Mahou San Miguel Takes Majority Stake in Founders Brewing Co.

Spanish brewer Mahou San Miguel has reached a deal to acquire a majority stake in Michigan’s Founders Brewing Co., according to a report by MiBiz.com.

Mahou already owned 30% of the fast-growing Grand Rapids-based craft brewery following a 2014 transaction valued at more than $96 million. The company will now hold 90% of Founders following the latest deal, which is expected to close in January, MiBiz reported, citing a filing with the Michigan Liquor Control Commission last week. Founders Brewing co-founders Mike Stevens and Dave Engbers will each retain 5% of the business.

The latest deal will buy out more than two dozen minority shareholders.

“To see the kind of return on the dollar that they’re able to enjoy, it really is very satisfying and rewarding, coming from a place of just a couple homebrewers — and quite frankly, I was the opposite of wealth,” Stevens told MiBiz. “It is the American Dream.”

Stevens did not return a call seeking comment.

MiBiz, citing a Freedom of Information Act request, reported that as part of the 2014 transaction, Mahou had an option to purchase the remainder of Founders on the 5-year anniversary of the deal for a price between 10- and 13-times EBITDA. However, Founders’ chief corporate counsel Tony Barnes told the outlet that the “old deal went away” and the new deal is a separate arrangement.

The latest transaction comes as portfolio-wide, off-premise dollar sales of Founders Brewing products are up 12.8%, to $71.6 million, and volume sales are up 12%, through August 11, according to market research firm IRI. However, both dollar sales (3.6%) and volume sales (3.3%) have slowed during to single-digit growth over the last four weeks.

Driving the majority of the off-premise dollar sales growth is Founders’ flagship offering, All Day IPA, the sixth best selling off-premise craft beer this year. That label’s sales are up 11.1%, to nearly $43 million, while volume sales are up 10.8%, year-to-date, IRI reported. However, All Day’s dollar sales (4.3%) and volume sales (3.9%) have both slowed to single-digit growth over the last four weeks, too.

Compare those numbers to 2018, when Founders produced 563,179 barrels of beer, according to the Brewers Association. Founders’ portfolio-wide dollar sales grew 32.4% and volume sales grew 37.8% in 2018, IRI reported. All Day IPA grew off-premise dollar sales 31.4%, while volume sales grew 32.1%, in 2018.

Stevens told MiBiz that Mahou taking controlling interest in Founders will help the company withstand industry headwinds such as slower growth, while also helping the company “reinvent what beer looks like” for a new generation of beer consumers.

“We really have to start looking beyond craft and beyond that industry,” he told the outlet. “We are starting to see a slow down there, but there is so much opportunity out there when you really start to look at it and evaluate the beer industry. Eighty percent of the beer drinking public does not drink craft. What does that mean? It means there’s a sea of opportunity. That opportunity is going to take a lot of resources — resources greater than any craft brewery in our industry has. We look at this opportunity with Mahou as our opportunity together to break into a much larger segment of the beer industry.”

Earlier this year, Mahou teamed with Founders to acquire a 40% stake in Boulder, Colorado’s Avery Brewing, which Mahou already owned 30% of following a 2018 deal. As part of that acquisition, Founders shifted some production of All Day IPA to Avery’s facility.

Meanwhile, after adding sales in Hawaii, Founders announced last month the completion of a 50-state distribution footprint.

UPDATE (3:25 p.m. EST, August 29): Founders issued the following statement:

“Since 2014, we’ve enjoyed an excellent relationship with Mahou Group. We’re fortunate to have a partner with whom we can exchange brewing knowledge and business strategy, who also reflects our values as a company. Day-to-day operations will continue to be led by the existing Founders team. We’ll continue to make the beers we love and have a partner in Mahou Group, who is just as passionate about beer and the future of Founders as we are.

“Founders will remain autonomous in managing its business, products and teams. Engbers and Stevens will continue to be shareholders in Founders and have no intention of leaving. Their commitment to the brewery will remain and their roles and responsibilities will continue as they are now.”

The company included an FAQ, noting that Mahou has no plans to buy out the company, there are no plans to combine Founders and Avery, and there are no plans to brew Mahou’s brands in Michigan.

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