Industry News

Goose Island and the Domino Effect

Five years ago, Goose Island Beer Company announced that it would be acquired by Anheuser-Busch InBev. John Hall, Goose Island’s founder, stayed on as an A-B InBev employee. He was put in charge of the company’s craft and import division. That division, now called High End, followed the Goose Island precedent and began buying craft breweries. There are now eight in High End’s portfolio.

There was another member of the Hall family to Goose Island: John Hall’s son, Greg. He left Goose Island after the sale and opened Virtue Cider on a farm in Michigan. Demand for the cider overwhelmed Virtue’s inefficient packaging equipment. Greg Hall wound up selling a controlling stake in Virtue to A-B InBev. The deal also allows Virtue to save on capital expenses; it uses Goose Island’s bottling and kegging operation in Chicago and thus doesn’t have to buy its own equipment.

Jason Notte of Marketwatch.com recently spoke with the Halls just a few weeks before the fifth anniversary of the Goose Island sale and discussed “life afterward, the changes that have occurred in both the craft beer and cider markets since and what the sale meant to Virtue Cider and other A-B InBev High End offerings”. The interview is on the lengthy side, but definitely worth reading

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The Friday Mash (Boomer Sooner Edition)

One hundred and twenty-five years ago today, at high noon, thousands of people took part in the Oklahoma Land Rush. Within hours, Oklahoma City and Guthrie had instant populations of 10,000.

And now…The Mash!

We begin in Tumwater, Washington, once the home of Olympia Brewing Company. Today, it’s the home of a cluster of legal marijuana growers and processors—including one of the state’s largest.

Peru’s Cerveza San Juan beer brand has replaced the roaring jaguar with barnyard animals on its cans. The reason? The brewery is calling attention to the big cat’s endangered status.

Officials have reinstated beer at the University of Missouri’s “Tiger Prowl”, where graduating seniors eat barbecue, get free merchandise, and get ready to say goodbye to their classmates.

Anheuser-Busch InBev has acquired its eighth craft brewery, Devil’s Backbone of Roseland, Virginia. Established in 2008, Devil’s Backbone has won multiple Great American Beer Festival medals.

The Vietnamese love beer, and craft brewers have begun to enter the market. One new craft is the Pasteur Street Brewing Company, whose founders include Vick’s Florida native John Reid.

Forbes magazine’s Tara Nurin explores “pay-to-play” in beer distribution. Even after a high-profile crackdown in Massachusetts, she says it’s “a common yet whispered business practice”.

Finally, Don Russell aka Joe Sixpack takes us back to the bad old days of Prohibition’s “needle beer”: speakeasy owners injected alcohol into near beer—which was still legal in the 1920s. One customer, who sampled the stuff, compared it to 44-D cough syrup.

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The Friday Mash (Apple Edition)

Forty years ago today, Steve Jobs, Steve Wozniak, and Ronald Wayne founded what became Apple, Inc. Today, the Apple brand is considered the world’s most valuable, worth close to $120 billion.

And now…The Mash!

We begin in Fort Worth, where fans of Louis Torres’s “beer can house” have just days to get a last look at it. Torres sold the house, which is likely to be leveled by developers.

A federal appeals court in Cincinnati ruled that Anheuser-Busch InBev can sell beer with up to 0.03 percent less alcohol than advertised and still be in compliance with the law.

The World of Beer chain of beers is taking expansion to a new level. It has granted a franchise to Chinese investors, who plan to open three locations in Shanghai.

According to the UK’s Local Government Association, one way of curbing alcohol abuse is to make lower-alcohol beverages—i.e., beer—more widely available to drinkers.

Neal Ungerleider of Fast Company magazine reports on the status of Stone Brewing Company’s brewery in Berlin, and Stone’s effort to sell IPA to Germany’s conservative beer drinkers.

A couch potato’s dream happened in I-95 in Melbourne, Florida. A semi-trailer carrying Busch beer slammed into the back of another truck loaded with Frito-Lay products.

Finally, the owner of a Belgian beer bar in Philadelphia had these words for those who carried out the terror attacks in Brussels: “Heaven is an afterlife of Belgian beers, chocolates and frietjes that the terrorists shall never know.”

Why Some Breweries Avoid Distributors

For a start-up brewery, Denver is a challenging market. The area is not only awash in breweries, but demand has driven up the price of cans. This has caused some small breweries to adopt a different business model: bypass packaging altogether, and sell fresh beer only to the immediate neighborhood. Breweries that adopt this model avoid the expense of buying a canning or bottling line, hiring sales personnel, and hiring a distributor. And they have the option to package if market conditions change.

Breweries that sell directly to customers enjoy a greater return on investment. They have more freedom to experiment with beer styles, and brewery owners contend that their product is fresher than the packaged variety. Many have won a devoted following in their neighborhoods. Small breweries have even created their own beer festival, called Festivaus. It attracts more than 60 Denver breweries, and a crowd of over 2,000 attendees.

In two decades, Denver’s craft brewing industry has come full circle. In 1994, when Great Divide Brewing Company opened, it faced stiff competition from four nearby brewpubs; and, at the time, a brewery that opened a taproom was expected to operate it as a restaurant. Instead, Great Divide packaged its beer and didn’t open a taproom for 13 years.

The Friday Mash (Stanley Cup Edition)

On this day in 1892, Lord Stanley, Canada’s former Governor-General, pledged to donate a silver challenge cup to the best hockey team in Canada. The Montreal Canadiens have won 24 Stanley Cups, nine more than the second-place Toronto Maple Leafs.

And now…The Mash!

We begin in Silver Bay, Minnesota, where the city council banned a local microbrewery’s products from the municipal liquor store after the brewery opposed against taconite mining in the area.

Hops have been used in folk medicine for centuries. Today’s scientists have been working on harnessing hops’ anti-inflammatory and anticancer properties.

Releases draw big crowds of beer geeks. Unfortunately, some of them behave badly, pushing and shoving, cutting in line, and abusing breweries on social media when the beer runs out.

The pace of mergers and acquisitions in the brewing industry is picking up, and now craft breweries are taking one another over. Recently, Oskar Blues Brewery has bought Cigar City Brewing.

Tom Osborne and Mike Robb appeared on the television show Shark Tank to pitch The Beer Blizzard, a freezable product that fits on the bottom of a beer can, keeping it colder longer.

A craft brewery in London is attacking the problem of food waste by salvaging heels from bread loaves. The heels—which normally go to waste—are made into a beer called Toast Ale.

Finally, Dogfish Head Craft Brewery’s Sam Calagione says he got his first taste of the beer business waiting tables at a Manhattan bar. That inspired Calagione to buy a homebrewing kit. On a whim, he added overly ripe cherries…and the rest is history.

The Friday Mash (All That Jazz Edition)

Ninety-nine years ago today, The Original Dixieland Jass Band recorded the first-ever jazz record, for the Victor Talking Machine Company in New York. The band later changed “Jass” to “Jazz” and went on to record many classics, most notably the “Tiger Rag”.

And now….The Mash!

We begin in Royal Oak, Michigan, where the late Glenn Frey of the Eagles grew up. The Roak Brewery threw a party in Frey’s honor, and brewed a English golden ale called “Lyin’ Eyes” for the occasion.

A beer spa is now in business in Sisters, Oregon. Hop in the Spa, which is partnering with Deschutes Brewing, offers “microbrew soaks” and “hops on the body” treatments.

Ultra-marathoner Jesse Weber employed an unusual strategy for going the 50-mile distance. Along the way, he stopped for a Pabst Blue Ribbon–after fortifying himself with cookies and a quesadilla.

Victory Brewing Company and Southern Tier Brewing have formed a joint venture which, they hope, will allow them to stay independent and stay competitive in a consolidating industry.

Bay area rapper E-40 has released his own brand of malt liquor, which checks in at 10% ABV. Deadspin.com’s Patrick Redford tried a bottle (a 40-ouncer, of course) and gave it a resounding thumbs-down.

World of Beer is looking to hire three people for what it calls “the internship of a lifetime.” Interns will get to travel, drink, and share their adventures with the world—and get paid for it.

Finally, Louisville’s Against the Grain Brewery & Smokehouse has teamed up with Hi-Five Doughnuts to create a new beer called “Mmm…D’oh! Nuts.” The doughnuts and vanilla glaze—a gallon’s worth—created a smoky beer with a root beer-like sweetness.

Distribution: Beer’s Next Battlefront?

Last week, Massachusetts’ liquor regulators slapped the state’s largest beer distributor with a 90-day license suspension. The distributor’s offense: paying some $120,000 in bribes to a dozen bars in return for their devoting tap handles to the brands the distributor carried.

Beer journalist Jeff Alworth contends that the practice of paying bars to carry its brands is hardly limited to the distributor that got caught. What made that case stand out was the distributor blatantly bought tap handles. More subtle corruption is harder to detect because state liquor regulators don’t have the resources to monitor every transaction between a distributor and a bar.

According to Alworth, the recent merger of Anheuser-Busch InBev and SABMiller may lead to even more cheating with respect to beer distribution: “Large companies like [Anheuser-Busch InBev] are already making a big play to control distribution. Smaller companies are going to become desperate to get their beer to market. As more and more breweries come online and more and more consolidation happens at the top, the opportunities to cheat will grow.” While this story won’t dominate the media, Alworth predicts that “it will be one of the most important dynamics driving what happens in beer in the coming years.”

The Friday Mash (“Rhapsody in Blue” Edition)

On this day in 1924, George Gershwin’s “Rhapsody in Blue” premiered in New York at a concert titled “An Experiment in Modern Music.” Paul Whiteman and his band performed the work, with Gershwin playing the piano.

And now….The Mash!

We begin in Zalec, a town in Slovenia’s hop-growing region. The city plans to spend €170,000 ($190,000) to build Europe’s first-ever “beer fountain”. For €6, visitors will be able to buy samples in a commemorative mug for three 10.5-ounce samples.

Craft beer is hard to find in Las Vegas. The reason? State laws which, until recently, allowed brewpubs only to sell directly to customers and imposed hefty license fees on brewpubs.

David Forde, a UK-based executive of the Heineken Company, thinks we should be drinking less because excessive drinking will create a backlash. Heineken’s latest ad campaign is “Moderate Drinkers Wanted”.

Some scientists believe that beer was the reason why our ancestors switched from a hunter-gatherer to an agricultural existence. Beer was more nutritious than beer and, unlike water, was free of pathogens.

New Belgium Brewing Company has narrowed its list of sites for a second brewery to two: Asheville, North Carolina; and the Philadelphia area. The final decision should be made by June.

USA Today’s panel of beer experts have chosen 20 cities for its America’s “best beer scene” competition. Until February 29, you can vote for your favorite—but only once per day.

Finally, Forbes magazine’s Breanna Wilson went to the 16-room Dogfish Inn in Lewes, Delaware. The inn doesn’t sell Dogfish Head beer onsite because it wants guests to wander the town’s restaurants—one of which is Dogfish Head Brewings & Eats.

Why Golden Road Agreed to Be Acquired

Last fall, when Anheuser-Busch InBev acquired Los Angeles-based Golden Road Brewing, critics of the deal characterized Golden Road as a “built to sell” operation. They pointed out that for a new brewery, it was unusually big, both in production and distribution area.

Tony Yanow, one of Golden Road’s founding partners, says the “built to sell” rumors are untrue. He contends that being acquired wasn’t discussed until after A-B made an offer, which was too good to turn around. A-B gave the brewery “a really good valuation”, and promised to keep its employees on the payroll with opportunities for advancement.

The fast-changing craft beer industry was another reason to agree to the deal. Yanow said, “In a world where the amount of shelf space is not growing, but the number of breweries is growing so quickly, it’s a fight to get your beer [into major retailers],” He added that the challenges will grow as the industry consolidates and the big players strengthen their grip on distribution networks and retail accounts.

The Friday Mash (Divestiture Edition)

Thirty-four years ago, AT&T agreed to be broken up into seven regional phone companies. Over the years, the “Baby Bells” recombined; and Southwestern Bell, the last surviving Baby Bell, renamed itself—you guessed it—“AT&T.”

And now….The Mash!

We begin in Chicago, where Walgreen’s sells Big Flats 1901 for $2.99 a six-pack. The contract-brewed beer has an overall rating of “Poor”—along with some funny reviews—on BeerAdvocate.com.

Kefir beer might be a healthier option for those with stomach ulcers. Scientists in Brazil found that rats that were fed kefir beer were less prone to inflammation than those that were fed regular beer.

Glassblower Matthew Cummings thinks beer deserves better glassware than the shaker pint. His Pretentious Beer Glass Company turns out odd-looking vessels designed for particular styles.

Vilde Haye, an Israeli boutique brewery, has launched a series of beers inspired by an imaginary klezmer orchestra. Each beer in the series has a “mascot,” a shtetel musician with a back story.

Mexican beer is growing faster than craft beer, thanks to America’s growing Latino population. There’s room for more growth as Anglos become aware of brands like Modelo and Tecate.

Brewbound.com lists the top ten craft beer stories of 2015. They include mergers and acquisitions, veteran craft-brewing figures stepping down, lawsuits, and the popularity of hard root beer.

Finally, Frank Winslow, Yards Brewing Company’s Director of Quality Assurance, explains why most beer bottles are brown but some are green, and why Corona might contain hop extract rather than actual hops.

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