Why So Many Big Brands Are Buying Little Ones

"Authenticity" is the branding buzzword of the moment, and industry giants are acquiring smaller competitors to get it

Written by Murad Hemmadi

Forget tech startups—microbreweries are the hottest thing to acquire these days. On both sides of the border, beer industry giants are snapping up makers of craft suds. Labatt Breweries—the AB InBev-owned Canadian staple—has been particularly active, buying up Toronto’s Mill St. in October and Vancouver’s Turning Point a month later.

The frothy market for microbreweries is part of a broader trend of large conglomerates buying up niche brands. Blame millennials and their desire for “authenticity,” that branding buzzword that means some combination of a compelling backstory, irreverent marketing and anti-consumerist values. “There tends to be a naive freshness to these brands,” says Thomas Pigeon, chair and founder of Pigeon Brands. “They have a surprising look to them—they sure as heck don’t follow all the branding conventions. There’s a special magic dust of excitement.”

Established companies like AB InBev can’t manufacture or develop that kind of connection with young consumers on their own. So they buy it instead. “They’re largely vested in brands built up over decades, with conventional advertising and relationships with consumers,” says Pigeon. “The marketplace is getting turned upside down so fast in so many categories that it’s pretty hard for some of these big brand owners to turn the ship fast enough to respond.”

Acquiring an upstart provides a path into hot, niche markets and a ready-made product to service them, which a conglomerate’s R&D and marketing systems would need years to reproduce.

Here’s a look at six “authentic” brands that were bought out by giants, and how they fared post-acquisition.

This article is from the January 2016 issue of Canadian BusinessSubscribe now!


Is it possible to buy authenticity? What are other examples of big companies buying beloved brands? Let us know by commenting below. 

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