AB InBev Buys Craft Brew Alliance After All
In August, it was the shoe that didn’t drop. AB InBev (ABI) had had the opportunity to buy Craft Brew Alliance (CBA) as a part of an arrangement struck three years ago, but finally passed in August, paying the Portland-based brewery collective $20 million instead. That was perplexing. CBA’s biggest asset, Kona, was a brand ready-made for an industrial giant. It has enormous brand potential that extends nationwide—vanishingly rare in the current clogged craft market—and products tailor-made to be scaled up at any of the twenty North American plants owned by ABI.
In the end, ABI had seen all this upside—and a way to acquire it at a discount. And this afternoon, ABI bought CBA:
AB InBev already owned 31.2% of Craft Brew Alliance, so it will pay roughly $221 million at a valuation of more than $320 million for the company, if the deal goes through; even with the $20 million payment, it is saving millions from what the 2016 deal would have required it to pay.
Many in the industry had long expected this decision. In January, CBA shuttered Widmer’s pub, a decision that made no real sense outside the context of a sale to ABI. The company has shifted its focus heavily toward flavored malt beverages with its pH project. Because ABI had already tied CBA into its distribution networks, the acquisition would represent a seamless transition. And at $221 million, CBA represents a massive bargain over high-profile purchases like Lagunitas and Ballast Point from recent years.
For fans of Portland and Oregon brewing history, it’s depressing news. The Widmer brand has been in a long, slow decline, and it’s hard to see ABI working very hard to resurrect it. I’ve long suspected that ABI will have little use for a brewery over twenty years old when it already has huge excess capacity. Selling the site in Portland wouldn’t be a shock and would further discount the total price. Widmer became Oregon’s oldest brewery when BridgePort closed up shop earlier this year; don’t be surprised if Portland loses Widmer entirely in the not-so-distant future.
Ironically, I missed the news when it broke because Patrick and I were recording a podcast discussing the closures of so many Portland breweries this year. That’s the kind of year we live in—barely time to process the news of one closure or sale before the next one happens. In the end, it turns out that the melancholy I’d slated for August wasn’t dispelled, just delayed. It’s washing over me now—