Brooklyn Brewery is piecing together what might be the most diversified and unique partnership model for an American craft brewery. This week they announced a sale of 24.5% of the American brewery business to Kirin, Japan's second largest brewer and beverage business that includes a variety of partnerships including Heineken Japan, a Coca-Cola bottling business, as well as holdings in real estate, engineering, and restaurants. The joint venture will expand Brooklyn into new markets internationally, and will be 60% owned by Kirin, 40% owned by the New York brewery.
WHY IT MATTERS
Even as the shine of anything Brooklyn-based wears off Stateside, its international relevance is still largely underutilized by Brooklyn Brewery, and through a fascinating series of partnerships they've been able to explore the export market relatively unchallenged. Meanwhile, back at home, the competitive space for their flagship Lager and some IPAs is brutal by comparison.
Very quickly, the brewery's second biggest market outside of New York City was Sweden—where the Brooklyn logo can now be seen hanging above bar doors almost as often as Guinness in Dublin. That success led to partnerships with Carlsberg to build the New Carnegie brewery in Stockholm, which serves to bring Brooklyn to the local market as well as revive the old Carnegie brand owned by Carlsberg. Similarly, this new vision with Kirin includes developing new brands together that serve the Japanese market.
So while many of the U.S.'s largest craft brewers copy/paste new conventional breweries (mostly heading East to cover both coasts), Brooklyn is clearly looking for systems of low pressure to stake an early claim, build up defensibility in those markets, and diversify their risk and opportunity through new partner brands and concepts. Just look at this timeline:
1984 — Founded as a contract brand in upstate New York
1994 — Garret Oliver assumes brewmaster role
1996 — Matzo factory becomes the Brooklyn-based production brewery
2009 — Export to Swedish market
2010 — Steve Hindy sells voting shares to Ottaway brothers
2013 — New Carnegie partnership with Carlsberg begins in Stockholm
2016 — Announce plans for Brooklyn facility re-investment
2016 — Sell minority stake to Kirin for international expansion
Brooklyn's model has always defied convention. Starting as a contract brand in up-state New York, the brewery's physical connection to Brooklyn-proper is a relatively recent one. Steve Hindy sold his voting shares in 2010, around the time they were deciding what their future looked like in the borough where space is both limited and expensive and competition started to play a major role in their prospects. Now lead by Harvard MBA, Eric Ottaway (and co-owned with his brother, Robin, who bought a majority stake), the brewery continues to take incremental, unconventional, relatively risk-averse steps to creating a system of capacity, talent, and an international portfolio of brands that no one else seems capable or interested in following. But that hasn't pulled focus away from the Brooklyn property. In fact, a re-investment in the property there is one of the biggest moves they've made despite the attention given to their international deals.
Encroaching on 300,000 barrels produced this year, Brooklyn may seem like an idle threat to the likes of New Belgium, Sierra Nevada, and Lagunitas, all of whose numbers soar high above Brooklyn's (although they struggle to maintain the growth trajectory). But counting the barrels, brands, and market penetration abroad, the picture is more of a mosaic of unconventional growth and forecasting in new markets. When the next generation of breweries head further abroad into markets like Scandanavia, Japan, and—according to Kirin's plans—Brazil, it'll be Brooklyn there waiting for them.
Kirin Hopes to Refresh Beer Offerings With Stake in Brooklyn Brewery [The Wall Street Journal]