Continuing the build out of its high-end craft division, Anheuser-Busch InBev today announced it would acquire Karbach Brewing of Houston, Texas. Though founded just five years ago, Karbach has enjoyed explosive growth (even for a young craft brewing company in today’s insatiable marketplace), and is on pace to brew 80,000 barrels this year, all to be sold in Texas. The company is now positioned to grow even more efficiently, as A-B InBev plans to invest in Karbach “to realize a brewing capacity of 150,000 barrels” annually by 2019, per a news release.
WHY IT MATTERS
A-B InBev acquiring breweries is nothing new, but this deal is different. This is the company’s first since the Department of Justice vowed to “carefully scrutinize any future craft acquisitions” made by the world’s largest beer maker.
Spurred by its investigation into the company’s Devils Backbone buy this past April, the DOJ said in September, “[T]he division will consider whether these transactions, either singularly or collectively, are likely to harm competition” in the beer marketplace. It ultimately closed its investigation into that purchase, though, concluding that, “in light of the distribution relief secured in the ABI/SABMiller settlement, the competitive implications of ABI’s acquisition of Devils Backbone are too uncertain at this time to warrant further investigation.”
So more than dealing with the critical eye of the public, this deal will also be subject to scrutiny from the federal government.
From a strictly business perspective, Karbach seems to fill a giant, Texas-sized hole in the corporation’s craft lineup. Since getting into the craft game in 2011 with the purchase of Chicago’s Goose Island, A-B InBev has been one of, if not the most, active buyers in beer, spreading money around the country in apparent, if unspoken, geographic patterns. In addition to Goose in the Midwest and Devils Backbone in the Southeast, the company also owns Blue Point (Northeast), 10 Barrel and Elysian (Pacific Northwest), as well as Golden Road, Four Peaks, and Breckenridge (Southwest).
“Karbach has built a unique, thriving brand rooted in the Texas spirit,” Felipe Szpigel, president of A-B InBev’s craft portfolio, The High End, said in the release. “From the beginning, they have shown creativity and passion with the super beers they brew, and they’ve been able to use their unique offerings to appeal to the laid back lifestyle that resonates with Texans.”
For Karbach, the sale is the culmination of a meteoric rise to prominence, powered by its Hopadillo IPA, Love Street Kölsch, and Weekend Warrior Pale Ale.
“Chuck [Robertson] and I started the brewery five years ago on Karbach Street in Houston, where the warehouse was located for the beer distribution company we started decades before. After watching so much great beer move through our warehouse over the years we decided it was time to add our own to that list,” Karbach co-founder Ken Goodman said in the release. “Karbach is the heart and soul of our beer industry careers, and we are thrilled about this new partnership with The High End and what it will mean for our dream to give more Texans the most unique, unexpected, and exciting beers they’ll have fun drinking.”
Robertson built on that in an effort to clarify the company’s continued level of independence, the issue often of most concern to the types of beer drinkers that feel personally betrayed when a company they love gets bought out.
“While we are joining a talented and innovative group of craft breweries in The High End, Karbach will retain a high level of independence, and the existing management and brewing teams will continue to drive culture and strategy, all while having fun building our brands,” he added.