Brookston Beer Bulletin

Jay R. Brooks on Beer

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Pyramid CEO Resigns

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Pyramid Brewing announced today that CEO John Lennon has resigned, effective immediately. The company is reporting that Lennon left to “pursue other business interests,” which is about a vague as you can get. He had been on the job only since last August, and before that he was with Beck’s. It will be interesting to see what finally comes out as the real reason for his departure, because in my mind these sort of things don’t play out like this unless there is a hidden agenda.

He will be replaced by board member Scott Barnum, who previously has worked for Pete’s Brewing and Miller. Barnum is a resident of the Bay Area and will apparently maintain offices both in Berkeley and Seattle.

A Confusion of Brands: Miller Buys Steel Reserve

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Okay, maybe the confusion is all on my side, but I’m confused. SABMiller announced the purchase from McKenzie River Partners of Steel Reserve, the leading high gravity beer. High gravity beers are essentially a euphemism for malt liquor. But the McKenzie River Partners that I knew also owned or at least controlled in some fashion Black Star Lager from Great Northern Brewing Co. of Whitefish, Montana.

The original Black Star Lager label and today’s label.

 
I knew at some point that Steel Reserve became the focus of the company but Black Star all but disappeared from the Bay Area, where at one time it actually did pretty well. I confess when the focus changed to malt liquor, I stopped paying attention. I don’t generally think much of high gravity beers — Dogfish Head’s Malt de Liquor notwithstanding — so I tend to ignore news about them. For this reason, this move by Miller to buy even the leading malt liquor for an astonishing $215 million makes little sense. Also in the deal is Sparks, a caffeinated alcoholic malt beverage with added caffeine, guarana and ginseng. But the spin machine makes these two brands sound like Miller’s salvation. I guess time will tell.

From the press release:

The deal immediately strengthens the Miller portfolio with two fast-growing and profitable brands that are defining their respective product categories and far outpacing overall industry growth. Miller also expands its innovation capability and expertise by aligning itself with an entrepreneurial pioneer with a proven track record of creating highly successful, first-mover brands like Steel Reserve and Sparks.

“Sparks and Steel Reserve will have an immediate positive impact on our growth profile,” said Norman Adami, president and CEO of Miller Brewing Company, a wholly owned subsidiary of SABMiller plc. “In addition, our new product development relationship with Minott Wessinger connects us with a very special guy when it comes to innovation.”

Under Mr. Wessinger’s leadership, the Sparks and Steel Reserve brands have grown at triple and double digits respectively. Miller plans to build on their innovative and highly differentiated positionings and continue their impressive growth by leveraging Miller’s first class marketing, sales and distribution platforms.

“I’m very excited about the new relationship with Miller and confident that they will take Sparks and Steel Reserve to the next level with great marketing and sales support,” said Mr. Wessinger. “The U.S. beverage market is changing rapidly and there are tremendous opportunities for us to create new brands that bring value to consumers, wholesalers and retailers.”

Both Sparks and Steel Reserve are already brewed by Miller under a contract brewing agreement with McKenzie River. Under the new agreement, the parties have also agreed to a long-term contract brewing relationship. The majority of Sparks and Steel Reserve volume is currently distributed by U.S. wholesalers who also carry Miller brands.

McKenzie River has successfully built national distribution of both the Sparks and Steel Reserve brands through seeding in independent C-stores followed by expansion into chain convenience stores and supermarkets. Miller intends to increase the channel penetration of the brands.

Besides acquiring great brands, Miller also gains access to Mr. Wessinger’s creativity and entrepreneurial winning streak through a formal product development relationship.

“Our new relationship with McKenzie River will enable Miller to tap into emerging consumer trends and leverage new brands through our national system of distributor partners,” Mr. Adami said.

Brother David Wins Best of Show

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Anderson Valley Brewing’s Brother David’s Double, in addition to being awarded a gold medal in the Belgian Strong Ale category, was declared “Best of Show” in the Commercial Craft Brewing Competition at the 2006 California State Fair.

From the press release:

“We’re very proud of the Brother David’s Abbey Style Ales,” said Brewery President, Ken Allen. “Not only did Brother David’s Double win the Best of Show, but our Brother David’s Triple received the Third Place Bronze. We think our abbey style ales stand up to just about anything the Belgians themselves are producing, and the public response to these two beers has been very gratifying,” he added.

Certified beer judges and craft brewers from around the state chose the winners at this year’s competition from 411 California beers submitted by 74 breweries in 35 categories. “California Craft Brewers once again show us why they are leaders in the American micro brewing renaissance. They are actively pushing the industry forward with high levels of quality and
stylistic innovations,” said J.J. Jackson, state fair craft brew competition organizer. He described Brother David’s Double as “a unique, stylistic beer and one that I enjoyed tasting after the judges awarded it.”

Vic Kralj, co-owner of the Bistro, with the real Brother David, Dave Keene, owner of the Toronado.

NBWA Continues Lobbying for the Rich

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I knew this issue wasn’t going away. Congress is again moving toward letting the rich get richer while the rest of us get poorer. A compromised version of the repeal of the estate tax passed the House today and while it’s not quite as onerous as outright repeal, it still leaves a very bad taste in my mouth. What’s that flavor? Greed. Bloomberg has a nice overview of today’s events regarding the estate tax vote. Why is this here? Because the National Beer Wholesaler Association continues to make this their top priority. It has very little to do with the beer business per se, apart from keeping a very wealthy few beer wholesalers as rich as Croesus.

From the NBWA press release:

NBWA Applauds House Vote Calling for Permanent Relief from the Death Estate Tax

ALEXANDRIA, Va. – The National Beer Wholesalers Association (NBWA) today applauded House passage of legislation that aims to provide the nation’s small business owners with permanent relief from the onerous death estate tax. H.R. 5638, the Permanent Estate Tax Relief Act of 2006, sponsored by Ways and Means Committee Chair Bill Thomas (CA-22), passed the House with bipartisan support.

“Today’s vote represents recognition by the House that it is high time to deliver a permanent solution to the death estate tax to America’s small business owners,” said NBWA President Craig Purser. “While full outright repeal is the ultimate goal, in this intense political climate we acknowledge that partial relief is better than nothing. Those groups that oppose Chairman Thomas’s bill in favor of holding out for a vote on full repeal must understand that small business owners need permanent relief now, and the window of opportunity is closing.

“The onus is now on the Senate to act swiftly. The Senate asked for legislation from the House and the House answered the call. Now is the time for Senators to stand up for small, family-owned businesses and support this effort to provide permanent relief from the death estate tax once and for all.”

Horse manure. You can read my earlier equally fair and balanced rant entitled “Enough Already: Time to Cry Bullshit” about this issue.

City Brewery of Wisconsin to Buy Latrobe Brewery

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It was announced today that InBev has signed an exclusive letter of intent with City Brewery of La Crosse, Wisconsin. Three weeks ago it was reported that negotiations had broken down in City Brewing’s efforts to buy the Coors brewery in Memphis, Tennessee. So this makes a lot of sense, though I’m surprised they didn’t use this as a bargaining chip — bludgeon, really — to get the concessions they wanted from the brewery workers’ union in Memphis. Who knows, perhaps they still will. After all the letter of intent doesn’t guarantee that they two parties will be able to agree on a price and terms acceptable to both. But it’s certainly a good first step. I can only imagine the 200 plus workers at the Latrobe Brewery are breathing a collective sigh of relief. Let’s hope it all works out to everybody’s satisfaction.

From the Pittsburgh Times-Review story:

Latrobe Brewing Co. may soon have a new owner, as InBev USA said Wednesday it has signed an exclusive letter of intent with City Brewing Co. of La Crosse, Wisc., to purchase the brewery.

InBev and City Brewing Co. will now begin negotiations in an effort to reach agreement on a final deal, according to a statement issued by InBev Wednesday.

InBev said no timeframe has been set for completion of the talks, which will remain confidential between both parties. InBev said no information would be forthcoming until the talks are concluded.

City Brewing brews its La Crosse and La Crosse Light beers. The company also has a significant contract brewing business, which means it brews beer for other brewing companies.

Two weeks ago InBev said a letter of intent was being negotiated with an undisclosed potential buyer.

InBev said members of the International Union of Electronics Workers/Communications Workers of America, which represents about 154 workers at Latrobe Brewing, will be included in the talks. Union officials could not be reached for comment.

InBev also said local, state, and federal government leaders will also be consulted. State officials could not be reached for comment.

According to a statement released by Pennsylvania Governor Ed Rendell, he would be willing to discuss offering incentives to City Brewery in an effort to save the jobs.

From his statement:

“I am very encouraged and hope that our work to save the more than 200 jobs at Latrobe Brewing Company will be successful. I intend to speak with officials from City Brewery tomorrow to discuss our aggressive and innovative Pennsylvania Economic Stimulus program, which, I hope, will help them decide, like many other companies, that Pennsylvania is the right place to locate and expand their business.

“The hardworking, highly skilled men and women at the Latrobe Brewing Company are the best reason for any brewing company to bring their product to Pennsylvania, and I am hopeful that this letter of intent will translate into a contract to purchase the company. I intend to work personally, along with my Governor’s Action Team to ensure that this happens. This is not the final step, but it is a very good step in the right direction.”

HopUnion Merges with Yakima Chief Craft Division

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hopunion-globe yakima-chief
HopUnion LLC announced today that they will be merging, effective August 1, with Yakima Chief’s craft division. Yakima Chief will continue to independently run their other divisions. But the craft beer side of their hop business will be folded into HopUnion’s and almost nothing will change there apart from having more hops to offer and the addition of longtime Yakima Chief east coast salesman Jim Boyd.

From the press release:

“We believe this merger will help provide more selection of hop varieties as well as better stability in the supply and demand chain,” said Ralph Olson, general manager and one of the owners of Hopunion Craft Brewing Sales, LLC. “Our ability to take care of the needs and desires of the customer will be greatly enhanced.”

Olson said that by combining the two companies there will be improved efficiencies in pellet plant production with the ability to produce larger volumes of consistent product.

Prior to the merger, Hopunion Craft Brewing Sales, LLC and Yakima Chief, Inc. were providing specialty hop varieties to the craft brewing industry.

Joining Olson in the new company will be Ralph Woodall, Jim Boyd and David Edgar, who together have over 60 years of experience in the hop industry. Support staffs from Hopunion Craft Brewing Sales, LLC and Yakima Chief, Inc. will be located at the Hopunion Craft Brewing Sales, LLC office in Yakima.

Ownership of the new company includes several Northwest growers who specialize in producing premier aroma hops. With these grower partners, the new company will be able to continue to provide the consistency in quality of hops that customers have come to expect from both companies.

“We will now be able to provide greater coverage in North America for the craft brewing industry,” Olson said of the merger. “And, it will allow us to help nurture craft and specialty brewing internationally, a growing segment of the industry.”

I spoke to Ralph Woodall this morning and it sounds like the merger is all positive. According to Ralph, the two can now stop competing in this area and start working together which should be a boon to craft brewers. Both have, as I understand it, great reputations in the industry though HopUnion certainly has the more public face (and puts on the best industry parties — especially when they work alongside Joanne Carilli from White Labs). Gerard Lemmens had been the public persona of Yakima Chief but he left the company last year for Brewers Supply Group and has all but retired to London now. So this merger makes a great deal of sense for both parties.

HopUnion, even before the merger, was the biggest supplier of hops to the craft beer industry with Yakima Chief solidly at number two. Post-merger they will own a sizable share of the market, though the craft beer market represents a fairly small percentage of total U.S. hop production. Best of luck to the Ralphs, David, Jim, Jennifer, Dave and Becky, the Johns and the rest of the wonderful folks at HopUnion.

ralph-olson-1
The infamous Ralph’s from HopUnion. From left: Ralph Olson and Ralph Woodall, with Rob Widmer, of Widmer Brothers Brewing. I took this at the 15th Anniversary Party for the Celebrator Beer News.

CAMRA Unhappy About Greene King Takeover

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On Friday, the UK’s Guardian Unlimited that CAMRA and other consumer advocacy groups are already angered by Greene King’s takeover big to buy Hardys & Hansons, after which they believe “Hardys & Hansons will be chewed up and spat out like so many before it,” according to Camra’s chief executive, Mike Benner. Hardys & Hansons also includes the pub Ye Olde Trip to Jerusalem in Nottingham, believed to be the oldest pub in Great Britain. The pub is literally carved into the sandstone under Nottingham castle, although Wikipedia indicates that perhaps nineteen other pubs have similar claims to the title “oldest in Britain.” Greene King’s bid has thus far included no information about the fate of the pub, the brewery or their employees.


 
 

From CAMRA’s press release:

The Campaign for Real Ale today called on shareholders of Hardys & Hansons to reject the takeover offer from Greene King and draw a line in the sand on behalf of beer consumers.

The offer to buy Nottingham based Hardys & Hansons is the latest in a series of acquisitions that has seen Greene King devour ten rivals in ten years.

CAMRA Chief Executive Mike Benner said: “If this deal goes through, history has shown us that Hardys & Hansons’ brewery and beers will not be in safe hands. Now is the time for the shareholders who truly care about this excellent brewery with more than 174 years of history to make a stand and reject this offer.

“Today’s announcement made scant reference to the future of the beers, the brewery or the staff. We believe if the shareholders don’t block this now, Hardys & Hansons will be chewed up and spat out like so many before it.”

CAMRA is concerned that the acquisition of Hardys & Hansons 268 strong pub estate would take the number of pubs owned by Greene King and selling its beers to around 2680 nationwide. Having such a massive presence can only be damaging to consumer choice.

Mike Benner continued: “In 2002 CAMRA warned the Government that the abolition of the Guest Beer Right would result in a series of mergers and takeovers that would undermine competition and consumer choice. Do we want to find ourselves in a situation where every other pub sells only Greene King IPA? The Guest Beer Right must be reintroduced before it is too late so that licensees can sell a beer of their choice to preserve the future for independent breweries.”

Here’s a history of buyouts undertaken by Greene King over the last ten years:

  1. 1996: Magic Pub Company (This pub group included the Hungry Horse concept which is now one of the Greene King’s pub brands)
  2. 1999: Morlands Brewery (closed the brewery and Ruddles beer brands acquired at the same time)
  3. 2001: Old English Inns (the pub estate integrated into the GK pub estate)
  4. 2002: Acquired the Morrells Pub company (pubs integrated with the GK pub estate)
  5. 2004: Laurel Pub Company (pubs integrated with the GK pub estate)
  6. 2005: Ridleys Brewery (brewery closed)
  7. 2005: Belhaven Brewery (brewery still open)

Senate Votes Against Abolishing Estate Tax

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I realize this is not, strictly speaking, beer news, but given the NBWA’s unrelenting efforts to help their rich members avoid paying taxes, and my diatribe about it two days ago, I wanted to update the story. Today, the Senate voted to “reject a Republican effort to abolish taxes on inherited estates during an election year with control of Congress at stake,” according today’s San Francisco Chronicle. The vote was three short of the votes needed to advance the bill.

Also from the Chronicle article:

“The estate tax is an extremely costly tax for a wealthy few that comes at the expense of every other American born and yet to be born for decades to come,” said Senate Minority Leader Harry Reid, D-Nev.

Under current law this year, the first $2 million of a person’s estate or $4 million of a couple’s, escapes taxation. The remainder can be taxed at rates up to 46 percent.

According to the most recent statistics available from the Internal Revenue Service, 1.17 percent of people who died in 2002 left a taxable estate.

“Repealing the estate tax during this time of fiscal crisis would be incredibly irresponsible and intellectually dishonest,” Sen. George Voinovich (R) of Ohio said.

Unsurprisingly, the NBWA wasted no time expressing their displeasure with the Senate vote. From their press release:

“We are disappointed about today’s vote regarding a permanent solution to the death tax which hurts small family-owned businesses. Make no mistake about it. Those Senators who previously supported death tax repeal and today opposed this effort to proceed to H.R. 8 are standing in the way of a permanent solution. Those Senators that voted “no” on cloture have essentially voted “yes” to increase the death tax to 55 percent in 2011.

“On behalf of America’s beer distributors, we will continue to work with Congress on a permanent solution to the death tax that will allow small business owners to plan for the continuation of their businesses with certainty and without fear of a looming death tax threat that could mean the death of the family business.”

Oh, those poor rich families. They may be family-owned, but small they’re not. But I guess money makes people do and say crazy things. So the spin machine is again in high gear. I’m sure we haven’t heard the last of this issue.

Beer School is Back at 21st Amendment

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21st Amendment brewpub’s beer school, which was monthly but has been on sabbatical lately, is returning.

From the press release:

Join us Tuesday, June 13th at 6 pm on the mezzanine at the 21A for an evening of Summer Brews. Beer and brewers from all around the Bay area will be pouring as we discuss the history and styles of summer beer.

$25 for beer samples and appetizers.

6.13

21st Amendment Beer School: Summer Brews
21st Amendment Brewery – Restaurant – Bar, 563 2nd Street, San Francisco, California
415-369-0900 [ website ]