CBC Week + a Blockbuster Brewery Deal

[00:00:00] Justin Kendall: It's CBC week and we've got a major craft deal. Hello and welcome to the Brewbound Podcast. I'm Justin Kendall.

[00:00:17] Jessica Infante: I am Jessica Infante. And I'm Zoe Licata.

[00:00:20] Justin Kendall: We're like a witch's circle here.

[00:00:21] Jessica Infante: I know. We're all together in person. I love when this happens, you guys.

[00:00:26] Justin Kendall: It's so much fun.

[00:00:27] Jessica Infante: I sound like the girl at the end of Mean Girls, who's like, I just wish we could be together, and I'd bake a cake of rainbows and smiles. And here we are at the Pennsylvania Convention Center. Same energy. Same energy.

[00:00:37] Justin Kendall: We meet in the strangest places.

[00:00:40] Jessica Infante: Well, we are here at CBC. We all got here different ways. I drove, Zoe trained, Justin flew. Planes, trains, and automobiles. Yeah, man.

[00:00:48] Ad Read: We made it in time to head to Love City last night, which was an incredible event. I don't think I'm exaggerating when I say it was a really great time, great turnout for our fun event there, sponsored by Aaron Fox Schiff, our lawyer friends.

[00:01:01] Justin Kendall: Yes. Great party. It was a fun party. Right? We throw a good party. We throw a good party. And maybe we'll do less content in the future. Who knows? Maybe we do more. We'll figure it out.

[00:01:13] Jessica Infante: We'll figure it out. I feel like people need the live podcast recording as an excuse to come, but then when they do come, they don't really want to hear it. So maybe we'll just say we're doing it and not. I don't know.

[00:01:24] Justin Kendall: My phone was blowing up the entirety of the weekend with people signing up, signing up, signing up. And then Sunday it was like 20 people, 30 people, 40 people. It was more, more, more. It was exciting to see because, you know, people sign up for things a little late.

[00:01:42] Jessica Infante: People sign up for things so late.

[00:01:44] Justin Kendall: And then we tell Love City, you know, hey, you know, we might have 40, 50 people. I think I told them 100. Here's 150, maybe 200 people.

[00:01:53] Ad Read: And then it was. I was sitting at the registration desk and it was suppliers, brewers. It was folks from all over the world. We had a lot of international guests last night. Folks from New Zealand, from England. There was tons of folks. It was really cool.

[00:02:09] Jessica Infante: Good times had by all. I feel like we just got to jump in because Justin, you tea something.

[00:02:15] Justin Kendall: Yeah, we're burying the lead here, talking, gassing ourselves up. But it wouldn't be a CBC or a trip out of my house without major news. And that broke early Tuesday morning. Firestone Walker in D'Youville, USA, are acquiring the Stone Brewing brand from Sapporo, USA. Fucking nuts, man.

[00:02:40] Ad Read: Yeah, I think we've used a lot of expletives in our just gaining of knowledge about this deal.

[00:02:45] Jessica Infante: Yeah. Well, we'll put the warning on this episode. I think we put the warning on most episodes. Justin, you've done all the reporting on this. What do we need to know?

[00:02:54] Justin Kendall: Well, about a year ago, Sapporo did an internal evaluation and they decided they wanted to focus on the Sapporo brand and they started chopping stone around and They talked to several people, and Firestone and Duvel emerged as the partner of choice. And what Firestone is going to pick up is the brand IP. They're going to pick up the Stone Brewing World Bistro and Gardens at Liberty Station, the 30,000 square foot flagship taproom. They're also going to take the taprooms in San Diego's Little Italy, Oceanside, and Pasadena. And they're getting the licensing deals at Petco Park and the San Diego Airport as well. And then Sapporo is going to move all production of Sapporo to Richmond, Virginia. That's going to be the headquarters, the hub. And today I learned, TIL, that they lease Escondido.

[00:03:59] SPEAKER_??: Huh.

[00:04:00] Justin Kendall: Yeah, so they are going to find a third party to take that.

[00:04:05] Ad Read: Wow.

[00:04:07] Justin Kendall: It's a massive deal.

[00:04:08] Ad Read: Yeah, there's a lot, a lot going on. A lot of beer moving around, a lot of ownership of on-premise or on-premise locations moving around. There's a lot.

[00:04:17] Jessica Infante: What does this mean for Duvel USA Cruise BA rank?

[00:04:23] Justin Kendall: You have to do a little bit of patchwork math with this stuff because we don't have the 2025 numbers yet. But Nick Firestone told me that Stone was about 250,000 barrels last year. Trumer Pills, which they're also acquiring.

[00:04:39] Jessica Infante: How big is that?

[00:04:40] Justin Kendall: Around 30,000 barrels. So you're adding close to 300,000 barrels, give or take. And then the Firestone Walker production in 2024, which is the last number we had, 480,000 barrels. The Duvel portfolio, so we're talking Boulevard and Brewery Omegang, that's 167,000 barrels. We don't have the import figure, I don't believe, but

[00:05:06] Jessica Infante: I don't think that would count here anyway.

[00:05:08] Justin Kendall: No, but I mean they'd be, I think I did the math before I left, putting all this patchwork math together and it's probably wrong, 920,000 barrels. Crazy. Guess who's going to be in charge of the stone portfolio?

[00:05:23] Jessica Infante: I don't know.

[00:05:25] Justin Kendall: Brewmaster Matt Brindleson.

[00:05:26] Jessica Infante: Wow.

[00:05:28] Justin Kendall: He's going to oversee that in Paso Robles in Kansas City. There's so many facets to this deal. They're going to produce in Paso Robles. They're going to produce in Kansas City. Firestone Walker is going to be in charge of the Western US, California, and Texas, as well as national accounts. They're taking all that. East of the Rockies, Dooble USA, and our friend Bobby Dykstra over there. going to be leading the charge on all of that.

[00:05:58] Jessica Infante: I have a very important question for you. Where will we learn about Stone's ABP? Will it be in Bobby Dykstra's cinematic masterpiece.

[00:06:08] Justin Kendall: Oh, man.

[00:06:09] Jessica Infante: That is a great question.

[00:06:11] Justin Kendall: I wonder if we get it split, because they're going to have, it's like 40% and 40%. Oh my god. I know that's not 100, but.

[00:06:19] Jessica Infante: Wait, so Reynoldson is going to be like a business fellow, or is he? No, he's just running. Still brewing. OK, cool. Yeah, still brewing. And you said, like, in charge of the portfolio.

[00:06:28] Justin Kendall: I was about to say, was he going to be in like? You know, making sure everything is tasting right.

[00:06:34] Jessica Infante: As he should be. I like this for him. I was concerned that he was about to become a brand person. No. I would advise him against that, having been a brand person myself.

[00:06:42] Justin Kendall: Yeah. So we talked about market share, and they didn't have a number to give yet.

[00:06:46] Jessica Infante: Because this is like California dominance.

[00:06:48] Justin Kendall: Oh, yeah. So it's funny you say dominance, because Nick Firestone said, we become the dominant craft player in LA, San Diego, Orange County. which was part of the rationale for this in the first place. That's the quote.

[00:07:02] Jessica Infante: How much more do you want, Nick Firestone? God.

[00:07:05] Justin Kendall: I don't know. He could go shopping, apparently.

[00:07:08] Jessica Infante: Yeah, well, you know, we talked about this a few weeks ago. He told me that their M&A department is him and Google. And look, buddy, you've been doing a lot of Googling lately.

[00:07:16] Justin Kendall: He may have admitted to lying to you.

[00:07:20] Ad Read: I also don't know how much googling is required to see what's going on with Stone. I feel like they were well aware of Stone before any such googling. You know what?

[00:07:28] Jessica Infante: He's dead to me.

[00:07:29] Justin Kendall: So they really like the IPA portfolio, if you can imagine that.

[00:07:32] Jessica Infante: Wow.

[00:07:32] Justin Kendall: And Buena Vista, of course.

[00:07:34] Jessica Infante: Well, yeah. Those are good beers. What else do we know about what this means for the people on the Stone Brewing right now?

[00:07:40] Justin Kendall: So the executive leadership team at Sapporo are going to stay there.

[00:07:45] Jessica Infante: So Zach will continue to be the CEO of Sapporo Youth.

[00:07:48] Justin Kendall: So the plan is to hire a quote, significant number of Stone Brewing employees across hospitality, sales and marketing. And as far as production goes, that's going to be assessed as they transition because they're still going to Stone Brewing in Escondido, they're still going to Stone Brewing in Richmond in the interim until this thing closes and everything gets wound down where it needs to be and transitioned over to Paso Robles and Kansas City.

[00:08:17] Ad Read: We knew something. Something always drops at CBC. And here we go. We got it.

[00:08:22] Justin Kendall: They said this wasn't intentional, of course.

[00:08:24] Jessica Infante: Sure.

[00:08:25] Ad Read: Oh, yes, of course.

[00:08:26] Jessica Infante: Are any of them even here?

[00:08:27] Justin Kendall: They are not. Yeah, a lot of Zoom calls in the Lowe's hotel room today.

[00:08:32] Jessica Infante: Well, I think Nick is just afraid of me now that he knows he lied to me.

[00:08:37] Justin Kendall: I would be.

[00:08:38] Jessica Infante: As he should be, yeah.

[00:08:39] Justin Kendall: So that's kind of where things are. Sapporo is going to focus on Sapporo. Oh, they're going to keep the Richmond Taproom. They're going to shut it down as stone, and then they're looking at ways to retrofit that as a Sapporo Taproom there. Yeah, so that was kind of one of the hanging pieces out there of what they're going to do with that.

[00:09:01] Jessica Infante: So you say a year ago, Sapporo Stone realized that something needed to be done, but they've only had the brand since 2022. And I think this confirms what we all suspected at the time was that Sapporo just wanted production.

[00:09:16] Ad Read: I think we talked about it when the deal happened, that Sapporo, like a lot of other import brands, is really focused on how can they be more efficient with the U.S. market and expand the U.S. market, and that just requires a space to do it.

[00:09:28] Justin Kendall: So I did ask them if they paid under $165 million for it, and they no-commented me.

[00:09:36] Jessica Infante: Of course they did.

[00:09:37] Justin Kendall: Of course they paid less than $165 million for it. They didn't like my jokes, apparently. I liked my joke. I like your joke.

[00:09:48] Jessica Infante: Oh, my God.

[00:09:49] Justin Kendall: It's a it's a low bar to, you know, for us there. Just a little bit of paid a little less than one hundred and sixty five million mergers, acquisitions and light comedy. Yeah.

[00:09:59] Ad Read: Does this mean we're going to have stone beers possibly at our Rebound Live party this year?

[00:10:04] Justin Kendall: Very well could.

[00:10:05] Ad Read: Hmm.

[00:10:06] Justin Kendall: You're going to have to go. I'm going to have to swing by Liberty Station on my next San Diego trip.

[00:10:11] Jessica Infante: You're going to have to be dressed as the gargoyle for that party.

[00:10:15] Justin Kendall: Maybe Matt Brindleson will be. As far as alignment, everybody's going to ask about distribution. We probably should talk a little bit about that. So if it's not broke, they're not going to fix it so far. So obviously Sunset Distributing has the largest chunk of stone volume.

[00:10:35] Jessica Infante: Do they carry Firestone?

[00:10:37] Justin Kendall: They do not. I believe they are a Reyes Beverage Group client. Of course they are. So, yeah, not moving as of now. And then Nick said that in the rest of the footprint outside of SoCal, they're around 90 percent aligned. So at least in California. And then it's two thirds the rest of the way in the rest of the country for Duvel and Stone.

[00:11:05] Jessica Infante: All right.

[00:11:06] Justin Kendall: It's fun. Yeah. This is the fun stuff, right?

[00:11:09] Jessica Infante: This is the fun stuff.

[00:11:13] Ad Read: That was a very long pause before agreeing to that statement.

[00:11:17] Justin Kendall: This is the exciting stuff. Like, it can't all be Tilray.

[00:11:22] Ad Read: Apparently not. And when does Tilray do like a Spite acquisition now? Just to be like, we're still the most recent one to acquire a craft brand.

[00:11:31] Justin Kendall: You never know what Irwin Simon is going to do.

[00:11:34] Ad Read: Acquire Yingling.

[00:11:36] Jessica Infante: Oh, man. Oh.

[00:11:39] Justin Kendall: By the way, you want to talk about where this convention is going in the future?

[00:11:43] Jessica Infante: Sure, we can do that.

[00:11:44] Ad Read: Are we allowed to do that? They are advertising the next one, at least. All right.

[00:11:49] Justin Kendall: San Antonio.

[00:11:49] Jessica Infante: San Antonio, which is where we were supposed to go in 2020.

[00:11:53] Justin Kendall: Make good, right?

[00:11:54] Jessica Infante: We'll make good. I didn't check out the dates.

[00:11:57] Justin Kendall: Early April is what I saw.

[00:11:58] Jessica Infante: Early April. I think so. All right, cool.

[00:12:01] Justin Kendall: Hopefully that's not like an, that wouldn't be like an Easter weekend, I don't think.

[00:12:06] Jessica Infante: No Easter, you know, I don't know. That doesn't matter.

[00:12:08] Ad Read: We'll walk around. There's a big sign somewhere in this convention center that shows you see you in San Antonio with the dates. So we'll take a picture for everyone.

[00:12:20] Jessica Infante: Zoe, you have been writing up on today's keynote speaker. Would you like to share anything?

[00:12:25] Ad Read: Yeah. Our keynote speaker today was someone not involved in beverage alcohol, which is a change up from previous years. And it was Will Guidara, who is a hospitality aficionado and former owner of a very popular restaurant in New York. And...

[00:12:47] Jessica Infante: I wonder what The Brewers list looks like there.

[00:12:49] Ad Read: That is a great question. He is also an author and wrote a book called Unreasonable Hospitality and has another one coming out soon, this month I believe.

[00:13:01] Justin Kendall: How unreasonable is his hospitality?

[00:13:04] Ad Read: So that's the catch. There's not quite a succinct definition of what Unreasonable Hospitality is and the kind of one hour speech was really dedicated to explaining examples of that and what they did at their restaurant to rise in the ranks and really connect with their diners. And the concept is essentially just finding things and touch points with consumers that show that you are paying attention to what they're going through, that you're listening to them, and that you're making them feel seen and appreciated in their experience. So he's talking about doing things at a fine dining restaurant that has very high-income clientele, doing stuff like gifting them Tiffany glasses after they get engaged at his restaurant, or finding a New York-style street hot dog to give to these fine diners because they really wanted that experience as well. Those aren't necessarily entirely translatable to Craft Brewers, but the concept of how can you find ways to give what we've talked about a million times as the consumers a experience rather than just a product is really that core message. So it was talking about, hey, how can you really dive into every single touch point that you have with a consumer, not just when they come into your establishment, into your tap room or into your bar, not just when you give them the product or when you give them a receipt, but what are you, are you constantly listening to what they're talking about? Are you seeing how you can connect with what they're going through on that day? Are you, you, How are you delivering a receipt or a check or like having them actually do the transaction itself? How can you make that more of a personal experience for folks that's enjoyable and not just a transaction? So there's, brewers will have to come up with their own ways of doing it themselves and what's unique to their own taprooms, but it was very much a motivational speech of hey, quality of your product is kind of the default standard now. What can you do to better connect with consumers beyond that?

[00:15:08] Jessica Infante: Oh, that's a very good takeaway Zoe.

[00:15:09] Ad Read: Good job.

[00:15:10] Justin Kendall: Have you seen the bear?

[00:15:11] Ad Read: I have not watched the bear, but I have heard. So Will is a consultant on the bear, I think is what they said he was, right? I feel like he said he was an executive producer. Oh, excuse me. Taking away his title. And you could definitely tell that based on his speech. Lots of references.

[00:15:28] Justin Kendall: That hospitality portion where you basically eavesdrop on your diners and pay Uber attention to them and then try and make their, what was it, dream weaver?

[00:15:40] Ad Read: Dream, yes, Dreamweaver was the title that, the position that they created at the restaurant for someone whose sole responsibility was not anything to do with the operations themselves, but creating these memorable touchpoints with folks. So listening, observing, having resources available for, you know, if other staff members have ideas for creating those touchpoints, they then can go and execute them. So that is, didn't know Dreamweaver was a job you could have, but, I don't know, maybe I want that job.

[00:16:11] Jessica Infante: I gotta say, I think if I were a guest at a restaurant and I could tell that the staff was eavesdropping on me and acted upon what I had said, I think I'd be creeped out.

[00:16:20] Ad Read: I would be a little creeped out, that's for sure. He shared more kind of wholesome examples of, like, hearing about a couple whose wedding was ruined and they end up turning their evening into a party for them so they could have their first dance. Like, it's definitely a little bit of creepy spying and eavesdropping going on, but...

[00:16:39] Justin Kendall: I want to know what they do when they can tell a dinner is going south fast, whether that's a couple or a family.

[00:16:47] Ad Read: That is a great question. I wish we could ask Will. He is not here. He bounced after his speech, but I would definitely like to know because these are all examples of just improving things or really making things even better, but if it's going horribly for things not to do with your business, I don't know how you improve that. I don't know.

[00:17:10] Jessica Infante: He explained how when they drop a check, they also bring over a bottle of cognac with a little tiny bit poured in glasses for the diners at the table and tell them, this is with our compliments and feel free to pour yourself some more. And I know of a lot of Eleven Madison Park from their granola, which in the New York Times recipe app, which is my favorite thing, they have this recipe for this granola. It's amazing. It's exquisite. It's a little salty, a little sweet, a little sour. It's just so good. And I had always heard that when you go to Eleven Madison Park and you leave, you are given a little container of their granola for breakfast tomorrow. So that's where I thought he was going when he started talking about that cognac. And I'm texting you guys, like, oh, the granola. And you're probably like, what the fuck is this chick on about? No love for the granola. No granola talk, unfortunately. Yeah. I mean, the other thing I know about them is that my cousin staged there, and I need to text him to be like, I got some thoughts, buddy.

[00:18:04] Ad Read: I want the inside scoop on what actually went down. Was anything a little bit more exaggerated than what actually happened?

[00:18:13] Jessica Infante: Right. And how much of Richie in the bear is Will?

[00:18:16] Justin Kendall: Sounds like quite a bit.

[00:18:18] Jessica Infante: Quite a bit, but also Richie's like solid character.

[00:18:21] Justin Kendall: Very good character.

[00:18:22] Ad Read: Yeah.

[00:18:22] Justin Kendall: I enjoyed the show.

[00:18:23] Ad Read: I'm curious to talk to The Brewers. We talked to a couple, but talk to some more as throughout the next couple of days and see what they thought about it and how they might, any ideas they might have to incorporate it if they've been inspired by anything. But yeah, it was definitely different. this year. I think it was also an indicator of just the state of where craft is right now of just trying to look beyond the industry itself at what works and how you can better speak with consumers because they're not just thinking, the consumers themselves aren't just thinking about Craft Brewers anymore.

[00:18:52] Jessica Infante: Because the BA has tried this before. We had the alleged creator of Hot Cheetos come and speak about innovation. You know what? Wow, look at that. He was probably there to give people a pep talk about product innovation, and now that Kraft has evolved more to a hospitality business model format, this guy is here to talk about that.

[00:19:11] Ad Read: He did touch on innovation very slightly today, kind of. He said, I'm not going to say the exact quote, but he essentially said, don't avoid doing innovation just because it's not scalable or because it can't be something that applies to everyone and everything. And he was talking about things like innovation when it comes to these touch points, but I think it was also relevant The Brewers of, you know, people were thinking really big, thinking scale for a long time. And there's some insight there of, okay, focus on who your core consumer is and what they're actually wanting and asking for. And you don't need to create a product that's going to speak to a kind of generic group of folks. What do you keep saying, one size fits one? One size fits one, yeah.

[00:19:55] Justin Kendall: Or you could just buy a complete portfolio of IPAs and Mexican-style lager.

[00:20:01] Ad Read: You could do that. You could.

[00:20:04] Justin Kendall: Well, we've got a lot more CBC to go. I would say the vibes are high so far.

[00:20:11] Jessica Infante: I would agree with that.

[00:20:12] Ad Read: Very high. I think people really like that it's just in Philly. It seems like this is an environment people really enjoy. It's talking to some folks about how it's just nice that you actually get to run into folks here. And so it feels like it's really the Craft Brewers Conference in the little community inside this neighborhood. So that seems to be working well for folks.

[00:20:31] Justin Kendall: We'll have a lot more coverage of CBC at Brewbound.com and in the Insider Newsletter. We still have the State of the Industry to go with Bart Watson. They shook it up this year and they've placed it on Wednesday at the end of the day. So we will be here till the end, or I'll stay as long as I can before I gotta go to the airport and get back to Iowa.

[00:20:54] Ad Read: We'll be here till the end. Because of that schedule change, I think this is gonna be the first year I'm actually staying for the World Beer Cup. Oh. So that will be a fun to witness. Oh, are you gonna go? I think so. Alright. Here anyway. Yeah, yeah, yeah. It's right after Bart's speech. We're also recording tons of podcasts, interviews while we're here. So we've done, Jess did a bunch today. We're doing more over the next couple of days. So everyone listening can make sure to tune in for plenty of conversations where we'll touch on more stuff happening at CBC as well as what's going on with everyone else.

[00:21:24] Justin Kendall: I personally can't wait to not be sequestered in my hotel room. So hopefully, hopefully nobody else buys a brewery in the next 48 hours. Good job. You just spoke it into existence.

[00:21:35] Ad Read: No, we are directly from recording this headed to the welcome reception to hopefully enjoy some great beers and chat with more folks.

[00:21:44] Justin Kendall: And what a weird time to be in Philly too. Like we're right next to Iron Hill Brewery, which reopened across the street. And Evil Genius acquired 21st Amendment, the brand.

[00:21:55] Jessica Infante: Yeah. Luke Bowen from Evil Genius just came by the booth before you guys got here with a can of Come Hell or High Watermelon.

[00:22:03] Ad Read: Also, 250th anniversary of America, quite the time to be in Philadelphia. I suppose. A lot going on sports-wise here. The city is buzzing. I still want to meet Gritty.

[00:22:13] Justin Kendall: Yep. That's bucket list number one right here.

[00:22:16] Jessica Infante: Maybe he'll be at the welcome reception.

[00:22:17] Ad Read: He might be.

[00:22:18] Justin Kendall: He better be. If I find out that he's at the welcome reception and I was in my room, I'm going to be upset.

[00:22:24] Ad Read: We'll let you know on the next episode if we saw Gritty. Perfect.

[00:22:27] Justin Kendall: What a cliffhanger. Oh, stay tuned. Well, that's our show for this week. We will be back next week with interviews from CBC and much more. So we'll see you then.

[00:22:42] Jessica Infante: And that's our show for this week. Thank you for listening. The Brewbound Podcast is a production of BevNET CPG. Our audio engineer for the Brewbound Podcast is Joe Cracci. Our technical director is Joshua Pratt and our video editor is Ryan Galang. Our social marketing manager is Amanda Smerlinski. Our designer is Amanda Huang. If you enjoyed this episode, please share it with your colleagues and friends and review us on your listening platform of choice. You can find our work at Brewbound.com and we also welcome feedback and suggestions at podcast at Brewbound.com on behalf of the entire Brewbound Podcast team. Thank you for listening. We'll be back next week.