We have to remember that the giant multinational brewing conglomerates that exist today were once what we would call craft brewers. They made great beer. They distributed it. Innovated and survived wars. In the US they even survived years of prohibition. These were the brewers that made a lot of great decisions and were there for consumers through thick and thin. And they grew big because of that.
For more great stories about the global beer industry and newest trends check our new article Are Brewers Ditching Hops and Why?
The process of making a living in the beer industry
Every business starts small. Although they operate much differently today they were once a local craft brewer. Bigger isn’t always better, but it isn’t always worse either.
Before finished beer makes it to your bottle or glass there were dozens of people who created and sold the ingredients used to make it. As a hop grower in order to make ends meet you have to grow plenty of hops each year. And sell almost all of them. If you want to make a profit you’re going to have to get paid for every hop. Selling hops to mega breweries is more profitable.
You know you’re going to get paid for most of your hops each season. They may demand a lower price for hops. Or have some long-term invoicing terms. But they most certainly will pay you no matter what. that feels really safe for hop growers. This allows them to take a chance on a new brewery that may pop up in the area.
Craft beer as investment opportunities
This logic can be applied to other businesses that support brewing such as barley growers, brewery equipment manufacturers, and even truck drivers. They are all able to operate more confidently with large players existing in the market. That makes them more likely to take risks with new start-up breweries.
Every brewery needs to have a good relationship with a bank. The amount of money you need to buy all the equipment and ingredients to operate even a small brewery is much more than most people have access to. Banks and investors are looking for business opportunities that are safe.
The safer the business opportunity and the higher potential for growth the better. Big breweries buying smaller ones signals to investors that putting their money into breweries is safer than other business opportunities.