SABMiller buys Meantime to quench thirst for craft beer

May 15
10:45 AM 2015

SABMiller (SAB.L) is buying Britain's Meantime Brewing Company, swallowing up one of the pioneers of the country's craft brewing movement to give the owner of big brands such as Peroni and Grolsch exposure to a fast-growing part of the drinks market.

A surge in demand for craft beers in recent years has stolen market share from the world's two biggest brewers, SABMiller and Anheuser-Busch InBev (ABI.BR), as drinkers seek new tastes and support niche, local suppliers.

Sales volumes of Meantime's beers including London Pale Ale and London Lager soared 58 percent in 2014, compared with a 1 percent rise in Britain's beer market as a whole. The more richly flavored craft beer also sells at a premium to standard lager, another draw for SABMiller.

However, some supporters of craft beer say brands such as Meantime, which was founded in 1999 with the backing of a group of friends in a former tramshed in Greenwich, south London, risk losing their appeal if they sell out to a global brewer.

"I probably won't be drinking Meantime anymore," said Jeff Rosenmeier, founder of the Lovibonds craft brewery in Henley-on-Thames, southern England, though he conceded most drinkers wouldn't notice and only "beer geeks" would turn away from it.

"Lame, lame, lame," wrote one craft beer fan on Twitter, while another said "Goodbye to a indie brewery success story".

Meantime chief executive Nick Miller, who joined from SABMiller in 2011, rejected the criticism.

"Why would Meantime suddenly not become a craft beer just because it's got a different set of shareholders?" he asked on a call with reporters.

"Are you telling me that shareholders determine whether you're craft or not? Surely it's about the liquid, the beers that you produce, and the passion that you have for producing beer?"

Meantime's founder Alastair Hook, its brew master, and Miller will continue to be part of Meantime following completion of the deal, expected in early June.

SABMiller said it aimed to grow sales of Meantime's beers across Britain and use its distribution networks to export it to other markets in Europe.

AB InBev bought Goose Island, a U.S. craft beer brand, in 2011, and in the past year acquired craft names Blue Point and 10 Barrels, prompting a backlash on social media, with the three brands featuring on the website "Craftbeerblacklist".

SABMiller's U.S. joint venture with Molson Coors, MillerCoors, already sells Blue Moon in that country, another beer that plays in the craft beer category, although it has also faced some criticism.

Despite that, analysts welcomed SABMiller's expansion into a fast-growing market.

"The variety of styles added to SAB's extensive local and heritage beer menu should serve it well," Accendo Market's Mike van Dulken said.

SABMiller shares were up 1.2 percent at 3,644 pence at 1120 GMT (7.20 a.m. ET), within a UK blue-chip index up 0.3 percent .FTSE.

The financial terms of the deal were not disclosed, but will be small in the context of SABMiller's market capitalization of 58 billion pounds ($91 billion). SABMiller sold 245 million hectolitres of lager in 2014, compared with Meantime's annual capacity for production of 120,000 hectolitres.

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