https://www.reddit.com/r/Homebrewing/comments/57c9me/its_official_northern_brewer_midwest_has/
Excerpt from the Daily email of "Craft Beer News" from http://bevinsights.com/
Beyond acquisitions that expand its core brewing business, AB InBev recently "partnered" with Northern Brewer, one of top online homebrew supply retailers, via ABI's global ZX Ventures "Disruptive Growth" group. Minnesota-based Northern Brewer is widely considered the largest online ingredient and equipment retailer for homebrewers across US, especially if considered in tandem with Midwest Supplies, with which it now shares ownership after each co took on separate private investors, according to multiple reports/sources. Both of those cos operate separate websites as well as brick and mortar shops in the upper Midwest, but do the majority of their sales online, we understand.
This deal just one more piece of largely secretive plans and activities of ABI's private equity subsidiary ZX Ventures. So far it invested in a number of cos with biz models tangential to brewing, including Owl's Brew tea-based mixers and radlers and Kombrewcha low-alc kombucha brands, as reported in sister-pubs Beverage Business Insights and Beer Marketer's Insights. The group "is pleased to share we have partnered with Northern Brewer. The team there shares our passion for brewing and commitment to the best ingredients," ZX's Global VP of Homebrewing Cassiano Hissnauer said in statement to Craft Brew News. "ZX Ventures is excited to enter the homebrew space to help Northern Brewer to grow," he added, as the 20-yr old homebrewing supply retailer "has built an extraordinary network and community of homebrewers." Terms of the "partnership" were not disclosed.
In fact, very little about deal being talked about. Note that AB has favored 100% acquisitions in all of its small brewer purchases within the US rather than partial stakes. But not much known about size or scale of previous investments made by ZX group or its overarching strategy other than "disruptive growth." For its part, Northern Brewer offering very little information too. It's "still a family-owned local business," according to its website, and isn't commenting on "any potential business partnerships" when asked by numerous interested hobbyists, hipped to possibility of a deal by a post to popular online forum Homebrew Talk. Unsurprisingly, reactions there vary from vitriolic conspiracy theories to what amount to shrugs and laughs: why would the world's largest brewer buy some homebrew shop in Minnesota?
Top Supply Retailer's Close Contact with Homebrewers, E-Commerce Platform As a leader in US sales of homebrew suppliers, Northern Brewer buys and ships a lot of grain, hops and yeast as well as equipment ranging from plastic tubs to multi-hundred-dollar high-tech brewing, fermentation and draft systems. It also operates its own online forum for homebrewers to discuss recipes, troubleshooting and more, and runs an extensive customer service platform to answer questions. All in, that's a whole lot of data on the homebrewing community, often pointed to by craft brewers as a major source of innovation in brewing.
Then too, Northern Brewer also runs a fairly significant e-commerce platform, taking, processing and shipping orders from all over the country. E-commerce is already a much-discussed topic in the beer industry, with many wondering when large scale online beer sales may emerge and just how disruptive it will be to the industry when it does. Recently, king of online retail Amazon has been testing new concepts to expand existing Amazon Fresh grocery biz, including plans to build brick-and-mortar convenience stores, as Wall St Journal reported this week. Many expect Amazon to test online alc bev sales thru its Prime service (see Oct 5 CBN) and now major retailers Wal-Mart and Kroger are working to compete by adding digital and/or delivery capabilities, per WSJ.
Homebrew Retail: Fewer Shops, Less Profitable Due to Changing Homebrewer Patterns Homebrewing itself has become an increasingly popular hobby in the US that has grown right along with craft brewing. There were about 1.2 mil homebrewers brewing an estimated 2 mil bbls per year back in 2013, according to American Homebrewers Assn, an arm of Brewers Assn. Currently, there are just over 800 homebrew retail shops in US, as tracked by AHA, director Gary Glass told CBN. But that's down slightly from peak of 815-820 at end of last yr and beginning of 2016. That's first time AHA has tracked a decrease in the number of outlets, Gary said. He also expects to see a slight overall decline in revenue reported by these retailers this yr.
Behind those overarching trends, Gary revealed a couple of interesting patterns that counter the notion that the hobby overall could be in decline. The sharpest declines in outlets have been among older (5+ yrs in biz) brick & mortar stores, but AHA has also tracked revenue declines among online retailers. The strongest growth has been among new brick & mortar neighborhood stores. Members tell the AHA they prefer to shop at local homebrew stores (often referred to as an LHBS by homebrewers) over online retailers. So as new shops open, they're either taking biz from online retailers (when they're the first LHBS in an area) or older shops not providing as strong a service. Further, many homebrewers report moving to more advanced "all-grain" brewing, which mirrors process at commercial brewers more closely and eliminates use of grain extracts, which tend to be both more expensive and have better margins for retailers, Gary reminded. That switch alone will hit a shop's bottom line. Homebrewers also seem to be brewing less frequently, Gary said, which could, in part, be because there are so many more local breweries around.
Long-time homebrewers often report turning to the hobby in order to just have access to the styles of beer they sought. They also tend to be some of the most fierce advocates for independence in the beer industry. "You make a choice, a vote, a statement every time you open a bottle of craft or homebrewed beer instead of a can from a factory with an advertising budget that could swallow your local microbrewery whole," founder of Northern Brewer Chris Farley wrote for post titled "Good Beer is Your Right," still on the co's website. And judging by the doomsday scenarios and jokes about assimilation ("resistance is futile") already splattered across the Homebrew Talk forum thread, many homebrewers won't take kindly to news of ZX's investment. In fact, even before confirmation, concerns about the deal echo those raised after AB's acquisitions of small brewers: access to raw materials and increased buying power of an industry leader or better-funded competitors that could dig deeper in targeted local markets. Whether or not these concerns are well-founded, this investment clearly a striking move that further embeds AB into the heart of craft.
