A unique beer merger took place on Thursday, and the strategy behind it has fascinating implications for every entrepreneur.
Boston Beer Company, which makes Sam Adams, acquired fellow craft brewery Dogfish Head for a staggering $300 million. According to Brewbound, Dogfish Head founders Sam and Mariah Calagione will receive 406,000 shares of Boston Beer stock--which, at its current price of $332.94 per share, is valued at more than $135 million. Sam Calagione will also obtain a seat on Boston Beer's board of directors.
The past few years have seen a relentless stream of craft brewery acquisitions by huge beer conglomerates like Anheuser-Busch, Heineken, and MillerCoors. This infographic put together by beer blog the Mad Fermentationist shows how much consolidation has flowed through the industry.
In response, two of the biggest remaining craft breweries in the United States are teaming up to compete with their industry's giants--rather than against each other. Boston Beer had the second-highest sales volume of all American small and independent craft breweries in 2018, with Dogfish Head not far behind at 13th, according to trade group Brewers Association.
The development feels particularly timely, with the national conversation in recent weeks focusing on the power of market leaders in industries like social media and ridesharing. Earlier on Thursday, Facebook co-founder Chris Hughes wrote in a lengthy New York Times op-ed that his former company needed to be broken up under antitrust laws. On Friday, Uber finally debuted on the public market at $45 per share--a dramatic undercut of rival Lyft's initial pricing of $72 per share in late March.
Every successful startup eventually reaches an inflection point: You're either joined by newer, cheaper startup competitors or targeted by the large companies who take notice of your existence. Sometimes, both can happen at once--and either can take down your business if you're not careful, which is why entrepreneurs would be wise to take a proactive rather than reactive stance.
Predicting how your future competitors will target you and devising counter-strategies that can be deployed at the press of a button could be the best way to protect your business. Like Boston Beer and Dogfish Head, you might even consider teaming up with one of your competitors to take on a much larger one.