It has been just over 36 hours since news broke that Calgary’s Banded Peak Brewing was being purchased by AB-Inbev (ABI), the world’s largest brewing corporation. Details on the deal remain scant (and likely will for a long time). The Banded Peak boys released a statement with the usual glowing optimism and lack of detail that comes with these deals and ABI is, as usual, remaining mute. (Media reports are saying that Labatt was the buyer but I refuse to be fooled by the ruse – Labatt is ABI’s wholly owned Canadian arm.)

However, many questions abound. There was widespread surprise across the industry at this announcement. Not that ABI had bought a small craft brewery – there have been rumours for weeks now that they have been trying to land a deal with someone – but at WHICH brewery ended up being their target. Had there been a betting line, Banded Peak would be an odds-maker’s nightmare.

I don’t have any firm answers (as I say lots of sealed lips), but I put on my thinking cap to try to make sense of this. Let me explore the what, the why and the what does it mean questions.

First, for those not familiar with Banded Peak, they are a small Calgary-based craft brewery that opened in 2016 in what is now known as the Barley Belt. Three homebrewing friends – Alex Horner, Colin McLean and Matthew Berard – were the force behind it. The brewery quickly built a reputation for solidly made beer and strong marketing around an outdoors-based theme.

The what behind the deal is partially known. We know it is a complete buy-out, but that ABI will keep the three owners and staff around to operate the brewery. For now. We have seen this play out elsewhere. Often the original owners drift away after some time, for a range of reasons. It is, obviously, too early to know if that will be the case here.

The price tag is undisclosed but I would be floored to hear it was more than a couple million – which is chump change for ABI. But that alone gives us our first answer to why the deal went down. Banded Peak was financed through a combination of self-financing and a start-up loan. I am not privy to Banded Peak’s books, but I wouldn’t be surprised if, despite (and maybe because) of early success, cash flow was a challenge.

But mostly you can’t blame three young business-savvy guys to see the offer sheet, recognize the HUGE return on initial investment it represented and sign before it went away.

The why on Banded Peak’s side is easy to assess. The harder question is why ABI wanted a young start-up rather than one of a handful of more established breweries in the province. Banded Peak produced about 3,000 hectolitres last year (the Edmonton Labatt plant can produce four times that in a day). This purchase is really small potatoes for ABI. So why?

I can only guess, but my theory is that they wanted a brand they could mould and grow. Banded Peak’s brand has tonnes of latent value – quality product, interesting back story, good packaging, growing reputation – but it would have taken the three founders years to translate that into sales and actual value. The brewhouse is small (10hl if my old notes are accurate), but still has lots of capacity in it to triple or quadruple in size (although I wouldn’t be surprised if they soon upgrade the equipment).

In short with an injection of cash, Banded Peak could grow to rival some of the more established Alberta players in a relatively short time frame. And that is the value for ABI. Plus, it gives them a spot in the trendy Barley Belt, alongside some of Calgary’s most respected breweries, which cannot be under-estimated.

Plus, I think Sapporo’s purchase of Wildrose last year increased the pressure to buy into the burgeoning Calgary market. This deal is not about Annex, Dandy, or Village (sorry guys), although stealing a bit of their business is a nice side benefit. It is about the longer game of keeping up with the other big boys in the ongoing struggle to infiltrate the craft segment.

I think for ABI, Banded Peak is a bit of a gamble, but one with fairly low stakes. They are banking they can accelerate its growth without undercutting its reputation as a good craft brewery. Time will tell.

Finally, what does this latest deal mean for the craft beer industry in Alberta?

In short, nothing we didn’t already know. Sure, it sucks to see a good local brewery with potential sucked into the Borg that is ABI. But the big boys have been buying up craft breweries for a decade now – just, until recently, not in Alberta. They are playing a long term game and Alberta has finally hit their radar as a place they need to engage. So, first, that highlights how much Alberta’s craft segment has grown in the past few years. Second, we need to see this as a rearguard action – a defensive move.

There will be more acquisitions in Alberta. Mark my words. How effective will they be at eating into the growing craft segment? I don’t know. That answer will be determined by consumers.