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Can Craft Brewing Age Gracefully? We’re About to Find Out

We talked at some length last week about Sapporo USA’s shocking decisions to remake Anchor Brewing Company as a California-only brand and discontinue packaging its beloved Christmas seasonal for distribution. Much of the consternation on social media came from folks who consider the San Francisco outfit to be sacrosanct in the American brewing pantheon, and much of the reason for such veneration comes from the fact that Anchor is very old. The firm first opened its doors in 1896, and has been a fixture in the Bay Area ever since, more or less. Fritz Maytag’s 1965 acquisition of a 51 percent stake in the brewery is widely considered to mark what we now think of as the American craft brewing “moment,” and that was nearly six decades ago. The slow march of time is inexorable, and even venerable institutions of industry are not exempt from the indignities of growing old in these United States, hard to watch though that may be.

At the moment, Americans are eligible to file for Social Security benefits starting at 62. Even if Father Time restarted the clock on Anchor when Maytag took over, the brewery would’ve been a mere four years from retirement age. (The now-retired industrial scion himself is the ripe old age of 85; he was 27 when he signed on the dotted line.) Dave Burkhart was at Anchor for over 30 years before retiring at the end of 2022, and when I mentioned his long tenure on a recent episode of VinePair’s new beer history podcast, Taplines, he laughed wistfully. “It sound[s] like a really long time when you say it in decades,” he said. And it is — for individual employees. But people can retire. What happens to breweries when they hit 30, 40, 50 years old, and the founders who’ve run them for decades are looking to cash out?

It’s an inevitable question with only a few realistic answers. Drinkers who value small-business tenets like family ownership, local connection, and historicity — things that have long been central to the craft brewing industry’s pitch — aren’t going to like most of ‘em.

The most obvious outcome is also the saddest: They go out of business. In January 2020, Boulder Beer Company shut down its pub and sold its building, three months after ceasing to package its own beer. Colorado’s first craft brewery opened for business in 1979, and at closure had a deal in place with Sleeping Giant Brewing Co. to continue brewing some of its beers for retail. But even if that’s still in force (I wasn’t able to immediately tell), contract-brewed 6-packs are an inauspicious coda to 40 years of Colorado brewing history. Could it have gone another way if a qualified buyer materialized, ready to inject new life and cash into the legendary-but-struggling firm? Sure, probably. But as the craft brewing business has slowed down, qualified buyers are few, and wobbly breweries are plenty. So it goes.

Less sad, but still emotionally fraught nonetheless in a business that has lionized “independence” above all else, is that old craft breweries will sell to not-craft breweries. I’ve written many, many times before about this, but suffice to say that there’s no one way of “selling out.” Some sold to a multinational strategic partner, like Anchor’s post-Maytag owners did to Sapporo six years back, and a dozen-odd breweries of varying age did to Anheuser-Busch InBev over the course of the last decade. (Goose Island, founded in 1988, was the oldest and went first, and that was not a smooth ride, as former employee and current Off Color co-founder John Laffler told me on Taplines this week.) Some merged into a company that eventually got sold to ABI, which is what ultimately happened to Redhook (1981) and Widmer Bros. (1984) after the Pacific Northwest breweries formed the Craft Brew Alliance in 2007. The degree to which the American drinking public cares about independent ownership is up for debate (I have my doubts), but whatever else such sales do, they secure a succession plan for founders ready to hang up their mashing paddles.

Much has been made of the potential for craft-on-craft deals as the industry gets tougher, and we took a look at the trend in a recent column. Most of those deals are taking place among small and midsize breweries, but the ones that have taken place between the industry’s bigger players are revealing. Comparative younglings Victory (1996) and Southern Tier (2002) found a family-office private-equity partner to back its Artisanal Brewing Ventures rollup — good work, if you can get it. New Belgium (1996) sold to Lion Little World, a subsidiary of Kirin, in 2019, then acquired Bell’s Brewing (1983) two years later. After 38 years at the helm, Bell had no heir apparent, and was able to land his life’s work a berth within a like-minded organization. The motivation was rumored to be vice-versa at Boston Beer Company (1984), where the acquisition of Dogfish Head (1995) in 2019 set Jim Koch up with a potential in-house successor in the charismatic Sam Calagione.

Who’s left of the bigs? Yuengling (1829) is the oldest and biggest brewery on the Brewers Association’s 2022 list of the top 50 craft breweries by volume, and it will presumably be ushered into its next era by one of chief executive Dick Yuengling’s four daughters (all of whom serve in executive roles at the Pennsylvania firm) when he decides to step down. Convenient! The only other major craft brewery without a succession plan locked in is Sierra Nevada Brewing Co. Ken Grossman founded the brewery in 1979 in Chico, Calif.; when I spoke with him recently for an upcoming Taplines episode (subscribe!) he’d just re-taken the CEO role on an interim basis to backfill Jeff White, who himself was retiring after 38 years in the beer industry.

At 68, Grossman is still going strong, and we chatted a bit about Sierra Nevada’s bog beyond-beer future before I pressed record to talk about its past. But who will retake the reins from Grossman? Macrobrewers have soured on the craft brewing business, and mid-major strategic partners are no guarantee of a stable legacy, as Anchor Brewing Union workers can well attest. Private equity has well-documented perils, and Big Cannabis can be hit or miss. Plus Sierra Nevada seems too big to fit under the tent at Boston Beer Co. or Lion Little World, where New Belgium and Bell’s would have a lot of overlap with its portfolio and distribution. Speaking of New Belgium: CEO Steve Fechheimer is stepping down in August. Could Kirin’s loss be Grossman’s gain? Or will interim CEOs be steering both firms in a couple months?

Only time will tell there. But as more iconic craft breweries reach retirement age, expect more succession questions to swirl, dear readers. Try not to despair when you hear the answers.

? Hop-ocalypse Now
Man, the hits just keep coming for the greater Baltimore beer scene, huh? Less than six years after luring Diageo to establish a new Guinness plant and its first-ever taproom near the city in 2018, news broke this May that the firm would be shutting down production there and opening another taproom in Chicago. Charm City’s Ls on this one are several. State lawmakers bungled a brewery bill as they courted Diageo, and now the entire state’s brewing industry is stuck with that lousy legislation on the books. A Baltimore County official then pledged 500,000 taxpayer dollars in a vague scheme to relocate production of Guinness’s Baltimore Blonde to another local brewery, only to receive a semi-snub from the spirits conglomerate in return. The latest insult? News this week that the contract for the beer, a point of local pride, is going to upstate New York’s F.X. Matt — the very same brewer that acquired Flying Dog last month and plans to shutter its plant in Frederick, an hour west. Ouch.

? Ups…
ABI is “providing financial assistance” to independent wholesalers affected by Bud Light’s sales slide, sure, fine… “Surprising[ly],” beer outpaced wine and spirits in off-premise dollar sales in the last year, I’m surprised… A glut of equipment from shuttering breweries is driving down prices (please move this one to “downs” if you’re trying to sell used brewing equipment right now)… Congrats to the Brewers Association, which found time to file an amicus brief in Jack Daniel’s winning SCOTUS case? I guess?…

? …and downs
The Brewers Union of Georgia alleges Creature Comforts wrongfully fired a pro-union worker… A pioneering craft maltster, Skagit Valley Malt, abruptly shuttered and filed for Chapter 7 bankruptcy this week… Mississippi’s governor just signed a bill kiboshing Pepsi’s Blue Cloud distributorship… Michigan breweries want to sell others’ non-alcoholic brands in their taprooms, and wholesalers ain’t havin’ it… ABI says “We hear you” to the most vile bigots in the country, woof…

The article Can Craft Brewing Age Gracefully? We’re About to Find Out appeared first on VinePair.

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