In many ways, it was inevitable . . . large companies acquire other companies all the time. So it was just a matter of time before the same practices infiltrated the craft beer world. And the latest news isn’t revolutionary because large beer brands have been buying craft breweries for years. But there is something that feels quite different about this. So what will happen when Sam Adams buys Dogfish Head?
Maybe it feels different because of the iconic nature of both of the brands. Or maybe because the press release used the word “merger” instead of acquisition.
On the surface, this is just one very large brand buying another brand but deep down, there are a number of elements at play that I can’t help but wonder how this will impact each company and the craft beer world.
Is This Good For Craft Beer?
I’m selfish when it comes to my view on business deals like this one. All I care about is whether it is good for craft beer and its fans.
What I know hasn’t been good for craft beer is the continual acquisitions that AB-InBev (Budweiser), Constellation (Corona), and Heineken have made over the past years. These large macro beer companies have eaten up some amazing craft brands as a means of entering into this niche market.
It has allowed them a foot into an industry where quality, innovation, and community matter most but those are values that don’t align with companies that make mass produced light lagers.
For many, Sam Adams is so large that they struggle to see them as craft beer and Dogfish Head isn’t a small brewery by any stretch. But both continue to meet the recently changed definition of craft beer set by the Brewers Association. And for me, they are still innovating and producing high quality brew.
Which makes me believe that this joining of brands will have a positive impact on each company and craft beer overall. Because if they are better positioned to battle the large brands, then they can help ensure there is room for the small local breweries.
Is This Good For Sam Adams And Dogfish Head?
There is probably a lot of speculation among the staff at both of these breweries. Acquisitions notoriously result in the elimination of overlapping positions, culture shifts, and even location closures. So there is good reason for employees to wonder how this will impact their lives.
Fans of either brand are probably wondering how it will impact the beer. Will there be a reduction in the number of unique beers each brewery produces? There isn’t much overlap in style focus. Which I think is one of the keys to this “merger”.
Dogfish Head has a strong focus on IPAs and unique beers. In addition, they’ve found a lot of success with their SeaQuench Ale which is a session-able sour beer. While Sam Adams is best known for their Boston Lager and other highly approachable beers like their seasonal releases; Cold Snap and Oktoberfest.
As far as products are concerned, there isn’t a glaring issue with overlap. That’s a really good sign as each can continue to develop each brand with it’s own unique character. However, the question is will either brand lose what makes it unique as they merge the personnel?
Brands That Compliment Each Other
There are many reason why this business move makes sense. First, it is impossible to ignore the shared passion of Jim Koch and Sam Calagione. As industry icons, they built their breweries from the ground up to be massive national brands that have paved the way for craft beer in their own specific way.
And they have both embraced innovation. It may not seem revolutionary now but many of the beers that Sam Adams has produced over the years were ahead of their time and often considered extreme. And Dogfish Head is constantly pushing the envelope on what ingredients are used in their beer.
There’s no denying that both of these brands have an incredible focus on the customer’s experience and respect for the beer industry. It is continually noted how both companies have always worked hard to see the entire category of craft beer grow; not just their own bottom line.
Their wide distribution is very similar as well. This should lead to efficiencies in distributor relationships and logistics. I also see Sam Adams helping Dogfish Head getting an even better tap handle presence. Being on tap at every restaurant and sports venue has been very powerful for Sam Adams and this could be repeated for Dogfish Head.
Reasons Why This Might Not Work
While I am very optimistic about these brands coming together, there is no guarantee that this will be successful. The reality is the beer business is really difficult. With the explosion of small breweries, many are deciding to drink local beer rather than national brands like Sam Adams and Dogfish Head.
For die hard “craft beer” fans, this merger may increase the number of people that no longer consider these brands craft beer due to the massive size of the company. While this perception is debatable, it is interesting that the press release was quick to point out that these two brands together still represent less than 2% of the beer sold in the US. Which means they are still small in the beer world; just massive in craft beer.
For fans of each brewery, there will be a concern that each will lose part of their identity. Will Sam Adams try to become too extreme while Dogfish Head mellows their brand? Hopefully not, but maintaining each unique culture will not be an easy task.
Sam Adams Buys Dogfish Head: But Many Won’t Notice
It is important to remember that Boston Beer is actually the company buying Dogfish Head. Sam Adams is just one of many brands that Boston Beer operates. Brands like Angry Orchard, Twisted Tea, and Truly are all owned by Boston Beer. And Dogfish Head is simply being added to that portfolio.
So at the end of the day, I think the average consumer will continue to see these two brands as separate. Just like they see the other brands in their portfolio as separate. Not all beer drinkers are reading news like this or care who owns who. The leadership at these companies need to remember this and not try too hard to merge the brands. They can both stand on their own.
Will this acquisition be successful? That’s hard to predict but what I do know is the beer business is always shifting. Large craft brands like these are getting squeezed between small, local beer and huge, macro beer. It is very wise to look at mergers, acquisitions, and other business moves to remain strong and strategic. I’m all for this move as it keeps two brands that are craft focused out of the hands of a company like AB-InBev.
