Friday, August 18, 2017

The Perks of Private Equity?

The Bruery announced that is is opening its first East Coast outpost across the street from Washington D.C.'s Union Market.  The Bruery will share the 5,000 square foot space with a "notable" partner that has not been named.  The Bruery plans to open the store in approximately three months and plans to hire five employees.  This expansion sounds modest, as it's just a retail store not brewing operations, and The Bruery is sharing the space with another partner.  It is a conservative first move by The Bruery's new private equity majority owners.

Saturday, August 12, 2017

Magnolia Brewing Acquired By New Belgium Group

A New Belgium led group has purchased San Francisco's Magnolia Brewing's assets.  New Belgium is the fourth largest craft brewer in the country and is employee-owned, and Magnolia will become a majority-owned subsidiary.  New Belgium partnered with Dick Cantwell, a co-founder of Elysian Brewing, which was sold to ABI in 2015, and which Cantwell left shortly after the ABI acquisition.  How this transaction was structured or financed was not mentioned in this Good Beer Hunting article, but Magnolia's Dave McLean is staying on.  Magnolia was operating out of bankruptcy before its acquisition.

I have been to Magnolia's brewery and pub in San Francisco's Haight-Ashbury district. It is a great place with good food and beer.  I am glad that Magnolia was able to find a buyer that will allow it to continue operations and expand.  The pub's tap list is heavy on English-style low abv beers like bitters and milds, and they are good.  The Haight-Ashbury pub has four beers on cask.  I notice that a couple of IPAs have made it to the current list.  Magnolia also has a large barbecue pub in the Dog Patch area of San Francisco that I have not visited.

It is good news that a craft beer company is buying another craft brewer rather than a conglomerate.  Magnolia's Haight-Ashbury pub is a wonderful place to eat and drink good beer, and I imagine its barbecue restaurant is just as good.  Here is to the comment in the Good Beer Hunting article that the acquisition will "breath new life" into Magnolia.

Wednesday, August 9, 2017

Growlers As Open Containers

The San Diego Reader has an article on growlers as open containers.  A growler is considered an open container, even if it is full, unless the growler is sealed or stored in a car's trunk.  Not all breweries seal growlers, and the ones that do use various temporary devices that serve more as deterrents to opening the growler in the car than as sealants to keep the beer fresh.  The following two paragraphs put some perspective on the issue:

According to the San Diego district attorney's office, only 101 defendants have been charged with open-container violations in the city of San Diego since the beginning of 2014. Of those, 70 percent were concurrent with a DUI charge, meaning 30 percent were sober drivers in possession of open containers; the DA does not keep records on whether any of those charges involved growlers.

California Highway Patrol public information officer Ray Payton wasn't aware of any statewide policy with regard to growlers. "Sometimes the law has to catch up," he said. Payton further suggested that, "If the officer can prove you are heading back from a brewery and coming home," and "as long as [the growler is] completely full and still sealed the way they seal it [at the brewery], you should be okay…as long as you haven't been drinking."

So, don't start sneaking chugs from your growler on the way home from the brewery.  I recently received a soft sided Coleman cooler that is great for keeping growlers upright and cold for my arduous treks home from breweries. 

Thursday, August 3, 2017

Anchor Is Sold

Anchor Brewing has been sold to the large private Japanese brewing company Sapporo Holdings.  The $85 million transaction is expected to close by the end of August.  Sapporo is buying a well known brand, which anecdotally, seems to have a strong distribution in place.  Anchor was no longer owned by Fritz Maytag, he sold to private equity firm Griffin Group in 2010.  The threat of large mega brewing conglomerates has never been greater and shows no signs of subsiding, so I expect more transactions like this.

Good Beer Hunting has a good article by Matthew Curtis, who also runs the Total Ales blog, on the transaction.  This passage jumped out at me:

The valuation of this transaction will come as a shock to some because it’s considerably lower than that of other recent brewery acquisitions—$85 million is just 2.5 times that of the company’s 2016 annual sales total according to Sapporo’s press release. It’s a figure that feels somewhat insignificant when compared to the billion-dollar valuations that both Lagunitas and Ballast Point commanded in their own acquisitions by Heineken and Constellation Brands respectively—especially when you consider the heritage and legacy that Sapporo will be adding to its portfolio.  

It is hard to imagine a private equity firm selling its stake for less than market value.  Read another way, it looks like Heineken and Constellation may have overpaid to buy competitors, or factored in some outrageous growth projections in their valuation models.  

I saw this San Francisco Chronicle article (hat tip Ramblings of a Beer Runner) that puts the sale in context, too.  An interesting point from the article is that Anchor is only operating at 55% of capacity, which gives it considerable expansion capability at its current facility.  One of the first things I thought about when I read about the sale was the status of Anchor's planned brewery/restaurant/beer museum on San Francisco's Pier 48.  Apparently, this beer amusement park is going nowhere soon, as reported by the Chronicle.

If you are of a certain age, which I am, it is likely Anchor's Steam Beer was your first craft beer.  It was mine.  I never liked Steam that much, and it made young me leery of craft beer until I tried others that I liked better, like Sierra Nevada's Pale Ale.  I like Steam now more than I did, but that first impression has stuck.  It is too bad I did not try Anchor's Porter first, because that is one great, true to style beer.  While not true to style, but surely on trend, I have liked other recent Anchor offerings, too, like its blackberry IPA and its meyer lemon lager.  

Craft brewers that do not want to sellout to giants like ABI or Molson Coors, but still want growth capital are looking to private equity for financing.  The Bruery sold a majority of itself to private equity firm Castanea Partners in May.  Private equity firms typically allow original owners to continue to run the business, but the owners are no longer the sole owners and decision makers. Private equity firms raise their capital through investment funds, which generally have five- to ten-year hold periods.  At some point, the private equity firms have to liquidate these funds by selling their investments to provide returns to their fund investors.   At that point the original owners attracted by private equity have little say in who buys the company.  I suspect part of Griffin's decision to sell Anchor was a need to provide a return of capital to its fund investors after seven years.  Selling to a private equity firm to avoid being bought by a mega brewer, only to eventually be sold to a mega brewer is unfortunate, but out of the original founders' hands. 

Wednesday, August 2, 2017

Mikkeller's Windy Hill

I visited Mikkeller Brewing's San Diego tasting room on Sunday for the first time and purchased a growler of its Windy Hill IPA, a hazy, New England-style IPA.  "Oh my, this is quite a beer," was my initial reaction.  It had a pronounced citrus taste, like many cloudy IPAs, but it had an intriguing back-of-the-throat earthiness that arrived late and added another dimension to the beer.  Windy Hills is hoppy, but it is not bitter.  IPAs' bitterness can be jarring if you are not accustomed to it, but Windy Hills' hops had a softness to them that accented the citrus fruit, and did not exhibit a commanding bitterness.  It had a full body, despite a diminished malt profile, which resulted in an unobtrusive 7% abv.  I have read enough beer blogs and beer journalism to know that not everyone likes New England IPAs, and some think they are a fad sure to pass.  A beer like Windy Hill is so good it makes me believe that hazy beers are going to stay around for awhile, and I am okay with that.

I am impressed with the beers Mikkeller is brewing.  Its regular Waves IPA is not only delicious, but I feel its flavor is unique among San Diego's IPAs.  I have had some of its special release IPAs, which were stellar, and I tried another of Mikkeller's special releases on Sunday, another cloudy IPA, Care Taker IPA, and it too, was outstanding.  I bought a four-pack of pilsner, too, so I am not only focused on IPAs.

Monday, July 31, 2017

Stem to Stern

I picked a bottle of Coronado Brewing's Stem to Stern Batch 1 over the weekend in partial honor of Coronado Brewing's twenty-first anniversary.  Batch 1's label said it was a hoppy red ale, a style I love, but one that is underbrewed, and one that I think is becoming rare.  Done right, a hoppy red ale is more a malty IPA than a heavy amber ale, and has enough bitterness to accompany a high level of sweetness.  This puts hoppy red ales in an opposite position to current consumer tastes that shuns malt and craves hops.  This is too bad for beer drinkers.  Stem to Stern combined just the right mix of rich, candied malt, with a bright bitter finish, and clearly lands on the red IPA side of the style ledger.  It had a quiet 7.7% abv and a chalky dryness that served to bridge the malt and hops.  It was a drinkable, lovely beer.  Unfortunately, I did not take a picture of Stem to Stern Batch 1.

Friday, July 28, 2017

Eppig Brewing Coming to Point Loma

Eppig Brewing is opening a satellite tasting room in Point Loma.  Eppig's headquarters remains in North Park.  The new location is 2817 Dickens Street, and via mapping software it look like it is near Point Loma Seafoods.  I looked several places and could not find a planned opening date.  I have not had an Eppig beer yet, but reviewing its beer offerings on its website it looks like Eppig brews a number of German-style beers.  Its Export Stout, which is not German, is the beer I want to try first.

Thursday, July 27, 2017

Head In The Mash Tun

Good Beer Hunting has a stunning article on a Lagunitas-owned limited liability company's purchase of a 19.9% interest in Shorts Brewing Company.  Shorts is based in Bellaire, Michigan.  The purchasing company is called Lagunitas U.S. Holdings, LLC, or LUSH, and is 100% owned by Lagunitas.  Lagunitas formed LUSH with the intention of buying and/or partnering regional breweries.

What is stunning is not Lagunitas forming LUSH, or Lagunitas acquiring an interest in Shorts, or Shorts selling a fifth of itself, but the naive comments from Shorts' owners.  It is as though they do not even know or want to admit to themselves who really acquired the interest in their company.  Lagunitas is 100% owned by Heineken, so the 19.9% interest in Shorts acquired by LUSH is owned by Heineken*.  If that is what Shorts owners wanted, fine.  The sale decision by small breweries is ultimately a personal decision, and while cranky beer bloggers and upset craft beer drinking purists may bitch, it is not us making payroll twice a month.  Don't sell to a big brewer and pretend you did not.

The task of grasping this type of subsidiary genealogy is a somewhat-intentionally complicated one, as evidenced by the Short’s team’s own understanding of it all. Reached by GBH, Joe Short, who founded the eponymous beer maker back in 2004, conceded even he isn’t exactly sure of “how it works with Heineken buying Lagunitas.” Kerry Cochran, a Short’s sales person who covers Indiana, Ohio, and Pennsylvania, added she, too, wasn’t entirely positive of how LUSH related to Heineken, describing the green-glassed goliath as a “third cousin” or “third uncle.”

Some at Shorts do understand what is happening:

So here’s Scott Newman-Bale, a partner at Short’s, with the most helpful and clear distillation of the deal: “Although our arrangement is with Lagunitas U.S. Holdings, we’re not trying to hide the fact that Heineken is ultimately the one that owns the shares. But we’ve never actually talked to Heineken at all.”

If you never talk to the company buying your company, you do not have the right to complain about future changes and corporate mandates.  According to the article, LUSH has an option to purchase the remaining 80.1% of Shorts.  This article has popped up multiple times on my twitter timeline in the past twenty-four hours.  I encourage you to read it.

* I read through Heineken's website after reading this article.  I did not find any reference to Lagunitas as a Heineken brand or wholly-owned company.  Strange.  All I saw was one picture of a bottle of Lagunitas IPA with bottles of Heineken's other international brands.  I guess Heineken's attempt to obscure its ownership of Lagunitas is intentional.

Wednesday, July 26, 2017

25 Best Breweries In America

Here is an article from Gear Patrol proclaiming the twenty-five best breweries in America.  These lists are usually clickbait nonsense, but Gear Patrol's story before its list is worth reading.  It gives a good description of the big forces against craft beer and how the large breweries are purposefully blurring the lines of what craft beer is to hurt independent craft brewers.  In the article I learned that one definition of a craft brewer is it must brew less than 6 million barrels of beer a year.  For context, all the independent brewers in San Diego brewed just over 1 million barrels in 2016, and this included Stone Brewing, Green Flash, and Karl Strauss, so 6 million barrels is a massive amount of beer. 

The article had this eloquent disclaimer expecting the haters:

Before you dive in, know this: No list is perfect nor permanent. Missing from ours are the thousands of small, determined breweries that have become vital parts of their communities, either through philanthropy, volunteerism or job creation — but usually a combination of the three. Our goal is not to discount their efforts, nor their beer, but to celebrate the movement they’re a part of by recognizing its leaders and innovators — those breweries we feel continue to push excellence, despite size or reputation, and define the limits of what it means to be a craft brewer in America today.

While we expect our fair number of critics, our mission here is not to play favorites, but to help you as the consumer navigate your way through the wide, beautiful world of American craft beer, which has never been more political, exciting or delicious as it is right now.
I have not tried beers from many of the breweries on this list so I am not going to criticize the selection.  But while not hating, I can't imagine a list without Stone Brewing.  I know its beers are many places, but so are Sierra Nevada's beers, and seeing a Stone Enjoy By on a Von's shelf is not like finding a Sante Adairius Rustic Ale, but Stone makes some great beers and is constantly innovating.  Stone's rare misses are better than most breweries best beers.  Societe Brewing and Modern Times Beer  deserve honorable consideration on any list of best breweries. 

Tuesday, July 25, 2017

Into The Sunset IPA

Mike Hess Brewing has added grapefruit, blood orange, and tangerine to its Solis and Hoptuitus IPAs, and I have found the results excellent.  The craft beer purists may complain about citrus beers, but I like them.  Mike Hess' Ocean Beach tasting room tapped a new IPA, Into The Sunset, last Friday brewed with blood orange.   I don't know much more about this beer than that it is new, fresh, and delicious.  If you like citrus IPAs, you will want to try this beer.

Monday, July 24, 2017

Gone With The Trade Winds Tripel

The Bruery retired its Trade Winds tripel last year.  I looked without success for a bon voyage bottle
after I heard the news.  It took me more than a year to find a bottle.  Trade Winds was one of The Bruery's first seasonal beers, and was brewed with rice and Thai Basil.  I have not had this beer for years, but I remember not tasting much of the Thai Basil.  This time, the herb aroma leapt from the bottle and tulip glass, but as I remembered, it added little to the flavor.  Trade Winds poured a dark orange, a color intensified by the beer's opaqueness and its striking white foam.  The finish had a touch of bitterness, but you are not drinking Trade Winds for its hops.  Sugar and yeast are Trade Winds' two main flavor points.  Sweasty. 

I found Trade Winds cloying to a level of distraction.  I have not had a beer this sweet in a long time, and I found it unpleasant.  I felt it needed some dryness, or additional bitterness, or something to serve as a counterweight to the syrup, but palate relief never arrived.  The beer's nonexistent 8.6% abv provided no refuge.  You could smell the yeast together with the basil, but the yeast's esters seemed to enhance Trade Wind's high saccharine level. 

This may sound strange, but I recommend picking up a bottle of Trade Winds if you can find one.  Buy it for nostalgia's sake if nothing else, because The Bruery is no longer brewing it and it is a small piece of craft beer history.  I'm sure it ages well, but I suspect time will only make it sweeter as the yeast continues to work.  Serve it in small doses as an after dinner digestive. 

Friday, July 21, 2017

AleSmith's Summer Double IPA

I have not had AleSmith's Double IPA in a few years, since before it changed its name from Summer Yulesmith.  Drinking it recently, I see it as an example of just how IPAs and double IPAs have shifted from heavy, sweet, and alcoholic beers, to lighter, citrus-centric beers without the boozy heat.  Double IPA takes me back to the mid-2000s when robust double IPAs filled my beer fridge and brewers embraced the virtues of malt to offset their gratuitous hops, and when the taste of pine in an IPA was common not a rarity.

AleSmith's Double IPA is a big imperial IPA.  I consider it one of my benchmark double IPAs, thick and swampy, a prototype of today's dank beers. But Double IPA is too bitter, too malt heavy, too sweet, and too lacking in citrus to confuse it with new style dank beers.  Double IPA reeks pine.  It is almost like drinking pine sap.  To match Double IPA's coniferous forest of hops, AleSmith loads up on malt, which brings in heft and a sweetness that plays off the beer's bitterness.  All this is wrapped in a warm, pervasive layer of alcohol.  The abv is "only" 8.5%, but tastes higher.  The short summation for Double IPA:  It is one heck of a beer.

I am glad Alesmith has not reformulated Double IPA, even though it has proved itself a master the new hop-centric style of beers with its .395 Pale Ale.  I am no crank that never wants change, I love new style IPAs and I'd welcome a new style double IPA from AleSmith.  But it is nice to go back to an old favorite, too.