Millercoors joins craft beer spending spree

Millercoors, the second largest brewer in the US after Anheuser-Busch, has acquired a majority stake in Californian craft beer company Saint Archer – the latest in a spate of craft takeovers by big producers.

San Diego-based Saint Archer is expected to sell 35,000 barrels of beer this year, just three years after it was first set up (Photo: Saint Archer)

The deal represents the first takeover of a craft beer brand by Millercoors, the joint US venture between global brewing giants SABMiller and Molson Coors.

Financial details of the deal have not been disclosed, but the Wall Street Journal reports that, based on other recent craft beer acquisitions, Saint Archer could be worth around $35 million (£22.7m).

Saint Archer expects to sell around 35,000 barrels this year, which it says is double the amount sold in 2014. This rate of growth makes it an attractive asset for a big brewer like Millercoors, which is looking to fend off the threat of its market share shrinking as craft beer continues to grow.

Millercoors said in a statement that Saint Archer will be permitted to continue to operate as its own separate entity under the leadership of co-founder and president Josh Landan.

Spreading distribution

After the deal is made, which is expected to be next month, Millercoors’ strategy will be to spread the Saint Archer’s reach from California – the only state that it currently supplies – across the US using the big brewer’s distribution network.

“We have always wanted to get great beer into more people’s hands,” said Landan. “Joining Tenth and Blake [Millercoors’ craft beer division] allows us to keep doing what we love right here in San Diego, but now with more resources to innovate and grow. With Tenth and Blake’s help, we hope to one day be a national brand.”

Scott Wheatley, Millercoors’ head of craft beer, said the deal is consistent with the company’s strategy of expanding its premium offering while “driving top-line growth”.

Buyout trend

It is the latest in a raft of craft beer buyouts that have been picking up pace over recent years.

Big producers are seeking to counter the threat posed by the increasingly popular craft beer category on their market share and sales, with takeovers followed by investment in quickly upping distribution being a common approach.

Earlier this week, Dutch big brewer Heineken made a deal with popular craft brand Lagunitas to split ownership of the Californian company. AB Inbev, parent company of Anheuser-Busch and maker of Budweiser and Bud Light, has made four craft beer acquisitions since 2011.

Production volumes of craft beer in the US rose 16% between just January and June this year compared with the same period in 2014, jumping from 10.6 million barrels to 12.2 million.