Today is the 62nd birthday of Pat McIllhenney, brewmaster and founder of Alpine Beer Co. near San Diego. Pat makes some amazing hoppy beers. Unfortunately, his beers are hard to find up our way, but that hopefully will be improving since last year Alpine was acquired by Green Flash Brewing. Join me in wishing Pat a very happy birthday.
Today is Steve Wagner’s 58th birthday. Steve is a co-founder of Stone Brewing and the president of the California Craft Brewers Association. In the late 1980s, Steve was a member of the band “The Balancing Act,” who put out several albums on I.R.S. Records. Now he just presides over one of the most successful microbreweries in the U.S. Join me in wishing Steve a very happy birthday.
Today is the 43rd birthday of Lee Chase, co-owner of Blind Lady Ale House in San Diego, and brewer at Automatic Brewing, located in the Blind Lady’s back room, and brewery consultant to the stars. Chase was also the head brewer at Stone Brewing for nearly a decade and oversaw the building and installation of the new brewery in Escondido. Lee’s a terrific brewer and a great beer ambassador, and also great fun to hang out with a share a pint, which I was able to do a few Decembers ago at the Stone Vertical Epic Tasting. Please join me in wishing Lee a very happy birthday.
Lee with Stone co-founder Steve Wagner on April 14, 1999 celebrating their first bottling run on their then new Maheen bottler. [Note: photos purloined from Facebook & Stone Brewing.]
You’ve probably heard the rumors and the news that 10 Barrel Brewing, acquired by Anheuser-Busch InBev in 2014, is trying to open a new brewpub location, this one in San Diego, California. Today I received a press release from ABI, detailing the trouble they’ve met in trying to expand into the Southern California market. Here’s what they had to say:
This will be the first non-craft brewery, per the Brewers Association’s definition of a craft brewer, to expand into San Diego — which is already home to 117 local craft breweries, with 40 more in planning. The news has been met with strong opposition from members of San Diego’s craft beer community, including the San Diego Brewers Guild, who’s mission is to promote awareness and increase the visibility of fresh, locally brewed beer.
10 Barrel has applied for a permit to construct a brewpub in San Diego’s burgeoning East Village, at 1501 E Street, and has proposed a “full-service restaurant with accessory alcohol manufacturing.”
Today, February 17th, representatives of 10 Barrel will present on behalf of the project to the Downtown Community Planning Council (DCPC), an advisory group, and a decision is expected soon.
Apparently, the biggest opposition they’ve received is from local brewers already in the market, in the guise of the San Diego Brewers Guild. This is setting up to be an interesting battle. San Diego business owners clearly want to keep their local angle for the businesses, though how that will square with the acquisition of Saint Archer by MillerCoors remains to be seen.
Curiously, ABI’s press release also includes that opposition, in fact is more than half of what I received, giving voice to their complaints. According to them, “Representatives of the San Diego Brewers Guild, including President Emeritas Kevin Hopkins, will speak at the meeting on behalf of the Guild,” and also circulated the guild’s official statement:
“The acquisitions that transacted last year and the news of AB-InBev’s intentions to open up in San Diego through 10 Barrel highlights the fact that San Diego is truly a world-class brewing center. That reputation is due to the hard work of locally-owned breweries and the San Diego Brewers Guild. Historically, it has been independent brewers who have built the thriving beer community that San Diego is now known for around the world. The risk underlying the acquisition of breweries by large, international corporations and the risk of businesses like the proposed 10 Barrel brewpub in San Diego is that beer drinkers here may think that when they patronize these businesses, and buy and drink beer, that they are supporting the local brewing community. That is not the case. Should the 10 Barrel project open in San Diego as proposed, consumers need to know that it is owned by Anheuser-Busch and not a local craft brewery or a craft brewery in general. Now more than ever, with the introduction of non-craft breweries to San Diego’s craft landscape, it is important to continue to support locally owned and operated San Diego breweries, like the brewer members in the San Diego Brewers Guild.”
I’m a little baffled by that. Are they looking for sympathy for their cause. On one hand it’s certainly understandable that San Diego brewers would prefer to not have a carpetbagger come into their midst, but as Thorn Street Brewery owner Eric O’Connor said in a letter of opposition, “large companies have the right to open and operate where they see fit.” I’m sure I’d feel the same way, but I’m not sure what anyone could do about it. As long as consumers support the venture, it will continue to thrive. If everyone agreed to not patronize it because its ownership wasn’t local, it would likely have to close. But how realistic is that? I’m not trying to be difficult, I honestly don’t know. We all talk a good game about supporting local and not spending money with breweries who’s ownership has changed and/or is not to our individual liking. But Goose Island, 10 Barrel and even Blue Moon continue to do quite well despite all the foot stomping. And this is not a new problem. People said the same thing about Redhook and Widmer when ABI acquired just a minority interest in them in 1994, and both are still in business over twenty years later, so I’m not sure a boycott would really work, nor could this sort of hand-wringing do any good.
In O’Connor’s letter, he adds that if 10 Barrel does come, “there should be complete transparency of who the ownership is and where the money is going.” But isn’t there already? Don’t we already know that ABI owns 10 Barrel and that’s, of course, where the money will go. MillerCoors isn’t hiding the fact that they own Blue Moon, or Saint Archer. Likewise, it’s not exactly a secret who owns Goose Island, Blue Point, or Shock Top. But that’s because there’s a tiny sliver of the market that actually pays attention to who owns what. Most of the world is busy doing something else, living their lives, and drinking whatever they want, oblivious.
And believe me, my sympathies are with the San Diego brewers, but I don’t see what they can really do. ABI also included a pdf of all the complaints their plans have received, including letters from other local bars and brewers. The gist of them is that “beer drinkers here in San Diego may think that when they patronize a business like what 10 Barrel is proposing, and when they buy and drink 10 Barrel’s beer, that they are supporting the local brewing community.” And they’re probably right to be concerned about that, but I think it’s more of a problem because most people don’t care as deeply about that as we do. Mike Sardinia, president of the guild, insists “it is vital that consumers need to know that it is owned by Anheuser-Busch and not a locally operated brewery.” In his conclusion, he warns that “[i]t is important that the City not make it easy for Anheuser-Busch to open in San Diego without due diligence and without a full review of its application and its intentions with the 10 Barrel project.”
The irony there is that in the early days, small brewers were complaining that it wasn’t fair how difficult the then Big 3 (Bud, Miller and Coors) made it for them to obtain distribution, tap handles and generally succeed in a market that they dominated. I’m certainly glad we have more power now, and have, in many cases, succeeded spectacularly, but I’m still not sure this, while understandable, is the best way to use it.
Last month, Peter Rowe, in the San Diego Union-Tribune, asked rhetorically, An Anheuser-Busch brewpub for San Diego? Toward the end, he even mentions that “some threaten to picket and boycott 10 Barrel, when and if it opens,” which also seems silly. If people in San Diego, like most places, are really as supportive of local-only businesses then it will fail all by itself. But I think the real fear is that everybody loves the locals on Twitter, or Facebook, or when answering a pollster, but not when it comes to reality. Like it or not, national brands in every industry are popular precisely because they’re familiar, widely available and the same everywhere. It’s certainly true that artisanal products, like cheese, chocolate, bread, etc. are all doing great, but the big brands are still the big brands, just like with craft beer. Dents have been made, but they still have a majority marketshare.
But headlines about this from mainstream news are along the lines of Local craft brewers to Anheuser-Busch: Keep out. It feels strange to side with the big guys but it doesn’t feel like they’re doing anything particularly wrong here. I understand opposing this or even working together to promote their own local-ness as a positive attribute, but this feels like a case when turnabout isn’t fair play. We should be better than that. If San Diego brewers are making great beer — and they are — and if people in their market are willing to support them, then this is something that will take care of itself, and that, I think should be the goal.
Today is also the birthday of Chuck Silva, former brewmaster at Green Flash Brewing in San Diego. His West Coast IPA has taken the world by storm, and personally, I love his Tripel and Le Freak. The big, shiny new brewery they recently built is also pretty amazing. But eventually Chuck wanted to something of his own, and is in the process of opening Silva Brewing Company in the Central Coast of California, around his native San Luis Obispo area.
Join me in wishing Chuck a very happy birthday.
AleSmith Brewing of San Diego, California announced this morning that they’ve entered into a “creative enterprise” with Mikkel Borg Bjergsø to establish Mikkeller Brewing,” taking over day-to-day operation of San Diego’s second-oldest craft brewing facility. So essentially, as far as I can tell, Mikkel will be taking over the original AleSmith location, with Pete Zien retaining a minority stake in the business. Mikkel will get the older, original 30-barrel brewing system — which will become Mikkeller San Diego — and AleSmith will operate the newer 105,500-square-foot facility located two blocks west of MSD.
San Diego, California (December 8, 2015) — Two world-renowned brewing interests are proud to announce the launch of a creative partnership that will result in the planet’s most famous gypsy brewer acquiring a brick-and-mortar brewery to call his own. Mikkel Borg Bjergsø, the founder and creative mind behind Denmark-based Mikkeller, has officially entered into an agreement with AleSmith Brewing Company owner and brewmaster Peter Zien for the duo to establish a new company called Mikkeller Brewing San Diego. Bjergsø and Zien will possess ownership stakes in the business, which will be based within the storied confines of AleSmith’s original headquarters on Cabot Drive in San Diego’s Miramar community and produce beers for worldwide release.
“People have always asked me when I’m going to open my own brewery, and my answer has always been ‘never.’ It’s the easiest answer, but it’s been on my mind for several years,” says Bjergsø. “I like being a ‘gypsy brewer,’ but know that having a stake in a U.S. brewery will change our position here. Brewing in one of the best breweries in the world really makes sense. If they can brew beers like they do at AleSmith, it really can’t go wrong.”
Bjergsø’s vision will guide brewing operations at Mikkeller San Diego, which is equipped with the same 30-barrel brewing system AleSmith used to produce 15,000 barrels of beer annually before moving into a much larger, 105,500-square-foot facility two blocks west earlier this year. To ensure the fastest, most efficient transition, Zien will initially oversee multiple components of the brewing process and provide ongoing assistance on an as-needed basis. Additionally, several members of AleSmith’s original brewing team, the bulk of whose careers with the company have been spent operating the original brewery, will become employees of Mikkeller San Diego and usher the facility through its exciting second life.
“I am very excited to announce this partnership to the brewing world,” says Zien who will maintain a minority stake in the business. “Mikkel and I expect to create unique and flavorful beers of the highest quality, as we are both known for brewing with AleSmith and Mikkeller.”
Eager to embark on this shared next chapter in their brewing careers, Bjergsø and Zien worked with the eventual Mikkeller San Diego staff to craft two beers based off brand new recipes conceived by the former. Those beers, AleSmith-Mikkeller IPA (India Pale Ale) and AleSmith-Mikkeller APA (American Pale Ale) are currently on tap at Mikkeller Bar in San Francisco, Calif.; AleSmith’s recently debuted 25,000-square-foot Miramar tasting room; and numerous craft beer-centric venues throughout San Diego County. Thus far, they have been met positively by beer enthusiasts. Next up on the brew schedule is an imperial take on an English-style porter, which will be released via a similar distribution method. Eventually, numerous Mikkeller San Diego beers will be bottled, canned, and distributed more widely nationally and internationally.
In addition to beers brewed solely by Mikkeller San Diego personnel, Bjergsø intends to make a center of craft collaboration of his new digs by inviting respected brewers from all over the world to conceive and brew recipes that push the envelopes of what ales and lagers can be. In doing so, he will build off relationships forged during his decade spent trotting the globe in an ongoing mission to bring his beery ideas to life with the help of gifted brewers the world over. He will also reach out to new and upcoming brewers making waves within the industry, providing the basis for many happy returns among brewery visitors.
While the brewing component of Mikkeller San Diego’s campus—which consists of five suites within an intimate business complex—will remain mostly untouched, construction will soon commence to convert the 750-square-foot tasting room to an interior design concept more consistent with that of Mikkeller’s global beer bars. The sampling space is projected to open to the public in early 2016, offering an array of beers that simultaneously display traditionally stylistic roots while coming across as exploratory, adventurous and, in some cases, downright twisted. It will be the only place in the world to taste the entire array of Mikkeller San Diego beers in a single sitting.
Constellation Brands announced this morning that they will acquire Ballast Point Brewing & Spirits Company for roughly $1 billion. If you’re not familiar with Constellation, they’re “the number three beer company in the U.S. with high-end, iconic imported brands including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico. Constellation is also the world’s leader in premium wine, selling great brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford, Rex Goliath, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company’s premium spirits brands include SVEDKA Vodka and Black Velvet Canadian Whisky.”
So far, almost all of the news about the deal is from the press release:
Constellation Brands (NYSE: STZ and STZ.B), a leading beverage alcohol company, today announced an agreement to acquire San Diego-based Ballast Point Brewing & Spirits. Ballast Point is one of the fastest growing craft beer companies in the U.S. with a beer portfolio that includes more than 40 different styles of beer, led by its popular Sculpin IPA and Grapefruit Sculpin IPA. The partnership with Ballast Point provides a high-growth premium platform that will enable Constellation to compete in the fast-growing craft beer segment, further strengthening its position in the highest end of the U.S. beer market.
Ballast Point started in 1996 as a small group of home brewers and remains dedicated to the art of making better quality craft beer. Ballast Point will continue to operate as a stand-alone company with its existing management team and employees running the day-to-day operations. The company is one of the most successful and respected craft beer companies in the country, with an expertise in brewing the most premium, highest quality award winning products, and a grassroots approach to innovation that engages beer lovers and home brewers in the process. The Ballast Point team will continue to build on its successful expansion across the U.S., and will now have access to Constellation’s strong financial position and willingness to invest in growth.
“We started this business nearly 20 years ago with a vision to produce great beer that consumers love and to do it the right way,” said Jack White, founder of Ballast Point Brewing & Spirits. “To achieve that vision, we needed to find the right partner. The team at Constellation shares our values, entrepreneurial spirit and passion for beer, and has a proven track record of helping successful premium brands reach the next level of growth and scale.”
“We believe in the vision that Jack and his team have created and we’re excited to welcome Ballast Point, one of the most respected craft brewers in the country, to the Constellation Brands family,” said Rob Sands, chief executive officer, Constellation Brands. “Along with imports, craft beer is a key driver of growth and premiumization within the beer industry, with craft doubling its share of the U.S. beer market in the last five years. Ballast Point has certainly been a key driver of that growth. Their business philosophy and entrepreneurial spirit perfectly align with our culture and we look forward to strengthening our position in the high-end beer segment with what is arguably the most premium major brand in the entire craft beer business.”
Ballast Point is on pace to sell nearly 4 million cases in calendar 2015, which would represent growth of more than 100 percent versus calendar 2014. Net sales for calendar 2015 are expected to approximate $115 million. Volume and net sales growth from calendar 2012 to calendar 2014 averaged over 80 percent. Ballast Point employs more than 500 employees, produces beer in four facilities in the San Diego, CA area, and sells its beer in over 30 states.
Constellation Brands plans to purchase Ballast Point Brewing & Spirits for approximately $1 billion. The purchase price values the acquisition multiple of the projected calendar 2016 Ballast Point EBITDA in the mid-to-high teens range. Constellation estimates that on a comparable basis (1), the acquisition is expected to be neutral to diluted earnings per share for fiscal 2016 and $0.05 to $0.06 accretive for fiscal 2017. The transaction will be financed with cash and debt, and is expected to close by the end of calendar year 2015, subject to customary closing conditions.
Brandon Hernández had the news this morning that Chuck Silva Resigns from Green Flash Brewing Co., published on WestCoaster. I first met Chuck at the old, much smaller, Green Flash brewery not too long after he started there in 2004. As Brandon details, Chuck was undoubtedly a big part of the brewery’s subsequent success. According to the press release, Chuck is planning on creating his own new brewery, Silva Brewing Company, along with his wife Mary Jo. He’s looking at the Central Coast of California, near where he grew up and where he has many longtime friends and family. It’s apparently been in the works for some time now, and starting today, he be concentrating on the new project full time.
About his time at Green Flash, Chuck had this to say:
“It’s been so fulfilling to play such a major role in the accomplishment of so many goals at Green Flash. Together, we’ve come further and grown larger than I could have ever foreseen. I couldn’t have done it alone and I thank every member of the craft community that helped me along the way,” says Silva. “But it’s always been my dream and personal long-term goal to brew on my own terms. Now is the time to go for it and I’m looking forward to working on smaller projects.”
Good luck, Chuck, I for one can’t wait to have a beer at your new brewery.
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.
I don’t know many details at this point, but Craft Business Daily is reporting that “San Diego’s Green Flash has just announced their acquisition of small, local 3,000 barrel Alpine Beer Company. Financial terms were not disclosed,” adding — quite correctly, I think — “the age of craft buyers acquiring craft brewers is upon us.” I know that Green Flash had been brewing kegs for Alpine recently, while founder Pat McIllhenney was working on expansion plans for his brewery. As more details come to light, I’ll update them here.
UPDATE: I have now received a press release from Green Flash with additional details on the deal:
At Alpine Beer Company this morning, Green Flash founders, Mike and Lisa Hinkley and Alpine Beer Company founders, Pat and Val McIlhenney announced that their breweries will join forces, teaming up to share resources, knowledge and experience. Both the McIlhenneys and the Hinkleys view the affiliation as mutually beneficial, and are committed to supporting each other for the success of both breweries. Each company will remain independently operated and maintain its distinct brand and culture. Pat will remain Alpine’s President and Brewmaster to oversee all operations of Alpine Beer Company while also ensuring Alpine beers continue to meet his unwavering standard of quality, whether brewed at the Alpine or Green Flash facilities. The most notable change will transpire over the next several years, as Alpine beer will become available to their legions of fans from across the country who have only experienced the greatness of Alpine beers while visiting California.
In a “handshake agreement,” Green Flash began brewing Alpine beer in November 2013 at their San Diego facility with the goal of helping longtime friends at Alpine raise capital to expand their production capacity. Green Flash has been producing three of Alpine’s brews (Nelson, Hoppy Birthday and Duet), increasing Alpine annual production from 1500 to 3000 BBLs.
The experience of brewing together has been a successful learning experience for both breweries. Green Flash Brewmaster, Chuck Silva divulged, “It was both intriguing and challenging to meld our philosophies while we worked together to scale up Pat’s recipes to be brewed in larger quantities. We worked together to stay true to the original beer and were very happy with the ultimate results. Working with a close friend is a real treat, but for me, brewing with Pat and making Alpine beers, is yet another highlight of my brewing career in San Diego.”
The successful arrangement they have shared over the past year was the impetus that prompted the breweries to take their relationship to the next level. Each views the partnership as an organic evolution that will benefit both of their operations in many ways. “Our team was thrilled to be able to brew the awesome beer from Alpine when we began teaming up,” says Mike Hinkley of Green Flash. “The excitement of our brewers is what prompted me to think about additional ways we could work together and help each other. We perceive this solid new partnership as an incredible opportunity to continue to explore our craft while benefiting from the passion and experience of Pat McIlhenney.”
“After working with Green Flash for the past year, I have come to truly trust and deeply respect the entire Green Flash operation – Chuck and all of their brewers are meticulous, yet easygoing, and I am comfortable working with the team,” says Pat McIlhenney of Alpine Beer Co. “There are many benefits in teaming up with Green Flash as a partner. Not only are they committed to producing high-quality beer, the company culture and mom and pop roots of Green Flash are very similar to our own.”
Alpine employees 20 people, is distributed exclusively in California with the ability to produce a maximum of 1500 BBLs from their San Diego County brew-house, with most of their beer sold directly from their on-site pub. Brewing capacity limitations have made it impossible for Pat and his team to support the overwhelming demand for their exceptional products. As partners, Alpine will be able to tap into the growing Green Flash team of talented brewers, their production capacity, access to capital, and human resources in operations and administration. Mike added that “I am hopeful that the culmination of the next few years will be that, together, we build a new production facility in Alpine. Maybe we will even brew some Green Flash ale in Alpine.”
“I know there is strength in unity, which will allow both of our breweries to secure even higher quality ingredients – we will be a great force as a team,” exclaims Pat. “However, the most important advantage is how this partnership will help improve the quality of life for my employees. For the first time, Alpine will be able to offer our team an excellent company benefits package including affordable health care, 401K plans and other perks made possible by this exciting partnership.”
In 2015, Green Flash will begin bottling select Alpine brews in 22oz bottles adding to the three current draft offerings. Collaborative brews are already in Chuck and Pat’s top-secret conversations, so consumers can expect these to appear in their tasting rooms and at the best craft beer bars in Southern California. The two Brewmasters are already talking about how they can work together at Green Flash’s Cellar 3, a special barrel-aged beer packaging facility that is currently under construction in Poway, and will include a cork-finish bottling line.
Chuck said, “I consulted Pat and borrowed some of his ideas when I made our tenth anniversary Flanders-style ale, which was a great success and will be recreated at Cellar 3. I am always on the look-out for ideas. With Pat and me on the same team, you can count on us to push the envelope even further.”
Mike summarizes, “This partnership is win-win-win. Green Flash wins because we are teaming up with a truly iconic brewery. Alpine wins because they get to see their beers enjoyed by so many more of their adoring fans. But most of all, beer geeks everywhere win, because Chuck and Pat will be working together to create beers that will blow their minds.”