Have You Heard About Terrapin?

That’s Terrapin Brewing of Athens, Georgia. They’re been in the news of late because the craft division of MillerCoors, a company called Tenth and Blake, have converted part of a loan they made to the brewery’s founders into a stake in the company, estimated to be something under 25% of the entity as a whole.

Whatever your thoughts on this might be, it’s likely neither as bleak nor as dire as you expect it to be. And neither will it be the last time you’re going to hear about something like this.

As I noted when Anheuser-Busch InBev bought Goose Island earlier this year, these types of deals are an inevitability in an industry where the only domestic growth is being shown by the breweries populating the 5% market share that is craft brewing. Big breweries like ABIB and SABMiller have, for the most part, essentially conceded that their brands can at best hold their own in a dwindling market and are content to buoy revenues through price hikes, like the 3% to 5% boost ABIB is currently effecting in the States.

How they can grow their presence in the market, then, becomes a question of either creating their own brands that play in the craft sphere, such as SABM’s Blue Moon and ABIB’s Shock top, or buying up their smaller competitors. Terrapin may not eventually fall to full MillerCoors control, or in a few years we might be more money pumped into the mix and a controlling share obtained. But whatever does happen, you can bet it won’t be Terrapin alone making those decisions.

The good news is that for every brewery that may fall to the goliaths, there are likely a few dozen about to open.

4 Replies to “Have You Heard About Terrapin?”

  1. This is a normal progression in most industries. For the large corporation it’s a quick and easy way of adding proven product to the line. For the small guy, it’s a chance to reap the rewards of his hard work.

    Small-business entrepreneurs often find themselves approaching (or contemplating) retirement with no “heir apparent” — a child to take over the business or an employee willing to buy them out. Selling out to a large corporation is much easier than the risk and expense of an IPO.

    One can only hope that the acquiring corporation is as interested in the quality of the product as it is in the brand name.

  2. Yeah, it happens more than you’d think in other sectors too. I don’t think it’s too much to be concerned about – like you say, if the ‘brand’ and new owners work together and don’t mess things around too much.

  3. I don’t think the macros expect to hold onto their current US market share–it’s begun an inevitable, slow decline. This is one reason it makes sense to move into other markets like China where the growth potential is staggering.

    It’s also worth noting that Shock Top and Blue Moon outsell all or nearly all craft beers out there (Boston Lager may give them a fight, but that’s about it). The big companies have been making and selling beer a very long time. They have a vague sense of what they’re doing.

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