When Microsoft bought LinkedIn last year, the tech giant didn’t disguise itself as Pa Gates’ Craft Technology Works. When Amazon bought Whole Foods this year, it didn’t create a South Lake Union Organics holding company to do so.
So why do brewers keep filtering their craft beer acquisitions through smaller, friendlier faces?
That question came up when Lagunitas U.S. Holdings bought a 19.9 percent stake in Short’s Brewing Co. last July. After all, Heineken bought a 50 percent stake in Lagunitas Brewing Co. in 2015, which allowed Lagunitas to buy stakes in Independence Brewing, Moonlight Brewing and Southend Brewery and Smokehouse. In May, however, Heineken bought the rest of Lagunitas. Now those breweries are at least partly Heineken-owned, right?
Well, Joe Short—who founded Short’s in 2004—told Good Beer Hunting that he isn’t sure “how it works with Heineken buying Lagunitas.” While Heineken’s corporate offices wouldn’t comment, Heineken U.S. chief marketing officer Nuno Teles offers some insight.
“The way we operate is as two separate entities,” he says. “We do have collaboration and we do have strategic partnership, but we do believe it is important to keep the two organizations operating in an independent way.”
Brooklyn Brewery sees an even clearer dividing line. After announcing in June that it had purchased stakes in 21st Amendment Brewery and Funkwerks, Brooklyn came under fire from Brooklyn-based Sixpoint Brewery. The latter pointed out that large Japanese brewer Kirin had purchased a 24.5 percent stake in Brooklyn Brewery last year and compared its purchases to those Lagunitas made on Heineken’s behalf. Brooklyn scoffed at that assertion and at the claim that Kirin had a “path to control” of either Brooklyn or its new “partners.”
“The partnership with 21st Amendment and Funkwerks is between the two breweries and Brooklyn, not Kirin,” Brooklyn Brewery notes in a blog entry. “The minority investments came from Brooklyn, not Kirin.”
These moves from Brooklyn and Heineken are similar to those in larger brewers’ craft playbooks. In 2010, MillerCoors launched its Tenth and Blake craft division and initially stocked it with MillerCoors holdings like Jacob Leinenkugel, Blue Moon and Crispin Cider. The company added Saint Archer Brewing Co., Revolver Brewing and Hop Valley Brewing Co., but Tenth and Blake made its first acquisition in 2011 when it turned a loan to Terrapin Beer Co. into an equity stake.
“Tom [Cardella, former CEO of Tenth and Blake] came down and talked to us,” says Terrapin co-founder Brian “Spike” Buckowski. “We told him basically what we were going through, and Tenth and Blake jumped in and loaned us the money to buy out our original investors.”
Last year, MillerCoors took a majority stake in Terrapin and moved both Blue Moon and Leinenkugel’s out of Tenth and Blake entirely. Tenth and Blake, however, is dwarfed by Anheuser-Busch InBev’s craft division, The High End. Anheuser-Busch’s attempts at putting on a friendly craft face date back to its acquisition of a stake in Seattle’s Redhook Ales in the 1980s and its “specialty” division, but The High End is rooted in AB InBev’s $38.8 million acquisition of Goose Island Beer Co. in 2011.
The High End has since purchased nine more breweries, a cider company and an alcoholic seltzer brand. While it framed its purchase of Virtue Cider as an acquisition by Goose Island, the majority of The High End’s acquisitions have been through the division. By the time The High End acquired Wicked Weed Brewing earlier this year, the group’s craft experience had become a selling point.
“Before brands were part of The High End group, people like Tonya Cornett at 10 Barrel and Jason Oliver at Devils Backbone and Todd [Usry] at Breckenridge were friends and mentors in the industry,” Wicked Weed co-founder Walt Dickinson says. “To hear [High End President] Felipe [Szpigel] talk about his vision for us is one thing, but to hear from people I’ve looked up to my whole life as a brewer and have them tell me that things are going to be OK and that these are good partners—that meant a lot to us.”
But it isn’t just big brewers putting on that small-brewer mask. In 2015, Oskar Blues Brewery sold a majority stake to Fireman Capital and used it to buy a controlling stake in Michigan’s Perrin Brewing. Fireman had already bought a $35 million stake in Utah Brewers Cooperative and its Squatters and Wasatch brands, and the Oskar Blues and Perrin additions were lumped alongside them in a portfolio called United Craft Brews. By the time Fireman purchased Cigar City Brewing in 2016, however, that portfolio became known as Oskar Blues Brewery Holdings. (Editor’s note: Oskar Blues Brewery Holdings was recently renamed to CANarchy.) When Victory Brewing Co. and Southern Tier Brewing Co. sought private equity last year, they took the name Artisanal Brewing Ventures instead of that of their partner, Ulysses Management.
But even craft-friendly names alone aren’t always enough. The Craft Brew Alliance doesn’t meet the Brewers Association’s craft brewer definition due to AB InBev owning a more than 30 percent stake in its business. Yet Craft Brew Alliance, says CEO Andy Thomas, offers multiple brewing facilities, marketing prowess and AB InBev distribution and marketing money without AB InBev ownership.
“We talk to a lot of partners—and this is true of Appalachian Mountain Brewing, this is true of Cisco, and this is true of Wynwood—and those brands saw a lot of the same things in us, so it was important that we shared a lot of the same values with them,” Thomas says. “Because times get tough and you want to be comfortable that the person you’ve aligned yourself with will have your back and will make the same decision you will make nine out of 10 times.”
Jason Notte’s writing has appeared in The New York Times, The Huffington Post and Esquire. Follow him on Twitter @Notteham.