Tough Topic: Goose Island Changes Hands

On Thursday March 21 I posted a more thoughtful second look.

Given today's breaking news I have opted for a second hastily written Tough Topic post.  You should still check out my post on Brewery Tours.

In what is a historic announcement Goose Island's ownership sold the production brewery and beer portfolio to Anheuser-Busch.  I have no qualms about saying this is historic.  Goose Island was a pioneer in bringing craft beer to the Midwest.  Several other breweries in the region, and even the nation are headed by brewers who cut their teeth at Goose Island.  Goose Island has stood for quality and innovation in a tight knit drinking community.

Goose Island is not just where I became acquainted with craft beer, where I made friends or enjoyed the best beer I ever had.  Over the last few years Goose Island really pushed the idea of drinking local with beers like Green Line, and  helped fuel the trend for barrel aged beer with the Bourbon County Stout line of beers.  While all this occurred Goose Island has had some issues, and long term customers were beginning to grumble about a drop in quality.  (See here and here for details.)  

I have met the Halls and I never doubted they were in this business to make money.  I can not blame them. only idiots go into business to go broke, but a bottom line always seemed to pop up with them.  Goose now claims that in order to keep up growth they needed to sell to Anheuser-Busch for $38.8M.  Frankly, I think they undervalued the brewery, but I am just a  humble blogger.  BeerAdvocate  has a press release where John Hall founder of Goose Island calls this a partnership.  I find it hard to consider someone buying a 58% stake in the business a partnership when the founder is no longer really in charge.

The customary claims that nothing will change are being made and Goose Island will continue operations as is, but with additional support of the resources of AB.  However Goose Island's current brewmaster is already stepping down and being replaced by Brett Porter. Brett is a well regarded brewer, but this is evidence of change, and I can only assume that positions will be eliminated.  I already had a recently terminated Goose Island employee tell me he expects us to see many more pink slips.

What else will change?  Beer selection.  I expect to see the Michelob line of beer scaled back.  Currently Michelob sells a line of craft style beers in in several traditional styles from English Pale Ale to Bavarian Wheat.  Michelob struggled to gain a foothold in this segment and having beer drinkers adopt it as a viable choice.  It would realistically make sense for AB to push Goose Island's current well rated and accepted line of beer into the same shelf space.

Harry Schuhmacher has reported on his Twitter feed that Dave Peacock the CEO of AB has stated they will not brew Goose Island's line of beers at the St. Louis brewery.  I find the choice of words interesting given that AB operates eleven other facilities in the US and has access to InBev facilities overseas.  At some point someone will make a decision that it is cheaper to begin doing runs of certain beers such as 312 or Summertime in a larger facility.    I agree we will not see these changes right away, but they are coming.  Once capacity opens up we may see the Oatmeal Stout and Nut Brown beers return or we may see less profitable beers disappear.

I do think the Chicago facility will continue operation, in fact AB is claiming to pump over a million dollars into the facility in the next year.  However, I believe that this will be to focus on smaller batch beers such as Bourbon County and Matilda.  It is just too easy to increase profits on some of these beers by transferring production to another facility.

What else will change?  I do not think AB will change their position on honesty.  I do think Goose Island will have a drop of sales in certain circles such as HopCat's announcement to discontinue sale (#3 Beer Bar on Planet Earth by BeerAdvocate).  I do think their sales will likely increase, and Goose Island will sell coast to coast.  I have not alway embraced the David vs Goliath philosophy and felt microbreweries biggest competition was each other and not the big guys.  I think this acquisition needs to be closely watched by Dogfish Head and Brooklyn Brewery.  This threatens them in a way they have not seen.

In any case the next 24 months will have a lot to show.  Will this work?  Will it grow or die?  What will the effect on other establishments be?  Come back and find out I plan to watch closely.  Given Goose Islands increasing focus on Belgian style beer it is ironic they got bought up by a Belgian conglomerate.