Pretty Beer To Stop Brewing

Sad news. Dann and Martha Paquette, co-owners of the Pretty Things Beer and Ale Project posted on their website today their decision to cease the operations of their company. Explaining their decision in For a Beginning, there must be an End, here’s what’s up:

Seven years ago we sold our first glass of beer at The Publick House in Brookline. We didn’t foresee then that our strange project would become such a part of our lives.

It has been a crazy fun time. We’ve dressed up in more costumes than a Bob Hope special. Amazing employees and friends have conspired with us along the way. Bocky, Anya, and John Funke have channeled our project almost better than we have done ourselves. And we found a rag tag group of like-minded creative brewers out there in the world as well.

Brewing our beers has been a great labor and a great joy. But best of all we shared it with so many great beer drinkers. It really feels like we met you all. We’ve stood in shops, bars, restaurants, on stages, in VFW halls. Sometimes you were already fans. Sometimes you spat out our beer. Sometimes you just fancied a chat. We always felt happy to meet you by the end. It was always fun, or funny, or we sold a beer, or learned something. Many of you became friends. We’ve loved drinking beers with you.

We hope our beers brought you joy and brought you closer together. There’s no greater goal for a batch of beer or a project like ours.

After seven years it’s time to draw the curtains and head off to a new adventure. A poorly drawn grain of barley called Jack D’Or made this whole thing possible. He’ll be coming with us.

Besides making great beer, Dann’s thoughtful approach to everything they do has been great to watch, if only from afar. The few times we’ve spent any time together I’ve loved talking philosophically with him and certainly hope his voice won’t be lost as he transitions to whatever adventure awaits him in the next chapter of his journey. And I wish Dann and Martha the best of best wishes going forward.

Pretty Things beer will be available until it runs out, probably sometime in January of next year. If I were you, I’d stock up while you can.

Their parting shot.

SABMiller and Anheuser-Busch InBev Reach “Agreement In Principle”

abib sabmiller
While most of us were sleeping, it appears SABMiller and Anheuser-Busch InBev were quite busy, and announced this morning SABMiller and Anheuser-Busch InBev [Reach] Agreement in principle and extension of PUSU. The New York Times has an analysis of the deal, or you can read the entire Press Release from SABMiller:


LONDON–The Boards of AB InBev (Euronext: ABI) (NYSE: BUD) and SABMiller (LSE: SAB) (JSE: SAB) announce that they have reached agreement in principle on the key terms of a possible recommended offer to be made by AB InBev for the entire issued and to be issued share capital of SABMiller (the “Possible Offer”).

Terms of Possible Offer

Under the terms of the Possible Offer, SABMiller shareholders would be entitled to receive GBP 44.00 per share in cash, with a partial share alternative (“PSA”) available for approximately 41% of the SABMiller shares.

The all-cash offer represents a premium of approximately 50% to SABMiller’s closing share price of GBP 29.34 on 14 September 2015 (being the last business day prior to renewed speculation of an approach from AB InBev).

The PSA consists of 0.483969 unlisted shares and GBP 3.7788 in cash for each SABMiller share, equivalent to a value of GBP 39.03 per SABMiller share on 12 October 2015, representing a premium of approximately 33% to the closing SABMiller share price of GBP 29.34 as of 14 September 2015. Further details of the PSA are set out below.

In addition, under the Possible Offer, SABMiller shareholders would be entitled to any dividends declared or paid by SABMiller in the ordinary course in respect of any completed six-month period ended 30 September or 31 March prior to completion of the possible transaction, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).

The Board of SABMiller has indicated to AB InBev that it would be prepared unanimously to recommend the all-cash offer of GBP 44.00 per SABMiller share to SABMiller shareholders, subject to their fiduciary duties and satisfactory resolution of the other terms and conditions of the Possible Offer.

Antitrust and reverse break fee

In connection with the Possible Offer, AB InBev would agree to a “best efforts” commitment to obtain any regulatory clearances required to proceed to closing of the transaction. In addition, AB InBev would agree to a reverse break fee of USD 3 billion payable to SABMiller in the event that the transaction fails to close as a result of the failure to obtain regulatory clearances or the approval of AB InBev shareholders.


The announcement of a formal transaction would be subject to the following matters:

  1. a) unanimous recommendation by the Board of SABMiller in respect of the all-cash offer, and the execution of irrevocable undertakings to vote in favour of the transaction from members of the SABMiller Board, in a form acceptable to AB InBev;
  2. b) the execution of irrevocable undertakings to vote in favour of the transaction and to elect for the PSA from SABMiller’s two major shareholders, Altria Group, Inc. and BevCo Ltd., in each case in respect of all of their shareholding and in a form acceptable to AB InBev and SABMiller;
  3. c) the execution of irrevocable undertakings to vote in favour of the transaction from AB InBev’s largest shareholders, the Stichting Anheuser-Busch InBev, EPS Participations SaRL and BRC SaRL in a form acceptable to AB InBev and SABMiller;
  4. d) satisfactory completion of customary due diligence; and
  5. e) final approval by the Board of AB InBev.

The Board of AB InBev fully supports the terms of this Possible Offer and expects (subject to the matters above) to give its formal approval immediately prior to announcement.

AB InBev reserves the right to waive in whole or in part any of the pre-conditions to making an offer set out in this announcement, other than c) above which will not be waived.

The conditions of the transaction will be customary for a combination of this nature, and will include approval by both companies’ shareholders and receipt of antitrust and regulatory approvals.

In view of the timetable for obtaining some of these approvals, AB InBev envisages proceeding by way of a pre-conditional scheme of arrangement in accordance with the Code.

The cash consideration under the transaction would be financed through a combination of AB InBev’s internal financial resources and new third party debt.

Further details of the PSA

The PSA comprises up to 326 million shares, which will be available for approximately 41% of the SABMiller shares. These shares would take the form of a separate class of AB InBev shares (the “Restricted Shares”)[1], with the following characteristics:

  • Unlisted and not admitted to trading on any stock exchange;
  • Subject to a five-year lock-up from closing;
  • Convertible into AB InBev ordinary shares on a one for one basis after the end of that five year period;
  • Ranking equally with AB InBev ordinary shares with regards to dividends and voting rights; and
  • Director nomination rights.

SABMiller shareholders who elect for the partial share alternative will receive 0.483969 Restricted Shares[2] and GBP 3.7788 in cash for each SABMiller share.

Extension of the PUSU deadline

In accordance with Rule 2.6(a) of the Code, AB InBev was required, by not later than 5.00 pm on 14 October 2015, to either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

In accordance with Rule 2.6(c) of the Code, the Board of SABMiller has requested that the Panel on Takeovers and Mergers (the “Panel”) extends the relevant deadline, as referred to above, to enable the parties to continue their talks regarding the Possible Offer. In the light of this request, an extension has been granted by the Panel and AB InBev must, by not later than 5.00 pm on 28 October 2015, either announce a firm intention to make an offer for SABMiller in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for SABMiller, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.

AB InBev reserves the following rights:

  1. a) to introduce other forms of consideration and/or to vary the composition of consideration;
  2. b) to implement the transaction through or together with a subsidiary of AB InBev or NewCo or a company which will become a subsidiary of AB InBev or NewCo;
  3. c) to make an offer (including the all-cash offer and PSA) for SABMiller at any time on less favourable terms:

(i) with the agreement or recommendation of the Board of SABMiller;
(ii) if a third party announces a firm intention to make an offer for SABMiller on less favourable terms; or
(iii) following the announcement by SABMiller of a whitewash transaction pursuant to the Code; and

  1. d) to reduce its offer (including the all-cash offer and PSA) by the amount of any dividend that is announced, declared, made or paid by SABMiller prior to completion, save for ordinary course dividends declared or paid prior to completion, which shall not exceed USD 0.2825 per share for the period ended 30 September 2015 and a further USD 0.9375 per share for the period ended 31 March 2016 (totalling USD 1.22 per share) and shall not exceed an amount to be agreed between AB InBev and SABMiller in respect of periods thereafter (which shall be disclosed in any announcement of a firm intention to make an offer).

The announcement does not constitute an offer or impose any obligation on AB InBev to make an offer, nor does it evidence a firm intention to make an offer within the meaning of the Code. There can be no certainty that a formal offer will be made.

A further announcement will be made when appropriate.


Labatt Breweries Buys Mill Street

Mill-Street labatt
This morning, Labatt Breweries, itself part of the family of brands owned by Anheuser-Busch InBev, announced that they were purchasing Toronto’s Mill Street Brewery.

From the press release:

Labatt Breweries of Canada today announced that it has purchased Mill Street Brewery, an award-winning craft brewer based in Toronto. The deal will allow Mill Street to deepen its traction with consumers in the fast growing craft beer segment, where it has an extraordinary variety of unique beers, as well as brew pubs in both Toronto and Ottawa. To help achieve this, Labatt will immediately invest $10 million in Mill Street’s Toronto brewery, which includes a state-of-the-art brewhouse and packaging capabilities.

“Mill Street has continually distinguished itself with its energy and success in innovation, and powerful commitment to great-tasting quality beer,” said Labatt president Jan Craps. “Our partnership and investment will accelerate its growth in one of the most dynamic beer segments, while fully preserving Mill Street’s creative character and pioneering spirit.”

“With the success of Mill Street has come the challenge of serving a growing demand for our brands,” said Irvine Weitzman, Mill Street CEO, who will continue with Mill Street along with co-founder Steve Abrams and famed brewmaster Joel Manning. “Our partnership with Labatt is a natural evolution in our growth that will allow more Canadians to enjoy our beer and secure the legacy of our brands by allowing us to remain focused on the authentic characteristics that have made Mill Street what it is today.”

Founded in Toronto’s Distillery District in 2002, Mill Street is an award-winning craft brewery and the largest producer of certified organic beer in Canada. It has won numerous beer quality awards including the Canadian Brewery of the Year Award in three consecutive years. Core brands include Ontario’s first organic beer, Mill Street Original Organic Lager, along with 100th Meridian, Tankhouse Ale, and Cobblestone Stout. The brewer is also renowned for permanent specialties including a strong golden ale Betelgeuse, an Irish-style red ale Bob’s Bearded Red and nitrogen-charged Vanilla Porter, as well as for several small-batch specialty beers.

“Throughout our history, our dedication to our craft and our passion for pushing the envelope have allowed Mill Street to make waves in Canada’s craft beer segment,” said Abrams. “We are excited about the prospect of working with Labatt to build even further on our successes and sharing our brands with more beer lovers across Canada.”

Mill Street brands will continue to be brewed under the expertise of brewmaster Joel Manning.
“This investment in a state-of-the-art brewhouse that Mill Street will run on a stand-alone basis positions us to reach the very top of our craft,” added Manning. “We couldn’t be more pleased by this fantastic opportunity to further entrench our reputation for innovation and quality, and bring more great brands to more consumers.”

Labatt and Mill Street Brewery announce purchase agreement
From left to right: Irvine Weitzman, Mill Street CEO, Jan Craps, President of Labatt, Joel Manning, Brewmaster at Mill Street, and Steve Abrams, Co-Founder of Mill Street. (CNW Group/Labatt Breweries of Canada)

SABMiller Rejects Buyout Offer From A-B InBev

abib sabmiller
SABMiller released a statement this morning rejecting the latest takeover offer from Anheuser-Busch InBev. You may, or may not, be able to read the statements released by SABMiller on their website, and there are some fairly scary disclaimers including language that, depending on your jurisdiction, claims that the publicly available information may not be legal to read, and in such case advise you to “exit this web page.” Which while I’m sure is required by some law, probably UK law, also feels fairly ridiculous. At any rate, quite a few news outlets, such as the Wall Street Journal, Reuters and the New York Times are all reporting on it, so it must be okay for the likes of me.

The gist of it is the SABMiller board unanimously rejected ABI’s latest takeover offer, for the primary reason that they believe ABI’s offer “substantially” undervalues their company (currently the offer values SABMiller at $104 billion), among a few other technical reasons having to do with the timing, regulatory issues and others. The current offer is for roughly £65.14 billion, which is $99.76 billion dollars.

The Wall Street Journal helpfully created a graphic showing the recent history of the potential deal as it’s been unfolding.


There’s little doubt this is not the end of it, but there will continue to be a back and forth as this high-stakes game unfolds. And it really is a game, sad to say. Apparently negotiations have been tense, which really should not come as a shock to anybody, yet you see statements like this. “AB InBev is disappointed that the board of SABMiller has rejected both of these prior approaches without any meaningful engagement.” The absurdity of that reveals the gamesmanship involved, as it plays out in the media. It’s going to be an interesting few weeks.

World Beer Market: Opportunities & Forecasts 2014 – 2020

Allied Market Research, an international research company with seven offices around the world, has started selling their latest report, the World Beer Market – Opportunities and Forecasts, 2014 – 2020. If you want to buy the report it will set you back anywhere from $4,515 to $10,680, for a global user. While here at the Bulletin we’re not sufficiently well-heeled to buy our own copy, there is some information revealed to entice potential buyers on the report’s website.

For example, this chart gives several data points from the report.

Global Beer Market

And here’s the “Report Overview:”

Beer is a yeast – fermented alcoholic drink prepared from malt, and flavored by adding hops. Popular in Neolithic Europe, its production dates backs to as far as 2050 BC. By, 7th century AD the alcoholic drink was being produced and marketed by several monasteries in Europe. This drink is majorly brewed from ingredients such as yeast, water, hops and malted barley, although many fermentable carbohydrate sources or natural additives may be included. Likewise, fermentable carbohydrates like wheat, rice and maize are added to produce different styles as well as flavors. Beer style categorizes this alcoholic beverage by factors including flavor, production technique, ingredients, color, and origin etc., of which ale and lager are the two commercially popular types. Ales use top fermenting yeast at a room temperature, on the contrary lagers are made with bottom – fermenting yeast below 10 Celsius. The global beer market is expected to generate about $688.4 billion in sales by 2020. Besides this, the aforementioned industry is likely to register a CAGR of 6 percent during the forecast period 2015 to 2020. A significant increase in the consumption volume is believed to fuel the market growth in developing regions.

Worldwide, sales is following an upward trend. Many brands are now experiencing tremendous success due to a sudden rise in the disposable income and changing lifestyle. Exploiting a niche segment, matured markets are also witnessing a dramatic shift in the high calorie beer market and have developed a taste for low –calorie brew. Likewise, continuous popularity of craft brew has paved a path for a new generation of producers. It is phenomenon, that right from their debut to their annual sales the strong and light brews occupy majority of the market share in the beer industry. Alternatives to glass such as PET, makers are using durable yet ductile, affordable and sustainable packaging solutions like cans or draught. Consumption statistics also disclose a rapid growth in the number of female drinkers.

Beer Market Analysis by Type

World’s largest brands have uncorked and positioned their wide portfolio of strong and light brew in the domestic and international market, which now occupies a major chunk of the total business. The market for strong brew is expected to garner about $464 billion in sales by 2020. Besides this, the strong industry is likely to register a CAGR of 6.5 percent during the period 2015 to 2020. Many developed countries have been biased to stronger brew, a liking that has become highly accentuated with the brand image associated with such drinks. In the West, taste and refinement are the prime factors for drinkers. Thus many prefer strong brews due to their high alcoholic content. In close completion are the light brews that have low calorie count and other nutritional contents. Light brew have exploited the desire of the health conscious drinkers to stay healthy.

Beer Industry Market Analysis by Production

Breweries are categorized into macro-breweries and micro-breweries based on the production volume or size. Officially the war between them is on, with craft brew companies increasing their production capability. Macro breweries are offering quality and quantity across greater distances. At the same time microbreweries are benefitting too. Likewise, emergence of breweries in less saturated locales worldwide too is a welcome news. Recent changes in drinking preferences have considerably increased the demand for micro-breweries, which is anticipated to register a CAGR of 9.3 percent during the period of 2015 to 2020. Larger number of discerning consumers are shifting to locally produced drinks, enabling the ale industry to revive. So, with varieties of flavor as well as alcohol content, microbreweries are increasing today because distributors spotted a huge demand and took risk on imports of major microbrew brands.

Industry by Category

Better sales of even the more expensive premium, super premium and draught have shrugged off all doubts about the dip in the consumption volume. Consumers today are increasingly desirous to experiment with locally produced premium and international varieties. Many brewers now recognize that the premium brews industry would stay the most attractive new segment. Some brewers have just hyped their portfolio as premium in many countries because they are international. Producers are putting greater focus on how they should brand these premium labels. Premunization, is significant and an innovation, that aims at targeting the high–spending customers including highly trendy brews for tier -1 mavericks. The premium industry is anticipated to register a CAGR of 6.4 percent during the period of 2015 to 2020, when compared to the super premium and normal brew segment. Besides this, the super-premium brews are observing a rapid growth in the business and would grow three folds. Few major consumer behavior pattern have also given the super-premium sales a push. The grocery outlets today make up a major part of alcohol sales in terms of value. This presents a greater opportunity for the super – premium brews to grow via channel expansion. Moreover, the normal brews occupy a largest division of about 43 percent of the total industry.

Industry by Packaging

The packaging plays a vital role when it comes to influencing the customer buying pattern. Available in bottles, cans or draught these drinks are delivered with care and consideration. In line with the growing sales of brews like ales, new and flavored drinks in bottles are making waves. However with acceleration, canned brew are giving an intense competition to their bottled and draught peers. Likewise, cans are becoming more and more famous and idiosyncrasy in it contributes to the shift in the buying pattern or attitude. There is a rising demand for canned that can be easily stored as well as transported. Further, what makes canned the first choice is the fact that it protect the content from external heat. Alongside this, range of already –established draught brews are continuing to expand in the competitive business environment.

Industry by Geography

Over the 300 years that ale existed in North America, customer demands has constantly pushed the segment forward with rapid and steady growth. Next, introduction to the craft brewing technique created immense opportunity and a greater population responded to it with further support. Similarly, Europe also has an emerging market for hop lovers. Region’s relaxed brewing mandates have stabilized the consumption volume, which fell significantly in the past two years. Emerging economies are also becoming significantly important to the major international brands, as sales in some matured region still lags. Increased sales in Latin America and Asia has empowered producers to economize out complete sales growth. The Asia – Pacific market is expected to garner about $202.4 billion in sales by 2020. Besides this, the market is expected to register a CAGR of 7.3 percent during the period 2015 – 2020.

Beer Industry Competitive Analysis

To acquire a major chunk of the market, brew producers are seen expanding their distribution channels even for their less popular breeds. Merger and acquisition, rumors have hovered over the brew sector for years, with many domestic and international brewers considering tie – up at some point, inescapable. Likewise, multinational producers continue to make huge investments to grow their reach and trump up collaboration with domestic operators, to help consumers keen in exploring the local and international varieties buy them. To tap demand for expensive brews, a product segment where companies have more rivals brands decide to compete directly and launch new products.

And here’s a short “Analyst’s Review:”

The Global Beer Market would witness a steady growth in the coming years. Europe accounts for the highest revenue generating region in the global beer market followed by Asia-Pacific and North America. The growth in the North American and European region would be at a moderate pace in the future due to increasing health consciousness and legal regulations in the region. However, there has been a significant increase in the demand of beer in the developing countries of Asia-Pacific region. International brewing companies like SABMiller, Heineken have introduced especially brewed beer for the Asian market catering to the distinct taste buds of the consumers. The global beer market is primarily driven by the increasing disposable incomes and changing lifestyles. The growing adoption of craft beer and the rising number of restaurants and bars would further accelerate the growth of the beer market.

Conventionally, the male population has been the major consumer segment. However, with evolving cultural changes and modernization, there has been a significant rise in the count of females drinking beer. Women in the age group of 21 to 30 consume more beer than other age groups. Women generally prefer light beer with low alcohol content. Many vendors in the market are focusing on drinks especially made for women to increase their customer base and serve a wider audience. There has also been a rise in the adoption of craft beer as consumers want to explore different beer flavors. Craft beers include traditional brewing methods with exotic ingredients which add distinct flavor to the beer. Craft beer is widely adopted in the European and North American countries while Asian countries are still in the growing phase. Growing health consciousness, heavy taxation, and legal regulation limit the growth of the market. Stiff competition from substitutes including wine and other spirits also restrict its adoption.

You can buy the full report, and if you want to share it with me, I wouldn’t say no.

Cisco Brewers Partner With The Craft Brew Alliance

cisco-brewers CBA
The Craft Brew Alliance, or CBA — which includes RedHook, Widmer and Kona — announced today that “it has formed a strategic partnership with Cisco Brewers,” Nantucket Island’s only small brewery. The Massachusetts brewery will enter “into a master distribution agreement and alternating proprietorship” with CBA, which according to the press release, will give Cisco “access to CBA’s extensive sales and distribution network and New Hampshire brewery to support Cisco’s growth, and bring more of their coveted island-inspired craft beers to more consumers throughout the Northeast.” The press release is cagey in using “strategic partnership” and not acquisition, merger or a buyout. Money undoubtedly changed hands, but nothing was disclosed about the moneteary arrangements of the deal.


More from the press release:

Through the alternating proprietorship agreement, Cisco will not only leverage CBA’s state-of-the-art brewing facility in Portsmouth, N.H., but the two craft beer companies will also share a master brewer. CBA Lead Innovation Brewer Mark Valeriani will oversee production of Cisco beers at Cisco’s brewery on Nantucket, as well as CBA’s Portsmouth brewery, which is ideally located to support growing demand in the Northeast for distinctive craft beers with local relevance.

“This new partnership is exciting to us for several reasons,” said Andy Thomas, chief executive officer, CBA. “First, the team at Cisco has built an exceptional company with a deep connection to its local community and strong cultural values that mesh really well with CBA. Second, Cisco has already established a strong presence in the Northeast, which is an important market for us as we continue to expand the Alliance and leverage our East Coast footprint. And third, we see some terrific growth opportunities for both companies as we partner to bring more great brands and brews like Whale’s Tale and Grey Lady to more beer drinkers in the East.”

Cisco Brewers is one of the fastest-growing craft breweries in New England and has been featured by People Magazine, TripAdvisor, and the Huffington Post, among others, as a top destination on Nantucket. As demand for the brewery’s innovative beers continues to expand, the master distribution agreement with CBA will enable Cisco to increase distribution of its beers in chain and other retail accounts throughout its core markets in the Northeast. CBA will work with its network of wholesaler partners, as well as Cisco’s existing wholesalers, to bring the beers to market.

“Today, there are a lot of options for breweries that want to grow. Working with the team of people at CBA to craft this partnership has been extremely energizing,” said Cisco Brewers Chief Executive Officer Jay Harman. “Having a partner that knows how to manage a wholesale network and properly bring craft beer to market is just one of the reasons this partnership with CBA is so appealing. Anyone who has been to Cisco falls in love with the beer but also the mismatched handmade bar stools and carefree unbuttoned culture that makes us who we are. When it comes to sharing Cisco off the island, and the steep competition in New England and beyond – with a new brewery opening every 12 hours – our goal is to get good, fresh beer to market in a way that truly represents our brands and culture.”

Harman continued: “We evaluated several options when looking for ways to embark on the next stage in our journey, and after sitting around the kitchen table with Andy and his team, we realized we had found a partner who could not just help us grow, but who could also help us realize the full potential of what we started 20 years ago.”

The partnership with Cisco Brewers expands CBA’s family, which already includes one of the westernmost island breweries, Kona Brewing Company, with one of the easternmost island breweries in the United States. Cisco Brewers was founded 20 years ago on Nantucket Island, 25 miles off the coast of Cape Cod, and is best known for such island-inspired brews as Whale’s Tale Pale Ale, Grey Lady Ale, and Shark Tracker Light Lager, which benefits science and education programs for OCEARCH.

American Brewery Count Reaches 4,000 Milestone

The Brewers Association announced this morning that the American Beer Industry has hit another milestone: there are now over 4,000 active breweries in the U.S. It also appears likely that the previous high of 4,131, which was achieved in 1873, will likely be broken if not by the end of this year, then certainly sometime in 2016.

Here’s the press release from the BA’s economist, Bart Watson:

Much of the beer world’s attention in the past week was focused on the Great American Beer Festival. However, the week also brought another milestone in the resurgence of local American brewing, with the Brewers Association database passing 4,000 active breweries. Although precise numbers from the 19th century are difficult to confirm, this is almost certainly the first time the United States has crossed the 4,000 brewery barrier since the 1870s.

Van Wieren (1995) notes that the Internal Revenue Department counted 2,830 “ale and lager breweries in operation” in 1880, down from a high point of 4,131 in 1873. Given the strong pace of openings (approximately two openings/day with a net increase of 1.9/day factoring in closings), it is likely that later in 2015, or early in 2016, there will be more active breweries in the United States than at any point in our nation’s history. This is a remarkable achievement that would have been unthinkable in late 1970s, when the number of American breweries dipped below 100.

More recently, it seems only a short while ago that I was writing about passing the 3,000 brewery mark, and many of the same thoughts still apply: the continued return to a localization of beer production and the potential for future growth balanced by ever increasing competition and future challenges for breweries to differentiate themselves. I’ll also repeat what I said then:

“What it does not mean is that we’ve reached a saturation point. Most of the new entrants continue to be small and local, operating in neighborhoods or towns. What it means to be a brewery is shifting, back toward an era when breweries were largely local, and operated as a neighborhood bar or restaurant. How many neighborhoods in the country could still stand to gain from a high-quality brewpub or micro taproom? While a return to the per capita ratio of 1873 seems unlikely (that would mean more than 30,000 breweries), the resurgence of American brewing is far from over.”

The past 15+ months have borne out that statement as the map of U.S. brewing has continued to diversify. There are now breweries in more than 2,000 unique cities across all 50 states. At the same time, there are also nearly 1,000 cities with a population of more than 10,000 that don’t have a local brewery yet, and numerous neighborhoods in larger cities without a local brewpub or taproom. As America’s beer culture continues to deepen and spread, there are still ample opportunities for well-differentiated, high-quality entrants. So, to all the hard-working brewers/brewery staff that have made 4,000 breweries a reality, and to the next wave of innovative entrants to follow, cheers!

Bountiful Breweries

Taco Bell Introduces Beer

Taco Bell announced today the opening of their first Taco Bell Cantina in Wicker Park, Chicago. The new restaurant had a soft opening today, with a grand opening scheduled for September 22. A second one will open in San Francisco later this month. One aspect about the new concept, known as “urban” restaurants, that stands out is they will serve beer, along with wine, rum, vodka and tequila.

From the press release:

“These new urban restaurants are a critical part of our growth strategy in markets where people experience our brand differently,” said Brian Niccol, chief executive officer, Taco Bell Corp. “Today’s consumers are living in more urban settings and our new restaurants cater to their lifestyle in adapting our traditional restaurant concept to fit their modern needs.”

The Taco Bell Urban Concept incorporates five consumer trends that balance relevancy and brand authenticity:

  1. Urbanization: The Taco Bell Urban Restaurant Concept reflects the Millennial trend of seeking more urban environments to live, work and play. These restaurants are ideally suited to fit in with pedestrian areas without drive-thrus.
  2. Digitization: Every point of the customer’s ordering journey is optimized through technology, including digital menu boards, TV monitors and Taco Bell mobile ordering and payment app pick up.
  3. Localization: Taco Bell incorporated the local architecture of the neighborhoods each restaurant serves.
    • The Wicker Park restaurant’s brick walls and prismatic glass were restored to help preserve the 100-year-old building. The location also features a mural designed by local artist, Revise CMW, which serves as a nod to the neighborhood’s history as an artistic hub.
    • The San Francisco restaurant, located near AT&T Park, features a patio and mobile pick-up window to cater to the quick pace, tech savvy and vibrant community.
  4. Green: The new urban locations will be more energy efficient with systems including LED lighting, use of reclaimed elements where possible and recycling.
  5. Transparency: An open kitchen design and food served in open face baskets gives customers a look inside Taco Bell’s quality ingredients.

Taco Bell Cantina restaurants will be the first and only Taco Bell restaurants to serve alcohol to customers who are of legal drinking age. The San Francisco restaurant will serve beer and wine only, while Wicker Park will serve beer, wine, sangria and twisted Freezes. Cantina restaurants will also feature a new tapas-style menu of shareable appetizers – including nachos and rolled tacos – during designated hours each evening, in addition to the full standard Taco Bell Menu.


According to the Chicago Tribune:

The menu features three 16-ounce frozen drinks that look straight out of the Kwik-E-Mart; spike your cherry-red Cantina Punch, electric-yellow Cantina Margarita or Ninja-Turtle-green Mountain Dew Baja Blast with your choice of Captain Morgan rum ($6.19), Ketel One vodka ($6.69) or Don Julio tequila ($7.19).

You’ll also find Steelhead wine ($4) in individual-size twist-off bottles, and two taps pouring Dos Equis ($4) and Fat Tire ($4.50).

Toast to the fact you’re drinking in a Taco Bell over a new menu of what the brand is calling Shareables — essentially, appetizer baskets. Choose from regular or chili-cheese nachos, quesadilla triangles, mini taquitos (called “rolled tacos”) and, surprisingly, chicken tenders, which are actually the best of the bunch.

The new T-Bell also comes with exposed brick, an open kitchen and a fancy new name: Taco Bell Cantina.

But give up your dreams of a drink after closing time at your local bar. Taco Bell Cantina will serve wine, beer and liquor until only 10 p.m. Sunday to Thursday, and midnight Friday and Saturday. 1439 N. Milwaukee Ave.


Expect to see Alcohol Justice and the prohibitionists going apoplectic over this news.

MillerCoors Acquires Majority Stake In Saint Archer

saint-archer millercoors
Not quite as big news as yesterday, but certainly continuing a trend. This Morning, MillerCoors announced that Saint Archer Brewing of San Diego, California will be joining their craft division, Tenth and Blake, as they acquire a majority interest in the small brewery.

Here’s the press release:

Tenth and Blake, the craft and import division of MillerCoors, announced today an agreement to acquire a majority interest in Saint Archer Brewing Company.

Founded in San Diego in 2013 by a talented group of entrepreneurs, artists, skateboarders and surfers, Saint Archer brews an award-winning range of ales including Blonde Ale, IPA, White Ale and Pale Ale. Saint Archer expects to sell 35,000 barrels of beer in 2015, up more than 100 percent over 2014, making it one of the fastest-growing breweries in California. Tenth and Blake plans to support its continued growth under the ongoing leadership of Josh Landan, Saint Archer co-founder and president.

“We have always wanted to get great beer into more people’s hands,” said Landan. “We were fortunate that brewers big and small were interested in partnering with us, but Tenth and Blake was the clear choice. Tenth and Blake shares our passion for putting great beer first. 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. With Tenth and Blake’s help, we hope to one day be a national brand.”

Saint Archer’s management and their team will continue to brew, package, ship, and sell Saint Archer’s outstanding portfolio of high-quality brands. Saint Archer will be run as a separate business unit of Tenth and Blake.

“We’re really excited about our partnership with Saint Archer,” said Scott Whitley, president and CEO of Tenth and Blake. “Saint Archer is consistent with our strategy of building our high-end portfolio while driving topline growth. Josh and his team represent everything we look for in a partner. Saint Archer brews award-winning ales across a variety of styles that are complementary to our current portfolio—including some outstanding IPAs. We’re excited at the prospect of working together to support the continued success of Saint Archer.”

Saint Archer picked up two gold medals at the 2014 San Diego International Beer Festival and a gold medal at the 2014 Great American Beer Festival.

Saint Archer joins other leading crafts in the Tenth and Blake portfolio, including Blue Moon Brewing Company, Jacob Leinenkugel Brewing Company, Crispin Cider Company and a minority equity stake in Terrapin Beer Company.

The transaction is expected to complete in October 2015. The terms of the transaction were not disclosed.


Heineken To Acquire 50% Stake In Lagunitas

lagunitas-circle heineken-white
Well this was certainly unexpected. I knew that ABI had met with Lagunitas founder Tony Magee but had been rebuffed. But today, Lagunitas Brewing announced that Heineken was acquiring a 50% stake in the Petaluma brewery. Apparently “Lagunitas will continue to be led by Tony Magee … and the company will continue to operate as an independent entity.” The deal is structured as a joint venture and is with the global Heineken rather than Heineken USA.

Here’s the Heineken press release and as it was posted on Lagunitas:

Heineken N.V. today has announced the acquisition of a 50% shareholding in the Lagunitas Brewing Company, the fifth largest craft brewer in the United States by volume. Lagunitas owns a stable of award-winning brands, including Lagunitas IPA. Lagunitas IPA is the largest India Pale Ale brand in the United States and has become a benchmark for the category. The transaction will provide HEINEKEN with the opportunity to build a strong foothold in the dynamic craft brewing category on a global scale, whilst it provides Lagunitas with a global opportunity to present its beers to new consumers in a category that is showing exciting international growth opportunities.

Founded in California in 1993, Lagunitas is estimated to sell c. 1 million hectolitres of beer in 2015 from its two world-class breweries in Petaluma, California, and Chicago, Illinois. A third brewery is currently under construction in Azusa, California. The brewer has a strong track record of growth, with 2012 – 2014 revenue CAGR at 58%. Its other leading brands include A Little Sumpin’ Sumpin’, Daytime, Pils, Sucks, Hop Stoopid and Maximus. Lagunitas has a nationwide presence in the United States and the brewer has expanded into a number of other markets including the UK, Canada, Sweden and Japan, offering strong potential for continued growth outside the United States.

In the United States, craft beer continues to outperform the overall beer market, and now represents 11% of total volumes. Within the craft segment, IPA is the fastest growing category.

Lagunitas will continue to be led by Tony Magee, its founder and Executive Chairman, alongside the existing management team and the company will continue to operate as an independent entity.

The transaction is subject to customary closing conditions and is expected to complete in the 4th quarter of 2015. Financial terms are not disclosed.


For more background, and offering a more personal insight, Tony Magee posted his thoughts about the deal on his Tumblr:

The Future will not be like the Past


So….. this morning you may have heard the exciting news that we announced a powerful joint venture with Heineken to export the exciting vibe of American craft beer globally. If you did, then you know the reason for my previous ten blog entries. What you might not know is how the thinking came about that brought us to this opportunity or how it is that this new relationship will work. If you’re interested, dear reader, please read on.

Our time in Craft Brewing didn’t begin on Craft’s first day, that day came thirty years before we started. Initially in SanFrancisco on 8th Street and then 20 years later around California and the Pacific Northwest. However, from the first day the world of Craft resembled the river in the proverb by the Greek philosopher Heraclitus which says that ‘You can never step in the same river twice; It won’t be the same river and you won’t be the same person’.

The nature of Craft has been on a never-ending curve towards something that it never imagined for itself. In total in the U.S.A. Craft Beer still represents only 9% of all the beer enjoyed. That’s less than one-in-ten. Yet, in places like San Francisco and the Pacific Northwest it approaches and even exceeds 50% of the world of beer. This past February, for one week, our IPA 12-packs were the #1 beer package in the whole of the Bay Area. Number 2 was a big brewer’s 30-packs and #3 was another big brewer’s 24-pack. That kind of thing was not even dreamt about just 5 years earlier. I believe that the West Coast scene is a forecast for the rest of the country and even the rest of the world. It’ll take time, but it is entirely possible. So it is that we have worked hard and grown with that opportunity and we have been driven by a spirit of adventure.

A blog post here a few episodes back was called ‘On Finishing a Poem’ and in it I thought through the nature of the terminal point of a creative adventure. How do you know when you have put the right amount of the right stuff into a thing? Well, you only know when you know, and sometimes it takes a baseball bat to the forehead to notice. For me it was the ill-fated trade-mark dispute back in April. After the dust settled, which took a while, I looked at Lagunitas and realized that we had already infused it with a lot of the right stuff and that it didn’t need to be endlessly recreated for it to have a good time interacting with beer-lovers across the country. By that time we were already looking towards Lagunitas#3 in Azusa with a view towards another brewery after that. We already had ideas of new flavors and we had ideas about new ways to make more connections with more people. The domestic future was a living thing in our minds. In other words, we were already working out an exciting path of worthy challenges within the 50 states, but there is the whole world to think about too…

About the same time we launched Lagunitas in Ireland and I met people there who were big fans of U.S. Craft flavors, some of whom were themselves newly minted brewers, and I realized that the whole damn world of humans may well want to enjoy these same flavors. When I got back home I thought long and hard about how to aim at that truth, how can we get there, to the whole world? I thought about going it alone and working our way through the weeds to that future reality. But I thought also about all of the ‘deals’ going on inside of Craft these days. Private Equity money, Budweiser and now Miller/Coors buying our peers. Family Offices investing. People with big money from the get-go coming in alongside all of the rest of us inspired amateurs.

Here’s my thinking on things, if it matters. I’ve watched for the last few years as some good brewers have made their own decisions about their own futures and the futures of their people and brands. I’ve watched and felt strongly that it was a problematic thing. I’ve watched and tried to learn what it was that was happening. Craft Brewing, the thing itself and the environment it lives in, is freakin’ complicated enough. The entrance of giant piles of Private Equity money and Mega Brewers is disturbing. Not because any of you here will be corrupted by it all, but because the distribution and retail tiers and the merely-craft-aware peeps out there can be corrupted. Beer is an old biz in the US and it used to be very orderly. Craft disrupted that and now the old order wants to find a way back to the past. It won’t work, but it’s going to try.

Amid all of this uncertainty, and being 55 years old going on 80, I had to think long and hard about how to steer our ship into these new waters. There are basically five categories of options that range from indifference all the way to going head-first over the transom and selling the business to someone else to steer the ship instead.

I wrote about the five structural creatures that constitute the zoology of ‘Optionality’ in another blog post and that post ended with the question, ‘is there a sixth way?’. Our new Joint Venture with Heineken is that ’sixth way’. It represents a mutual respect society, a meeting of equals, a partnership of peers. The graduation of American Craft Brewing along with the people who brew it onto the world stage.

Selling one’s business entirely is one thing. This is not that. Selling a stake to a PE fund that will need to re-sell it in a few years is another thing. This is not that. ESOPs are cool but they do not pave a road to bigger opportunities for the people and the brand. This is not that either. What we have created in this relationship is a wide staircase to the sky for all of our people and for our brand as well as for the home-grown vibe of American Craft brewing.

Some might say I’ve changed my mind. Well, I have. But the world around us has changed too and if learning leads to new insight, that’s the best kind of change imaginable. The hard part is discovering truly positive change within the possible avenues forward.

I have also thought about all of the inspired new breweries coming to the scene and that the landscape may well become uncomfortable someday soon. I worried that Craft was beginning to compete with other Craft, a thing that hadn’t happened in the past when everyone looked to the far horizon for opportunities. But that’s not a terrible thing, it’s just nature doing its Darwinian thing. And there is the reality that I’m not really even middle-aged anymore unless I expect to live to be 110, which I don’t. I thought about how all of the people who have made their bets alongside mine would do if I wasn’t here. Maybe everything would be fine, and maybe not. Some of them are my age while others are just beginning their very own working lives right now with Lagunitas.

If I was going to do anything at all it would have to provide big opportunities for those same people and not just be safe-harbor for me and my shareholder partners. It would have to provide something that we could not readily build for ourselves. Historically, the history of breweries shows them to be two or three-generation endeavors, but I only have one of those for myself. I think that a lot of Craft Brewery owners might well be thinking the same thing. After all, no one gets out of here alive. I thought long and hard about how I wanted to spend the next ten of the dwindling count of years remaining on the clock and I decided that I did not want to spend it worrying about what would happen in the fifty states alone. I decided that I wanted to build a ‘sky-hook’. I wanted to see if anyone else saw what I saw in the rest of the global market for great tasting beer.

There’s a pertinent Friedrich Nietzsche parable about a ‘madman’ who comes into a town square holding a lighted lantern declaring to the town that he has important news. He tells his story and the people laugh and berate him in disbelief, throwing stones to drive him off. Finally he gives up saying, ‘I have come too soon’’. He drops the lantern, the light goes out, and he departs.

I wondered if my idea of globalization for American Craft too had also come soon. I thought about who might see what I saw and if the time was right to reach out to that other brewer. I thought about who that other brewer might be and the list was very short. The list of truly global beer brands is a short one. It certainly would not include the ‘bankers’ who own the great Anheuser-Busch now, nor would it be the South Africans who control the other two large brewers in the US who are themselves essentially ‘bankers’. The global brewing scene is a very consolidated one. Consolidation has been the modus operandi for the last 40 years, so there really are very few global brewers, and at that maybe only one actually global beer brand! In my mind only one Brewer stood out as truly global, family-owned and still brewers first; Heineken. We talked with a few others but there was really only one relationship that seemed acceptable.

When we, the Madman in the Parable, came into the square with our lantern, holding up the light of our ideas, we was stunned to see that that one particular brewer understood what we were talking about. They welcomed a dialogue about these crazy ideas of order. They saw what we saw- a global beer business in a state of change, and they wanted to work together to explore this brave new world. We had indeed NOT come too soon.

In them we met a global brewer who uses no adjuncts in their flagship beer; malt only. We met a brewer that is still controlled by its founder’s great-granddaughter. We met a brewer whose CEO/Chairman understood the details of the brewing process. We met people who thoroughly understood the revolutionary aspects of what beer-lovers have wrought in the America. We met people who laughed easily along with us at our own history and our predilections. After all, they are from Amsterdam, if you get my drift. More to the point, we met a company that saw and understood that we could only work together if we could continue as we are, steering our own ship here and abroad, being ourselves and exporting exactly that to communities all over the world, beginning with Mexico…! They wanted what it is that we wanted.

What grew from these conversations was an opportunity like none other to-date: An open door to a planet filled with beer-lovers and a conduit to meet them in our own way. One beer writer commented to me that he was struggling with the ‘having our cake and eating it too’ quality of this relationship, but that’s exactly what we have achieved. It’s come about because we lucked out and found a space where our desires were in sync with the other’s needs. We wanted what they wanted.

Things that are born grow, and mature and become. That process of becoming is endless and all of craft rolled together is itself a thing becoming. It is not one thing, rather whatever you see of it today represents only one point on a curve. Breweries that were born decades ago are at one locus on that curve, ones that were born a few months ago are at a different point on that curve, but all are becoming, endlessly.

So it is for Lagunitas, and this new adventure represents no more or less of an inflection point on that curve than did moving the brewery to Petaluma in 1994, or switching our flagship from Pale Ale to IPA in 1995, or borrowing $52 million to build Chicago or promoting the talented Jeremy Marshall to full Brewmaster status in 2013.

This is not the end of anything at all at Lagunitas, except maybe it is the end of the beginning, meaning that we are now standing at the threshold of an historic opportunity to export the excitement and vibe of American-born Craft Brewing and meet beer-lovers all over the Planet Earth, our true homeland. This could one day even be seen as a crucial victory for American Craft Brewing.

By the way, in the official press release I say that we’ll be available from Mongolia to the far-flung ‘Isles of Langerhans’. Those lovely sounding islets are actually some tiny structures inside your pancreas and I stole that from the Firesign Theater. Everything comes from somewhere, and Lagunitas comes from the U.S.of A. ….available everywhere soon! Cheers, to the ongoing victory of American Craft brewing….!

Tony Magee and longtime honcho Ron Lindenbusch at the brewery’s 10th anniversary party in 2004.