Victory Looks Forward
Founder Shares Thoughts on Acquisition
Bill Covaleski didn’t like what he was seeing. Large brewing companies buying up smaller breweries and then putting pressure on wholesalers and bar accounts, to say nothing of new entrants to the marketplace on a daily basis. It was troubling from a business standpoint, and after 20 years in the industry he knew it was important to ensure the future for Victory Brewing Co.
“It was time to look at our strategy and trajectory, to be strong and to protect the livelihood of our employees,” Covaleski said in his first full interview after announcing the news this morning that Victory would join Artisanal Brewing Ventures (ABV), a North Carolina-based holding company that also includes the New York-based Southern Tier Brewing Co.
Covaleski and Ron Barchet, the COO of Victory, will become significant shareholders in ABV and will join the ABV Board of Directors, which also includes Phin and Sara DeMink, of Southern Tier. CEO John Coleman and CFO Bill Wild will lead ABV’s management team, according to a press release.
Terms of the deal were not disclosed.
“It’s very easy to look at this and say ‘Ron and Bill got wealthy today,’ but at Victory we are 54 shareholders and they are family and friends,” said Covaleski, the founder and brewmaster of Victory. “Right now all they get is an annual dividend check for taxes, to look at some stainless steel, and a discount on beer. We worked on this deal to help these people who made Victory a great place have stability. That was a priority for us.”
During the telephone interview with All About Beer Magazine, Covaleski was in Parkesburg, Pennsylvania, home to the brewery’s newest location, where the entire sales staff was gathered for its annual meeting. He and Barchet spent the last several days talking directly with the staff about the news, before it became public knowledge.
“We wanted to see them face-to-face and tell them what the future looks like,” said Covaleski.
And that future, he says, is an alliance with good people that will help the brewery get from point A to point B.
“Point A is stability,” he said. “Point B is the same stability in a very tumultuous marketplace.”
He spoke about scale, the middle tier of the beer world and the importance to grow and to stay independent. “I don’t want to sound doom and gloomy, but there are big fish swimming in the little fish bowl of craft beer.”
Victory—which is available in 37 states—sold 142,000 barrels of beer in 2015.
“We enjoy our independence. That’s a model that works for us.”
ABV is a good alternative to partnering with a large brewing company, Covaleski said, because it wants to invest money and help the brewery grow.
“We’re very comfortable with them,” he said of ABV. “They have similar priorities, and we like how they’ve managed other companies. This feels good and sincere to us.”
The conversations of selling the company—or merging with another—began last summer after Victory qualified for a $52-million loan. It’s what the brewery needed to grow, having added the Parkesburg location to the existing Downingtown location that has been Victory’s home since it was founded 20 years ago. With that loan, the brewery decided to look at alternative financing, and worked with an investment bank to take a few different proposals. When it found ABV and visited Southern Tier, “it was like looking into the mirror.”
Covaleski pointed out that Southern Tier and Victory don’t have a lot of product overlap except in the IPA category where it “gets lumpy, but that’s expected.” The goal now is to find efficiencies and ways of doing more with more. “You can’t cut costs in a growth environment.”
And yes. There is already talk of a collaboration beer between the two new brewing partners.
“In all of the conversations, we haven’t dwelled on the past,” Covaleski said. “We just look forward, all the security is there. We look forward, we don’t look back.”
John Holl is the editor of All About Beer Magazine.