Goeler: Blue Point Purchase Shows A-B InBev’s Interest in Variety, Local Markets

As reported earlier today, Anheuser-Busch InBev, the country’s largest brewer, has agreed to purchase New York-based Blue Point Brewing Company, a move that reflects the beer giant’s growing interest in the craft segment — and its consumers’ thirst for variety.

Exact terms of the Blue Point deal, announced this morning, were not disclosed, but sources familiar with the transaction said it could be valued between $18 and $24 million.

Mark Burford, Blue Point’s co-founder and brewmaster, said that negotiations with A-B InBev began last year and have been going on for “many months.”

Peter Cotter, the co-founder and president of Blue Point, said he’s excited for the opportunity to become a part of A-B InBev’s craft portfolio, which also includes Goose Island Brewery, a Chicago-based craft brewer that was purchased for $38.8 million in 2011.

“All of the employees will be able to maintain their jobs and the credibility and quality of the brand will remain,” Cotter said. “It’s great for the community. With the kinds of resources from A-B coming into Patchogue (Long Island), it will create job growth and the sky is the limit for where the brand could go.”

According to IRI, a Chicago-based market research firm, Blue Point’s dollar sales grew just over 20 percent in 2013, to more than $4.2 million, in multi-outlet and convenience stores (which includes supermarkets, drugstores, mass market retailer, military, dollar and club). Dollar sales for the company’s flagship Toasted Lager, which accounts for about 50 percent of production, were up 11.5 percent.

However, it wasn’t necessarily Blue Point’s impressive growth numbers that attracted A-B InBev to the deal. Instead, the opportunity to add greater depth to its current set of craft offerings was a primary consideration, said Andrew Goeler, A-B InBev’s vice president of imports, craft and specialties.

“This fulfills the consumer demand for variety and is a nice complimentary portfolio to what Goose Island offers,” Goeler said. “Blue Point has some excellent brands and having access to the A-B system is something that is really important.”

That system includes access to multiple brewing facilities across the country and an intricate network of wholesalers that will be granted the first rights to distribute Blue Point beers. For A-B InBev, the deal hinges on efficiencies that come alongside the expansion of a higher-margin portfolio.

“Similar to what we do with Goose Island, where we make some of the beers at an A-B brewery, we have the same opportunity to expand with Blue Point,” said Goeler. “We will be able to get the brands out to A-B wholesalers and will allow consumers to have access to these great beers.”

Blue Point production is already conducted on a contract basis — it produced a large portion of its 60,000 barrels brewed in 2013 under contract at North American Breweries’ facility in Rochester, N.Y.

Plugging the brand into the A-B InBev wholesaler network, however, could prove to be a more difficult task. Blue Point currently distributes its beer in 15 states, but a number of its distributors — like Peerless Beverage and Shorepoint Distributing in New Jersey — are aligned with MillerCoors. Meanwhile, L. Knife & Son operations that sell A-B InBev products in New York and Massachusetts could also be at risk for losing the brand to wholly-owned A-B InBev distributors.

“Those decisions will be up to the A-B wholesaler and the existing wholesaler,” Goeler said. “Those kinds of conversations will occur at the local level. Even when we did the Goose Island partnership, there were competitor wholesalers that had Goose Island and they worked it out amongst themselves.” 

Nevertheless, Goeler said Blue Point will have immediate access to A-B InBev’s wholesale network in the 35 states where its beers are not currently sold.

“If we roll into a new state with Blue Point, it will go to the A-B wholesaler for sure,” he said. “That expanded footprint is a key piece of what we can offer a company like Blue Point.”

Bill Hayde, the co-founder of Intercontinental Beverage Capital, a New York-based middle-market investment group that is currently advising on deals for a number of beverage companies, said he believes A-B InBev was attracted to Blue Point’s strong focus on its home region.

“I think what they liked is that it is concentrated in certain areas and they owned their territory,” he said. “Blue Point owns Long Island and they have worked hard to grow a presence there. I think it will add a lot of value as A-B continues to recognize the growing demand for strong, local craft brands.”

Goeler made similar remarks.

“I think the thing we liked the most is Blue Point’s location,” he said. “This is a growing part of the country and gives us a nice footprint with a local brand out of Long Island.”

As expected when a craft brewer is purchased by one of the big brewers, immediate consumer reaction to the deal wasn’t positive. A number of fans took to Twitter (and even the comments section of Brewbound) to express their displeasure with the announcement, with some calling the deal “Goose Island, part 2.”

“I think what we saw was a similar response initially with Goose Island,” said Goeler. “Over time, as we have proven with Goose Island, we are letting them operate just as they are. We are helping them with some of the resourcing opportunities for distribution, but I think we have a little bit of history and credibility. If anything, we are doing innovating more and creating new brand out of our Fulton Street Brewery in Chicago. We hope to do the same with Blue Point.”

The deal is expected to close in the second quarter, according to A-B InBev.

Ironically enough, Blue Point once mocked A-B InBev’s acquisition of Goose Island with a faux April Fool’s Day news release claiming the brewery was being sold to MillerCoors. The release, which is still posted on the company website, reads that Blue Point is “independently owned with no corporate ties. Ever.”

Never say “never,” right?

Brewery: Blue Point Brewery Website: http://www.bluepointbrewing.com/
Address: 161 River Ave
Patchoque, NY 11772
United States
  • Uncle Donald

    “I will never say never!”-JB

  • CraftbeerNut

    Crapwiser doesn’t have any craft brands they are by definition not craft beer brands if Crapwiser owns the brand.

    An American craft brewer is small, independent and traditional.

    Small: Annual production of 6 million barrels of
    beer or less. Beer production is attributed to a brewer according to the
    rules of alternating proprietorships. Flavored malt beverages are not
    considered beer for purposes of this definition.

    Independent: Less than 25% of the craft brewery is
    owned or controlled (or equivalent economic interest) by an alcoholic
    beverage industry member who is not themselves a craft brewer.

    Traditional: A brewer who has either an all malt
    flagship (the beer which represents the greatest volume among that
    brewers brands) or has at least 50% of its volume in either all malt
    beers or in beers which use adjuncts to enhance rather than lighten
    flavor.

    The following are some concepts related to craft beer and craft brewers:

    Craft brewers are small brewers.

    The hallmark of craft beer and craft brewers is innovation. Craft
    brewers interpret historic styles with unique twists and develop new
    styles that have no precedent.

    Craft beer is generally made with traditional ingredients like
    malted barley; interesting and sometimes non-traditional ingredients are
    often added for distinctiveness.

    Craft brewers tend to be very involved in their communities through
    philanthropy, product donations, volunteerism, and sponsorship of
    events.

    Craft brewers have distinctive, individualistic approaches to connecting with their customers.

    Craft brewers maintain integrity by what they brew and their general
    independence, free from a substantial interest by a non-craft brewer.

    The majority of Americans live within 10 miles of a craft brewer.

    • chrisfurnari

      Funny how if someone asked you yesterday if Blue Point was “craft beer” you would have replied with a definitive “yes.” Today? Not a chance. No — instead you would rather slam a pair of entrepreneurial biz owners for achieving liquidity (probably as you sip on your own Goose Island bourbon county liquid).

      And thank you for copying the Brewers Association definition of a craft brewer.

      • craftbeernut

        So you are telling me that a huge profit centered corporation is the same thing as the brewery right down the street that pours his heart and soul into his beer? Yeah the Goose Island stuff is still OK but I would bet that all of the Bourbon County that is being sold now was made before the buy out. So saying oh yeah nothing has changed is judging things too soon. While I don’t begrudge the owners of those brands a chance to profit from their hard work by selling to ABinbev once the brand is sold to them it is no longer a craft brand.

  • Zappa

    I’m sorry I thought it was about the liquid.Lots more Bourbon County since AB did the Goose deal. So 142 Million Cases is small? Would the definition be different if MC bought 26% of Terrapin. Would you have taken the payoff.