Craft Brew Alliance to Acquire Minority Stake in Miami’s Wynwood Brewing

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Craft Brew Alliance today announced it has signed a letter of intent to purchase a 24.5 percent stake in Miami upstart Wynwood Brewing Company.

The deal, which is valued at less than $30 million, is expected to close in the first quarter of 2017.

Described by CBA as a “strategic partnership,” the deal will allow Wynwood to tap into the larger company’s nationwide network of Anheuser-Busch wholesalers and will give the Miami brewery access to additional production capacity at CBA’s brewing facility in Portsmouth, N.H.

“Our success over the past several years hasn’t come without its challenges, and we’re now at a turning point if we want to fully satisfy our growing customer base,” Wynwood co-founder Luis G. Brignoni said via a press release. “While exploring our options, we wanted to find a way to meet demand without sacrificing creative control over our day-to-day.”

By selling a 24.5 percent stake, Wynwood will retain its “independent” status in the eyes of trade group the Brewers Association, which defines a craft brewer to be one that is less than 25 percent owned or controlled by an alcohol industry member that is not itself a craft brewer. Any investment over the 25 percent threshold would have jeopardized that status, because Anheuser-Busch InBev already owns 31.6 percent of CBA and has the right to review any CBA transactions over $30 million.

“I have been very vocal about what we think about the 25 percent threshold,” Craft Brew Alliance CEO Andy Thomas, who has routinely objected to the BA’s definition, told Brewbound. “I think 25 percent is arbitrary, but that is what it is and that’s the game.”

For his part, Brignoni said his company was interested in selling a stake of that size because it dictated that CBA would have “skin in the game” as opposed to just contract brewing and master distribution agreements.

“The fact that they do have a stake means our interests are very much aligned, and that was very important,” Brignoni said.

“We did talk to a lot of investors before we settled on CBA,” he added. “But what made CBA attractive to us was the full package. It is not just money from an investor looking to get a rate of return after a set amount of years. They want to see us succeed and make sure the beers coming out of Portsmouth are beautiful. We preferred a partnership with industry folks that can take us to the next level.”

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For CBA, the investment into Wynwood gives the company access to an increasingly more important Florida market, with a regional brand better positioned to capitalize on a growing desire for locally produced beer.

“Wynwood is a perfect fit market-wise,” Thomas said. “Florida has always been on the top of our list. If you look at what these guys are doing down in Miami, and what we can do to help develop that, and if you look at the synergies we have in terms of the brewing footprint, the fit is great. There isn’t anything about this partnership that isn’t right off the wishlist for either of us.”

Wynwood, which has outgrown its 7,200 sq. ft. facility in Miami’s famous art district, had been searching outside of the area for a place to build a larger secondary location. Once more serious negotiations began with CBA, around October, those plans were tabled, Brignoni told Brewbound.

“This is obviously our top priority at the moment,” he said. “We want to launch with CBA and work on the master distribution agreement, and then come back to the drawing board. We have always wanted to build in the neighborhood, rather build outside, and now we have an opportunity to evaluate our original plan.”

The investment into Wynwood marks CBA’s third small brewery partnership in the last two years. Last September, it signed a contract brewing and distribution agreement with Nantucket, Mass.-based Cisco Brewers.

At the time of that deal, Thomas said CBA intended to purchase a less than 25 percent stake in the company, something that has yet to come to fruition.

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CBA also struck a similar brewing and distribution arrangement with Boone, N.C.-based Appalachian Mountain Brewery (AMB) in early 2015.

CBA is currently engaged in active discussions with both Cisco and AMB to acquire equity positions, Thomas said, and the company is still thirsty for additional deals.

“We are not done yet,” he said. “ We are looking to support the Kona brand with strong brands in key markets. The southeast was a priority for us, and we got that checked off.”

The company’s next priority is inking a deal with a craft brewery in California, Thomas added.

“There are a lot of interesting opportunities, and California is something that is important to us,” he said.

For now, CBA has shored up significant gaps along the east coast where its Redhook and Widmer brands were suffering. Thomas added that there were still areas around the “Portsmouth orbit” where CBA could look to invest, but most of the company’s focus has shifted west.

Editor’s Note: The relationship between Craft Brew Alliance and Wynwood Brewing developed as a direct result of the Brewbound Startup Brewery Challenge. Wynwood Brewing won the CBA-sponsored business pitch competition in December 2015. After the two companies brewed a collaboration beer together, the idea of exploring a longer-term partnership emerged.

A press release with additional information is included below.

Portland, OR and Miami (Dec 15, 2016) – Craft Brew Alliance, Inc. (“CBA”) (Nasdaq: BREW) and Wynwood Brewing Company, an award-winning craft brewery based in the heart of Miami’s vibrant Wynwood Art District, announced today their intent to enter a strategic partnership. Through the partnership, Wynwood Brewing Co. would gain access to CBA’s state-of-the-art production capabilities and regional sales and marketing infrastructure, with a focus on meeting increased demand throughout the craft brewer’s home state of Florida. Additionally, under the terms of the partnership agreement, CBA would take a minority 24.5% stake in Wynwood Brewing Co., which will enable the pioneering Miami craft brewery to expand its local production brewery and tap room.

Founded by Luis Brignoni and his father Luis Brignoni Sr. (“Pops”), Wynwood Brewing Co. is deeply rooted in its founders’ Puerto Rican heritage and namesake neighborhood, Wynwood. The neighborhood is renowned as one of the most vibrant and artistic communities in the country and attracts artists and influencers from around the world. The brewery has doubled its production every year since it released its first beers in 2013, drawing inspiration from its location within Miami’s thriving local and international art hub.

“We’ve been vocal about finding the right strategic partners in the right geographies to expand CBA’s distinctive portfolio that combines fast-growing national brands like Kona Brewing Co. with strong regional craft breweries,” said Andy Thomas, chief executive officer, CBA. “With Wynwood, we’re able to round out our portfolio of exceptional craft brands in the east, which includes our partners Appalachian Mountain Brewery in North Carolina and Nantucket Island-based Cisco Brewers in New England. We’re looking forward to helping the great team at Wynwood bring more of their special brand, steeped in Puerto Rican culture and a love of great beer, to more beer lovers throughout Florida.”

“Our success over the past several years hasn’t come without its challenges, and we’re now at a turning point if we want to fully satisfy our growing customer base,” said Luis G. Brignoni, co-founder, Wynwood Brewing Co. “While exploring our options, we wanted to find a way to meet demand without sacrificing creative control over our day to day. Meeting the team at CBA made our next step forward so much clearer. Not only are they serious experts at craft brewing and marketing, they have an amazing track record nurturing family-founded brewers such as Kona Brewing Co. as well as newer partnerships like Appalachian Mountain Brewery. My father and I are really excited about the opportunities this partnership will create for our loyal staff, customers and accounts, who can look forward to many more years of great Wynwood beers.”

As Miami’s first craft production brewery, Wynwood Brewing Co. operates a 15-barrel brew house and tap room. The brewery’s core portfolio includes La Rubia Blonde Ale, Wynwood IPA, Magic City Pale Ale, and Pops Porter, which earned a gold medal at the 2014 Great American Beer Festival, along with a rotation of creative seasonal and limited-release beers.

Wynwood Brewing Company and Craft Brew Alliance met through the Startup Brewery Challenge, a unique business pitch competition created by Brewbound with the help of CBA and Widmer Brothers Brewing to foster business growth of emerging craft brewers. As a Startup Brewery Challenge winner, Wynwood’s founders and brewmaster traveled to Portland to brew a collaboration beer with CBA’s Innovation Brewing Team, and during that trip it became clear that the Brignonis’ aspirations for their company aligned with CBA’s strategic partnership model. The collaboration beer, known as the Portland Cuddle, won best overall IPA and Gold in the Specialty IPA category at the Copa Cervezas de America, the most important beer competition in Latin America, this past October.

Wynwood Brewing Company is CBA’s third partnership forged as part of the company’s strategy to expand the Alliance with distinctive, storied craft breweries in key beer geographies. CBA partners are able to leverage the company’s national brewing footprint and sales and marketing infrastructure, while retaining ownership of their brands and dedicating more resources to support their home markets. CBA and Appalachian Mountain Brewery (AMB) partnered in 2014 to expand the Boone, N.C. brewery across its home state. With the partnership, CBA invested in a canning line at its Portsmouth brewery, which has helped support AMB’s growth from 1,000 barrels to more than 6,000 barrels in less than two years. CBA’s second partnership with Cisco Brewers in 2015 has enabled the Nantucket Island brewery to expand production of its core portfolio in CBA’s Portsmouth brewery and grow volume across their home market of Massachusetts.

About Wynwood Brewing Company

Wynwood Brewing Company’s mission is simple: To create the best possible brews for their patrons to enjoy. Every day, you can spot someone with spray-paint can in hand ready to create a work of art in the vibrant Wynwood neighborhood. Much like those artists, Wynwood Brewing is committed to creating a work of art in every glass by making great bold beers that have character and are uniquely Wynwood. Their brands take anywhere from 2-6 weeks to be finished. However, they do have some barrel-aged products that take up to 9 months to be completed. WBCo is also committed to creating a strong community by supporting local partners and neighbors, as well as local charities in the neighborhood of Wynwood. For more information, go to http://wynwoodbrewing.com/.

About Craft Brew Alliance

CBA is a leading craft brewing company that brews, brands and markets some of the world’s most respected and best-loved American craft beers. We are home to three of the earliest pioneers in craft beer: Redhook Ale Brewery, Washington’s largest craft brewery founded in 1981; Widmer Brothers Brewing, Oregon’s largest craft brewery founded in 1984; and Kona Brewing Company, Hawaii’s oldest and largest craft brewery founded in 1994. As part of Craft Brew Alliance, these craft brewing legends have expanded their reach across the U.S. and approximately 30 international markets.

In addition to growing and nurturing distinctive brands rooted in local heritage, Craft Brew Alliance is committed to developing innovative new category leaders, such as Omission Beer, which is the #1 beer in the gluten-free beer segment, and Square Mile Cider, a tribute to the early American settlers who purchased the first plots of land in the Pacific Northwest.

Publicly traded on NASDAQ under the ticker symbol BREW, Craft Brew Alliance is headquartered in Portland, OR and operates five breweries and five pub restaurants across the U.S. For more information about CBA and its brands, please visit www.craftbrew.com.

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