More brewery acquisitions on the way – The Letter

The words are different, but as far as consumers are concerned, it’s all the same. Last winter, Anheuser-Busch “acquired” Elysian Brewing and “purchased” 10 Barrel Brewing. This spring, Encore Associates “bought out” Full Sail Brewing. Just the other day we learned that Duvel Moortgat “partnered” with Firestone Walker. One may sound less offensive than the other, but in the end they’re all the same: a privately owned and operated brewery is now something else.

By now I think everyone recognizes that more brewery acquisitions are on the way. Have you ever wondered how these conversations get started? What’s it like to own a beloved, local brewery and suddenly find big business knocking on the door with an offer? Below I share a letter that one such brewery received recently.

About the Letter

A local brewery owner forwarded a copy of a proposal letter to me. According to him, “This is the kind of stuff that’s floating around the industry now, so we should expect to see quite a few more acquisitions.”

Without mentioning the name, suffice it to say that this brewery is one of Washington State’s well known, small- to medium-sized, and beloved breweries. This brewery did not invite this kind of offer. It is not shopping itself around. It is not exactly an old, established brewery, but it is not exactly a brand new brewery either. It’s not as big as Elysian, but it’s not a nano-brewery. There are literally dozens and dozens of breweries around the Northwest that are of similar stature. In other words, this is not an anomaly. A lot of breweries are hearing these kinds of overtures.

The Letter

We represent a private equity firm who requested that we contact you to determine your level of interest in selling all or a portion of your business. Our client is interested in acquiring craft breweries with revenues between $10 million and $150 million (although companies outside this range may be considered) that possess the following attributes:

-Leading, defensible market positions

-Excellent customer relationships

-Strong brand recognition

-Demonstrated track record of execution and revenue growth

-Strong Leadership

The craft beer industry is experiencing tremendous growth and here is some recent industry data:

* Most craft breweries have no succession plan.

* Private Equity (PE) sources are predicting that there will be 25 craft brewery transactions in the next 12-15 months.

* There is tremendous money with PE groups, family offices and strategic buyers that is eager to get in the craft beer space. One example is a $130MM fund that has been raised strictly for craft brewery investments.

* Selling multiples are now very high for craft breweries and this is getting the attention of brewery owners who are seeking an exit or capital infusion. It is estimated by PE groups that this window will not happen again for another eight to ten years.

* Recent craft brewery transactions (partial or whole) include: Boulevard, 10 Barrel, Blue Point, Elysian, Southern Tier, Bronx Brewery, Squatters, Oskar Blues, Full Sail, Perrin, Wasatch, Founders, Uinta, Sweetwater, and Alpine.

* Challenges in distribution, capital expenditures, and marketing and sales are the main reasons breweries are seeking capital partners. Breaking into the top 50 breweries requires extra infrastructure and resources that a financial partner can bring to the table, alleviating the need to borrow and guaranty debt.

* The current exuberance surrounding craft beer is creating a bubble of expansion that will pop and leave behind losers to be picked up on the cheap, as some PE experts claim.

Our client prefers to purchase a majority portion of a business, free you up to do whatever you do best, partner with you and your management team on the exact same terms and inject capital or recruit additional industry experts to unlock the growth potential of your business. Attractive situations include opportunities to: broaden a distribution channel or operational focus, recruit and further develop a sales team, expand a company’s intellectual property portfolio, supplement the management team with strategic leadership or scale a business through strategic add-on acquisitions.

The purpose of this letter is to introduce you to this opportunity and determine your level of interest. All inquiries will be held in strict confidence and our client would be pleased to execute confidentiality agreements, where necessary.


This whole issue has become something of a dead horse and I am probably  just beating it, but in the coming months and years we are going to see a lot more mergers, acquisitions, partnerships and, well, sell outs. But why?

The obvious answer is because craft beer continues to gain momentum in the larger beer marketplace and more beer drinkers, especially the younger, up-n-coming drinkers, are becoming craft beer consumers. In America beer is a $100 billion per-year industry and as craft beer continues to grain market share, we should expect to see more companies working to get in on the action.

It’s a new concept, but the idea of opening a brewery, achieving a certain amount of success, and then selling it to a larger company like Anheuser-Busch is a reality these days. For all I know the guys at 10 Barrel Brewing opened their brewery six years ago with the intention of selling it to Anheuser-Busch. Maybe it was part of the plan from the onset. Maybe you don’t like that strategy, but this is America and if you are free to open a brewery and not sell it to Anheuser-Busch then I suppose it is only fair that someone else is free to open a brewery and sell it to Anheuser-Busch.

The craft beer boom of the past decade has created a world of opportunities and just about every craft brewery is either already expanding or busily trying to figure out a way to fund growth. A lot of brewers are knocking on the bank door looking for loans. There is a lot of investment happening silently behind closed doors and most of it never makes the news.

Many breweries, if not most breweries, already have silent investors involved. Today, more than ever before, breweries are entertaining offers from both private and corporate investors. It’s reality. These kinds of acquisitions, mergers, and buy-outs always include capital infusion.

For some older brewery owners, maybe this is all really good news. Let’s face it, there are brewery owners out there who are probably considering exit strategies. Some people don’t want to work all their lives and operating a brewery is a lot of work.

Maybe you’d figure out something else, some other way to cash in on your years of hard work without selling out to huge corporate interests. Maybe you’d find a way to have your cake and eat it to, hatching a plan to maintain your brewery’s reputation and integrity while also getting the big payday. Truth is, simply cashing the check and walking away is an option.

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  1. “Recent craft brewery transactions (partial or whole) include: Boulevard, 10 Barrel, Blue Point, Elysian, Southern Tier, Bronx Brewery, Squatters, Oskar Blues, Full Sail, Perrin, Wasatch, Founders, Uinta, Sweetwater, and Alpine.”

    Anyone know anything about why Oskar Blues is listed there? Lots of news lately about them buying up even smaller breweries, but they’ve been pretty adamant in public about not getting acquired themselves.

  2. Any successful business will have people interested in acquiring it. No surprise there. With craft beer, the level of outrage or support from the consumer depends in who you sell it to. If Mary’s Book Nook sells her business to Jane, people may still shop there. If Mary sells it to Barnes & Noble, they will probably call her a sell out. If Mary sells to Bogus Equity Capital, who let’s Mary stand behind the cash register and chat up customers for a year, at which time Bogus sells it to B&N, Mary takes less heat but her loyal customers will find a new small book store to shop at.

    Craft breweries who develop their business based on customer loyalty and a cult of personality (Jim Koch, Sam Calagione, Dick Cantwell, Charles Finkle) have a hard time exiting without some kind of ripple in the cosmic beer continuum. It does not seem to matter though, that when brewmasters who made the great beers that won the awards leave for some new place, the brewery can continue on with hardly a peep.

    I think the big deal is the idea of a homegrown US brewery selling to a foreign-based beer conglomerate. If you are going to sell, at least sell it to another US-based business.

  3. It is fascinating to read a proposal letter like that. A lot of craft brewers don’t have succession plans. Hell, when they started most people thought it was crazy and that they were doomed to fail.

    Harpoon is transitioning to an employee-ownership model to maintain independence. Ironically they decided to do that when one of the co-owner/co-founders wanted to start acquiring struggling craft brewers, while the other just wanted to retire.

  4. A true tragedy in itself allowing $$$ to take over small businesses.., and many will say its “corporate” greed that is hurting small businesses.

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