Strategic partnerships benefit brewers of all sizes
Strategic partnerships benefit brewers of all sizes

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Strategic partnerships benefit brewers of all sizes

by Michael Uhrich, Chief Economist

Last month, at the 2017 Beer Institute Annual Membership Meeting in San Diego, I shared with the audience some alarming facts. Beer’s share of beverage alcohol and its production capacity utilization are at historic lows. Now is the time to look for new opportunities to grow, and brewers and beer importers are doing just that. In fact, it seems like just about every other day we hear about another deal that has been inked in the beer business, including nine major deals in the last six weeks and 19 so far this year. These deals involve brewery acquisitions, sales of partial stakes, and employee ownership plans. It is curious, though, that some people in the beer industry have praised only a few of these deals while criticizing others. One thing that all of the recent beer deals share in common is that they have all given small American breweries the ability to take their businesses to the next level.

Strategic partnerships help small brewers grow in a lot of ways. They often provide an infusion of capital, which can allow small brewers to invest in their businesses in ways that they otherwise couldn’t, such as upgrading equipment. The benefits don’t stop there, however. Partnerships also often afford small brewers greater access to raw materials at lower prices. They can allow brewers to be more competitive in the labor market, offering higher wages and benefits and expanding their workforce. Brewing partners often share chain retailer and distributor relationships, thus extending the benefits of the partnership to all three tiers of the beer industry. In particular, partnering with a larger brewer often enhances brewery safety measures, which reduces the frequency and severity of workplace accidents. Moreover, collaborating with the right strategic partner often enhances a brewery’s ability to grow its business, both in terms of sheer size and in the way that it does business.

The benefits of strategic partnerships also help American beer drinkers. Partnerships allow brands to expand into new markets, accounts, and occasions–exposing beer drinkers to new choices and experiences that may not have been previously available to them. Best practice sharing among brewers often leads to greater levels of innovation and enhances beer quality and consistency. As a result, the standard for innovation and quality in the beer industry rises, pushing all brewers and beer importers to make the very best and most exciting beers they can and to sell those beers at the most competitive prices possible. More and better beer choices at lower prices mean the American beer drinker ultimately wins.

While partnering with other brewers and importers certainly isn’t for everyone, doing so can have tremendous benefits for the companies involved, the beer drinker, and the beer industry as a whole.

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