Four Peaks sold to Anheuser-Busch

23 Dec 2015 | Author: | No comments yet »

AB InBev seeks quick sales for Peroni and GrolschAnheuser-Busch InBev, the largest beer brewer in the world, has acquired Tempe-based Four Peaks Brewing Co. in the latest shakeup in an industry remade in recent years by a series of similar sales. Under the AB InBev auspices, Four Peaks will continue brewing its beers, including its flagship Scottish-style ale Kilt Lifter, which makes up more than 60% of its sales.

If you buy beer at a grocery store, supermarket, liquor store or bottle shop in this country, that retailer’s relationship with its distributors has a profound effect on what beer is available and what you’ll be buying.Anheuser-Busch, which has agreed to buy rival brewer SABMiller, plans to contact potential bidders for SABMiller’s Grolsch and Peroni beers and wrap up deals in less than three months, sources close to the process said. The deal is a capstone of sorts for a craft brewery that began in 1996 and quickly established itself as a distinctive local label best known for its Kilt Lifter beer. Armed with that knowledge, beer drinkers, beer brewers and beer sellers all have an active interest in keeping distribution options independent, varied and free from as much undue monetary influence as possible.

They are aimed at heading off competition regulators’ concerns about AB InBev’s $100 billion-plus takeover of SABMIller, one of the biggest deals in corporate history. Four Peaks would be the latest addition to AB InBev’s High End unit, which includes Goose Island Beer Co., Blue Point Brewing Co., 10 Barrel Brewing, Elysian Brewing Co. and Golden Road Brewing. To that end, we’re glad to see that the Brewers Association craft beer industry group, the National Beer Wholesalers Association and other groups with a stake in the distribution debate are preparing to spend the bulk of 2016 addressing this issue.

Sources said AB InBev was keen to avoid getting bogged down in any regulatory scrutiny over a European portfolio that already includes its premium brands Corona and Stella Artois. Four Peaks expects to sell 70,000 barrels of beer this year. “For 20 years we’ve had more amazing experiences than I can count doing what we love to do most – brewing great beer and sharing it with a growing craft community in Arizona that has supported us from day one,” said Andy Ingram, a Four Peaks co-founder in a statement released by Anheuser-Busch on its website. “We’re excited to join the enthusiastic team and tap into their resources to expand our footprint and share our beer with even more people moving forward.” Anheuser-Busch, best known as the brewer for Budweiser, did not disclose terms of the sale and representatives of that company and Four Peaks were not immediately available for comment Friday. Four Peaks was founded in 1996 by Jim Scussel, Randy Schultz and Andy Ingram, who issued statements saying they hope partnering with Anheuser-Busch expands the reach of the company. “As the leading craft brewery in Arizona, we’re proud of what we’ve built and of our brewing heritage,” Scussel said. “We’re excited to build on that success with The High End.” Arizona Gov. Last month, AB InBev entered a formal agreement to buy SABMiller SBMRY -0.06 % PLC for about $108 billion, setting in motion a complicated, yearlong process of winning regulatory approval around the world.

Peroni and Grolsch together generate earnings before interest, taxes, depreciation and amortisation (EBITDA) of €120-150m, and could be valued at a multiple of around 12 times their EBITDA, the sources said. Because financial buyers do not have to assess a deal’s impact on their current operations, they can pull the trigger more quickly, but will not bid as much since they lack synergies. Lately, that’s included an emphasis on lowering federal beer excise taxes even before addressing similar, and more onerous, state beer excise taxes. US buyout funds KKR, Bain Capital and TPG have already expressed interest in the brands being sold by AB InBev, which also include craft beer maker Meantime Brewing.

However, a few large-scale developments have shaken some sense into everyone involved and reminded them that beer distribution as mandated by federal and state government in no way guarantees every brewer’s ability to bring their beer to market, nor the public’s access to that beer. Across social media, fans of Four Peaks seemed to have a different reaction, with many wringing their virtual hands over the news their beloved brewery was no longer “local.” Phoenix attorney Brent Kleinman tweeted about the acquisition with the hashtag #CryingInMyKiltlifter. He praised the deal on Twitter, saying “great beer and hard work pay off!” But others on social media lamented the loss of local control of the brewery. Despite A-B’s plan to sell off SABMiller’s U.S. interests in its MillerCoors joint venture to Molson Coors for $12 billion, a Senate Judiciary Committee hearing on the proposed deal highlighted some key concerns.

When it comes to brewers, Heineken would face competition hurdles and Carlsberg lacks the firepower for a big deal, sources said, though one said meetings between the brewers and financial investors pointed to the possibility of a joint bid that would break up the assets. Meanwhile, Anheuser-Busch InBev has offered wholesalers significant incentives to make A-B products more than 90% of their offerings and has lobbied in Ohio and Florida for increased control over wholesale operations through its Wholesaler Equity Development Corp. (WEDCO) subsidiary. Considering that it’s doing all of this in a market where brewers are mandated by the three-tier system imposed after Prohibition to work with distributors to access the retail market, Pease asked the committee to approve the SABMiller buyout if A-B InBev divests its company-owned wholesalers. It was designed to prevent mega breweries such as Anheuser-Busch from controlling beer production, distribution and retail sales at restaurants and stores.

He notes that brewery-owned distribution operations (as opposed to independent distributors) limits the access to market for other beer suppliers by imposing limitations on their options for distribution. National supermarket chain Kroger recently announced plans to hand over its alcohol shelving and marketing to Southern Wine & Spirits by creating a “Planogram Center of Excellence” funded by suppliers and wholesalers.

That “planogram” is basically a retailer’s map for product shelf space that determines who gets the best and most plentiful room and who’s tucked off to the margins. They’ve both tapped Treasury Secretary Jack Lew on the shoulder to point out potentially illegal consequences to both planograms and their potential “slotting fees” for distributors and brands. It likely won’t put extra tax dollars in their pockets, but maintaining an independent (and not-so-easily-bought) distribution system should at least keep everyone in business for a good, long time.

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