Small might be beautiful, but it can also be dangerous – at least in the beer business – according to investment bank Nomura, which has downgraded some of the world's largest brewers as success in the craft beer industry threatens to chip away at volumes and profit margins.
"We believe the growth of craft represents both an opportunity (especially for small brewers) as well as a threat (especially for the larger names), not just in the U.S., but in most mature markets," research analysts at Nomura, led by Ian Shackleton, said in a research note on Thursday.
The bank downgraded its rating on AB InBev - the world's largest brewer which produces Beck's, Stella and Budweiser - to "reduce" from "neutral", along with SAB Miller, which brews Fosters, Grolsch and Miller's. It kept Dutch company Heineken on a "reduce" rating.
Nomura highlighted that these large, traditional brewers have failed to keep up with moving trends. Beer is moving closer to the wine model, the bank said, where consumers like to choose different drinks, as opposed to the traditional beer model, where consumers aspire to the same brands.