Barrel Roll-ups and Mash Networks

Originally Published: March 14, 2016

Another potentially game-changing move, on the heels of a number of craft brewery acquisitions and roll-ups within the industry, was announced today. Fireman Capital Partners and Oskar Blues Brewery have acquired Cigar City to further bolster their portfolio within United Craft Brews LLC.

You are going to see a few more of these types of deals taking place in 2016 and 2017. This is a healthy route to building a vibrant craft brewing category that can sustainably compete with the larger beer incumbents.

What large brewers fear most is not the increasingly long tail of micro-brewers. The game-changing threat is the emergence of well-structured and managed brewery networks and roll-ups that retain the critical attribute of independence and agility. Mostly, this will manifest itself in a number of "mash" networks made up of strong regional brands as well as select groups of smaller next-wave, hyper-local brewers.

Over time, viable indie craft breweries will be able to build their brands at scale, via this new type of competitive  business model  and "mash network". And by partnering with smart PE money, they can eventually pursue alternative exit options or creative buy-back approaches without having to only rely on an exit to one of the few larger players.

While there are mitigating or pro-active approaches that larger players could pursue, I am not convinced that they all have the appropriate market model, teams and culture in place to operate the dual-strategy that is needed. Especially as it pertains to retaining credibility in the eyes of the discerning and empowered craft beer consumers.

Cheers !