AB InBev acquires Camden Town: least surprising news in the history of beer

I was actually speaking to a senior London brewer about something else entirely on Monday when he asked me if I had heard that AB InBev had bought the Camden Town Brewery, and my instant response was: “That’s the least surprising news I’ve ever heard.”

Jasper Cuppaidge, evil mustachio-twirling villain – if you believe Twitter …
Jasper Cuppaidge, evil mustachio-twirling villain – that is, if you believe Twitter …

Camden Town has always seemed to me the Brewery Most Likely to Sell Out to a Big Buyer – certainly since its beers started appearing on bartops all over London. It’s got a great brand name, picking up the associations of a part of the capital that is somehow, at least in its image, gritty, urban, young, trendy and authentic all at the same time (possibly relevant trivia: Camden is where Scrooge’s clerk Bob Cratchit and his family lived, which suggests the place has had a reputation for cheery grittiness since Dickens’s time).

But it ought to be expected that the brewery is a great brand: founder Jasper Cuppaidge is married to the daughter of Sir John Hegarty, a partner in Bartle Bogle Hegarty, one of Britain’s most renowned advertising people, the man who gave us Vorsprung Durch Technik and Nick Kamen stripping to his boxers in a launderette to advertise Levi’s, and who is – or was – Camden Town’s chairman. If Hegarty and his ad world pals didn’t stump up the initial funding that allowed Cuppaidge to install all that shiny brewing kit from Germany’s Braukon in a Kentish Town railway arch in 2010, then I WOULD be surprised. And if there wasn’t always the possibility of a trade sale in the business plan, I’d be pretty surprised there too. (More trivia: Hegarty apparently designed Camden Town’s logo, with the horseshoe shape a nod to the Horseshoe in Hampstead where Cuppaidge started brewing)

I see the Guardian is suggesting ABI paid a total price of nearly £85m for Camden Town, which is within throwing distance of the £100m a (different) senior London brewer suggested to me that SAB Miller paid for Meantime Brewing earlier this year. That same man also suggested that I wasn’t far wrong when I said at the time that Meantime was actually worth about £25m. “Worth” here means “what you ought to pay based on a realistic return on your investment, given a company’s current turnover and pre-tax profit”, though in the real world, of course, “worth” means “what someone is prepared to pay”. So in that sense, Meantime IS worth £100m. But when I was at business college, a company’s worth was generally reckoned to be one times turnover or ten times PTP, which would put a value on Camden Town of £9 million tops – maybe £18 million if you were being optimistic.

But it’s all about snatching territory before others do: the craft lager/craft beer market is where the growth is, and ABI knew that if it didn’t grab Camden Town, someone else would, which would leave it struggling to find an equivalent scaleable brand. (Incidentally, nobody seems to have pointed out the irony of ABI buying one London lager brewery barely a month after it had closed another one.)

Of course, while ABI was negotiating to acquire Camden Town it was also hunting very much bigger game, namely SAB Miller, and it must have been embarrassed to realise that with SAB in the bag, it was going to own TWO London craft brewers, with Meantime as well. Hence, no doubt, the announcement that Meantime is to be sold off, along with other brands such as Grolsch and Peroni. In many London pubs, where you find Camden Town you often find Meantime as well: competition authorities would not smile on ABI owning both. But that raises the interesting question: who’s going to buy Meantime? I am told that a management buy-back is not considered likely, but apart from Heineken, which already has Caledonian developing a craft offer for it in the UK, I can’t think of an obvious buyer.

The Twatterati have been going bonkers at Camden Town’s alleged sell-out, with comments such as “Another one to avoid from now on, like Meantime”. It is the panto season, I suppose, where moustachioed villains called Jasper are there to be booed and hissed. But Mr Cuppaidge has done extremely well for his investors, and under ABI, Camden Town looks like continuing to supply London’s – and Britain’s – bar tops with considerably more interesting beer than might otherwise have been available. Not in BrewDog bars, of course, where James Watt, who has never knowingly ignored a publicity opportunity, has announced that Camden Town beers will now be boycotted.) But of course, they’re missing the point: the overwhelming majority of drinkers simply do not care who brews Camden Town’s beers. They’re only interested in enjoing drinking them.

Meanwhile the question is – who’s next? I’m not sure anyone in the UK has both the immediate brand clout and the availability to be a realistic acquisition target (BrewDog has the clout, of course, but Messers Watt and Dickie are having far too much fun to want to sell, I suggest, and anyway if they did there would be an irony explosion so huge it would leave most of North East Scotland a glowing desert.) Instead, I’d look to Italy for the next big acquisition of a craft brewer by a global marque*, followed closely by Poland.

* Update: and I was right. Five months after I wrote this, AB Inbev bought Birra del Borgo, brewer of ReAle, among other beers.

18 thoughts on “AB InBev acquires Camden Town: least surprising news in the history of beer

  1. “… if they did there would be an irony explosion so huge it would leave most of North East Scotland a glowing desert.”

    Good hearty chortle on that one…till I realized that it was close to the scenario of Elysian (“Corporate Beer Sucks”) being bought by ABI, and Seattle’s still standing. We just seem to stumble on.
    Good piece, as always.

  2. This question of whether people ought to have been surprised or not is interesting. We weren’t surprised in that we knew another buy out would come soon and Camden were a likely candidate, but still said, ‘Ooh, blimey!’ when the story landed. It’s like knowing there’s going to be a scare in a horror film (no judgement implied…) but still jumping when it happens.

  3. Nice to read a calm and intelligent response after reading all the “craft beer Taliban” came out as suggesting that this is the most heinous crime in history. breweries are like all other companies in the world of capitalism and free trade. All breweries large and small need to turn a profit. I’m sure Brewdog have to go to their very non-punk investors at Griffin Group LLC every month and talk about profits and losses!

    Good luck to Jasper – it’s his company that he built from the bottom up and he deserves to get a payday and the opportunity to expand and ironically bring back contract production from Belgium (home of ABI) to a new Brewery in North London!

    There’s enough great breweries large and small to let the drinker decide what to drink without resorting to insults

  4. The value of a craft brewery is that they take the same commodity grains and turn them into a product some consumers believe is worth far more than similar products produced on a larger scale and retailed cheaper. They add value. The value being the price difference between a can of craft beer and a can of mainstream beer.

    That could either be because they make a better product punters value or it could be factors like appealing to the values of their customers. They are small, none corporate, trendy. The product price premium may or may not be in the liquid.

    If the value is in the liquid then ABInbev have bought a brand which they can sell for more than their regular brands. All they have to do is keep making it to spec and keep selling it at a premium.

    If it isn’t in the liquid then the very act of buying the brand destroys the values their customers are actually buying and the beer is no longer worth the premium in the eyes of their customers.

    If the beer bloggeraty are genuinely representative of their customers, they have devalued the brand by the act of acquiring it. If the customers really only care about the taste of the beer, they have not.

    1. All good common sense here.
      Re your last paragraph I genuinely don’t think 90% of drinkers care who owns the shares, I think they drink a given beer because they like it. I don’t believe that ABI have devalued the brand, quite the opposite, because, of course, the Twatterati are *not* representative of the ordinary guy (or girl) in the pub.

  5. Very good, very balanced article Martyn, as one would expect.

    Avoiding a beer that you like, just for ideological reasons, is one of the stupidest things I can think of, personally.

    So many people are naïve and even juvenile when this sort of thing happens and simply don’t seem to understand how business works. Shareholders may agree to defer profits for a time to allow a business to grow, but if you can’t show them a return on their capital at some point you haven’t got a viable business. Simple as that. And breweries are businesses – the ones that survive anyway.

    Your most telling observation is that the vast majority of people don’t know or care who owns a brewery – they drink a given beer because they like the flavour. The importance of the *brand* and all the extrinsic stuff, brand image and so on, are exaggerated in almost every case imho.

    As for the wise old heads who are stroking their chins and saying, “Oh things *will* change now Camden/Meantime/whoever are owned by a bigger group, things will change, you mark my words………” – well, we’ll see, won’t we? Time will tell. And if the beer *does* go to shit, guess what – just don’t drink it any more. There will be plenty more beers to try.

    As an aside, I spent the afternoon some months ago with the brewing team from Goose Island and they are very happy with life under Ab Inbev, thank you very much.

    Mass-produced, poor quality lager is declining, just as, for example, Mild declined in the 60’s and 70’s. “Craft” is expanding its market share. The brewing industry will recalibrate itself so that what is today called “craft” becomes the norm. The Meantime/Camden take-overs are part of this process, and should be welcomed, not treated like the death of a much-loved family pet.

  6. Thanks for the article and good humor.

    I was suspicious when ABI bought Chicago’s Goose Island a few years ago, but GI still produces wonderful high-end beers (e.g., Bourbon barrel stout, Matilda, etc), although I find their entry-level ones have dropped a bit. Lagunitas in SoCal just sold a sizeable % to Heineken. It happens. These are businesses. At the end of the day, they have to generate more revenue than expenses.

    I would argue that the hipster crowd that has done so much in the craft beer movement the last five years does care about the brand that produces their beer. Sometimes their idealism and immaturity do collide. It’ll be interesting to see what happens to their love affair with VW.

    1. I agree that hipsters care about brands, but breweries like Meantime and Camden lost the real hipster market long ago. Your average bloke in the pub is much less bothered about brand ie more about quality and flavour.

  7. In valuing a company there is always the difficulty of placing a value on the brand name. Going back some years Nestle were able to buy Rowntree because the latter hadn’t included the value of its brand names on the balance sheet. It may be that the potential of the Camden brand makes the name more valuable than is generally allowed at present.

    In the marketing mix the product is the most important component and I cannot imagine that ABI will risk devaluing their investment by toying with the quality of the ale to maximise profits. Watneys is the case study from brewing history that tells us what will happen if that path is pursued. However they may maximise profits by promoting the brand and raising the prices. That is what the Twitterati should be concerned about. Having said that it’s not the 1970s and there are always other fine ales to drink.

  8. Good piece but I am not sure though that numbers of craft beer taps on London bars would be sufficient a dominant market position to result in any UK Competition Authority intervention.

    1. John –
      I agree with you – both Meantime and Camden put together wouldn’t worry the regulatory authority, far too small to be of any significance re monopolies/mergers etc. I think InBev just think it would be too blatant to own both the two biggest, competing London craft breweries, hence Meantime is for sale.

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