds (some estimate that craft beer could account for 30% of the market by the end of the next decade up from some 7% or so at present). .

Not by a longshot. Current craft beer market share is only 4%, not 7%. Thirty percent in the next decade is a pipe dream.

Blue Moon and Leinenkugels is craft beer?

Leinie's is still brewed in the old Leinie's brewery and is more "craft" than Blue Moon is.

I truly believe we will never go back to the days when there was only 82 breweries in the U.S. and the big three are worried about this.

BMC is not worried about the craft beer breweries, they are simply moving into a market they can make more profit in. Craft beer is growing at a 100% rate (production) each year on average while industrial beer (BMC) is slowly decreasing. BMC still has 96% of the beer market. I know of no monopoly of market share like that which truly scares the big market holders. No one holding a collective 4% is going to damage BMC in any capacity. AB loses more beer to waste during production than Boston Beer Company (Sam Adams) bottles for sale. You think AB is scared? Not a chance.