The craft beer industry has seen substantial consolidation in the last five years, even as start-ups continue to emerge. While just three large companies occupy 70% of the market share, the “support local” movement and our growing appetite for beer create favorable conditions for the start-up and sale of smaller craft beer businesses.
When examining whether consolidation is a viable option, microbreweries face similar issues as agriculture. Access to financial resources and expertise, a direct link to the consumer, and an interesting, well-told story all breed brand loyalty and a case for ongoing growth. What, then, are some trends that we can take from the craft beer industry and apply to agriculture?
Have a strategy. Many local breweries eventually reach a point where they must determine their strategy. Do they want to continue to focus on their local community or do they want to develop processes and procedures that support brewing beer for a much larger regional or even national audience? Does selling a partial interest create a revenue stream that promotes the ability to scale the business?
Speed is key. If there is an opportunity to consolidate – either in buying or selling – do not wait. Arriving last at the party rarely is a good thing, especially when beer is involved! All that is left is clean up. The same is true in pursuing microbrewery consolidation. Those that were first to sell were able to create their own terms and proactively set the market.
Create alliances. An emerging trend has regional breweries joining forces to gain market share. Creating new holding companies where small brewers can share the cost of operations, marketing, and other expenses allows them to be more competitive in affordably getting their product to consumers while maintaining their individual identities.
As agriculture continues along the consolidation curve, we can draw many insights from the craft beer industry. Seeing their strategies and decisions is likely to get our own creativity brewing.