Cigar City Bought By Fireman Capital

March 14, 2016 By Jay Brooks

cigar-city oskar-blues-blue
In an exclusive this morning, Brewbound is reporting that Fireman Capital to Purchase Cigar City. According to Brewbound, “Cigar City, a leading independent brewery based in Tampa, Fla., has agreed to sell controlling interest to Boston-based private equity firm Fireman Capital Partners, which already owns majority stakes in Oskar Blues, Perrin Brewing and the Utah Brewers Cooperative outfit that includes the Wasatch and Squatters brands.”

The overall entity created by Fireman Capital for their brewery acquisitions is United Craft Brews LLC, incorporated in Delaware. The SEC Form D lists Fireman Capital’s address is Waltham, Massachusetts, but information on OpenLEIs lists a registered address in Delaware, but Oskar Blues’ Longmont address as Headquarters for United Craft Brews. Last year, Westwood was still asking Does Oskar Blues Still Own Oskar Blues? This will undoubtedly continue to muddy the waters surrounding the answer to that question.

Rumors had been swirling that ABI was considering Cigar City as their next target for acquisition, and founder Joey Redner confirmed that he’d gotten as far as signing an LOI. But ABI let their exclusivity period pass without executing a formal purchase agreement, leaving Cigar City free to entertain other potential buyers.

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Cigar City’s website posted a joint press release about the transaction:

Oskar Blues Brewery Rolls up a Cigar City Blunt
Longmont, CO, & Tampa Bay, FL — Oskar Blues Brewery announced the acquisition of Tampa’s Cigar City Brewing. Putting months of acquirement rumors to rest, the decision is driven by mutual irreverence, respect and desire to stay true to craft beer roots.
The combination stems from the want to take risks, sniff out bullsh*t and grow against-the-grain in an era of increasing competition within craft beer. The collaboration will match years of large-scale growth, expansion expertise and resources of Oskar Blues with the strength of Cigar City’s local following to help both breweries strengthen their future position. Similarly to Oskar Blues, Cigar City’s award-winning brews are well known and respected within the craft community.
“Cigar City is facing next-level challenges and we needed to develop next-level skills and resources to meet them. But, we got into beer out of passion and an unwavering desire to travel our own path. We didn’t want to just shove our round peg into some f*cking square hole and hope for the best. Florida craft beer drinkers want something they can proudly stand behind. These guys get that. They wrote the book on keeping it real,” says Joey, founder of Cigar City Brewing. Joey will remain as CEO of Cigar City following the transaction.
Since 2009, Cigar City Brewing achieved a near constant growth pattern reaching nearly 60,000 barrels in 2015, placing the Tampa Bay area and the state of Florida on the craft beer map. The partnership will provide additional investment for Cigar City’s infrastructure growth within Florida.
“What Cigar City has done for the community of Florida craft beer is impressive. It’s important for our culture to do business with people we want to hang out with and Joey and the gang fit,” Dale Katechis, Soul Founder of Oskar Blues, stated about the new partnership.
Oskar Blues Brewery is the funky brewpub that started brewing beer in 1999 in the small town of Lyons, CO and is responsible for starting the craft beer in-a-can movement in 2002 with Dale’s Pale Ale. In 2008, the brewery expanded down the street to Longmont, CO. and added an additional brewery in Brevard, NC in 2012. Oskar Blues brewed 192,000 barrels in 2015 and announced another brewery in Austin, TX scheduled to open in May of 2016.
Terms of the acquisition are not disclosed.

Patent No. 4729900A: Foam-Stabilized Malt Beverage

March 8, 2016 By Jay Brooks

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Today in 1988, US Patent 4729900 A was issued, an invention of Kenneth Clare, Margaret A. Lawson, and Walter Bryden, assigned to Merck & Co., Inc., for their “Foam-Stabilized Malt Beverage.” There’s no Abstract, although in the description it includes this summary:

A fermented malt beverage having improved foam stability and desirable lace, cling, and clarity is described. The beverage is stabilized by adding 5-400 ppm by weight of combined xanthan gum and a cold-water soluble protein.

Here’s a better explanation, from the application:

BACKGROUND OF THE INVENTION

A number of malt beverages or beers will produce a relatively good foam immediately after pouring, but the foams so produced are not as persistent as is usually desired by the consumers of such products. In addition, consumers desire a beer possessing a foam that will “cling” to the insides of a glass or mug in an attractive “lacy” pattern. Lace and cling are difficult to achieve in the presence of slight contaminant levels of surfactants or detergents on the glassware, as occurs when beer mugs or glasses are handwashed and quickly rinsed prior to use. A further requirement is that the beer exhibit good clarity to the consumer, i.e., the absence of any noticeable “haze”.

Propylene glycol alginate (PGA), heteropolysaccharide S-10 (see U.S. Pat. No. 3,966,976) and cellulose ether (see U.S. Pat. No. 3,669,00) are additives known to stabilize beer foam.

However, continuing research is being conducted in an effort to discover new polymers, additives, and polymer combinations which may be more economical and which can be utilized to impart improved foam stability, lace and clarity to fermented malt beverages while avoiding attendant “haze” levels.

Xanthan gum as an extender or thickener in the food industry is well described in the literature. Also well known in the art is the use of collagen hydrolysates, derived from animal skin, in the preparation of hair care preparation, shampoos and skin care preparations. Collagen derivatives have been used in the brewing process as fining agents. Further, gelatin hydrolysates are well known in the pharmaceutical industry as tablet excipients used in granulating and binding operations during tablet manufacture. However, there are no general references to such compositions in combination being disclosed for specifically improving foam stability and properties of fermented malt beverages.

SUMMARY OF THE INVENTION

It has now been found that the foam retention and lace/cling properties of a fermented malt beverage can be stabilized while minimizing haze formation by adding a combination of xanthan gum and cold-water soluble protein to the beverage in a combined amount sufficient to result in a final concentration in the beverage in the range of about 5-400 ppm, by weight. The proteins useful in the invention include, inter alia, collagen, gelatin, or milk protein hydrolysates, having a number average molecular weight of 900-12,000, which can be used in a weight ratio of 1:4 to 4:1 of xanthan gum/protein.

Xanthan-Gum

Patent No. 254565A: Improvement In Process Of Preparing A Combined Extract Of Hops And Malt

March 7, 2016 By Jay Brooks

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Today in 1882, US Patent 254565 A was issued, an invention of Samuel R. Percy and Walter S. Wells, for their “Improvement in Process of Preparing a Combined Extract of Hops and Malt.” There’s no Abstract, although in the description it includes this summary:

The object of our invention is to produce a combined extract of hops and malt in which the essential principles of both substances shall be so concentrated as to be more easy of manipulation, less bulky in storage, and capable of indefinite preservation in their original purity and strength.

US254565-0

Bear Republic To Open 2nd Brewpub

March 3, 2016 By Jay Brooks

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One of my favorite breweries, and the 2nd largest in Sonoma County, announced that they will be opening a second brewpub in the town right next door to me, in Rohnert Park, California. Bear Republic Brewing, whose original brewpub in is Healdsburg, and also operates a production facility in Cloverdale, has taken over the former Latitude Island Grill space in Rohnert Park, just off the Gold Course Drive exit.

Here’s the press release:

In keeping with the tradition of honest ales and family values, Bear Republic Brewing Company®, its employees and the Norgrove Family are excited to announce that after twenty years, Bear Republic will be opening the company’s third brewery operation in the City of Rohnert Park, California.
“Bear Republic looks forward to developing a positive relationship with the Chamber of Commerce, the City Fathers, the local business community and the citizens of Rohnert Park,” said Bear Republic Brewing Company® President & CEO Richard Norgrove.
The former Latitude Restaurant will be the new site of Bear Republic’s Rohnert Park brewpub.
The brewery and brewpub operation is currently in the planning stages and will commence with the construction phase at 5000 Roberts Rd, formerly the site of Latitude Restaurant. No opening date is available as of this writing.
“Rohnert Park is thrilled to have Bear Republic coming to town,” said Rohnert Park City Council Member Amy Ahanotu. He added, “A brewery of their quality is exactly what we’ve been looking for to expand the dining and entertainment choices for our residents and visitors.”

That’s going to be awesome, with Bear Republic so much closer to my house, but also in building their business with this third location. For more information about the space, here’s the original designs from Latitudes.

Patent No. 669033A: Mender For Beer-Pipes

February 26, 2016 By Jay Brooks

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Today in 1901, US Patent 669033 A was issued, an invention of William J. Hayes, for his “Mender for Beer-Pipes.” There’s no Abstract, although in the description it includes this summary:

My invention relates especially to a device for temporarily unending or stopping a leak in the lead pipe which connects beer or barrels containing other malt liquors with the tap or With an air pressure supply. Frequently a hole is accidentally blown in such pipes and immediate repairs become necessary before artisans can be summoned to effect a permanent sealing. In accomplishing this I form an open cylinder A, of sheet-brass or other flexible metal, somewhat less in diameter than the pipe. This is provided at its edges with ears or lugs b, both of which are tapped and one screw-threaded to receive a take-up screw f. Inside this cylinder is disposed a rubber bushing cylindrical and split at 7L, Fig. 2.

US669033-0

Anheuser-Busch InBev Buys Goose Island Brewpub

February 19, 2016 By Jay Brooks

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The Chicago Tribune reported this morning that Anheuser-Busch InBev, who five years ago bought Goose Island Brewing, the production facility and the brand — but not the brewpubs — has announced the purchase of the original brewpub on Chicago’s Clybourn. Founder “John Hall said AB InBev was unable to buy the brewpub under Illinois law at the time of the first sale, in 2011, but also didn’t have much interest. ‘They didn’t understand the value, which they do now,’ he said.” Neither the price or terms were revealed, but apparently “Goose Island’s Fulton Street brewery will become the parent company of the brewpub on Clybourn, which Hall started in 1988 after a career in the corrugated box industry.” In December, the Wrigleyville brewpub closed, meaning ABI will now owns the entire Goose Island kit and kaboodle.

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10 Barrel Hoping To Open San Diego Brewpub

February 17, 2016 By Jay Brooks

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.

Victory & Southern Tier Announce Merger

February 16, 2016 By Jay Brooks

victory-new sign-plus southern-tier sign-equals abv
Victory Brewing, of Downington, Pennsylvania, and Southern Tier Brewing, of Lakewood, New York, announced today a merger between their two companies. Essentially, they’ve created a holding company called Artisanal Brewing Ventures (ABV) for both companies, and ABV will essentially own both breweries. Here’s how they characterize the newly created entity in their joint press release.

Artisanal Brewing Ventures is located in Charlotte, NC and was formed by Phin and Sara DeMink and Ulysses Management LLC; a New York based family office, with the vision of creating a home for like-minded, best-in-class craft breweries in close partnership with their founders. Ulysses Management was founded 20 years ago by Joshua Nash as the successor firm to the pioneering investment firm Odyssey Partners, LP. Ulysses invests in profitable, well-established companies with tangible, competitive advantages with the goal to build long-term value that benefits all stakeholders. To learn more about Ulysses Management please visit www.ulyssesmgmt.com.

Here’s more from the press release, which is on Southern Tier’s website:

Having just marked 20 years in the craft brewing industry, Victory Brewing Company (Victory) proudly announces a landmark alliance with Southern Tier Brewing Company (Southern Tier) under parent company Artisanal Brewing Ventures (ABV). As the first major transaction of 2016 within the rapidly evolving craft beer industry, this union presents a new model for craft beer partnerships by preserving brewery independence while pooling deep collective resources.
The new strategic framework between ABV, Victory and Southern Tier provides capital, security and vision for the future. ABV, formed to unify independent craft brewers and distillers, embraces the collaborative craft spirit while administering crucial growth resources. Arlington Capital Advisors acted as exclusive financial consultant to Victory. Wells Fargo’s Beverage Finance group provided capital to support the investment and continued growth at ABV. The transaction is expected to close within the next 60 days.
Under the umbrella of ABV, Victory and Southern Tier will independently operate their breweries, commanding a joint capacity of over 800,000 barrels of potential annual production. This alliance creates one of the largest brewers in the Northeast and ranks within the top 15 craft brewing companies in the United States according to Brewers Association criteria with combined 2015 shipments of over 250,000 barrels. With a world-class roster of complementary beer brands and an even stronger standing in the marketplace, ABV will shepherd Victory and Southern Tier in collaborative sales and marketing efforts to strengthen, support and expand its distributor and retail partnerships. Victory and Southern Tier brands will become increasingly available to loyal and new consumers across their combined markets as a direct result of this union.
“The craft beer community is at its most critical moment since its inception as larger brewing corporations have bought into our grassroots movement, irrevocably changing the marketplace. Like-minded brewers such as Victory and Southern Tier can preserve our character, culture and products by banding together,” said Bill Covaleski, Founder and Brewmaster of Victory Brewing Company. “Allied we can continue to innovate and best serve the audience who fueled our growth through their loyal thirst.”
“Having gotten to know Phin, John and the whole management team, I am more excited than ever about the innovations that lie in our collective futures. One walk through their brewery and I knew that Southern Tier had the same belief in quality and excellence that has driven our culture for 20 years,” explains Ron Barchet, COO of Victory Brewing Company.
The Victory and Southern Tier leadership teams and employees will remain intact. Bill Covaleski and Ron Barchet of Victory, who will become significant shareholders in ABV, will join the Artisanal Brewing Ventures’ Board of Directors. CEO John Coleman and CFO Bill Wild will lead ABV’s management team.
“This is exactly the kind of alliance we imagined when we created Artisanal Brewing Ventures in 2014,” said Phin DeMink, founder of Southern Tier Brewing Company and also a major shareholder in ABV. “This is a concept that was specifically designed by and for craft brewers, so we can focus on the things we’re best at while creating meaningful scale advantages. I’m proud to see this model validated and am grateful that my friends Ron and Bill have become our partners.”
“This is the ultimate craft beer collaboration. It is an honor to be associated with these pioneering entrepreneurs who have been contributing to the industry since craft’s early days,” said John Coleman, CEO of ABV. “I look forward to guiding these two truly great organizations forward as they collaborate, innovate and share best practices.”
“I believe this is a watershed transaction for the craft brewing world. This union of two great regional players preserves their independence and distinct cultures while sharing administrative and management functions to support deeper investment in sales, marketing and innovation,” commented Vann Russell, Managing Director and Founder of Arlington Capital.

This is something that has been in the works for many months. The trademark application for ABV was filed last year, in late August. That suggests that the deal would have been all but done if they’d progressed to the point of getting the new logo trademarked.

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Here’s more from the press release on the two companies.

About Victory Brewing Company

Victory Brewing Company is a craft brewery headquartered in Downingtown, PA. Founded by childhood friends, Bill Covaleski and Ron Barchet, Victory officially opened its doors in February of 1996. Victory’s second state of the art brewery opened in February of 2014 in Parkesburg, PA to serve fans of fully flavored beers in 37 states with innovative beers melding European ingredients and technology with American creativity. In addition to the original Downingtown brewpub, Victory’s second brewpub is in Kennett Square, while Parkesburg recently launched self-guided tours and the third brewpub.

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Bill Covaleski and Ron Barchet.

About Southern Tier Brewing Company

In 2002 Phin and Sara DeMink founded Southern Tier Brewing Company in Lakewood, New York with the vision of reviving the practice of small batch brewing to a region rich in brewing tradition. Following several expansions from 2009 through 2013 Southern Tier now ships over 100,000 barrels annually to 33 states to meet growing demand for Southern Tier’s diverse portfolio of innovative beers that embody the spirit of American craft brewing. In 2015 Southern Tier Distilling Company was formed to create innovative small batch spirits using unique local ingredients under a New York farm-distilling license.

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Sara and Phin DeMink,

Patent No. 1017086A: Process Of Removing Alcohol From And Purifying Beer

February 13, 2016 By Jay Brooks

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Today in 1912, US Patent 1017086 A was issued, an invention of Henry E. Deckebach, for his “Process of Removing Alcohol From and Purifying Beer.” There’s no Abstract, although in the description it includes this summary:

The process of treating beer consisting of withdrawing it from the fermenting tub, passing heated, compressed air through it, carrying off the air, sending the beer a strainer, returning it from the strainer to the fermenting tub, and continuing the circulation until the beer has been lowered to the desired temperature.

US1017086-0

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