Newspaper article St Louis Post-Dispatch (MO)

Big Beer Has Eye on Small

Newspaper article St Louis Post-Dispatch (MO)

Big Beer Has Eye on Small

Article excerpt

Tony Adams, chief executive of Portland Brewing Co., was getting used to being ignored as he quietly took business from the big beer makers.

Not anymore. In the past couple of years, Adams has fielded queries from major brewers, distillers and other beverage companies that want to buy the 10-year-old craft brewer.

"They call on the phone, they come to visit," he said. He's happy to give the suitors tours of Portland's brewery, where it makes 70,000 barrels a year, but so far there's no match. Adams is hardly alone. Craft brewers, which tend to make darker and fuller-flavored beers, say they're besieged with purchase offers from Anheuser-Busch Cos., Philip Morris Cos.'s Miller Brewing Co., Seagram Co., Canadaigua Wine Co. and others. The interest is understandable. Craft beers have just 2.5 percent of the $50 billion U.S. beer business, but boast fatter profit margins and sales that are growing about 30 percent a year. Compare that with stagnant or declining sales of other alcoholic beverages and prices that are under constant pressure. "I don't know how you could be in the beer business and ignore a small, but profitable, part of it," Adams said. Among the most active shoppers, insiders said, is St. Louis-based Anheuser-Busch, the world's largest brewer. The company is offering not only to invest in craft brewers, but to bring them into its distribution network, a crucial step for any small brewer that wants to expand. Anheuser-Busch "has its footprints all over the place," said Jack Erickson, publisher of The Erickson Report, a trade publication that tracks the craft-brewing industry. The company's plan is to create a family of craft and regional beers to sell alongside its main brews, such as Budweiser, Bud Lite and Michelob. One of the most desirable acquisition targets, say craft brewers, is Widmer Brothers Brewing Co., based in Portland, Ore., and one of the 10-biggest U.S. craft brewers. The company has been in business since 1984 and has an established financial record, something rare in the highly fragmented craft-beer industry. It also brews more than 125,000 barrels a year. …

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