Northern Brewer, perhaps the largest homebrew supply shop and website in America has been acquired by ZX Ventures, a global incubator and venture capital arm of AB InBev (AB). Rumors have been circulating for a week or so, and now they have been confirmed.
The American Homebrewers Association (AHA) estimates there are 1.2 million homebrewers in the US. The 1.2 million run the gamut in dedication from brewers like me who brew once or twice a month, those more advanced than me who spend thousands on equipment, to those who might brew a can extract kit once a year.
Homebrewing and craft beer certainly have a chicken and egg relationship. Jim Koch famously brewed his first batch of Boston Lager in his kitchen and many other craft brewers started the same way. And as craft beer has exploded, it has inspired more people to start homebrewing.
While homebrewing has grown exponentially since it was legalized in 1978, over the past few years it’s popularity has shown some signs of softening. The AHA’s membership has declined slightly from previous all-time highs. The AHA reports softening in sales at retail shops. This could be due to more brewers brewing all-grain which is less expensive than brewing with malt extract. Brewers could also be brewing less often. The hobby reached it’s apex of popularity after the last recession. As the economy has recovered and people have gone back to work, people are brewing less.
Which is to say that it is curious that AB would want to buy into a niche market like homebrewing. If Northern Brewer could use AB’s purchasing power and scale to buy ingredients, not only would that help Northern Brewer’s profit margin, but Northern Brewer could undercut their competitors’ prices for ingredients.
Surely Northern Brewer’s marriage with big beer will cause many homebrewers to buy their supplies elsewhere, just as there are beer drinkers who refuse to drink brands like Goose Island or Lagunitas that are bought out by a macro brewer. A lot of brewers also prefer supporting their local shop as opposed to buying ingredients online. A move like this would only stiffen their resolve.
I probably buy about half of my ingredients at local shops and the other half online. Where I buy my ingredients depends on what supplier has what I need, if there is a sale going on, or my schedule. There are times I need ingredients the same day, while there are also times when I don’t have time to drive to a local shop. Sometimes one shop or one website has one thing I need. From there I will buy ingredients for my next several bathes to qualify for free shipping, or if I drive to a shop I feel like it is a more efficient use of my time and gas if I guy a lot of stuff. Rationalization is a powerful thing.
I’ve only ordered from Northern Brewer once in 2016, but it was my go-to online supplier for a long time. I’ve brewed three Northern Brewer kits for the blog, Australian Sparkling Ale, Plinian Legacy, and Dawson’s Kriek. When I brewed a lot of extract and partial mash batches, I really liked Northern Brewer’s selection of malt extract. In my experience their customer service has been outstanding. One time I placed a particularly large order and one bag of hops was missing. Not only did they send the missing hops via 2-day shipping, the sent a note and a Northern Brewer glass.
As a brewer and a customer I’ll probably take a wait and see approach to see if I will still shop there. If Northern Brewer’s quality and quality of service under AB is on par with the taste of a Lime-A-Rita, I won’t shop there. I am more ambivalent than most on the influence of big beer in the marketplace than most.
This move is more concerning for me than AB’s brewery acquisitions because the homebrew marketplace may be easier to monopolize than the beer marketplace. It is easier to make a more flavorful beer than Bud Light and compete on quality. How can the other homebrew retailers compete when they are selling the same malt and hops as a conglomerate? The key for any business is finding a niche. That may be more important than ever for Northern Brewer’s competitors.