Australia’s Lion has snapped up Colorado-based New Belgium Brewing, the fourth largest craft beer brewer in the United States, in an effort to expand on the international stage.
Lion’s global craft division Lion Little World Beverages will acquire New Belgium in a cash transaction, as the owners of the XXXX beer brand look to the rest of the world for growth following the acquisition of main competitor CUB by Asahi earlier this year.
With breweries in Colarado and North Carolina New Belgium Brewing has a presence in all 50 US states, and Lion Little World Beverages said the acquisition provides the Kirin-owned company with “immediate scale in the world’s largest market for craft beer”.
Forbes estimates that the brewery made US$234 million last year with a net profit of US$17 million.
The terms of the deal have not been released, but the companies expect it to be complete by the end of 2019, dependent on approvals by regulators and New Belgium’s employee stock ownership plan, which was implemented in full in 2012. The employee-ownership model has been a partial aspect of New Belgium’s structure since 2000.
In an open letter on the New Belgium Brewing website, co-founder Kim Jordan said that more than 300 employees would receive $100,000 as part of the exit from the employee-owned structure.
Rumours of a sale have cropped up since the company appointed consulting firm Lazard to look into potential sales in 2015 as it struggled to find its place as a big brewer in a small independent brewer’s world, against a backdrop of declining growth among larger craft brewers just as it opened the steam came out of the market for bigger craft breweries and it had its first year of negative growth.
Back in May, long term head brewer Peter Bouckaert announced his departure to launch a microbrewery.
Even as recently as last year Jordan lauded the IBA’s focus on independence at BrewCon 2018, saying that independent beer’s “incredible stories” are what sets them apart.
“The big brewers can’t own that, borrow it or buy it,” Jordan told the crowd in 2018.
“We need to continue to terrify the dinosaur, because I think that the independent seal, the coming together as a community as independent brewers is really important to our future.”
Matt Kirkegaard spoke Jordan at BrewCon 2018 and in the wide-ranging discussion touched on the importance and meaning of independence to consumers and the industry.
“[Independence] is a uniter [sic] of one very specific and important piece of our identity,” she said at the time, acknowledging the ongoing trend of multinationals snapping up independent brewers.
“Having a big brewer by you allows one to invest in ways that you couldn’t without an infusion of capital. Brewing is an expensive endeavour, it takes a lot of capital and it’s difficult for people to figure out how they’re going to finance that.
“Our experience in watching this whole phenomenon of ‘Oh nothing is going to change and we’re still going to run it,’…is that that’s a temporary condition.
“I know of a brewery who, when they announced they had been bought by a multinational brewer, that brewer’s public relations team essentially moved into that brewery for the first month and no communications went out the door that were not written and or sanctioned by that big brewer, so that authentic voice [is removed].
“The other side is… they have access to things, whether that’s reach across the world, raw materials at a better price, expertise, a bulk bottling line – things that as independent craft brewers we don’t have access to.
“Do I resent that? No. Do I wish beer drinkers understood that the rest of us are trying to be deeply rooted in the craft beer landscape, good business people, dedicated to quality? Yes.”
Jordan did say that the New Belgium team had for a long time discussed whether the company should develop, and how that would look.
“Organisms, whether their communities…or a single celled organism don’t sit in stasis. You either expand or contract. The real eye opener for us was when we realised that if we didn’t grow all our coworkers sat in the same spot, nobody got to have new opportunities… there was no upward mobility. Growing enabled us to provide opportunity for a lot of people.”
Jordan’s partner Dick Cantwell, founder of Seattle’s Elysian Brewing in 1995 and sold it to AB InBev 20 years later has also experienced difficulties in his relations with the brewing giant, but this appears not to have factored into the decision to sell New Belgium.
Cantwell reportedly voted against the sale of his company to the brewing giant, and resigned from the company three months after the deal was announced.
As part of the deal. Magnolia Brewing, which Cantwell, New Belgium and Belgium’s Oud Beersel bought from out of bankruptcy in 2017, will also transfer to New Belgium and therefore Lion, buying the two other owners out of their minority stake. According to media reports, Cantwell will remain in the business going forward, under its ownership by the Kirin group company.
New Belgium’s HQ will remain at Fort Collins in Colorado, Steve Fechheimer, who joined in 2017, will continue as chief executive officer along with the management team.
Kim Jordan will take on a key advisory role in collaborating “alongside other leading founders within the Lion Little World Beverages network”.
New Belgium Brewing was founded in 1991 by former social worker Kim Jordan and then-husband Jeff Lebesch. It now has two brewing facilities in Fort Collins, Colorado and Asheville, North Carolina, as well as a venue in Denver.
“We’re confident that our shared values and commitment to purpose and culture will provide the foundation for a great partnership in the US,” said Stuart
Irvine, CEO of Lion, which has had limited access to the competitive US beer market until now.
“Kirin has entrusted Lion with leading its global craft beer strategy and today’s announcement is an important milestone for all of us as we look to drive growth in markets beyond Australia, New Zealand and Japan.”
Jordan said that Lion Little World Beverages are “brewers’ brewers”.
“We have really felt their commitment to this ancient craft,” she said in a press release regarding the announcement.
“We’re absolutely excited about helping to build a collective of breweries – each with their own vibe – who share the same commitment to delighting beer drinkers with great beer, great businesses, and great collaboration among us.”
Lion owns brands including James Squire, Little Creatures, Emerson’s, and Panhead. The global craft division, Lion Little World Beverages (originally established in 2015 as Lion Global Markets) will lead Kirin’s craft beer strategy globally going forward, according to the business.