Craft beverage M&A update: 2017

Baker Tilly Capital, LLC’s Craft beverage M&A Update provides an overview of the U.S. craft brewery and craft spirits distillery markets, as well as select transactions.

Craft brewery market trends

The number of craft breweries in the U.S. continues to grow, now at an all-time high of over 6,000 active breweries. Off-premise sales of craft beer grew an estimated 6 percent in 2017 and craft beer gained an estimated 0.5 percent share of overall off-premise beer sales in 2017. Large beer companies continued to lose ground as wine and craft spirits each gained an estimated 2.5 percent share of total off-premise alcohol sales. Canned beer is also on the rise as it grew from 17 percent of total craft beer sales in 2016 to 23 percent in 2017.

One interesting development in 2017 is the use of minority equity investments to create production and sales alliances between the companies to leverage each other’s resources geographically. Brooklyn Brewing sold a 24.5 percent interest in its company to Japan’s Kirin Brewery late last year and utilized some of the capital to purchase a minority interest in 21st Amendment and Funkworks. This is a more risk-averse strategy compared to building additional facilities to generate growth. Also, while the large breweries have signaled to the market that they will be less acquisitive in the craft space, Anheuser-Busch InBev continues to invest in craft breweries through acquisitions via its ZX Ventures investment unit. ZX Ventures announced it acquired 4 Pines Brewery in Australia in September 2017.

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