Amid Rumors of Sale, New Belgium Core Growth Slows


Colorado’s New Belgium Brewing is reportedly for sale.

Reuters, citing sources familiar with the matter, said that the employee-owned brewery, the fourth-largest in the country, could be valued at more than $1 billion.

New York-based financial advisory firm Lazard — via its middle market advisory practice — is reportedly shopping the craft brewery, which expects to produce about 930,000 barrels in 2015.

In an official statement, Kim Jordan, New Belgium’s founder and the chair of the company’s board of directors, wouldn’t confirm rumors of a sale, saying only that it is having conversations with those in the “capital markets.”

“New Belgium Brewing’s Board of Directors has an obligation to have on-going dialogue with the capital markets with the goal of making sure that we remain strong as leaders in the craft brewing industry,” she said. “There is no deal pending at this time.”

The decision to explore a sale coincides with the opening of the company’s second production facility in Asheville, N.C. — a $175 million project that was first announced in 2012. But it also comes as sales of products like Fat Tire, the company’s flagship, and Ranger, its IPA, are waning.

Not waning, however, is the merger activity around craft breweries themselves. Last month, the much smaller Ballast Point sold to Constellation for $1 billion; New Belgium would be the largest brewery currently on the market. Ballast Point will sell 290,000 barrels this year, so it could be assumed that New Belgium would fetch a higher price — but that smaller brewery is growing by leaps and bounds. New Belgium’s growth, meanwhile, has slowed.


The company, which was started by Jordan and her then-husband in Jeff Lebesch in 1991, has been inching deliberately toward 50-state distribution in recent years. Still, nationwide availability may not be enough to boost weakening sales of Fat Tire, which are down 1.4 percent year-to-date, according to market research firm IRI.

In a Wednesday interview with Brewbound, Joe Menetre, the company’s vice president of sales, said the brewery will likely be a national brand by the end of 2017, a timeline that is consistent with Jordan’s previously stated plan.

After it expands into New Jersey next March, New Belgium will have just eight states left to enter. In fact, a New York roadshow just ended and an entry there is imminent, Menetre said.

“We just finished going through all of New York,” he said. “It took about 20 days — four interviews a day — to go through the whole market and look at distributors.”

The brewery’s geographic expansion takes place during a critical time for New Belgium. In an October interview with Shanken News Daily, the company’s newly appointed CEO, Christine Perich, said 2015 would likely be the first down year in the company’s history.

Calling it a “capacity management year,” Perich explained that sales have suffered because of New Belgium’s choice to focus on its new Asheville brewery and expansions at its Fort Collins facility.

“We’re using a lot of our resources in Fort Collins to get Asheville going, so we couldn’t have the pedal down as hard as we did last year,” she said.

Sales have taken a hit as a result. Fat Tire and Ranger IPA are down 1.4 percent and 1.9 percent, respectively, for the year-to-date period ending Nov. 29, according to IRI.

Menetre is not concerned. He views the declines as part of a common trend seen by many breweries and their flagship brands, and believes entering new markets will have a positive effect on sales.

“Fat Tire obviously is a very well known national brand even though we’re not in all markets yet,” he said, “It’s still one of the top craft brands in the country.”

Indeed, many of the top craft breweries in the U.S. have begun to see the rate of growth for their leading products begin to slow or break even. The same IRI report showed Boston Lager volume sales down 7.3 percent year-to-date, and Widmer Hefeweizen down 1.3 percent.


Whether increased distribution can sufficiently boost sales for wavering flagships, as Menetre predicts it will for New Belgium, remains to be seen.

Sales for Fat Tire have continued to drop even as New Belgium enters new territories, however. The brewery has entered eight new states in the 29 months since Jordan first announced the company’s plan for national distribution. It also plans to enter three additional markets — Hawaii, West Virginia and New Jersey — in the first quarter of 2016.

Asserting confidence in the brand’s strength, Menetre cited increased competition and New Belgium’s growing portfolio as possible reasons why Fat Tire and Ranger are on the decline.

“We still see Fat Tire as a really good, viable brand, and the lack of the consistent growth I think has to do with the development of our own portfolio — and obviously the competition,” he told Brewbound.

Although New Belgium has sought to deflect concerns over its core’s performance, it is clearly something they are taking seriously. When asked how New Belgium plans to keep a competitive edge in increasingly saturated markets, Menetre listed core product promotion as the top priority.

“Realistically, it’s continuing to focus on Fat Tire, Ranger and seasonal,” he said. “Combined, it tends to be about 80 percent of our sales.”

New Belgium is also taking a vigorous, multi-faceted approach to growing brand recognition. Distribution growth aside, the company completed a 70,000 barrel expansion at its Fort Collins facility in 2013, and plans to have its new 200-barrel brewhouse in Asheville open to the public by February of next year.

New Belgium has also invested heavily in its digital footprint. Last year, the international digital consulting firm, L2, listed the brewery as having the 2nd highest “Digital IQ” in the beer industry – behind Bud Light and ahead of Budweiser