Here’s something a lot of craft brewers don’t like to share: They are every bit as interested in learning what Tenth and Blake – MillerCoors’ craft arm – can do for their businesses as MillerCoors is interested in talking to them about a partnership.
Tom Cardella, Tenth and Blake’s president and CEO, said during a recent interview with Brewbound that nearly 20 craft brewers approached him at this year’s Craft Brewers Conference, looking to discuss strategy and the future of their businesses. Those conversations, he claims, were unsolicited. Also unsolicited, Cardella said, are the phone calls from small brewers, which are beginning to come in more frequently.
“Because of the uncertainties within the craft segment and the rapid growth of new players coming in, we get a lot of phone calls from smaller guys that see us as an opportunity,” he said.
Cardella is a 30-year veteran of the beer industry and boasts executive stints with Miller, InBev, Beck’s North America and Labatt USA. Now, he’s drawing on that experience to help strengthen MillerCoors’ craft portfolio. He’s hoping craft brewers will recognize the opportunity to align themselves with the country’s second-largest beer company — something many in the space have viewed, until now, as a deal with the devil, an attempt by MillerCoors to “buy craft” rather than win converts organically.
Not surprisingly, Cardella doesn’t see it that way. But he’s also not rushing any deals.
“If it is a model that we think makes sense, we will create partnerships,” he said.
It’s no secret that Tenth and Blake has been looking at the segment intensely. The company has openly admitted to having conversations with a number of craft brewers. It already owns 25 percent of Georgia’s Terrapin Beer Company; the company has also shown interest in Boulevard Brewing, and acquired Crispin Cider in February.
“We maintain an ongoing dialogue with a fairly wide set of existing players,” he said.
He said the company wants to learn how to better support craft brewers and how Tenth and Blake might become more involved with new partners. Cardella said he has a bullish outlook on the segment, but he admits it comes with some concerns.
“The barriers to entry in the craft industry are very low right now,” he said. “Homebrewers with a passion have the ability to go out and find small amounts of capital. That model continues to be exploited, hence the ongoing dialogue that there are another 1,000-plus brewers coming onto the scene.”
His fear is that these new, small craft brands are going to have a tough time earning that coveted spot a wholesaler’s truck, something Tenth and Blake with its access to a large network of MillerCoors distributors can remedy.
His other concern is the continued capital constraints craft brewers face as they look to grow their brands – again, something Tenth and Blake, with its access to the MillerCoors coffers, can solve.
But he also recognizes that any relationship will likely depend on developing a reputation in the larger craft brewing community as a big brewer that recognizes how craft is rejuvenating the overall beer category.
Cardella’s message: We come in peace.
“We are builders of brands,” he said. “We want people to know that we are looking to build a portfolio of breweries and brands that will continue to please consumers, support the MillerCoors distribution network, and provide us the ability to have a meaningful dialogue with our retailers.”
It’s been a slow education process, but Cardella is optimistic. And as for investments, Cardella said he’s not sure when Tenth and Blake’s next craft deal will occur or what it will look like. The company is looking at both strong regional players and small local brands – the only caveat being that a smaller brand must be capable of scaling.
“What’s most important to us is the initial chemistry,” he said. “We want to find a relationship that not only enhances the value for both parties but one that maintains the spirit of the entrepreneur.”