In the same week that Anheuser-Busch InBev finalized its takeover of SABMiller, the world’s biggest beer company also announced the purchase of two major U.S. homebrew ingredient and supply companies.
ZX Ventures, A-B InBev’s “disruptive growth organization,” last week confirmed that it had acquired Minnesota-based Northern Brewer Homebrew Supply and its sister company, Midwest Supplies.
Northern Brewer, which operates brick-and-mortar stores in Minneapolis, St. Paul and Milwaukee, runs a robust e-commerce business, selling ingredients (malts, hops, yeast) and equipment (starter kits to all-grain brewing equipment) to homebrewers.
A large portion of Northern Brewer’s transactions occur online and the ZX Ventures purchase highlights that group’s growing interest in e-commerce.
“Northern Brewer has been a leader in homebrewing for more than 20 years, and has built an extraordinary network and community of homebrewers,” Cassiano Hissnauer, ZX Ventures’ Vice President of Homebrewing, said in a statement. “ZX Ventures is excited to enter the homebrew space to help Northern Brewer to grow.”
Chris Farley, who founded Northern Brewery in 1993, wrote on his company’s website that “nothing will fundamentally change” with a sale to ZX Ventures, adding that Northern Brewer’s “leadership team will remain intact and our company will continue to be independent.”
The decision to sell, he said, was made to further Northern Brewer’s growth.
“This deal will make us stronger and able to pursue our passion with even greater focus, better tools and ingredients,” he wrote. “This is a really exciting opportunity that doesn’t come around that often. We’re proud of this deal and are excited to begin working with the team from ZX. We’re confident that in time, you will realize just how much we’re going to gain from this partnership and how everyone – you, our company and our community – will be better off because of it.”
Specific financial terms of the transaction were not disclosed, but in November 2011, the Minneapolis/St. Paul Business Journal reported that Philadelphia-based private-equity firm Entrepreneur Partners had invested in Northern Brewer. At the time, the company’s annual sales were estimated to be as high as $20 million.
In his personal biography, David Kidd, who previously served as the CEO of Midwest Supplies and oversaw the merger with Northern Brewer, said the combined companies had revenues exceeding $50 million.
According to research from the American Homebrewers Association, 1.2 million U.S. homebrewers spent more than $800 million on supplies and equipment in 2015.
Rumors of Northern Brewer’s sale began to circulate in early October on a forum dedicated to homebrewing. The reaction was a mix of cynicism, disbelief and apathy.
“Not sure it is a bad thing,” one user wrote. “Think about it, NB get[s] access to all of AB’s resources. Hops, grains, brewers. Might turn out to be pretty great. …or it’s the end of days. either way, should be fun to watch.”
A-B InBev launched ZX Ventures (the Z stands for Zythology — the study of beer — and the X stands for experience) in February 2015, with the goal of investing into higher end and non-traditional areas of the beer category.
“We wanted to be as independent as possible from ABI,” Jerome Pellaud, ZX Ventures’ vice president of craft and specialties, told Brewbound in April. “We have the full support of ABI, but we wanted to show internally that it is a different unit. We have a separate P&L, the budgeting, everything is made separately so that we can have more agility.”
Pellaud, who is tasked with leading A-B InBev’s international acquisitions, said ZX Ventures is made up of three primary divisions — e-commerce, craft and specialties and “exploration,” which he described as a team devoted to discovering “what’s next.”
“We try to get to know the great people out there that are willing to embrace and change the beer culture in their own country or region,” he said. “Ideally, partnering with them makes it much easier for us to help them, and for them to realize their dreams. That is really the approach.”
By the end of this year, ZX Ventures’ craft and specialties division is expected to have about 150 employees, he added.
Earlier this year, ZX Ventures acquired Beer Hawk, a United Kingdom-based online beer retailer.
In a note posted to its website, Beer Hawk co-founders Chris France and Mark Roberts said a deal with ZX Ventures would enable the company “to provide even more support to the breweries, partners and suppliers we already work with.”
ZX Ventures also previously invested in Kombrewcha, maker of low-alcohol, organic kombucha drinks, and Owl’s Brew, which makes tea-based cocktail mixers and radlers.
In a statement sent to BevNET (Brewbound’s sister publication) earlier this year, Owl’s Brew founder Jennie Ripps said the partnership would enable her company “to continue our journey as we launch into our next phase of Owl’s Brew: flavorful and refreshing Owl’s Brew Radlers!”