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Food & Power: ABI’s Venture Capital Fund Quietly Expanding the Mega-Brewer’s Reach

Anheuser-Busch InBev was consistently in the news last year as it closed its blockbuster $100 billion acquisition of SABMiller. But beyond headline-generating deals, the brewer is finding new ways to expand its reach, particularly in the craft sector. The company’s wholly-owned venture capital firm has been quietly investing in beer ratings websites, delivery services, and international craft […]

November 2, 2017  |  by Open Markets

Anheuser-Busch InBev was consistently in the news last year as it closed its blockbuster $100 billion acquisition of SABMiller. But beyond headline-generating deals, the brewer is finding new ways to expand its reach, particularly in the craft sector. The company’s wholly-owned venture capital firm has been quietly investing in beer ratings websites, delivery services, and international craft brewers—an indication that, despite cuts to its domestic craft acquisition program, the mega-brewer is finding yet more ways to put pressure on the independent and craft beer sector.

The craft beer community was outraged when it learned that ABI, via its venture capital group ZX Ventures, quietly bought a minority stake in RateBeer, a popular beer ratings website, last year. Brewers soon learned that ZX Ventures had also invested in other beer review websites including Octoberand The Beer Necessities. In the beginning of February, ZX Ventures also acquired Beer Hawk, a British online beer retail site.

These investments worry many independent brewers, who argue that review websites will be ethically compromised by being partially owned by the most powerful brewer in the world. Sam Calagione, founder of Delaware’s Dogfish Head brewery, wrote that ABI’s investment in RateBeer threatens the site’s independence and grows the power of the mega-brewer. After word of the investments spread through the craft brewing community in June, several brewers including Dogfish Head, Harpoon, and Sixpoint, asked RateBeer to take their beers off the site. As of this week, those breweries and their beers are still listed on the site.

Paul Gatza, director of the Brewers Association, a trade association for craft brewers, says that ABI’s investment in RateBeer has resulted in “less authenticity” for the site, but also that it “showed craft brewers that [ABI] is willing to buy another non-brewing entity to try to influence sales.” ABI’s growing power among ratings websites could confuse consumers who “take what they see without a cautious eye,” he says.

Since ABI created ZX Ventures in 2015, the group has facilitated ABI’s acquisition of several international craft breweries: Colombia’s Bogota Beer Co. in May 2015; Brazil’s Cervejaria Colorado in July 2015 and Wäls in February 2015; London’s Camden Town Brewery in December 2015; Italy’s Birra del Borgo in April 2016; and Belgium’s Brouwerij Bosteels in September 2016. Its most recent acquisition, of Australia’s 4 Pines, was just closed in September of this year.

ZX Ventures has also been investing in other consumer engagement platforms, like the app Paranoid Fan, which event attendees can use to communicate with other attendees, and PartyWith, an app that connects travelers for meetups. Its investments also include Rappi, a Colombian food delivery service, and Starship Technologies, a company that creates delivery robots. The venture capital group was also behind ABI’s acquisition of two major homebrew supply companies in May of this year.

These investments have come as ABI appears to be slowing its domestic craft program. The company has acquired ten American craft brewers since 2011, including Goose Island, Elysian, and Wicked Weed. But in September, ABI laid off about 360 employees—about 90% of the staff—from its High End department, which managed the company’s domestic craft acquisitions. Several beer industry publications reported that the layoffs primarily affected staff who had been brought on through acquisitions.

Ratings websites and homebrew supply companies are only two of the many channels ABI is using to exert its power in the craft sector. In May, we reportedthat the mega-brewer was commandeering a supply of South African hops, which it owned via its SAB acquisition, away from American craft brewers and to its own supply chain. Some in the industry speculated at the time that the brewer was interested in using the unique hops for its own craft beer lines.

And in March, independent brewers in North Carolina took up a fight against ABI’s growing capture of the state’s beer distribution sector. Brewers joined together to support a bill that would allow them to self-distribute a higher volume of beer before having to contract with a distributor. They argued that ABI has written exclusive contracts with a growing number of distributors in the state, and that those distributors favor ABI brands over independent brewers. The bill remains in committee.

ABI now has a 28% global beer market share, and about a 45% market share in the U.S.

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The Open Markets Institute is co-sponsoring a briefing on November 14th at the National Press Club in Washington, D.C., with Friends of the Earth and many others, to discuss the Bayer/Monsanto merger. For more information, and to RSVP, click here.

WHAT WE’RE READING 

  • Mass Bay Brewing Company, the brewer of Harpoon and UFO beers, bought Clown Shoes Brewing for an undisclosed sum. Harpoon is the 18th-largest craft brewer in the U.S. 
  • BASF, a German chemical company, will buy Bayer’s LibertyLink technology and parts of the company’s seed and herbicide business for nearly $7 billion, pending Bayer’s acquisition of Monsanto. BASF is the third-largest agrochemical company in the world, and partners with Monsanto to produce genetically-modified seeds. 
  • A group of cattle ranchers in Oklahoma filed a lawsuit against the state Department of Agriculture, arguing that a recent ballot initiative to implement a state cattle checkoff tax was handled improperly. As we reported recently, many ranchers oppose the mandatory tax, assessed per head of cattle sold, which ranchers would pay on top of an existing federal checkoff tax. Ranchers voted on the expanded checkoff tax on November 1.

Photo from quinnanya on Flickr.

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