The three-way deal through which Harpoon’s parent company will acquire Long Trail Brewing in Vermont and WhistlePig Whiskey will acquire one of the latter’s production facilities, came about through long-standing personal relationships, Mass. Bay Brewing Company CEO and co-founder Dan Kenary explained to Brewbound.
“It’s a relatively complicated deal, given its size,” he said. “But it just worked because of the relationship between the three parties.”
Discussions about the crux of the deal – Mass. Bay’s acquisition of Long Trail and its Otter Creek and Shed brands – began in February between Kenary and Long Trail CEO Dan Fulham, whose friendship spans 35 years. The breweries had been exploring contract production of Long Trail’s offerings at Harpoon’s facilities in late 2021, and talks expanded from there.
“We have similar challenges,” Fulham said. “So, we just decided to just start talking and those discussions moved to maybe co-packing, and very recently it just became clear combining businesses just made a ton of sense.”
Simultaneously, Jeff Kozak, CEO of WhistlePig Whiskey in Quechee, Vermont, had been looking to expand his company’s production capacity.
Because Mass. Bay, which has operated a brewery in Windsor for 22 years, wouldn’t need three facilities in one state, WhistlePig entered the deal and will purchase the Middlebury facility where Otter Creek and Shed are brewed. However, Mass. Bay will lease the facility’s retail space and operate a small brewery, taproom and restaurant. Production of Otter Creek and Shed will transfer to Mass. Bay’s other facilities, which will include the Long Trail brewery in Bridgewater Corners.
The deal is expected to close next week, but Mass. Bay is not rushing to implement many changes to beer lineups or distributor footprints.
“We’re not doing anything right away,” Kenary said. “It’s complicated enough pulling these two organizations together to say, ‘Oh yeah, Day Two, we’re going to change all these things.’
“We’re not,” he continued. “Things are working; let’s keep them working, and we’ll look at this in August when everything’s being produced.”
Below are excerpts from conversations with both Kenary and Fulham.
Why make this deal now, amid economic uncertainty?
“Beer’s an interesting business, right? We’ve been around it longer than almost anybody – 36 years – so we’ve seen a lot financial crises, the dot com bubble burst, 9/11,” Kenary said. “It’s not worse than it was two years ago when COVID hit. The times are what the times are, but it’s been challenging in our end of the craft world for the last several years and we have the capacity. So, economically, it makes sense to bring these brands together; from a production perspective, it makes sense to bring them together.
“We’ve seen our numbers turn up when the economy’s turned down in some past recessions. So who knows what it looks like, but it makes economic sense for us,” he continued. “Our banking group is supportive. Our investor group is supportive. Our employee-owners are over-the-moon excited. So it just seemed the timing worked out on all three sides.”
What other options were on the table for Long Trail?
“There were a couple other potential brewers but Mass. Bay made sense just because it was going to be a cultural fit,” Fulham said. “The brands can continue to be brewed in Vermont. They have a Windsor brewery. There’s all sorts of synergies that don’t degrade the brand. The beer is not going to be brewed – and no offense – at City Brewing. The footprint is remaining in New England and Vermont, so that was important, and that’s where we landed.”
What will the taproom situation look like after the deal closes?
The addition of Long Trail’s facilities will double Mass. Bay’s number of permanent taprooms, from two to four, with a seasonal beer garden that opened for its inaugural summer in Worcester, Massachusetts.
While the Harpoon-branded breweries in Boston and Windsor pour offerings from several brands (Harpoon, UFO, Clown Shoes and Arctic Chill), there are no plans for crossover at the new taprooms.
“They’ll be distinct facilities,” Kenary said. “Long Trail will be Bridgewater, Otter Creek and Shed will be Middlebury and those will be the focus of those facilities. So we’ll keep doing what we’re doing in Boston and Windsor.”
How will the two companies’ workforces combine?
Both companies are hoping to retain the majority of Long Trail’s roughly 60 employees.
“I know it’ll be more than half,” Kenary said. “We’re still working on it and some will go to WhistlePig. Unfortunately, it will not be everybody, it doesn’t look like, but a lot. A lot of folks are coming over, and we couldn’t be happier about that.
“Given the alternative where we probably would have been an out-of-state acquisition, it’s probably a great outcome,” he continued. “I feel very strongly that we’ll most likely have significantly more people working in retail at both of the facilities in a year than are there now.”
Fulham admitted there’s “a little bit of uncertainty” among his staff, but said they are “incredibly supportive” of the deal.
“We owe the team a lot of gratitude because there are headwinds in the market,” he said. “Selling craft beer is not as easy as it used to be, but everyone’s stayed focused on the very positive.”
How much wholesaler alignment is required?
“We have a decent amount of overlap already,” Kenary said. “We have some new wholesalers in some important markets like Bellavance in New Hampshire, we’re excited to meet those folks and work with them. Valley up in Maine is new to us.
“Burke in Boston – same, which is great. Atlas, Merrimack – same. Colonial on Cape Cod and the South Shores is new. We’re actually excited to start working with some of these folks. And we also recognize that, given the realities of franchise law, that there’s not a ton you can do anyway, so we’ll work with what we have. And if, over time, we agree with wholesale partners that this might make sense or that might make sense, we’ll take a look at it. But for now we’re just gonna stay the course.”
Both companies sell the bulk of their volume in the six New England states and New York. In addition to those markets, Long Trail also ships to New Jersey, Pennsylvania, Delaware, Maryland, Virginia and Washington, D.C. Last year, all three brands’ combined output was 60,000 barrels, Fulham said.
How will the brands’ portfolios fit together?
The biggest change coming for the breweries’ offerings in the immediate future is that Harpoon IPA will no longer be the sales team’s top priority in Vermont, to give deference to Long Trail in its home market.
“We’ll be moving more toward market by market and looking at the numbers and figuring out which products seem to be resonating,” Kenary said. “Over time, the one thing I know for sure is that there will be change as we look at our entire portfolio – across Harpoon, UFO, Clown Shoes, Long Trail, Otter Creek, Shed – which brands, which styles stick and which don’t. We don’t know yet. No change for now. But we will be taking a hard look at it and working with our wholesale partners, our chain partners, our regional partners and figuring out what makes the most sense in each market.”
Fulham said he’d like to see each brand’s flagship stick around, such as Harpoon IPA, Long Trail Ale, Shed Mountain Ale, which he dubbed “classics.”
“Some brands may be retired from chain and broad channel distribution, but that doesn’t mean you can’t have fun with them in the taprooms,” he said. “You can continue to have Paul’s Copper Ale for old time’s sake or other things like Otter Creek Stovepipe Porter or brands that are known and loved, but those brands can have a role in the taproom, even if some SKUs need to be rationalized.”
What will be the future of Long Trail’s CBD-infused, non-alcoholic seltzers?
“They have a CBD seltzer that they make that we will continue to make and sell,” Kenary said and added that Harpoon will partner on the launch of a THC-infused product this summer for sale in dispensaries in Massachusetts.