Brewbound readers in 2019 gravitated to stories about major craft brewery mergers and acquisitions, hard seltzer launches and reformulations, lawsuits and distribution disputes and brewery closures.
The announcement of the $300 million merger between Boston Beer Company and Dogfish Head set the stage for a busy year of M&A activity, as many craft brewers began to form partnerships to weather a more tumultuous competitive marketplace. And more activity seems likely in 2020.
Before we move forward to 2020, here’s a look back at the 10 most-read stories on Brewbound in 2019.
Boston Beer Company’s Truly Hard Seltzer remained a distant second to top-selling brand White Claw in 2019. So, in October, Boston Beer announced plans to reformulate all 13 Truly flavors in an effort to make them “crisper and more refreshing.” It wasn’t the first time that Boston Beer blew up the Truly recipe.
But that wasn’t the only shot fired at White Claw’s parent company, Mark Anthony Brands. Boston Beer also announced plans to roll out a competitor to the Mike’s Hard Lemonade franchise in January 2020 with a Truly branded lemonade seltzer, which checks in at 100 calories and 5% ABV, with 1 gram of sugar.
Another round of the seltzer wars starts anew in January.
Boston Beer wasn’t the only Massachusetts alcoholic beverage company jockeying for hard seltzer market share. In February, Harpoon-maker Mass Bay Brewing announced a partnership with Worcester-based Polar Beverages to release Arctic Summer, a 5% ABV, 110-calorie, 1-gram of sugar hard seltzer in April. Although the hard seltzer space continues to be dominated by White Claw and Truly, the Arctic Summer brand had pushed beyond New England to 22 states, including California.
A new group of wolf packs started to form in early 2019, when Oregon’s Ninkasi Brewing sold a majority stake to Legacy Breweries Inc. — led by former Yakima Chief CEO Don Bryant — which intends to build a new rollup of craft breweries, similar to the CANarchy Craft Brewery Collective, which includes Oskar Blues, Cigar City, Three Weavers and others.
At the time, Bryant told Brewbound that the plan was to acquire two additional “Ninkasi-sized” breweries in the Midwest and east regions of the U.S. to establish as hubs. Legacy then would acquire 10 to 15 smaller breweries in those territories.
Six months after the Ninkasi deal, the strategy started playing out as Legacy acquired two smaller craft breweries, Aspen Brewing in Colorado and Laurelwood Brewing in Oregon. Legacy will be a player to watch in 2020 as a potential acquirer.
The Reyes Beverage Group remained an active consolidator of wholesaler businesses in 2019. However, one supplier, Michigan’s Bell’s Brewery, didn’t let its distribution rights be quietly sold to a Reyes subsidiary. Instead, Bell’s Brewery founder Larry Bell notified the company’s seven Virginia wholesalers in February that the Michigan craft brewery would cease shipments to the state.
In October 2018, Reyes subsidiary Premium Distributors of Virginia reached a deal to acquire Richmond-based Loveland Distributing Company, which has sold Bell’s beer since 2015. Bell’s had been attempting to terminate its contract with Loveland prior to the closing of that business’ sale to Reyes.
Bell’s and Loveland and Premium have remained locked in the dispute throughout 2019.
The biggest craft deal by volume ever went down in November when Kirin-owned Lion Little World Beverages struck a “definitive agreement” to acquire 100% of Fort Collins, Colorado-headquartered New Belgium Brewing Company in an all cash transaction.
The sale — which New Belgium’s employee owners voted in favor of in December — marked both the end of the craft brewery’s independence in the eyes of trade group the Brewers Association, as well as the company’s 100% employee ownership status.
The deal gives Lion a flagship U.S. brand, and likely won’t be the last big deal the company strikes, with noted M&A expert Simon Thorpe leading its North American craft beer division and spearheading dealmaking for the company in the U.S.
Stone Brewing’s lawsuit against MillerCoors over its rebranded Keystone Light products continued on into 2019. However, in March, the company’s attempt to stop MillerCoors from selling rebranded Keystone Light offerings fell short. A federal judge denied Stone’s motion for a preliminary injunction as well as the San Diego-based craft brewery’s attempt to dismiss MillerCoors’ counterclaims.
Although U.S. District Judge Roger T. Benitez denied Stone’s motions, he wrote that the craft brewery’s trademark infringement claim is “moderately strong” and said the “Stone” trademark is “indisputable” with “protectable ownership.”
Still, Benitez found that Stone was “hard-pressed” to prove it would suffer irreparable harm by not receiving a preliminary injunction. He added that MillerCoors “has not been found liable of trademark infringement,” and should not be forced to stop using the refreshed Keystone Light packaging until the matter is decided in a courtroom.
Nevertheless, in November, a federal magistrate judge filed a report and recommendation order largely siding with Stone Brewing’s claims that MillerCoors did not provide all available marketing materials for its Keystone brand during the lawsuit’s discovery phase. Although U.S. Magistrate Judge Linda Lopez declined to impose sanctions against MillerCoors, she did grant a partial award of monetary sanctions to the San Diego-headquartered craft brewery.
The case remains active.
Bankruptcies, foreclosures, financial issues and closures became more common headlines in 2019 as growth slowed and competition increased. Like many small craft breweries across the country, several small Massachusetts breweries ran into financial issues. It’s not an unexpected development as the Brewers Association expects a record 300 craft breweries or so to close by the end of 2019. A similar story is likely to play out in 2020 as the gap in the number of openings and closings shrinks.
Cracks continued to show in Constellation Brands’ $1 billion investment in San Diego craft brewery Ballast Point. Just two weeks after recording a $108 million impairment charge on the brand’s trademarks, the New York-based beer, wine, and spirits company closed Ballast Point Brewing’s 80,000 sq. ft. “Trade Street” sour beer and barrel-aging facility, as well as its Temecula, Calif.-based brewpub in April. Constellation also abandoned plans to open a brewpub in San Francisco’s Mission Bay neighborhood, where the NBA’s Golden State Warriors are building a new stadium.
Of course, Constellation’s ownership of Ballast Point would come to an end in December, when the company offloaded the brand to Illinois-based upstart craft brewery Kings & Convicts, which has the backing of The Wine Group chairman Richard Mahoney.
The Brewers Association’s annual ranking of the top U.S. craft brewing companies based on projected production volume grabbed readers’ attention. Pennsylvania’s D.G. Yuengling & Son once again secured the top spot as the largest BA-defined — businesses that make fewer than 6 million barrels of beer annually and are less than 25 percent owned by a non-craft brewer — producer of craft beer in the U.S.
Boston Beer Company and Sierra Nevada rounded out the top three. New Belgium, which ranked fourth in 2018, will lose its independent status following its sale to Kirin-owned Lion Little World Beverages.
The $300 million cash and stock transaction between Boston Beer Company and Dogfish Head Craft Brewery was by far the most-read Brewbound story of 2019. The merger united two of the most iconic and charismatic craft brewery owners in Jim Koch and Sam Calagione. Their story is just beginning, as Boston Beer works to move Dogfish Head into its wholesaler network. How the integration of those two economic companies, as well as if their platform expands will be another story to watch in 2020 and beyond.