Topping off several weeks of deals for California beer makers, Anheuser-Busch InBev said Wednesday that it would acquire Golden Road Brewing, Los Angeles' largest craft brewer.
Anheuser-Busch said the deal would help introduce Golden Road to more customers outside of its distribution network in California, Nevada and Arizona. In exchange, analysts say the beer behemoth can tap even further into the exploding craft brewing scene. Financial terms of the deal were not disclosed.
This is the first major acquisition of an L.A.-area craft brewery, and it's another indication that the beer industry is booming in the Southland.
The number of craft breweries and brew pubs in the county has swelled in recent years, from just a handful in 2010 to well over 30 today, with half a dozen more expected to open in the next six months. Most of these operations are small producers, and even the largest and most well-established brands like Eagle Rock Brewery, El Segundo Brewing Co. and Smog City Brewing make just a fraction of the beer that Golden Road Brewing does.
Founded in 2011, Golden Road is on track to make more than 1.2 million gallons of beer this year and open a second brewery and pub in Anaheim next year.
"This wasn't a sellout move for me," said Meg Gill, president and co-founder of Golden Road. Gill said she hadn't planned to sell to a beer conglomerate but "as soon as we saw that vision, both companies were excited to be a part of what the other was doing."
Just last week, Anheuser-Busch InBev approached rival SABMiller about a takeover that would combine two of the world's largest brewers and expand the combined company's international distribution.
Wednesday's acquisition of Golden Road helps ensure that Anheuser-Busch continues to stay relevant in the U.S. market, where craft beer is increasingly popular.
Craft beer continues to outperform the overall U.S. market, where it represents 11% of total volume. In California alone, there are nearly 600 craft breweries, the most of any state, according to the California Craft Brewers Assn.
Golden Road will join Chicago's Goose Island Brewery, Oregon's 10 Barrel Brewery and Washington's Elysian Brewery in Anheuser-Busch's stable of craft breweries. Buying popular craft breweries but allowing those companies to continue production without much interference seems to be the core of Anheuser-Busch's domestic strategy, said Nick Petrillo, industry analyst for IBISWorld.
Because Anheuser-Busch proudly touts its status as a macro-brewery, it wouldn't want to stray too far from its revenue-generating brands by creating its own version of a craft brew and risk alienating all consumers, he said.
Anheuser-Busch is just the most recent of the large brewing companies to snap up craft brewers in the last few weeks. Two weeks ago, MillerCoors said it was taking a majority stake in San Diego-based Saint Archer Brewing Co. Days before that announcement, Heineken said it would take a 50% stake in popular Petaluma-based Lagunitas Brewing Co.
The sudden acquisition activity, especially among younger craft breweries, could change the business plans for these smaller brewers, Petrillo said. Brewers might now decide to go into the business knowing that if they put out a good product, a larger company will want to acquire them for a good price, he said.
If this becomes a trend, it could alter the motivations of people entering the craft brewing industry, said Tom McCormick, executive director of the California Craft Brewers Assn.
"People never got into the craft brewing industry for the money," he said. "They got into it because they loved beer. I think now people have and are potentially getting into the industry because they see these quick flips."