She said.......
It's about the beer
                  He said........

Gina Miller            and                Bill Keeper

Hey Bill,  -
We're just about beginning February and I'm still saying Happy New Year to people.   
Regardless of what the calender says the sentiment remains true.  I do truly hope this will be a
good year for everyone, beer included.  And that's what brings me to ask you Bill, what do you
predict will happen in the beer world in the next 11 months?  I see a few trends.

In 2015 the craft beer industry and beer in general was, in my opinion, in a state of upheaval
largely unseen since the brewery consolidation of the late ’70s and early ’80s. Sure, Anheuser-
Busch had purchased non-controlling stakes in Redhook, Widmer Brothers and Kona before
and had already bought the Goose Island and Blue Point breweries. But acquiring four U.S.
craft breweries (Elysian, Golden Road, Breckenridge and 4 Peaks) and a cider house (Virtue)
in a calendar year? Come on Bill, that's unprecedented. So my first prediction is that Anheuser-
Busch InBev will do what it wants until someone says “no”: When Anheuser-Busch was told it
couldn’t own distributors in Kentucky, it just bought more in Colorado — where it’s already the
biggest distributor — and bought a craft brewery there just for kicks. When it appeared it
wouldn’t be allowed to buy SABMiller without ditching Miller brands in the U.S., it sold them to
Molson Coors at a discount. When the Justice Department told it that it couldn’t sell Corona,
Pacifico and other brands here after buying Modelo for $20.1 billion in 2013, it gladly ceded
US rights to Constellation Brands in favor of larger global market share. Expect more of this.

My second prediction is that private equity will play a bigger role: The Utah Brewer’s
Cooperative, Uinta, Southern Tier, Long Trail, Otter Creek, Magic Hat, Pyramid, Portland
Brewing and SweetWater were all at least partially owned by private-equity firms. And Oskar
Blues, Full Sail and Dogfish Head were among the brewers that sold either stakes or their
entire breweries to private-equity concerns. Do you see the trend Bill?  I do and I don't like it.

I understand that private-equity money enables brewers to expand and experiment without
giving up their independence at least in the short run.  We are however on a slippery slope
and I for one am worried about what's at the bottom of the hill.

That's it from me, chug-a-lug, Bill.....see you next time.

Hello Gina,

There you go again, spoiling my day with facts.  Sadly, everything you say is true and I too am
worried about just where the beer business is going in 2016.  So rather then tell you how
insightful you are (which you are) let me tell you about a few trends I see for the rest of the year.

Everybody has a price: Look at some of the names among the breweries that sold either a stake
or their whole brewery tlast year: Founders, Firestone Walker, Ballast Point, Lagunitas, Elysian,
Breckenridge. These are longstanding pillars of the craft beer community that, according to the
Brewers Association’s definition of a craft brewer, aren’t craft anymore.

They’re also indicative of just how costly craft beer’s massive growth can be. When you have to
increase capacity, take on new employees, pay more for ingredients and materials and open new
facilities, that all costs millions of dollars that you, as a relatively small brewer, often don’t have.
We are seeing brewers that have been at it for 20 years or more sell part or all of themselves just
to keep afloat.  I predict that brewery acquisitions aren’t done by a long stretch. Brewery
ownership doesn’t matter to most drinkers yet, but a rapidly shifting beer landscape may change
that in years to come

The secret agenda of all this is distribution control. The way U.S. drinkers get their beer goes a
long way in determining which beers they drink. Eleven breweries make 90% of the beer
consumed in the U.S. It isn’t surprising that they hold a lot of sway with distributors and command
a lot of shelf space and tap handles as a result. It’s a battle for small brewers to elbow into that
pack, but it’s a battle they can still win if they choose to make it a priority. The big battles lie
ahead in the states themselves.

Lastly I see a year in which true craft breweries realize their only hope is to embrace Innovation.  
That is more important than ever before.  From brewers that sell only kegs to those who invest
big in their communities and employees, the most brilliant and successful new breweries will find
ways to branch out and separate themselves from the pack. The big brewers are of course trying
to do the same but  their size limits them. The innovators will continue to grow making 2016
another watershed year for craft beer.

It just struck me that if we are so good at making predictions why don't we ever win any money at
the race track?  Oh well.

Here's looking at you Gina
Round 52