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Another sign of tuff times in craftland for mid-sized brewers and example of finding unique partnerships to forge forward paths. FX Matt Brewing will acquire Flying Dog Brewing as Flying Dog production plans to shift to FX Matt facility over the summer and close its sizable MD brewery, cos announced today. Recall, FX Matt and Flying Dog, along with Mass Bay Brewing, teamed up to create Right Coast Spirits RTDs last year too (see Jun 24 issue). That appears to have set the stage for deal where FX Matt will acquire all of Flying Dog for a bargain price, CBN understands. Suggests similarly positioned craft brewers are also facing increasing challenges.Current Flying Dog CMO Ben Savage will become president of Flying Dog "division of FX Matt" as Flying Dog founder/CEO Jim Caruso steps away. Goal is to "shift all production to FX Matt" and "cease operations" at Flying Dog's MD facility by "sometime in August," per release. Yet cos are "in the process of looking for a location for a Flying Dog taproom" and innovation brewery site in Frederick, MD.MD Production Down to 76,268 Bbls in Fiscal '22 (Thru Jun 2022); Volume -15% in '22 Scans Flying Dog production has been relatively stagnant over the last several years, and sales declined in 2022 and early 2023, scans suggest. Flying Dog MD production dipped 6% to 76,268 bbls in fiscal 2022 vs year ago (12 mos ending Jun 2022), according to state report. That's still up 4% vs FY19 levels, but down significantly from peak production volume of ~100K bbls. Flying Dog volume declined 15% in calendar 2022 Nielsen data vs 2021, and rate steepened to down more than 20% so far in 2023 scans. Tho total Flying Dog down more like 10% all-channel both in 2022 and early 2023, CBN figures.MD Facility Had "Too Many Limitations"; More "Capabilities and Flexibility" at FX Matt; "New Heights" & More Efficiencies Closing the MD facility is a tuff pill to swallow as Flying Dog "invested millions of dollars in the brewery" over the yrs. But it has "too many limitations and puts Flying Dog at too great a competitive disadvantage," Flying Dog CEO Jim Caruso explained in released statement. FX Matt facility "gives our brand immediate capabilities and flexibility to adapt to the changing consumer preferences" as "the lines between beer, cocktails, spirits and wine continue to blur," added Ben. It also "gives Flying Dog significant resources to not only optimize current product portfolio, but also quickly develop products in new, emerging categories," and utilize its canning line. Suggests Killer Hard Tea and Right Coast canned cocktails are just the beginning of its beyond beer endeavors."It is important to me that FX Matt Brewing is offering employment opportunities to as many employees as possible and we will provide job placement assistance to team members," Jim also noted. And "I could not imagine a better steward for the Flying Dog brand going forward than FX Matt," as co's "worked with them for many years&hellip;they are a prestigious family-owned brewery with more than 135 years of history," and "committed to building on the deep roots Flying Dog has established in Maryland." As for FX Matt, the co is "looking forward to helping Flying Dog reach new heights," stated CEO Fred Matt. FX Matt's own-brand volume is comin' off a tuffer year as shipments slipped high-single-digits to 167K bbls in 2022 (see Feb 24 issue). But FX Matt's contract brewing biz has been hummin' as co built annual capacity up to 800K-plus bbls with capabilities across RTDs/FMBs/Seltzer/non-alc and more in 2021. Flying Dog will instantly improve capacity utilization for FX Matt and help build efficiencies.Add it to the Thread of Brooklyn Minority Stakes; Kirin-Lion Ties This adds yet another established craft brand tied to Brooklyn Brewery thru minority stake investments. Recall, Brooklyn Brewery owns a minority stake in FX Matt as well as in 21st Amendment Brewing, which recently pivoted to contract brewing (see Mar 8 issue), and Funkwerks. Brooklyn, in turn, sold 24.5% stake to Kirin back in 2016, which also owns 100% of New Belgium and Bell's. All kinds of loose ownership webs between these cos (and it only gets more dynamic in international mkts).

FX Matt to Buy Flying Dog; Bargain Deal; Taking Over Production by Aug & Closing MD Facility

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