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05/08/2017

Crazy 2 Wks in Craftland: 2 Big Deals by Big Brewers; Boston’s Blues; Good News

AB Gets Wicked Weed, Heineken Gets Tony Mageed  

On May 3, AB struck again, apparently not quite done fillin’ in its regional craft portfolio.  This time AB filled southeast hole by purchasing one of NC’s most highly regarded brewers, Wicked Weed, known for sours and strong IPA portfolio.  Terms not disclosed, natch, but deal follows familiar pattern of owners staying on, saying they’re happy as hell to partner with global brewer that will allow ’em to do bigger and better things.  Immediate response from craft community pretty harsh as geeks loved these brands, but AB’s been thru it before.   

Next day, dime dropped that Heineken will buy rest of Lagunitas at undisclosed price.  Recall, Heineken bought half of Lagunitas in 2015 for over $450 mil (implying value over $900 mil), and there was likely back-end adjustment as even Lagunitas hasn’t hit growth targets.  So final valuation likely less than what Constellation paid for (much smaller, and now slower) Ballast Point and implied valuation of TSG investment in (significantly smaller) BrewDog.  Tony Magee stays on as “global craft czar” and Lagunitas will stay separate from Heineken USA.  But Lagunitas has plenty to learn from HUSA, Tony sez.  Then too, key drivers for deal were to make Lagunitas a Heineken operating co to better align on local pricing/margin with other operating cos, with aim to drive global growth.

Boston Bummer, Relyin’ on Summer; CBA Flat; Ballast Loses Mo’; Several Up Double Digits

Did someone say craft competitive biz these days?  Boston reported worst-ever qtr, with volume -14/15%; operating income tanked 64%.  Execs noted “very competitive” category and special challenges facing seasonals, especially Boston’s two spring seasonals in Q1.  While other brewers cited same challenge, Boston’s not backin’ off seasonals. Indeed, it’s relyin’ heavily on good season for Summer Ale. It will hold first-ever investor day 5/5.  Craft Brew Alliance reported so-so Q1.  Shipments up 4%, depletions even, with Kona up double-digits.  But Widmer and Redhook still down double-digits.  And CBA booked another operating loss: $2.8 mil.  At same time, its contract brewing deal with Pabst blew up.  Instead of brewing lotsa bbls for Pabst in Woodinville, WA plant and option for Pabst to buy it, Pabst will pay millions in fees for volume shortfalls, option disappears and CBA will close plant in Jul, tho still seeks to sell it.  Meanwhile, formerly flyin’ Ballast Point trends fallin’ to earth, with $$ sales up 2.7% for 13 weeks thru Apr 9 in scans.  That’s far cry from 30%+ all-channel growth in 2016.  Lotsa moving pieces and odd comps, and Constellation sez better days ahead, but slowdown real.  On flip side, Founders sez it’s on track for 32% gain in 2017, full speed ahead on All Day IPA and more.  And Stone reported very solid Q1 #s, up 18% in IRI scans.  Lagunitas still up double-digits too.

Publishing Info

  • Year: 2017
  • Volume: 48
  • Issue #: 9
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