Craft Beer Acquisitions: Sellouts or Success Stories?

The craft beer sector has shown a steady growth despite many small and independent breweries being acquired by beer giants.

According to the Brewers Association (BA), “in 2016, craft brewers produced 24.6 million barrels, and saw a 6 percent rise in volume on a comparable base and a 10 percent increase in retail dollar value...By adding 1.4 million barrels, craft brewer growth outpaced the 1.2 million barrels lost from the craft segment, based on purchases by large brewing companies. Microbreweries and brewpubs delivered 90 percent of the craft brewer growth.”

In an effort to continue nurturing that growth, the BA decided to create an Independent Craft Brewer Seal with the reasoning that the logo would serve as a tool for craft-beer enthusiasts to distinguish if their favorite beer was made by an independent brewer or not. In order to carry the stamp, a brewery has to meet the “craft brewer definition” determined by BA.

Craft Brewer Defined by Brewers Association

  • Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales)
  • Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcohol industry member that is not itself a craft brewer.
  • A brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation.
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Foodable has been following the growth of craft beer in the U.S. since its inception and has reported on the origins of "Beervana," what the craft beer market expectations and challenges are, and the network has also provided a behind-the-scenes look into some craft beer companies through its show Beer Artisan.

Most recently, though, the debate on what it truly means to be a craft brewer and consumer sentiments towards independent brewers who have been acquired by non-craft beer businesses have sparked Foodable’s curiosity.

Enter Foodable Labs, our sister data company, which has helped us compare the overall sentiment scores for three beer brands (Four Peaks Brewing, Cigar City Brewery, and Lagunitas Brewing) before and after their acquisitions.

Each beer brand was acquired by a company with more resources with goals of amplifying the beer production, as well as, the reach of the craft beer’s brand.

Four Peaks Brewing

This Arizona-based beer brand was founded in 1996 as a local brewery and restaurant by Andy Ingram, Jim Scussel and Randy Schultz. Fast forward almost 20 years later, this leading Arizona craft brewer, famous for its Scottish-style Ale, Kilt Lifter, gets acquired by Anheuser-Busch InBev (AB InBev) on December 2015, as it looked for external resources and the right partner to help expand the brand. The Kilt Lifter accounted for 60 percent of sales at the time of their acquisition by the beer giant and, now, a sample of its proprietary yeast strain is kept in a cryogenic freezer at a high-tech laboratory in Leuven, Belgium.

AB InBev “keeps all of its brewers’ yeast strains under lock and key at the Leuven facility, ensuring a pure, uncontaminated strain will always be available,” reported “USA Today.” Four Peaks Brewing became the sixth operation at the time to join The High End, AB InBev’s unit providing unique craft and import brands.

Thanks to AB InBev, the Four Peaks co-founders, who remain in control, have attained $1 million in upgrades, expansions and new brewing toys for the crew. “Amplify was the big word with them,” Scussel said of the proposal AB InBev made to “USA Today.” “Amplify what we do. And that’s what it’s been.”

Foodable Labs determined the overall sentiment for the brand before and after the buyout and it found that the sentiment score for Four Peaks in June 2015 was 38.33 points lower at 40.01 in comparison to its June 2017 sentiment score of 78.34.

Technically, Four Peaks Brewery is no longer considered “craft” according to Brewers Association’s definition, but it seems like the brand got the boost it was looking for when it decided to take its line of specialty beers outside of Arizona.

AB InBev has supported the brewery with added resources to improve the quality of their beers. Four Peaks, now, has a laboratory in Tempe with four full-time lab workers along with a new sensory room to identify off-flavors and fix production or distribution problems.

“The only downside to the buyout, according to the owners, is a significant uptick in meetings and teleconferences. But the acquisition also is fueling approximately 20 percent annual sales growth and opportunities the company could not have achieved on its own,” reported “USA Today.”

Cigar City Brewing

This Florida-based craft beer brand has a different story. Cigar City Brewing (CCB) was founded in 2009 by Joey Redner and is best known for its Hunahpu’s Imperial Stout, an “11 percent ale that is aged on cacao nibs, Madagascar vanilla beans, ancho chiles, pasilla chiles and cinnamon,” according to CCB’s website.

This eight-year-old company, which prides itself on incorporating Latin culture and tobacco-manufacturing history of Tampa Bay into its beer names and recipes, did not get acquired by a big beer giant. Instead, CCB became an equity-owned craft brewery after a non-beer company, Fireman Capital, acquired the business in March 2016 to join Oskar Blues Holding, a company created specifically to fund craft brewery acquisitions. Among the acquired, CCB joins Oskar Blues Brewery, Perrin Brewing Company, and Salt Lake Brewing Co. (Squatters and Wasatch Beers).

“I decided to join up with Oskar Blues because we were running out of runway at the brewery. We are capacity capped and I didn't want to borrow money. Just my personal philosophy. So finding a partner that could help us with capacity, operational and technical know-how and the capital needed for growth was what we needed,” Redner told “Forbes” via email.

This deal is an example of a growing trend in the craft beer industry of brewery mergers rather than being bought out by larger beer corporations.

Foodable Labs wanted to see how Cigar City Brewing’s overall sentiment compared before and after the merger. Our sister company determined that the sentiment score for CCB in June 2015 was 2.87 points higher at 75.41 than its June 2017 sentiment score of 72.34.

Could this be a result of the bitter taste left in the mouth of CCB fans after they learned the Tampa brewery was in talks with AB InBev before announcing the Fireman Capital acquisition? Or could the current lower sentiment score be due to less marketing resources in comparison to the big beer guys?

It will be interesting to compare these numbers to next year’s CCB overall brand sentiment score. What we do know is that Florida can’t stop buying CCB. Cigar City’s vice president, Justin Clark, told "Forbes" last year that the company sells 95 percent of its beer to the Sunshine State. “Every time we think we’re going to have more capacity, Florida needs more...”

Lagunitas Brewing Company

This California-based beer brand was founded by Chicago native Tony Magee in 1993 and is best known for its flagship India Pale Ale— described as a well-rounded IPA with a richness that comes from the Caramel Malt barley that mellows out the twang of the hops. Introduced in 1995, Lagunitas' IPA has a 6.2 percent alcohol by volume and pairs well with mild Blue cheese and Hamachi Kama (Yellowtail Collar), according to the company’s website.

Back in 2015, Lagunitas was the sixth-largest craft brewer in the US and 10th-largest among all beer brewers, according to data from Brewers Association.

If it's baroque, don't fix it! We're pretty darn excited, #IPA now hits the mark in Denmark! Skål!

A post shared by The Lagunitas Brewing Company (@lagunitasbeer) on

It first sold a 50 percent stake to HEINEKEN back in September 2015 before it was fully acquired by the Dutch brand in May 2017. Magee, however, doesn’t look at it as a buyout, but just quite the opposite. In a public Tumblr blog post, the Lagunitas executive chairman elaborates on the deal with HEINEKEN “Truth is that we did then, and are now "buying in"… Money has value and equity has value, too. I am using Lagunitas’ equity to buy deeper into an organization that will help us go farther more quickly than we could have on our own.”

Foodable Labs wanted to see how Lagunitas’ overall sentiment compared before and after the acquisition. Our sister company determined that the sentiment score for the Petaluma, Calif.-based brand in June 2015 was 19.68 points lower at 70.66 than its June 2017 sentiment score of 90.34.

Looks like the ‘equity-buy-in’ Magee orchestrated with the global beer brand worked out in his favor. Not only is Lagunitas’ overall sentiment up, but according to its Tumblr blog post, Magee gained a new consulting role within the HEINEKEN umbrella as their Director of Global Craft “to help guide their approach to small brewing as it emerges in the rest of the world.”

What’s for sure is that Lagunitas is no longer considered "craft" according to BA’s definition, even though the brand continues to expand its small brewing techniques across the world. For example, Lagunitas was not included in the Brewers Association’s Top 50 Craft Brewing Companies list for 2016 as it was in the previous year, since now over 25 percent of the brewery is owned by another non-craft beer, alcohol industry member.

Some beer brand operators, like Cigar City’s Joey Redner, don’t consider getting outside help a "betrayal" to craft beer.

“A betrayal of craft beer is when you don’t make good beer,” said Redner at a Brewbound-hosted market talk as reported by “Forbes.”

Foodable wants to know how does the rest of the hospitality industry and beer enthusiasts feel about this semantics battle. What conclusions have you drawn?