There’s an old business adage: if you can’t beat ’em, buy ’em, and that’s what Anheuser-Busch is doing, buying out Goose Island Brewery for somewhere between $22.5 million (according to MarketWatch) and $38.8 million (according to the Chicago Tribune). When I first saw this I thought it was an elaborate April Fool’s Day joke, but then I realized corporations don’t play those.
Goose Island has been financially associated with AB for a while as part of the Craft Brewers Alliance, but news of the buyout still surprises me a bit. I guess I never thought the day would come where we’d see a mega-macrobrewer buy out an honest to goodness craft brewery. Well, that day is here, and to me it feels like a step in the wrong direction.
Goose Island’s founder and CEO John Hall thinks just the opposite. He says it’s for the best:
“Over the past five years our partnerships with Craft Brewers Alliance and Anheuser-Busch have enabled Goose Island to reach a growing number of beer drinkers. This has fueled our growth to the point that demand for our beers has outgrown the capacity of our brewery. Recently, we’ve even had to limit production of some classic and medal-winning styles. To keep up with growing demand from drinkers we’ve explored a variety of paths too secure new capital to support our growth.
Today’s agreement to consolidate ownership of Goose Island under Anheuser-Busch will provide us with the best resources available to continue along our path of growth and innovation.”
Hall tells the Tribune that the brewery will continue to make interesting and creative brews, but only time will tell what the new ownership will mean for the quality of Goose Island’s beers, from Bourbon County Stout, to Matilda, to 312, to Honker’s.
Hall will stay on as CEO, but his son Greg will step down as brewmaster. Greg will be replaced by Brett Porter, who used to be the brewmaster at Deschutes and has been at Goose Island since last year. The two Chicago brewpubs were not part of the deal and will continue to operate independently from the brewery.
Last week’s legal dust up between Bell’s and Northern Brewer showed us that many craft beer fans have little tolerance for corporate shenanigans. We’ll see if Bud can navigate these tricky waters and keep the beer geeks on board, but it probably doesn’t matter. The casual beer drinker won’t know (or care) where Goose Island comes from, and there are many more of them than there are of us (see Blue Moon).
I bet they’ll love Bud County Stout.
For better or worse, expect deals like these to continue as we watch the future of craft beer unfold.
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Beer & Whiskey Brothers 
Sell out comes to mind. I think that we will see a slow slide into mediocrity for Goose Island. Very sad in a way to see this happening. I would have loved to try Budweiser 50 years ago. I’m guessing it was a much better beer than today. I’m thinking Goose Island will suffer the same fate.
We’ll see. Bud didn’t buy them to change them, but it’s hard to think that the corporate culture won’t trickle down into the grain bill.
Can’t say that you couldn’t see this one coming. AB had a stake in them and their distribution already. It does sadden me, though. I was hoping that’s where their involvement would end.
I think the jury is still out on the quality concern. I’ll give them the benefit of the doubt for now. Having sad that, I’ll also stock up on the Pre-AB-tainted Sofie and Pepe Nero that just hit the shelves here—just in case things start going south.
I think the jury will be out for quite some time and any quality changes will be subtle. Bud was looking to add something to their portfolio with this purchase – hopefully it’s more than just a brand to them and they keep Goose Island independent.
I doubt it though, as John Hall’s statement talks about capacity issues being addressed in the buyout, which makes me think they’ll be brewing the beer outside the Goose Island brewery.
At any rate, this is going to be interesting.
My thought Chad is we won’t see any changes for the first few years. Then they will begin to release lesser brews, then you will notice a slight quality difference, then that trend will continue. So we are probably all ok for a few years, except I bet the bring in the Folgers for the Coffee Stout right away.
Yeah, wasn’t thinking they’d start sucking immediately. I can’t believe AB would change too much up too quickly. They’re already alienating a large number of Goose Island fans with this move. Start making sweeping changes and you’d see even more fans jump ship.
Totally illogical, but I am, for whatever reason, glad that I tried/reviewed the Pepe Nero black saison last week prior to the news. Even had a brief discussion with Goose Island via twitter about it this weekend. You would think they would have let me in on the tectonic business shifts going on behind the scenes! 😉
Well, for me personally, i won’t be buying any more Goose Island products. I’m going to try to secure a Rare Bourbon County Stout, and any of the remaining 09 BCS lying around CO here and call it a day. Pretty disappointing to first hear of the initial stake back in 06/07? and now this…
I’m a craft beer drinker, not a used to be craft but sold out for 22mil for my personal gain beer drinker.
Thanks for the heads up on this!
I think a lot of folks share your feelings. I see Goose Island in a different light this morning, too.
look how MillerCoors made all of Leninkugel’s beers taste and smell like furniture polish. the MillerCoors team can barely handle their 4 yeast strains here in Milwaukee. they all freaked out when they had to start brewing Blue Moon. HUGE corporations make money by merging and getting rid of duplications. cutting costs at every corner. it’s poor leadership and planning that leads to something like this. New Belgium has been working on succession planning for years, so they never have to be sold to a corporate giant. it all comes down to leadership. this is such depressing news out of Chicago, that another American craft brewery with be owned by a Belgian corporate giant.
But I like Lemon Pledge…uh…Summer Shandy!
I think it’s a leadership thing for sure, and it looks like this was Mr. Hall’s goal. They’ve been taking the steps that have led here for years. I could see the Leinie’s Effect happening here if Goose Island is folded into the larger A-B portfolio. That would be a shame.
I had a feeling that you Bros would be writing this up after I saw this story online!
As of today, I have only had one beer from Goose Island, their Sofie Saison. It was fantastic and left me craving more of their beers. Sadly, they are currently unavailable in NJ and PA.
I’m curious to see what happens after In-Bev takes hold of the reins. They certainly didn’t buy Goose Island to lose money. Best case scenario, they pump some cash into Goose Island and allow them to keep doing what they do best but on a grander scale and with better national distribution. Only time will tell. Think positive! 🙂
That is the best case scenario – a well-funded craft brewer.
BUT…it’s easier to image that Goose Island is treated like a brand not a brewery, and their beers as recipes to be brewed wherever it makes the most sense for the bottom line. That could be Chicago, or it could be Newark, NJ. Just look at what happened to Rolling Rock.
You’re probably right Jim. I was trying on some positivity for a change. Very unlike me. 🙂
Rolling Rock? Though I have fond memories of Rolling Rock from my youth, I can’t say that it was EVER any good. Perhaps a step above Miller, but that isn’t saying much is it?
Rolling Rock was never great, but it WAS the pride of Latrobe, PA. Now it’s brewed next to Newark Airport. Same thing might happen to Goose Island.
I’m afraid they have a larger agenda. If they just wanted to pump cash into the brewery they could have done so through their former agreement. No, there is a bigger picture in play here, and only AB knows what it is. I’m thinking it should be to generate income and expand, but I’m sure the corporate bean counters will get hold of it and totally screw things up. So sad.
Cheers Jim!
I’m also surprised – though not shocked – at the news. This dynamic happens all the time in business with the bigger, badder, and “cost efficient-focused” buys out, dilutes (pun intended) and materially weakens its prey. Ford did it to Jaguar under their reign – I call it the “Fording Dynamic” and GM has done it to Saab (automotive industry analogies used since Goose Island is close to Michigan and because InBev/A-B hasn’t purchased Founders or Bell’s … yet).
I’m not at all surprised to see that Goose Island’s CEO has nothing but glowing and hopeful things to say about the marauding. What else is he supposed to say? If he truly suspects that A-B will dilute the brand, he won’t state that publicly. Sure, on paper the A-B financial war chest could be a big plus for Goose Island with potentially greater opportunities to expand, distribute and advertise but let’s not forget how that war chest was built. It surely wasn’t built on brewing and delivering high quality, well-crafted beer. Quite the opposite.
Paranoid? Perhaps. Justified in that paranoia? I think so.
On a lighter note, fantastic blog! Cheers!
I was thinking cars as well here, and Ford’s involvement with Volvo specifically. They cars remained decent, but there was enough parts-bin sharing to effectively change what a Volvo was and is.
In this case, we’ll see if any rice gets into the Goose!
AB/InBev accountant: “Wait a second, you mean to tell me that you AGE your beer in REAL bourbon barrels? That doesn’t make any financial sense! We need you to move out product as quickly as possible.”
Brett Porter: “To do that we’d have to totally change the way we make BCS. It’s not like we can use cheap bourbon flavored syrup in our beer!”
Accountant: “That sounds like a great solution to me. We’ll save millions. Here, have a bonus!”
🙂
On the bright side, I bet that Bourbon flavored syrup would be great on pancakes!
Mmmmmm….Bourbon Pancakes….. 🙂
That would be tasty. A great “hair of the dog” delivery vehicle!
It’s also too bad that Brett Porter probably won’t be allowed to brew a “Brett Porter” under the new ownership.
I figure GI will either become more of a specialty brand (featuring mostly BCS or Belgian-style brews) or get watered down like the rest of the AB beer-like products. Sadly, it will probably be the latter and not the former. My bet is that this experiment will eventually fail and GI will be lost forever or even engulfed by Budweiser in some way. It’s too bad AB couldn’t just start making better beer. They had to go buy a brewery to do it for them.
I think their best bet for success is keeping Goose Island insulated from their other operations. I think many beer geeks would be okay with that. Who cares who’s paying the bills if nothing else has changed.
I don’t know. It seems as long as they make money, GI will be allowed to do their thing. That said, as soon as the suits tinker with their formula in order to make more money for shareholders or the mass exodus of beer geeks cause sales to dip slightly, it could be the end of GI.
I think tinkering is inevitable as it’s an experiment of sorts, and one others will be watching closely.
Jim, check out my facebook page to see a local brewers (head brewer at one of the Bluegrass Brewing Companys brewpubs here intown) take on it…not what you would expect.
I’m heading up to Chicago this weekend and am kinda saddened by the whole thing and yes, sell out, comes to mind.
Mr. Cruz certainly seems like a “glass half full” kind of guy. I can see there are benefits to having the resources of AB on your side, but many beer fans see it as an us-versus-them kind of world, and them just bought an us.
I think we won’t know whether this is truly good or bad for years.
Here’s what Greg Hall has to say in an interview shortly after the announcement:
http://bit.ly/fSGL7v
So basically nothing is going to change, A-B is a white night, and BTW, I quit!! Now excuse me while I count my suitcase full of money…
The Chicago Beer Society e-mail list has been buzzing all morning with opinions, mostly negative, but some optimistic and hopeful that the Halls will not let their beers suffer from this. This is a different era than when AB took over RedHook and Widmer and didn’t do those brands any favors. AB’s business model probably doesn’t say “take over well respected micro brewer with growing market share, and destroy it.”
In the meantime I’m picturing a simple but effective magazine advertisement based on the classic children’s game. Picture a bottle of Budweiser, a bottle of Bud Light, a bottle of Bud Lime and a bottle of Honkers lined up next to each other, with this caption:
Sucks….Sucks….Sucks…Goose!
Only cus I’m a baseball nerd, but it makes sense for AB to full on out buy Goose. It’s starting to become bigger in a town that prides itself as being a “bud man”. So now will we see Goose Island in Wrigley??
I think you’ll see it in grocery stores in North Dakota as well (if it’s not there already).
Ha – love the ad idea!
Hopefully in five years it won’t be “sucks…sucks…sucks…sucks…”
Oh well. None of their stuff made it to Jersey anyway, so they might as well not even existed. (Though the samples I’ve had were very good!) Sell in Jersey or don’t sell at all! That’s what I say.
BTW, who owns Volvo now?
I think the Chinese own Volvo now. And I think it’s funny that the only chance we have of getting Goose Island in NJ is if Bud owns them.
If that’s the case, let’s hope they buy New Glarus next! 😉
Yes, I can’t wait for my Enigma, brewed with syrup from REAL cherries!
im having my buddy bring me down some New Glarus this weekend…jealous much?
Yes. Very much.
So much that I’ll have to crack open one of the Enigma’s I have squirreled away.
I’m disappointed but not surprised at all the negative feedback to this. I’m sure I’ll be in the minority on the podcast tomorrow night when we discuss it too.
What I don’t get is how people are thinking that AB would buy GI just to eliminate a competitor since GI is nothing compared to the sales of AB.
I for one don’t see the logic in purchasing a brewery just to force it to go downhill and brew crappy beer. If you buy a successful brewery the smart business decision is to keep doing the things that make it successful.
I’m sure when GI first entered into the distribution agreement with AB everybody was saying the same kinds of things and ya know what? Every GI beer I’ve had since then has been damn good.
The one argument that I can kind of buy is that people will boycott GI not because they expect a lackluster product but because they don’t want to support a foreign owned company. I only kind of buy that one though because you boycotting GI is going to do nothing to the pockets of AB and will instead only hurt Americans who are working at an American brewery.
Bottom line for me is that I’m reserving judgment and treating Goose Island the way I always have until they give me reason to do otherwise. And for those of you who don’t, cheers to you too because that’s more Bourbon County Stout for me!
You bring up a good point, but I don’t think folks are worried that AB wants to purposefully ruin GI. The worry is that once the corporate suits want to cut costs in order to increase profit, everything will go downhill. Honestly, I don’t care that AB is now foreign-owned. I care that they are a giant, faceless corporation built solely to make money, not to make a better product. If AB’s smart, they’ll let GI function as it has to this point, but as soon as they show losses in profits, it could be all over for GI’s better brews.
I think it boils down to the fact that many people who like craft beer don’t like big companies.
Big = Bad
Goose Island = Big
Goose Island = Bad
I kinda disagree here Jim. I don’t think that the average craft beer drinker assumes that big=bad automatically. I think they let the beer speak for itself. If Budweiser was good, I’d like to think that people would be forthright enough to say so. But the fact is that Bud is amazingly consistent, and mediocre to bad. It’ kind of like what one might think would happen if Saranac bought out Dogfish Head. It is a meh beer maker buying a fantastic brewery…and people are nervous. I know I am.
What macrobrewer isn’t considered bad by beer geeks?
I’m just saying that if Bud decided to make really great craft beer, I think people in the craft beer community would embrace it for what it is, a really good beer made by a giant. Its a hypothetical situation Jim.
I don’t think they would. I think part of being a beer nerd is having some level of contempt for the macrobrewers. Even if they made a great beer, I think a lot of beer geeks wouldn’t embrace it because they’d think there was some cost-cutting trick to it, or that it was brewed with unicorn blood.
Oh, I see. The Snob appeal argument. I get it. Ah, Jim…your Beer Douchicus is showing… 😉
Let’s not pretend that you don’t feel the same way. If you had a n awesome beer from Bud, you’d probably say “that was surprisingly good” and NEVER drink it again, unless it was the only option.
No. I don’t think Saranace buying Dogfish Head would be anything like this. We’re talking about a major, multinational corporation. They’re more than just lousy beer brewers. Dogfish Head being bought out by MillerCoors or AB would be like GI being bought out by AB.
A better comparison for sure.
Zac, the only reason I made that comparison is I know Jim Hates Saranac, and would find such a move in the craft beer world a sign of the end times. I understand that your suggested comparison fits the situation a bit better. 😉
Apparently with a capital “H”
Capitalized for EMPHASIS.
But that’s the problem here, we’re in the minority by thinking that Bud is mediocre to bad. They’re a perfect example of the style and like you said they’re as consistent as anybody in the industry (a huge sign of great quality).
Gotta remember that we’re the outliers and that even though we don’t like them, BMC know what they’re doing better than anybody. Think it’s a coincidence that Stone plucked Mitch Steele from the ranks of AB? They have some of the best brewers in the world.
If GI is as good as we all think they are, I don’t think they’ll be showing a loss that would require the dreaded “cost costs” mandate from AB.
The irony would be if we all stop supporting Goose Island because everybody thinks they’ll turn into a sub par brewery who starts losing money and cutting costs only to make it a self fulfilling prophecy.
Well, I always say that perception and mood can affect how a beer tastes, and the fact that Goose Island is now part of the A-B portfolio is going to put some beer geeks off. Even if the beer is brewed exactly the same, it won’t taste as good to some because of who’s calling the shots, even if the shots are called as they’ve always been.
Overall I think Goose will do fine, as most of their buyers don’t know or care who makes it, so I don’t think the prophecy will be self-fulfilling.
Another take: http://www.beerscribe.com/2011/03/28/why-the-ab-inbev-deal-is-good-for-craft-beer/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Beerscribe+%28Andy+Crouch%27s+BeerScribe.Com%29
Interesting take for sure. We’ll have to see who’s right in the end.
Why would Jim hate Saranac? They make great beers. 😉
Yes, or as I call them, beer-flavored beverages. 🙂
Perhaps there are a lot of really good reasons for that, Jim. I think one of the above comments mentioned InBev. Let’s not forget that we are not really talking about the A-B portfolio at all. I think the primary point of concern for me (and Erik from Top Fermented hits on it) is that it is really bad from a competitive stand point. More purchasing power from larger companies have been bad for local and regional brands. However, I do agree with you that some people just hate large companies from the beginning. Knee-jerk reactions are rarely filled with insight.
But I can’t help but point out that mitigating factors such as the purchase of barley, hops, and yeasts (as well as shelf space) have to be considered. Let’s also remember that conglomeration (and the purchasing power that came along with it) is what squelched our vital beer culture in the past.
I think your “Goose Stepping” caption captures the totalitarian nature of what is happening very well.
Yeah, I’m hoping for the best here, but I’m expecting the worst.
AB sees EVERYONE as competitors, just watch Beer Wars if you want proof. I think AB is looking to get some street cred in the Craft Beer community with this deal. I just have to look at their record to know that this is a no-win situation; Red Hook: horrible after being bought by Ab (as mentioned in these comments), Shock Top: swill, and lastly the all organic beer that they tried to run under the radar as being brewed by a small craft brewery.
The only hope is that A-B realizes their mistakes with Redhook and try to keep Goose Island from experiencing the same fate. Unless of course they see Redhook as a success and plan on repeating it.
I think we’re going to have to let this ride for a while, but if past performance is any indication (which it usually is), Goose Island may eventually be turned into a commodity.
Its hard to argue with a track record. 😦
Come to think of it, AB and GI’s close ties (even before this news) explains why the faculty club here at the University of Missouri (huge AB benefactor) has bottles of BCS for consumption. More BCS can’t be bad. Right?
Right!
For now.
Greg-
DFH is looking for a brewmaster! Keep your talent and spirit alive!
I think he’ll probably want to do his own thing now that he has some start-up money. At any rate, we wish him well, I’ve heard he’s a good guy.