Great ResignationInflationSupply ChainsLeadership

AB InBev’s Deal With Craft Brew Alliance Was Years in the Making

November 12, 2019, 12:00 PM UTC

Anheuser-Busch InBev, the world’s largest brewer, has just placed its biggest bet yet on craft beer.

On Monday, the Budweiser and Stella Artois brewer agreed to buy Craft Brew Alliance in a deal that values the smaller Portland-based peer at $321 million. AB InBev, which already owned a 31.2% stake in Craft Brew Alliance, will buy the rest of the outstanding shares for $16.50 a pop in cash. The news helped Craft Brew’s shares more than double on Monday afternoon, as the stock had been trading under $8 before the deal.

In recent years, AB InBev has been busy scooping craft brands from all across the country—a dozen in total including Elysian Brewing in Washington, Golden Road in California, and Goose Island in Illinois. AB InBev’s goal with these brands is to tap strong consumer interest in the craft movement, a subsegment of beer that is worth $27.6 billion.

And though craft beer sales growth has cooled of late from the heady double-digit gains the subsegment used to post years ago, smaller brewers reported a 3.9% jump in volume last year, outpacing the total category’s 0.8% drop.

The deal for Craft Brew Alliance will add eight new brands to AB InBev’s Brewers Collective, which is where it houses the rest of the craft brands. Formed in 2008, Craft Brew Alliance was created when two large Northwest craft brewers—Redhook Brewery and Widmer Brothers Brewing—merged. Kona Brewing was added in 2010 and since then, Craft Brew Alliance went on its own merger spree, buying Wynwood Brewing in Miami and Cisco Brewers in Massachusetts on its way to owning eight brands. It even sells a beer brand called Omission that was crafted to remove gluten, well ahead of a trend others have since replicated.

AB InBev has had a decades-long relationship with Craft Brew Alliance, with a majority of the latter company’s brands already distributed through AB InBev’s network of wholesalers. AB InBev also helped Craft Brew expand internationally. There has long been speculation a full takeover was just on the near horizon.

But in a sign that the parties were having some troubles coming to terms for a deal, AB InBev agreed to pay a $20 million incentive payment to Craft Brew Alliance in August after it failed to make a deal to buy out the rest of the company as part of the international distribution agreement that was inked in 2016. Craft Brew Alliance had hoped for a price of at least $24.50 per share, but AB InBev ultimately didn’t pay that steep of a price.

Perhaps that’s because Craft Brew Alliance is a bit of a fixer upper. For the first six months of 2019, sales are down and the brewer posted a net loss. Kona, the biggest selling brand owned by Craft Brew Alliance, has been a very strong performer with shipments up 10% in the first half of the year. But none of the others are generating any notable buzz.

AB InBev’s bigger bet on craft beer comes at a time when Americans are spending less on beer, with billions in market share ceded to liquor and winemakers in recent years. Newer categories like hard seltzer and hard kombucha are also taking off, and AB InBev is angling to get into those markets with Bon & Viv Spiked Seltzer and Kombrewcha. AB InBev also bought Babe wine earlier this year, the first wine brand it owns in the United States.

All of those deals better point to where drinkers are heading today, rather than the more stagnant craft space. The deal for Craft Brew Alliance almost seems like a hangover from craft’s better days, though AB InBev’s price looks cheap when compared to what Craft Brew wanted.

The deal for Craft Brew won’t greatly boost sales or volume at AB InBev, a behemoth that ships 567 million hectoliters of beer globally. Craft Brew Alliance, meanwhile, ships just 747,600 barrels annually.

There have been a slew of deals amid brewers that find themselves in the middle pack, not a Big Brewer nor a micro-sized craft brand. Other deals have included Sam Adams brewer Boston Beer’s takeover of peer Dogfish Head earlier this year and Brooklyn Brewery selling a stake to Japan’s Kirin. Others have inked deals with private equity firms.

And while craft beer sales have softened, AB InBev says it is making headway. Growth from the craft-focused Brewers Collective has accelerated this year. And prudently, AB InBev says the goal is to turn many of these brands into stronger local players, rather than try to create a portfolio that replicates the size and scale of brands like Bud Light.

More must-read stories from Fortune:

—Meet Yolande Milan Batteau, wallpaper atelier to the elite
—This club bridges the gap from coworking space to after-hours lounge
—Gift Guide: The best gin, tequila, mezcal, cognac, and more
—A background in education helped Emily Hyland build a pizza empire—Now you can travel with SoulCycle
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.