Good Beer Hunting

Plenty for All? — Aging Craft Brewers Offer Hard Lessons for the Future

Photo by Kyle Kastranec

Photo by Kyle Kastranec


Last week was a wild one for mergers and acquisitions, and just not in the way beer lovers have come to expect. Recent moves by Avery Brewing Company, Ninkasi Brewing Company, and Stone Brewing all represent a "modernization" of the M&A process for American breweries.

Avery, which had already sold a 30% stake in the company to Mahou San Miguel, offered up another 40% in a combined purchase by Mahou and Founders Brewing (which itself is 30% owned by the Spanish company). Stone sold off its $29 million Berlin facility to BrewDog, a transactional admission of failure in a country where co-founder Greg Koch was once declared Beer Jesus and crowdfunded $2.5 million from fans to construct the site.

An ironic bow comes from Ninkasi, which sold a majority stake in its business to a venture capital firm and real estate company. In doing so, it’s creating a combined business platform that will enable it to purchase other "small and independent" breweries, keeping them within the limits of a Brewers Association-defined "craft brewer" and Ninkasi's own mantra of "Craft Brewed & Independently Owned."

The move from Ninkasi is a bit of an unintended, cosmic jab at Stone, who once promised to do a very similar thing with its “True Craft” investment program aimed at allowing "craft breweries to stay craft breweries."

In a recent interview on the Good Beer Hunting podcast, Koch admitted the effort never got off the ground. In the end, a purported $100 million from undisclosed "independent investors" produced nothing aside from a Spotify playlist. Within months of the announcement, Stone did receive $90 million of private equity money in a separate transaction from VMG Consumer Partners. Instead of expansion on the back of that influx of cash, contraction and layoffs have occurred.


Like superheroes teaming up to create The Avengers, finding partners with which to battle the headwinds of industry change (and capitalism) is quickly becoming the move du jour in the beer scene. Three of the top-10 Brewers Association-defined craft brewing companies (Duvel Moortgat, Gambrinus, and CANarchy) are combinations of multiple breweries. The 11th-largest is another example of the phenomenon (Artisanal Brewing Ventures).

Mahou's pairing of Founders and Avery isn’t on the list, but represents another example of individual companies sharing brewing, ingredient, and business expertise in order to better succeed as regional and national brands (something that’s becoming increasingly difficult in today's beer business climate). Even one of the OG multi-brewery associations—Craft Brew Alliance—is evolving to better succeed (or perhaps sell).

Against the backdrop of a fast-paced industry featuring almost 7,400 competitors of all sizes, many newer breweries are learning from the proverbial sins of their "parents" who have seen this kind of teaming-up as a necessary step to stay financially or culturally relevant.

Where Stone may have failed in Germany with its "go big or go home" mentality, others have flourished by staying small and nimble. Greg Koch famously smashed German beer with a giant stone at the Berlin opening, a loud and proud example of American exceptionalism if there ever was one. Modern Times, on the other hand, has become one of the fastest-growing companies in the country through a network of brewpubs focused on more intimate interactions with staff (who are also employee-owners).

Georgetown Brewing Company and Rhinegeist Brewery have also shown massive growth—not by spreading far and wide on their march toward 100,000 BBLs, but instead by focusing on home markets and organic growth. They, of course, benefit from seeing the troubles faced by predecessors like Sierra Nevada or Boston Beer, but that's how trial and error works.

“We’re looking at 10% growth for 2019, then we’ll evaluate what’s happening in the industry and where things are gaining or losing share,” Matt Steinke, Rhinegeist’s director of sales, told GBH just last week. “We’re not happy being stagnant, but OK slowing down the growth to intentionally sustain it long-term.”

The reality for the trio of Avery, Ninkasi, and Stone is that it’s too late for them to take advantage of that same opportunity. But while Avery has had particular challenges increasing volume sales from its debt-funded 150,000-barrel brewery (and has flattened out at around 63,000 BBLs), neither Ninkasi or Stone have faced problems that are quite as dire.

In IRI-tracked national grocery, convenience, and other stores, Ninkasi's sales are flat. But according to numbers reported to the Oregon Liquor Control Commission, in-state sales continue to grow, though at a slower pace (3.2% in 2018) than craft's national average (4%). From 2016–2018, Ninkasi increased its barrels sold in the Beaver State from 47,496 to 50,228, and ranks as the third-best-selling brewery in Oregon by taxable barrels sold in-state.

Despite a national footprint that has plagued some of its long-tenured brewery peers, Stone grew its IRI volume by almost 11% from 2017–2018. That growth has been consistent for the company, but even before selling off its Berlin brewpub, it went through restructuring and layoffs. It also opened a $75-million facility in Richmond, Virginia.

In a 2016 interview with Men's Journal, CEO Dominic Engels said it would be difficult to identify if Stone got too far ahead of itself with expansion plans because they "were laid out long before the recent pressures to craft beer were being felt." The outlet suggested that a big part of Engels' job was to stick to an ideal Koch has long positioned as a core belief: "I have been charged with keeping Stone independent," Engels said.

For the companies that announced different kinds of moves last week, the idea of "independence"—though not the craft beer-focused definition created by the Brewers Association—plays an important determining factor in their decisions. In this sense, "independence" is associated with bolstering business and financial strength for the future, whether initiated by a need for an influx of cash (like Avery), succession (like Ninkasi), or course correction (like Stone).

“Finding the right partners, with the right long-term capital model to really build out a strong collaborative platform of brewers that can leverage each other’s strengths, made this the right decision for where the industry has evolved over the years,” Ninkasi CEO and co-founder Nikos Ridge told the Eugene, Oregon Register-Guard.

It's a sentiment that is reflective of broader challenges faced by beer, which continues to lose ground to wine, spirits, and a variety of other alcoholic beverages. As the industry changes, we're only going to see more of these moves that bring breweries together, or identify needs of efficiency for the sake of the bottom line. But as these examples illustrate, sometimes they become the cost of business for some of the industry's largest players. Nearly all growth for American beer is coming from its smallest companies (quite literally), and right-sizing for some after years of unstoppable growth was likely inevitable.

As for how those changes come to fruition, and what they mean for the ethos of these breweries, now seems to be a pivotal time in determining what comes next.

Words by Bryan Roth