After the Buyout: Getting a Grip on the Elysian Deal

In the aftermath of last week's news regarding Elysian Brewing and Anheuser-Busch, the uproar has subsided. Maybe the distraction of the Super Bowl in the Northwest had something to do with that. But there have also been some thoughtful, insightful articles that have helped put the sale into perspective.

Probably the most well-reasoned article appeared on Brewbound, which conducted a candid interview with Elysian co-founders, Dick Cantwell, Joe Bisacca and David Buhler. Good stuff. And there's been some interesting stuff in the various industry newsletters, which I sometimes read via the pirate channel.

Some of the more juicy tidbits:

Red Zone
Now that they own Elysian, AB will push to integrate it at AB-owned, "red" branches wherever possible. That can be a messy business. Elysian is currently in 11 states outside Washington, distributed in many places by MillerCoors and indie craft outfits. Getting Elysian into red branches will be an interesting process to watch. Here in Portland, Elysian is distributed by Columbia. It will surely wind up at AB-owned Western (formerly Morgan) fairly soon. There will likely be a brand swap or cash payout involved in that. Should be fun to watch this play out.

Damages
Elysian had been a counter-culture icon in the Seattle market for 20 years. No one knows what will happen to the brand's rep in the city going forward. Seattle is the second-ranked craft market in the country. People are serious about their beer and fiercely independent in the Emerald City. Some retail outlets are dumping their Elysian inventory. Will the discord last? Will the damage be long-lasting? Stay tuned.

Money For Nothing
One of the things that came out in the Brewbound article is that Elysian's co-founders had some options as they looked to expand and solidify their business. They are anticipating 50 percent growth in 2015 and that was going to require a significant investment within a year or two. They could have chosen a private equity partner. But there was concern that private investors would be looking for a quick profit. In the end, they (Cantwell dissented) decided Anheuser-Busch provided more of what they wanted and needed, though other offers were (they say) higher.

Shelter from the Storm
Beyond the need to partner with someone who would be in the game for the long haul, Elysian wanted to insulate itself from what Bisacca describes in the Brewbound piece as, the coming "bloodbath" in craft beer. He thinks grocery and related stores have expanded their beer sets about as far as they can and that there will soon be a price war for shelf space. The idea of a shakeout is seldom discussed publicly in the industry, though it ought to be. Anyway, Elysian eventually decided that partnering with Anheuser-Busch is the best way to shield itself from the prospect of a coming storm. And maybe they're right.

Big Business
Calvin Coolidge famously said, "The business of America is business." Along those lines, there will be more buyouts like the one that just happened. Anheuser-Busch hopes to acquire a collection of craft brands which it will use to bolster its slipping position. It will do this in many areas by operating in two of the three regulatory tiers. That approach is only marginally legal and it isn't going to benefit craft beer as a whole. Only AB and the acquired breweries are likely beneficiaries.

I honestly wonder how many buyouts it will take for people to start thinking about craft brewers in the same way we think about other entrepreneurs. The goal of any business is to build a following and attain financial stability and success. It isn't a crime. In craft beer, the values used to build brands include small, locally owned, independent, artisan, etc. And craft breweries aggressively embrace those values...right up until the day they sell to Anheuser-Busch.

There are certainly brewers who are more committed to craft's spoken values than others. But the reality is that craft beer is a business, increasingly a mainstream, big business.  Maybe it's time for everyone to come to grips with that and move on.