Craft breweries ‘overvalued’ says Molson CEO27th June, 2014 by Rupert Millar
The CEO of Molson Coors, Peter Swinburn, has said that craft breweries are “massively overvalued” which prevents their acquisition by larger breweries.
In an interview with Bloomberg, Swinburn said: “I’m just saying we have to generate value from any purchase we make, and we find it difficult to get the returns we want.”
The continuing boom in craft beer across North America has yet to make serious inroads into the market which is dominated by the big brands of Molson Coors, AB-InBev and SABMiller.
Nonetheless, its popularity has forced the likes of Molson Coors to create craft-style beers such as Blue Moon.
Craft breweries make attractive propositions but tax breaks in Canada preclude much buying opportunities there and the market is so “hot” for craft beer in the US that it makes even very small brewers far more expensive concerns than they would otherwise be.
Swinburn told Bloomerg that he expects to see more consolidation across the beer industry in the near future – though perhaps not on the scale of the AB-InBev or SABMiller mergers – and a cooling off in the craft market could open doors.
“But we’re not running around Canada or the U.S. or Europe trying to get people to sell their business to us,” he said.
The Brewers’ Association recently changed the definitions of craft beer, saying that any brewery producing up to six million barrels a year can call itself “craft” as of 2015.