Great Lakes Brewing News February/March 2017 : Page 1
Cask Ale Carousing ILLUSTRATIONS BY HANS GRANHEIM By Bill Metzger Los Testigos de Cerveza are an inter-national beer drinking group who have been traveling the world to seek out good beer for over 30 years. Bitter . At the turn of the 19th and 20th cen-tu-ries, brewers built large estates of ‘tied’ pubs and moved away from beers stored for months or years to develop ‘running beers’ that could be served after a few days of conditioning in pub cellars. Bitter was a new type of running beer: it developed from Pale Ale but was usually copper coloured or deep bronze owing to the use of slightly darker malts, such as crystal, that gave the beer fullness of palate. Bitter falls into the 3.4 -3.9% band. With ordinary Bitter, look for spicy, peppery and grassy hop character, a powerful bitterness, tangy fruit and juicy / nutty malt. (Def. from CAMRA’s Good Beer Guide 2016) Northumbria Rumbling “I like Newcastle.” Micro set down the pint of Moor Top he was drinking. “It’s shite,” Medio replied scornfully. Nuco nodded his agree-ment, then turned to the Blokester for the final word. “Big brewer for years,” the Blokester said. “Owned by Heineken. Brewed in Tadcaster, by John Smith’s.” See Carousing p. 4 B ig guy vs. small, international vs. domestic, private equity vs. independent ownership, macro vs. micro; the face of what used to be more discern-able as craft brewing has experienced much change of late. Before we delve into the recent work-ings of craft beer takeovers and acquisi-tions, it may serve us to go back a bit and explore some earlier history, one of the first big-beer infusions and entries into the craft brewing realm. ABI / Redhook / Craft Brew Alliance million. Bud’s cash infusion allowed this growing brewery to expand and open new facilities in Woodinville, Washington and Portsmouth, New Hampshire. It would begin trading publicly the following year. Fast-forward to 2008. Anheuser Busch was sold to Belgian’s InBev and became AB InBev (ABI). In mid-2008 Redhook also merged with Portland, Oregon’s Widmer Brothers Brewery and Craft Brew Alliance was formed (publicly traded as BREW). In 2010 BREW acquired Hawaii’s Kona Brewing Co. Anheuser Busch still maintains a reported 32% stake in BREW, as well as a Master Distributor Agreement for distribution of product. Event Calendar ............................. 2 Beer & Health ................................... 9 Homebrew ...................................... 10 Beer Beacon ............................... 11 Map/Directory.........................18-23 Import Report .............................. 31 INSIDE State by State News Indiana .......... 12 Ohio ............... 13 Illinois ........... 14 Chicago ......... 15 Wisconsin ..... 16 N. Wisconsin . 17 New York ....... 24 Central NY ..... 26 Western NY ... 27 Minnesota ...... 30 Ontario .......... 32 Pennsylvania . 34 Michigan ........ 36 SW Michigan . 36 SE Michigan .. 37 Way back in 1994, Anheuser Busch purchased a 25% stake in Independent Ale Co of Seattle, otherwise known as Redhook Ale Brewery for a reported $18 The Goose ABI returned to the playing field in 2011 with its first outright purchase of a craft brewery, Chicago’s Goose Island See Mergers p. 7
Cask Ale Carousing
Voyages of los Testigod de Cerveza
ILLUSTRATIONS BY HANS GRANHEIM
Los Testigos de Cerveza are an international beer drinking group who have been traveling the world to seek out good beer for over 30 years.
Bitter. At the turn of the 19th and 20th cen-turies, brewers built large estates of ‘tied’ pubs and moved away from beers stored for months or years to develop ‘running beers’ that could be served after a few days of conditioning in pub cellars. Bitter was a new type of running beer: it developed from Pale Ale but was usually copper coloured or deep bronze owing to the use of slightly darker malts, such as crystal, that gave the beer fullness of palate. Bitter falls into the 3.4 - 3.9% band. With ordinary Bitter, look for spicy, peppery and grassy hop character, a powerful bitterness, tangy fruit and juicy / nutty malt. (Def. From CAMRA’s Good Beer Guide 2016)
“I like Newcastle.” Micro set down the pint of Moor Top he was drinking.
“It’s shite,” Medio replied scornfully.
Nuco nodded his agreement, then turned to the Blokester for the final word.
“Big brewer for years,” the Blokester said. “Owned by Heineken. Brewed in Tadcaster, by John Smith’s.”
Los Testigos de Cerveza sat in the The Buxton Tap, a tied house of the Buxton Brewery in Derbyshire, England. It was just shy of noon and they were enjoying their first beers of the day.
“I just read that Heineken, owner of Scottish-Newcastle, is buying two thousand pubs in England,” Nuco said.
“Three hundred million quid if it’s approved,” confirmed the Blokester. “And they have taken on nearly one billion pounds of debt.”
Medio, Micro and Nuco had arrived in England to a customary bleak, rainy winter morning. After dodging the cigarette smokers milling around the No Smoking signs outside Manchester Airport’s Terminal 1, the tobacco tormented trio retreated back into the airport to enjoy a proper English breakfast. An hour later, the belated Blokester had shown up and driven the group across the Northumbrian moor to The Buxton Tap.
“Soon you’ll be able to order Newcastle Brown in every corner of this country,” said Medio.
“And Heineken and Amstel,” Blokester added.
Nuco picked up his beer. “Another massive company, too big to succeed. Maybe you’ll see some Lagunitas beers in the pubs. Heineken owns fifty percent of them, too.”
“Will all this come with a red star on every pint glass?” Medio asked.
“The horror!” said Micro. While ready to support just about every capital inspired merger on the planet, Micro owned a small brewery and had doubts about acquisitions unfolding in the industry where he made money.
“I wanna know how this’ll affect real ale culture,” Nuco said, still holding his half pint. “Up ’til now the big brewing companies have stayed away from cask.”
“Too much work,” the Blokester said. “Cask ale is quite difficult to manage.”
Still emerging from his jet lag, Nuco put the glass of Jacob’s Ladder to his lips and drank. A subtle, estery fruitiness greeted his palate, followed by smooth, low carbonation. The solid backbone bitterness invited him to drink again. “This beer is crackin’! Good recommendation, Bloke.”
“Once again,” Medio added. After numerous real ale voyages spent with the Blokester, Medio and Nuco trusted him implicitly.
Their English friend acknowledged the compliment. A lifelong member of the Campaign for Real Ale (CAMRA), he had a solid grasp of the good, the bad and the great examples of cask ale. When the Blokester declared a beer good, it was a signal to order one. When he grimaced, the two Americans avoided the beer. “I am concerned about the refurbishing that’s sure to happen to the pubs once Heineken buys them,” the Blokester mused.
“They’ll be pushing lagers,” Nuco hypothesized.
“And red stars,” Medio said.
Any changes to Heineken’s newly acquired Punch Taverns most surely would be an issue for CAMRA, which began its existence over forty years ago as a group of beer lovers fighting the destruction of the traditional English pub. Its founders’ love of beer had morphed the organization into a force for the protection of real—or cask—ale. The movement that CAMRA had created in preventing pub destruction and defending cask ale was said to be the greatest consumer revolt in Europe’s history. The inexorable march of fizzy keg beer on the island had been slowed enough to create a substantial niche for traditional British ale.
“Newcastle is a nice beer,” Micro maintained in the face of disdain.
“Too sweet,” Nuco said.
Micro returned to his pint of Moor Top. The heavily hopped Buxton pale ale was a beer to admire. And at 3.6% ABV, a lot of admiring could be had.
“That was one hell of a ride,” Nuco said, tired of trashing an obviously lame beer.
“Stayed within the lines for most of the trip,” Medio agreed.
To reach Buxton, the Blokester had driven west from Manchester toward the Pennines, the mountain range often called the backbone of England. The Pennines are part of the picturesque moor, made famous by novelists like Emily Bronte, in Wuthering Heights. In the 8th Century the Danes conquered and controlled the region. Its heart, Yorkshire, was a Danish stronghold for centuries. And where the band of beer drinkers planned to spend four days drinking cask ale.
“This is a great pub, Bloke,” Nuco said, admiring the main sitting room at The Buxton Tap. Giant glass windows allowed the light of day to illuminate a room filled with comfortable seats and a large couch, where the group sat. Tables were strewn about for drinkers to rest their beers on. The interior walls displayed numerous historic posters advertising cask ale, past and present. “You sure you don’t want a half pint?”
The Blokester shook his head. As the driver, he abstained from anything more than a sip of each beer. He still had to get the voyagers to Sheffield, where they would meet Mr. and Mrs. Nob’ead and sample more beer.
“This stout is smashing!” Medio enthused. He had ordered a half pint of Rednik Stout, a dark, roasty delight that was just what the doctor ordered to better his condition. Medio had arrived in England in pain, having had some operative adjustments to a meniscus a month prior. Simply hobbling from the car to the pub had increased the pain he already incurred from trudging down long airport hallways. The pull of real ale was all that prevented him from bailing on the voyage altogether.
“Finish up, boys,” the Blokester said. “Time to move on.”
Shufflin’ ‘round Sheffield
Sheffield is a rust belt city that still holds a reputation as a center for the production of stainless steel knives. Located in Northumbria, the city boomed during the Industrial Revolution, but fell upon hard times as factory owners moved operations to lesser developed countries. But nestled within the shuttered Sheffield factories sit numerous historic pubs. The city is a veritable gold mine of cask ale.
The day’s rain and gloom mirrored the group’s arrival to the city, where they met Mr. and Mrs. Nob’ead and settled into hotel rooms. Situated in the center of the city thanks to Mr. Nob’ead’s skillful room booking, the group immediately set out for a beer.
The first stop, The Sentinel, was a brewery so new that it wasn’t even listed in CAMRA’s 2016 Good Beer Guide, the indispensable reference for real ale seekers. The owner greeted the group and gave them a tour of the building, which ended in the brewery, displayed behind floor to ceiling glass separating it from customers. The Sentinel had obviously been an enthusiastic takeoff of the burgeoning artisanal beer scene that had begun in the U.S. and was now an established part of beer appreciation in Britain. The brewpub boasted a lineup of beers that ranged from a Bitter to U.S. style IPAs, to a continental pilsner and a Weissbier. Perhaps due to the owner’s long history with large breweries, all the beers were clean but lacking character, according to Nuco. The peripatetic half pint pursuer also declared that it wasn’t fair to evaluate any brewery’s beers before they had passed their one year anniversary, giving the brewer time to dial in recipes. Disappointed and ceding to jet lag, he and the kaput-kneed Medio limped back to the hotel room, leaving the rest of the group to continue pub crawling.
The next morning, after a proper English breakfast, los Testigos set off to find Medio some help for his ailing knee. The first stop was a store that sold shoes more appropriate for walking. Newly shoed, the limping gimp followed the group to a sporting goods store in search of a walking stick. From there the group headed to the train station, site of the Tapped Brewery and The Sheffield Tap. Occasional glances behind assured them that Medio was still alive and walking.
The beers and atmosphere at The Sheffield Tap were so good they required second pints despite the day of drinking that lay ahead. They also rejuvenated Micro’s capitalist gene. “I say we open a bagel shop,” he suggested, repeating a proposal he had vetted the day before. “I know a guy who makes bagels. No one does good bagels in Buffalo.”
“Beer and bagels?” Nuco asked, accustomed to hearing his business partner’s ideas.
“I know a great location, a former pizza shop located across from Thin Man,” Micro persisted. “We’ll brew cask ale there.”
“Make that an area to visit, two breweries,” Nuco said.
The idea was met with silent skepticism, but the second pint provided Micro the impetus needed to develop yet another business idea. “We should start a real ale beer tour company!” he enthused. “Mr. Nob’ead can drive and the Blokester can talk about the beers. You guys are founts of knowledge when it comes to cask beer. We get eight or nine people for each voyage. I don’t think the roads can handle any larger a bus.”
“Not profitable enough for that few people,” Nuco said, setting down his Mojo, a deliciously hoppy cask ale brewed in the next room. “You can’t get airline discounts without bringing, like, twenty people.”
“I think it’ll work,” Micro persisted. Despite Nuco’s wet blanket, the deal a day deliverer was not to be defeated. If the bagel brewery nor the tour company ideas wouldn’t work, he would come out of this voyage with a small business opportunity. Newcastle might be owned by international capital, but there was plenty of room for businessmen with capitalist genes.
Beer-seeking in Bradford
Bradford sits in West Yorkshire, in the foothills of the Pennines. Another former boomtown, it was a major producer of textiles thanks to local supplies of coal, water, and sheep. The city, at one time known as the “wool capital of the world”, had attracted thousands of immigrants seeking work. Like Sheffield, the factories had largely moved on, leaving city leaders to pursue a pie-in-the-sky dream common to so many de-industrialized regions, that of becoming a center of high technology.
The rain hadn’t let up when los Testigos arrived in Bradford. True to form, the regularly disoriented Blokester got lost. After driving through the town center four times while being interrupted every two minutes by directional telephone calls from Mr. Nob’ead, the group was nowhere nearer their hotel.
“Fuck it, let’s just go to that pub.” Nuco pointed to The Corn Dolly, a pub they had passed twice.
The decision was a stroke of good luck. A delightful example of what CAMRA sought to protect, The Corn Dolly had won numerous awards for excellence. Once reunited, los Testigos found a corner table and enjoyed freshly pumped pints of cask ale and sandwiches.
“This is the city where they burned copies of The Satanic Verses,” Nuco observed.
“By Salman Rushdie,” Micro piped in, eager to get past his Newcastle debacle. “Muslims didn’t like the book.”
“1989,” Mr. Nob’ead confirmed.
“Bradford is over twenty percent Muslim and the book caused quite a stir,” added the Blokester.
“At least we know we’ll get some good Indian food here.” Since arriving, Nuco had been harping on his need for curry, the best of which he had ever tasted was in England.
“First, the New Beehive,” Mr. Nob’ead said, referring to a pub within walking distance.
Formerly a regular haunt of CAMRA cask ale seekers, the New Beehive boasted a magnificent Edwardian interior. A period of time just after Britain’s Victorian era, Edward VII’s short reign (1901-1910) showcased the conspicuously rich in its music, fashion and architecture. To hell with refined Victorian sensibilities, it was time to show off!
The New Beehive had been listed for years in CAMRA’s guides. 2016 was not one of those years. Its extravagance had fallen on hard times. So few drinkers sat at the bar that los Testigos’ entry doubled their number. The beers were shaky, too, with Nuco pushing his aside and proclaiming it was sour.
After drinking two pints and leaving two more, the traveling beer drinkers retreated to North Parade Street, which boasted several pubs. While none of the pubs carried the tradition and beauty of the New Beehive, the cask offerings made up for their lack of history.
“Let’s put a hand pump in our pub and serve cask ale,” Micro said, his capitalist gene reactivated. The group sat in The Sparrow, a local favorite pub that was simply decorated yet showcased well kept cask ale. Patrons surrounded them.
“Difficulty is there’s no customer base in the U.S.,” Nuco replied. “I’ve been all over the U.S. and rarely see good cask ale. Or they have a beer engine, but more often than not it’s not pumping anything.”
“CAMRA has a guide to brewing and serving cask ale,” Mr. Nob’ead said. “I’ll see if I can get a copy for you. It was quite a while back, but by all accounts quite thorough.”
While Nuco expressed concern for brewing and serving cask ale back home, his original intention for inviting Micro on the voyage was to assess the idea of offering it to their patrons. England showcased the best cask ale on earth and a trip here was essential for any brewer planning to brew it. In Nuco’s eyes, the creative gene so common in U.S. brewers had hyper extended when it came to cask ale. He saw a field littered with cask creativity that actually obscured the brilliance of the brewing style. Berries, coffee beans, liquor barrels and other assorted bromides did not enhance cask ale, in fact they warped it. To Nuco, tradition was being mocked. He hoped that the one thing Micro took home was a recognition of cask’s brilliance. And a desire to imitate it.
Friday Night’s Alright for Fightin’
While the holiday season is a joyous time, it is also when many people reflect upon their lives. Often, they focus on the dissatisfactions so common to human existence. The holidays are a time of commercial excess and emotional upheaval; perhaps the two are co dependent. Match this madness with the fact that Fridays are a day for celebrating the end of the work week and you have the perfect combination for fighting: alcohol and emotional torment. In England, the Friday before Christmas is called Black-Eye Friday.
Nuco had planned the real ale voyage to happen before the madness so as to avoid holiday travelers, but in the year 2016 the English had decided to celebrate on the second Friday before Christmas. Never was the craze so evident than in Leeds, where los Testigos planned to spend their last day.
A short train ride from Bradford left the five travelers downtown, Mrs. Nob’ead having tired of the constant search for cask ale. It was just before noon when they arrived to hordes of drinkers roaming the streets and pubs. Straight from their offices, many of the celebrants had disguised their suits and dresses with ugly holiday sweaters torn from the hope chests of their grandparents. Those not wearing ugly sweaters often sported Santa hats, making the streets of Leeds look like an elven workshop gone awry. Instead of busily making toys to deliver to the sprogs on Christmas morn, the elves were out partying.
Nuco was disappointed. He and Medio had opted out of the “holiday spirit” decades ago. Annual reviews of one’s life never amounted to anything new, so the itinerant two preferred disappearing down some foreign alleyway in search of an open taco shop on Christmas morning. Family obligations were replaced with the opportunity to spread good cheer to those having to work the holy holiday. This year, Nuco had edged too close to Christmas and the hordes of revelers were painful.
Medio was suffering his own torment. By the fourth day of touring his knee had begun to rebel. Limping, new shoes, walking sticks and the occasional taxi had not helped ease the tottering Testigo’s pain. So after one beer in Leeds, he opted to hop the next train back to Bradford.
“Before our next trip Medio needs to pass a physical,” Micro proclaimed, still traumatized by memories of a voyage to Chile where Medio had arrived with viral pneumonia and kept him awake all night with his coughing. “And get a doctor’s note.”
The four remaining Testigos sat in Friends of Ham, a pub specializing in different cuts of cured pork and serving cask ale. Once again, Micro’s genetically inspired capitalist fervor kicked in. He suggested putting a leg of prosciutto in his bar, then rhapsodized about hams in general. “This is the best ham in the world. We ought to do this at the bar.”
Nuco, alarmed that Micro’s focus on real ale was on the wane, waved to the butcher. After a short conversation, he turned to Micro. “The man says this isn’t the best ham in the world. It’s the second best. They ran out of the best.”
“Well,” Micro said, straightening up. “For me, with this ham and this Bitter in front of me, it’s the best.” It was time to head home and begin to imitate the British cask ale tradition.
Read the full article at http://glbnonline.brewingnews.com/article/Cask+Ale+Carousing/2707949/382660/article.html.
Mergers, Makeovers And Monster Breweries
IS CRAFT BEER UNDER THREAT?
Big guy vs. small, international vs. domestic, private equity vs. independent ownership, macro vs. micro; the face of what used to be more discernable as craft brewing has experienced much change of late. Before we delve into the recent workings of craft beer takeovers and acquisitions, it may serve us to go back a bit and explore some earlier history, one of the first big-beer infusions and entries into the craft brewing realm.
ABI / Redhook / Craft Brew Alliance
Way back in 1994, Anheuser Busch purchased a 25% stake in Independent Ale Co of Seattle, otherwise known as Redhook Ale Brewery for a reported $18 million. Bud’s cash infusion allowed this growing brewery to expand and open new facilities in Woodinville, Washington and Portsmouth, New Hampshire. It would begin trading publicly the following year.
Fast-forward to 2008. Anheuser Busch was sold to Belgian’s InBev and became AB InBev (ABI). In mid-2008 Redhook also merged with Portland, Oregon’s Widmer Brothers Brewery and Craft Brew Alliance was formed (publicly traded as BREW). In 2010 BREW acquired Hawaii’s Kona Brewing Co. Anheuser Busch still maintains a reported 32% stake in BREW, as well as a Master Distributor Agreement for distribution of product.
ABI returned to the playing field in 2011 with its first outright purchase of a craft brewery, Chicago’s Goose Island Brewing Co. At the time, Craft Brew Alliance owned 42% of Goose Island, which ABI purchased along with the remaining 58% (for almost $39 million). Goose Island’s Chicago brewpubs were not part of the sale. In years to come, Goose Island fans would witness the demise of Goose Island Wrigleyville in December of 2015 and the eventual sale to ABI of Goose Island’s brewpub and brewery on N. Clybourn in February, 2016. Devotees would also taste a dumbing down of many of the brewery’s core beers, now in countrywide distribution.
Craft Buying Craft
A&S / Angel City Brewing
Alchemy & Science Beer Company was formed as an independent subsidiary of Boston Beer Co in 2011. In 2012 it purchased Los Angeles based Angel City Brewing from owner/brewer Michael Bowe. It was the subsidiary’s first purchase. A&S now owns Traveler Beer Company, which is contract brewed, Coney Island Brewing (in New York) and Concrete Beach Brewery (in Miami). Boston Beer Company’s resources and facilities are also available to assist in supplying these labels.
In San Diego, what initially started as a “handshake” agreement between friends in late 2013 developed into an offer for purchase the following year: Mike and Lisa Hinkley, of San Diego’s Green Flash Brewing Company, now own Pat and Val McIlhenney’s Alpine Beer Co. The brands remain as separate unique labels, and Pat McIlhenney continues as Alpine’s President and Brewmaster; overseeing all Alpine operations, especially those in its original Alpine locale.
The Hinkleys continue their devotion to maintaining the strict brewing practices and criteria that set Alpine beers apart from those of Green Flash. Additional equipment was acquired in order to stay true to Alpine’s brewing methods (i.e. the hop back used in five Alpine brews).
In mid-July 2015, David Walker and Adam Firestone of Firestone Walker Brewing Co disclosed news of a partnership formed with Belgian brewery Duvel Moortgat. It was billed as a merging of two family run operations that would assist FW in better serving an increasing demand. In years past we witnessed Duvel’s outright acquisition of Kansas City’s Boulevard Brewing and Brewery Ommegang in Cooperstown, New York. FW and its entire team continue to operate under the same leadership. “What’s new is that David and Adam have a new partner. Matt [Brynildson] now has a hotline to a global team of top brewers. Essentially, their peer group has grown along with resources to expand the brewery. Everyone is in good company and empowered to grow,” FW’s Christopher Weir confirmed. FW has gone on to open its Venice brewpub, production has stepped up, and Jim Crooks and Jeffers Richardson have continued to release amazing wild-side beers at FW Barrelworks. Firestone, Boulevard, and Ommegang products in current distribution appear to affirm Duvel’s hands-off approach in allowing its breweries to maintain the unique and quality beers that made them famous.
Big Beer Back Again
2014 through 2016 would be banner years for macro brewers acquiring craft breweries:
ABI purchased New York’s Blue Point Brewing Company in February, 2014. Oregon’s 10 Barrel Brewing would come later that year, in November. In January, 2015 ABI would also pick up Elysian Brewing in Washington. Then, in September it announced plans for buying Los Angeles based Golden Road Brewing. Before the year was over ABI would purchase two additional breweries, Arizona’s Four Peaks Brewing and Colorado’s Breckenridge Brewery. In April 2016, ABI acquired Devils Backbone in Virginia and announced it would be purchasing Texas based Karbach Brewing Co on November 3, its ninth craft beer acquisition. Karbach has become a very strong producer of craft beer in the Houston market and, having produced 40,000 barrels last year, was likely an attractive prospect.
In December of 2014, Mahou San Miguel, a 100% Spanish-owned brewer with international aspirations entered into an agreement to acquire 30% of Michigan’s Founders Brewing Company.
In October, 2016, Brooklyn Brewery announced it had sold 24.5% of its company to Japan-based brewer Kirin.
Background: SABMiller was formed in 2002 after South African Breweries purchased Miller Brewing Company. MillerCoors was fashioned as a joint venture between SABMiller and Canada’s Molson Coors in 2007. One further note, in case you are keeping score, Molson Coors was formed in 2005 by the merger of Molson of Canada, and Coors of the United States.
In September of 2015 MillerCoors announced its purchase of controlling interest in San Diego’s Saint Archer Brewing Company. It would be incorporated as part of MillerCoors’ craft and import division, Tenth and Blake Beer Co. Head Brewer Kim Lutz stayed on with Saint Archer until recently accepting an offer to return in December to Maui Brewing Company as Brewmaster. In July of 2016 MillerCoors would also buy Georgia based Terrapin Beer Company and Oregon’s Hop Valley Brewing. This past August, Tenth and Blake also announced its agreement to acquire majority interest in Revolver Brewing Company of Granbury, Texas, a leading craft brand in the Dallas/ Fort Worth market.
September of 2015 was also the month that Heineken procured a 50% stake in Lagunitas Brewing. Founded in 1993 by Tony Magee in Lagunitas, California, the brewery moved a year later to Petaluma, California where it grew and eventually expanded to its second location in Chicago. Lagunitas’ Chicago-based brewery began producing beer in April of 2014. The Chicago tap room opened a few months later. Since the Heineken merger Lagunitas’ third brewery in Azusa, California has opened its tap room and is expected to be in full production this year. The Azusa facility is reported to have a production capacity of 1,900,000 barrels. Last June, Lagunitas announced its own plans for purchasing stakes in three craft breweries: Southend Brewery & Smokehouse in Charleston, S. C.; Independence Brewing Co in Austin, Texas; and Moonlight Brewing Co in Santa Rosa, Calif. Plans call for the Southend brewpub to be rebranded as a Lagunitas brewpub. Plans for a Seattle tap room are also in the works.
Billion Dollar Brewery
In mid-November, 2015 news from Constellation Brands revealed it was paying $1 billion for San Diego’s Ballast Point Brewing & Spirits. Constellation owns wineries, spirits producers and breweries worldwide (including Corona & Modelo).
The other noteworthy players in this game have been private equity investment firms, providing needed capital to expanding breweries.
In August of 2014, after completing an $18 million expansion, Salt Lake City’s Uinta Brewing found its cash infusion from The Riverside Company, a Cleveland based global private equity firm. Atlanta’s SweetWater Brewing announced selling minority interest to TSG Consumer partners, a private equity firm in September of 2014.
The other noteworthy players in this game have been private equity investment firms.
In March, 2015 Oregon’s Full Sail Brewing was acquired by private equity firm Encore Consumer Capital. In May, 2015, Colorado’s Oskar Blues Brewery sold majority stake in its brewery to Fireman Capital Partners. The following March, Florida’s Cigar City also sold controlling interest to Fireman’s Capital.
In February of 2016 Arlington Capital Investors was instrumental in the merger of Pennsylvania’s Victory Brewing and New York’s Southern Tier Brewing Company into Artisanal Brewing Ventures. Note: prior to this merger Southern Tier had sold a stake to another NY Investment firm in 2014, Ulysses Management. And, in July, 2016, Florida Beer Co., a brewery with lofty growth and expansion aspirations (it started as Indian River Brewing Company about 20 years ago), sold to ANSA McAL US, an international procurement and logistics provider.
In July of 2014, Richard Doyle, cofounder of Boston based Harpoon Brewery stepped down as CEO and sold his interest in the company. The following year, with reported backing from private equity firm Friedman, Fleisher & Lowe (FFL), he established Enjoy Beer LLC, billed as a procuring craft beer group with a focus on building a partnership of breweries that are stronger together than they are alone. Louisiana’s Abita Brewing is one of its founding partners, having sold stake in the brewery about the time it completed a $30 million expansion of its facility in Abita Springs. And let us not forget the 2010 buyout of San Francisco’s Anchor Brewing by the Griffin Group, an investment and consulting company focused on beverage alcohol brands. Griffin also owns Preiss Imports.
Stone’s True Craft
In response to the mergers and acquisitions, Stone Brewing Company’s Greg Koch and Steve Wagner announced last April that they would be forming True Craft, a company that would provide capital investment in craft breweries. The plan is for minority non-controlling investments that will allow breweries to remain independent. VMG Partners has partnered with Stone Brewing in forming VMG Stone Brewing Co-investment, a Limited Partnership. According to the June SEC filing VMG has invested $89.5 million in the new firm.
Business as Usual?
Most merger announcements have come spouting qualified “business as usual” plans, with no intended interruption or changing of product. Instead the talk has been of a positive increasing of resources, capacity and availability. In the MillerCoors press release Saint Archer co-owner Josh Landon stated, “Joining Tenth and Blake allows us to keep doing what we love right here in San Diego, but now with more resources to innovate and grow.” Everyone hopes that this will continue to be the case. While at this point, for acquisitions of the past three years, we haven’t seen marked changes in product and have witnessed increased availability, it is still early in the game.
In the video announcement detailing the Golden Road purchase, AB’s CEO of Craft, Andy Goeler stated, “Five years ago, we began to rethink our role in the everchanging and evolving US beer industry.” He went on to detail ABI’s approach of purchasing and partnering with craft breweries, with emphasis on “continuing to focus on the quality” and maintaining the culture of the breweries acquired. ABI has plans to expand the 10-Barrel brewpub chain across the country. Denver and San Diego are among the first.
Many of these purchases appear to be strategic in nature. Acquisitions have been of growing craft breweries with sizable facilities located in key regional areas. Might “Big Beer” be on a quest to control regional markets? ABI now owns craft breweries within close proximity to Atlanta, Chicago, Denver, Houston, Los Angeles, New York, Phoenix, San Francisco, and Seattle, as well as markets in Oregon.
AB InBev’s merger with SABMiller was finalized in October. One saving grace is the fact that the US Justice Department required divestiture of SABMiller’s 58 percent stake in MillerCoors, which it sold to Molson Coors for $12 billion. ABI and MillerCoors will remain separate, so we won’t see a further merging of the separate craft brewery acquisitions by these two companies.
On the Constellation side, Ballast Point has already opened a satellite tasting room (with kitchen) in Long Beach (LA County) and has plans for a sizeable East Coast brewery in Virginia.
Size, wherewithal, and influence on distribution, wholesalers, retailers and even growers of ingredients could be driving factors that may contribute to a reduction in available shelf space and tap handles, and increasing hardship for some breweries.
Level Playing Field
At the forefront we must assure that both big beer and craft beer continue to play by the same rules. Scrutiny by regulators and craft brewers associations must be diligent in order to avoid any breaking or stretching of “Tied-House” regulations and other freeing market restrictions.
Quality and taste will continue to be important to the consumer as it becomes increasingly difficult to identify craft beer. Price could become an influencing factor in some retail channels. This means that, now more than ever, each individual brewery’s home market may determine continued success. Local fans and a busy tasting room are becoming increasingly important factors in survival and profitability.
THE CHART BELOW INDICATES THE ECONOMIC CONNECTIONS BETWEEN BUSINESS VENTURES AND SOLELY INCLUDES U.S. BREWERIES INVESTED IN.