AB InBev has acquired Australian craft brewer 4 Pines for an undisclosed amount through a deal facilitated by the group’s New York-based venture arm, ZX Ventures.
This deal is the latest move by AB InBev as it maneuvers to build out a portfolio of Australian assets. 4 Pines, which operates four sites in New South Wales including breweries in Brookvale and Manly near Sydney, will join existing Australia-based portfolio companies, Carlton and United Breweries.
For 4 Pines, this deal with AB InBev is expected to give the brewery the ability to expand its operations on a global scale – plans that 4 Pines said are already underway.
“Our aspiration is to grow the 4 Pines identity and operations locally in Australia and globally. The access 4 Pines will receive to AB InBev’s global resources will provide a platform to realise our goals even sooner,” said Jaron Mitchell, co-founder of 4 Pines.
Why Another?
On September 11 Food & Wine reported that AB InBev announced the layoff of more than 300 employees associated with The High End division – its unit launched in 2014 to manage the company’s line-up of craft breweries. At the time, the company stated that the move was driven by the desire to eliminate redundancies between the corporate sales force and parallel teams with the craft brewers.
Indeed, on September 7, Felipe Szpigel, president of High End, told Forbes contributor Tara Nurin in an interview that “the company would no longer focus on acquisitions and would instead pivot to growing its ground-up model.”
So why did AB InBev add another craft brewer?
Peter Filipovic, president of AB InBev’s Business Unit Australia, told Drinks Central that there were four factors driving the deal. “They make great beers, they have great people and with that comes a great culture. The fourth thing is the unique consumer experiences they offer at their venues, which really bring the brand to life.”
Can You Buy Rebellion?
In all honesty, craft breweries have seen great success by building a rapport with consumers established on an attitude of irreverent independence. Consumers who began seeking out little-known craft beers because of their high quality, traceability, and for lack of a better word – personality – soon came to see their beer choices as a vote against big business and the mainstream.
The question remains, can mainstream multinational corporations maintain this customer relationship through its acquired craft beer assets?
Despite the sentiment on the ground, the saturation of the craft beer space is driving the need for brewers to expand, and so, deals march on. Private equity-backed deals involving U.S. and EU-based beer companies totaled 37 in 2015 and 28 in 2016, according to PitchBook Platform, with the three most active quarters in the past 10 years all happening since the beginning of 2015.
Crafting a Connection
Although AB InBev has been a major player at the forefront of the craft brew acquisition frenzy since 2015, and has built up a formidable multi-national portfolio, the company is doubling down to create a connection with today’s consumer.
In April of last year the company joined the ranks of other iconic, global brands General Mills, Coca-Cola, and Campbell’s, and announced its partnership with Boulder-based Techstars to launch the joint accelerator Techstars Connection.
Over the decades, AB InBev has been at the forefront of industry innovation, being the first to use mechanical refrigeration, refrigerated rail cars, and first to integrate pasteurization into its production processes to ensure quality standards and safety, according to Food Dive. Today, AB InBev has grown to become the largest brewery in the world, and with such scale it can be difficult to maintain a constant pace of innovation.
This venture, which is fully funded by AB InBev’s venture arm ZX Ventures, was created to facilitate the connection of people to each other, products, and places resulting in an improved experience in the marketplace. To achieve this, the accelerator functions under the mission to “enhance consumption experiences through curation, personalization and localization (and) leverage the hidden benefits of raw materials, fermentation and brewing in products and systems that help people to live well,” according to a press release issued upon the accelerator’s launch.
It is here where the acquisition of 4 Pines aligns with AB InBev’s business mission, bringing innovation and a consumer connection that is often missing for global beer producers that have held large market shares for generations.
“Anyone who knows Jaron and the 4 Pines team know they do things differently, which is why we were so interested in teaming up with them,” Jan Craps, president of AB InBev’s Asia Pacific South Zone, told Drinks Central. “4 Pines is a truly innovative business with a great range of beers, talented people and a genuine, values-driven culture which is incredibly important to us.”
-Lynda Kiernan