SABMiller Agrees to Acquire Meantime to Add U.K. Craft Beers

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Brew Giant SABMiller Buys U.K. Craft Beer Purveyor

SABMiller Plc agreed to buy Meantime Brewing Co. of the U.K. as European craft beer makers start to gain attention from the world’s biggest brewers just as they have done for years in the U.S.

The acquisition brings to SABMiller a business whose beer shipments rose 58 percent last year, compared with 1 percent growth for all U.K. beers. Meantime products such as London Lager are sold in more than 900 pubs and bars, as well as in Waitrose, J Sainsbury Plc and Marks & Spencer Group Plc stores, SABMiller said Friday, without giving financial terms.

The world’s biggest brewers have increasingly been trying to capture some of the growth and cachet enjoyed by startup craft producers. In the U.S., microbrew has been in demand for years and now accounts for 11 percent of sales by volume, leaving mass-market brands like Miller Lite and Anheuser-Busch InBev NV’s Budweiser standing. Earlier this year, AB InBev acquired Seattle’s Elysian Brewing for an undisclosed amount.

“Craft beer is growing and attractive,” said Andrew Holland, an analyst at Societe Generale. “Meantime will benefit from SAB’s distribution channels.”

SABMiller rose 1.2 percent to 3,644 pence as of 12:09 p.m. in London. The brewer reported stagnant full-year earnings and European beer volumes earlier this week and said it expects the business climate to remain challenging.

Tax Incentives

The purchase of Meantime gives SABMiller a bigger presence in a segment that analysts estimate accounts for just under 10 percent of the U.K. beer market. The Good Beer Guide shows that Britain now has more breweries per person than anywhere in the world after two years of continued growth. It’s the biggest number of British breweries since the 1930s and 40s and the industry is growing at more than 10 percent a year.

The London Brewers Alliance says there are more than 40 microbrewers within the M25 motorway that encircles the U.K. capital. That’s a 13-fold increase in less than a decade. The growth has been partly fueled by U.K. tax incentives for small brewers.

As for Meantime, the deal allows it to tap into SABMiller’s distribution network, Chief Executive Officer Nick Miller said in an interview Friday. The brewer already exports to 40 markets including Italy, South Korea, and the U.S.

“We see a greater chance of success with SAB,” said Miller, who is returning to the company he worked for before joining the craft brewer.

Yakima Red

Founded in 1999 by Alastair Hook, Meantime generated sales of about 17 million pounds ($27 million) last year from beers including London Pale Ale and Yakima Red.

Talks with SABMiller began when an executive from the FTSE 100-ranked company asked Meantime for some cases of its pale ale for his birthday, Miller said.

The acquisition includes Meantime’s retail sites, including the Tasting Rooms and the brewery shop in Greenwich, London, and the Greenwich Union pub. Meantime is building a pilot brewery that will become a center of new product development for SABMiller Europe.

“Meantime is a well-respected brand that SAB can use to build on existing relationships with pubs eager to stock craft beers,” Martyn Cornell, managing editor of U.K. beverage industry publication Propel Info, said in an interview Friday.

Meantime’s products will also complement SABMiller’s lineup of imported premium beers, such as Peroni Nastro Azzurro and Pilsner Urquell, SABMiller said.

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