Craft Brew Alliance to Form ‘Strategic Partnership’ with Appalachian Mountain Brewery

amb_round_logoCraft Brew Alliance today announced it has signed a letter of intent to form a strategic partnership with Appalachian Mountain Brewery, a publicly traded craft brewery based in Boone, North Carolina.

Although specific terms of the deal were not disclosed, CBA told Brewbound the two companies will explore ways to “drive business growth and shareholder value through sharing resources in key strategic areas.”

“For Appalachian Mountain Brewing, we are looking to the future of what is happening in the industry, not only in North Carolina but across the entire country, Appalachian Mountain CEO Sean Spiegelman told Brewbound. “How do we continue to do what we love — which is build community, sustainability and philanthropy — and do it in a much bigger fashion, so that we touch more consumers in the same way we do locally?”

According to a company statement, the strategic partnership will provide Appalachian Mountain Brewery with access to CBA’s thought leadership, technical resources and experience in brewing, branding and go-to market strategies. The partnership could include sharing brewing, distribution, purchasing and sales resources, as well.

“There are a lot of intriguing things that we are working on,” said CBA chief Andy Thomas. “You will see us out there, very actively working together in the next few weeks.”

While the exact way that the partnership will develop is uncertain, Thomas said more concrete plans would be put into place within the next six months.

“It isn’t an acquisition at this point,” Thomas added. “The qualifier doesn’t say it will be or won’t be. For right now there is a meeting of the minds.”

That meeting actually began in May, when Appalachian Mountain attended the Brewbound Session in Boston and won the second annual Startup Brewery Challenge, a business pitch contest sponsored by CBA. After the two companies brewed a collaboration beer together, the idea of exploring a longer-term partnership developed.

“As a business person, you try to play with the best people that are out there,” said Spiegelman. “If you do that, you are going to get better. The ability to have conversations with Andy after the Brewbound Session was something that I wasn’t going to pass up.”

Those conversations culminated in today’s announcement.

CBA Logo - 5inIn addition to the Appalachian Mountain Brewery’s commitment to producing high-quality beer and supporting local philanthropic initiatives, Thomas told Brewbound that geography also attracted CBA to the partnership.

“We have been very public about the fact that there is opportunity for other brands to join the alliance as we like to call it,” he said. “We have also been pretty vocal about the Southeast being very interesting to us. North Carolina is the next big craft beer state.”

CBA — which produces and markets the Widmer, Redhook, Kona and Omission brands — has a history, dating back to 1994, of establishing partnerships that lead to acquisitions.

In 1994, Redhook — one of the founding breweries (along with Widmer Brothers Brewing) in what would eventually become the CBA — entered into a distribution and equity partnership agreement with Anheuser-Busch. At the time, Anheuser-Busch purchased a 25 percent stake in the Redhook business.

In 1997 Widmer entered into a similar distribution arrangement with Anheuser-Busch, in exchange for 25 percent of that business. Fast-forward to 2003, when Widmer formed a “strategic alliance” with Kona Brewing, taking a 20 percent stake in the brewery in exchange for access to the Anheuser-Busch distribution network. One year later, Redhook and Widmer formed a joint venture, combining its sales and marketing entities and distributing its brands through A-B. In 2007, Widmer purchased a 42 percent stake in Goose Island and in 2008, CBA was formed.

Since, CBA has entered into a similar arrangement with The Chive, contract producing and supporting sales of the popular website’s KCCO brand of beers.

A full press release with additional details on today’s announcement is included below.

appalachian mountain brewPortland, Ore. (Dec. 2, 2014) — Craft Brew Alliance, Inc. (“CBA”) (Nasdaq: BREW), an independent craft brewing company, today announced it has signed a Letter of Intent (the “Letter”) to form a strategic partnership with Boone, NC-based Appalachian Mountain Brewery, Inc. (“AMB”) (OTC: HOPS). Under the terms of the Letter, the two publicly traded companies will explore potential opportunities to drive business growth and shareholder value through sharing resources in key strategic areas including, but not limited to, brewing, purchasing, distribution, and sales. The prospective partnership also gives AMB’s employees access to CBA’s thought leadership, technical resources and 30+ years of experience in brewing, branding and bringing to market world-class American craft beers.

CBA and AMB share several similarities that reinforce the strategic alignment and cultural fit between both companies, including distinctive and identifiable brands that are rooted in real local heritage and a strong belief in the importance of community, philanthropy and sustainability. CBA’s portfolio of brands includes three of the industry’s pioneering craft brewing companies, Widmer Brothers Brewing, Kona Brewing and Redhook Brewery. All three companies are well known for their community involvement and commitment to environmental sustainability — from Widmer Brothers’ industry-leading water conservation efforts to Kona Brewing’s innovative use of solar power to supply its energy needs. Similarly, Appalachian Mountain Brewery oversees multiple programs focused on enriching its local communities, including its Pints for Non-Profits program and “We Can So You Can” initiative, which donates proceeds from every 16 oz. can sale towards the revitalization of mountains and rivers throughout the Appalachian Mountain Chain.

“This kind of partnership aligns perfectly with what we’re building CBA to do: help bring authentic craft beers and brands to beer lovers from coast to coast. As we look to the future, we’re excited to broaden the alliance with real brands that are steeped in place and legacy and nurture their ability to serve today’s increasing demand for great-tasting, local craft beers in emerging markets like North Carolina and the Southeast,” said Andy Thomas, chief executive officer, Craft Brew Alliance. “Sean and the entire team at AMB have already begun to build an amazing company, known just as much for its innovative award-winning beers and ciders as its leadership in sustainability and community involvement. We are thrilled to support their ongoing innovation and look forward to exploring opportunities to share CBA’s knowledge and resources, not to mention enjoy some great beers with a genuinely wonderful and talented group of people.”

2014-boston-startup-challengeIn May 2014, Appalachian Mountain Brewery won the Start-Up Brewery Challenge at the Brewbound Session in Boston. CBA is a three-time sponsor of the contest, in which craft brewery owners have three minutes to present their business models and pour one beer that receives immediate feedback from an expert panel of judges. Following the Challenge, the two companies had an opportunity to work together on a collaboration beer. It was during this experience that the companies discovered a strong cultural similarity and mutual interest in exploring a longer-term partnership that would align with both companies’ values and business objectives.

“Since AMB was founded, we have been consciously committed to finding ways to sustainably brew high-quality beer and give back to our communities in the Appalachian Mountains so that future generations can prosper and enjoy these great resources that we’re borrowing from them,” said Sean Spiegelman, chief executive officer, Appalachian Mountain Brewery, Inc. “I can think of no better path forward for our company than to create a strategic partnership with a respected leader like CBA. We are extremely excited to look at how AMB can leverage their technical expertise and extensive experience helping brands grow while maintaining their focus on local community, philanthropy and the environment. We’re also looking forward to brewing a collaboration on both coasts in a much larger format so that more of our consumers can enjoy the outstanding craft beer.”

Appalachian Mountain Brewery has recently begun canning on its Cask Semi-Automated Canning System, supporting AMB’s objectives to expand distribution of three of its beer styles in cans throughout North Carolina. The company is initially focused on canning its flagships, Long Leaf IPA, Blonde Ale and Porter. Added Spiegelman, “Can packaging is a turning point in our history as a small scale brewery. We will look back at 2014 as the year that put us on the craft beer map.”

About Craft Brew Alliance

CBA is an independent, publicly traded craft brewing company that was formed through the merger of leading Pacific Northwest craft brewers — Widmer Brothers Brewing and Redhook Ale Brewery — in 2008. With an eye toward preserving and growing one-of-a-kind craft beers and brands, CBA welcomed Kona Brewing Company in 2010, and then launched Omission beer in 2012 and Square Mile Cider Company in 2013.

When Kurt & Rob Widmer founded Widmer Brothers Brewing in 1984, they didn’t confine their brewing exploration to strict style guidelines. To this day, Widmer Brothers continues to create craft beers with a unique and unconventional twist on traditional styles that are award winning and please a wide range of craft beer lovers. Redhook began in a Seattle transmission shop in 1981 and those colorful roots are reflected in the brand’s personality to this day. The eminently drinkable beers consistently win awards and please crowds across the United States. Kona Brewing was founded in 1994 by the father and son team of Cameron Healy and Spoon Khalsa, who dreamed of crafting fresh, local-island brews with spirit, passion and quality. As the largest craft brewery in Hawaii, Kona personifies the laid-back, passionate lifestyle and environmental respect of the Hawaiian people and culture. Omission beer is the first craft beer brand in the United States focused exclusively on brewing great tasting craft beers with traditional beer ingredients, including malted barley, that are specially crafted to remove gluten. Square Mile Cider was inspired by the fortitude and perseverance of the original pioneers and reinvigorates an enduringly classic beverage.

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About Appalachian Mountain Brewery, Inc.

Appalachian Mountain Brewery, Inc. operates three wholly owned subsidiaries:

  1. Appalachian Mountain Brewery, LLC the Official Brewery of the Appalachian Mountains, not only makes seriously delicious craft beer, but focuses its business model on community, sustainability and philanthropy. In 2014 AMB was chosen as winner of Brewbound’s Start Up Brewery Challenge and ultimately won Startup Brewery of the Year. AMB was selected to compete, along with 8 other startup breweries and cider companies from all over the country. The Company’s CEO gave a presentation outlining AMB’s core values and goals for the next several years. AMB presented the “1st Revolution” a collaboration beer between AMB & Blood Sweat and Gears for the panel to sample and provide feedback and anaylsis. AMB won the popular vote with over 34% of all votes and the judges picked AMB as the winner of Brewbound’s “Start Up Brewery Challenge 2014 Boston”. In 2014 AMB has won a silver medal for its Smokey Mountain Schwartz Beer and a Bronze medal for its Crooked Common in the 2014 U.S. Open Beer Championships. Additionally, AMB won two Gold Medals and won the overall categories in the 2013 United States Open Beer Championship for its Honey Badger Blonde Ale and California Common. AMB competed against the biggest and best breweries from around the world where over 3,000 beers competed in 81 categories for aroma, appearance, mouth feel, flavor and overall impression. Appalachian Mountain Brewery, located at 3,333 feet elevation atop the Appalachian Mountain Range in Boone, NC, is certified by the NC GreenTravel Initiative, a program that recognizes state travel-related businesses that employ healthy environmental practices. AMB is within minutes of world-class destinations such as Grandfather Mountain, Tweetsie Railroad, Beech Mountain, Sugar Mountain, Appalachian Ski Resorts and the Three-Time National Football Champions Appalachian State University.
  1. Farm To Flame, LLC has a primary function is to service AMB. It is a food truck that features a unique wood fired oven in the truck. This allows AMB to enhance its experience for customers with a casual dining experience that balances innovation and sustainability. AMB is committed to the impact it has on the environment from being conscious of how it operates by setting an example for other companies and individuals to follow. Currently open 6 days a week for dinner at AMB, Farm To Flame has plans to expand into lunch and potentially looking for franchising in 2015 as well as begin a wholesale beer infused dough operation. F2F, LLC has been officially certified by ASAP (Appalachian Sustainable Agriculture Project) as a AG Partner. This is a prestigious accomplishment for F2F and becoming officially certified as a Western North Carolina grown and produced product.
  • The food truck runs on biodiesel from High Country Biofuels.
  • When our truck is parked at AMB it’s powered 20 240-watt solar panels.
  • Our utensils and containers decompose within 50 days
  • Sources its products that go into its menu within 50 miles of Boone, NC (when applicable/available)
  • Donates to local farms and causes that affect our farming community thru its Flame To Farm Program
  1. Hard Mountain Cider, LLC currently holds permit with TTB and expects permits to finish construction of its facility and in Q4 to begin production. HMC is a wholly-owned subsidiary of Appalachian Mountain Brewery, Inc. Hard Mountain Cider, LLC has leased 3,300 square feet of operation space to begin operations of hard cider using North Carolina apples. HMC will operate (4) 10-barrel fermenters, (3) 10-barrel single wall brite tanks and (1) 20-barrel jacketed brite tank. Additional capacity is being explored for 2015 with plans to bottle and can for self-distribution. HMC, LLC has been officially certified by ASAP (Appalachian Sustainable Agriculture Project) as a AG Partner. This is a prestigious accomplishment for HMC and becoming officially certified as a Western North Carolina grown and produced product. HMC, LLC plans to begin production in Q4.