Anheuser-Busch is consuming another beverage to sate its thirst for revenue: energy drinks.
The megabrewer on Thursday announced its acquisition of San Francisco-based Hiball Energy, a maker of organic energy drinks and Alta Palla sparkling juices and waters.
Terms of the deal, expected to close in the third quarter of 2017, were not disclosed.
Hiball Energy organic drinks, made with guarana, ginseng, caffeine and B vitamins, and Alta Palla low-calorie, low-sugar beverages -- also organic and made with fair-trade ingredients -- are available in about 14,000 U.S. retailers including CVS, Kroger and Whole Foods.
"I believe that with our support they, and now we, can accelerate that growth and bring their drinks to more customers in more places," said Anheuser-Busch President and CEO João Castro Neves during a conference call announcing the deal.
Two and a half years ago, Anheuser-Busch began discussing a move into non-alcoholic beverages to expand its revenue-generating portfolio with its nationwide wholesaler network, Castro Neves says. "They were very interested ... as long as we are tapping into high-growth, high-margin segments," he said.
AB had already moved beyond beers, recently teaming up with Starbucks to sell Teavana bottled teas in Starbucks stores and other retailers (in four states so far).
Major beer makers must expand their portfolios beyond beer, because big beer brand sales are flat overall. In the U.S., craft beer sales garnered about 22% of the relatively flat $107 billion beer market in 2016, according to the Brewers Association. Craft beer held 19% of the beer market last year and 10% in 2012.
"These big beer companies need to broaden their portfolios with brands that are doing well to help make up for what they’re bleeding from craft sales," said Jim McCune, executive director of craft beverage for marketing firm EGC Group.
Hiball may be the company's first energy drink acquisition, but it has offered energy drinks previously in various parts of the globe. Its Fusion energy drink is the second-largest brand in Brazil and AB wholesalers distributed Monster Energy drinks in the U.S. until 2015, when The Coca-Cola Co. took over. And AB launched its own 180 brand of energy drinks in 2001, but eventually folded that unit.
Anheuser-Busch has also acquired a collection of regional U.S. craft breweries over the past six years including Goose Island in Chicago, Wicked Weed in Asheville, N.C., and Virginia's Devils Backbone Brewing Co.
And last year, parent company AB InBev closed its $104 billion mega-merger with SABMiller. "This is a very significant step in that part of our strategy," Castro Neves said. "We are looking for growth, not just here but in other markets."
Formed in 2005 by founder and president Todd Berardi, Hiball had retail sales of about $40 million over the last 12 months. "Twelve years ago I started selling this out of back of my car, door to door in San Francisco," Berardi said. "We have obviously come a long way since then. Super-proud of this day and what we have built so far, but tomorrow brings a new opportunity."
Berardi and wife Alyssa Warnock, the company's creative director and designer, and Dan Craytor, vice president of business development, will continue to run Hiball, the companies said.
Follow USA TODAY reporter Mike Snider on Twitter: @MikeSnider.
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