Boston Beer Co (Sam Adams) and Dogfish Head are "merging"

Linc

Letter to Beer Advocate community that @UPSLynx sent me.

Press release from Boston Beer.

Highlights from the press release:

• The combined company will be led by Boston Beer CEO, Dave Burwick.
• Sam Calagione (of DFH) and his family will receive approximately 406,000 shares of Boston Beer stock based on a share price of $314.60. Dogfish Head shareholders will also receive $173 million in cash.
• Sam Calagione will join Boston Beer's Board of Directors.
• The combined company will maintain its status as an independent Craft brewery, as defined by the Brewers Association (well under 6M barrels/yr).

So mostly it's Sam Adams buying out Dogfish Head, except they get a board seat. Sounds like a good plan to me.

AlexDeGruven

I'll take this over an InBev buyout, at least.

Cliff_Forster

This has to happen. The craft beer dream has expanded to so many small regional breweries that all do minor variations of the same exact thing. Regional pride can carry the more exceptional brands but so far. Dogfish Head isn't just your run of the mill small batch regional brewer, they are exceptional. Give it a few years, the exceptional craft houses will all consolidate their portfolios with someone to expand, and slowly one by one the smaller IPA Bro's are going to have to fold. There is simply way too much competing product.

UPSLynx

This is such a fascinating moment in beer. They call it a merger, but when you read into it, it really is Boston Beer buying DFH. It's a big-beer scale acquisition done in a way that only some of the OGs of craft beer could dream up. Sam Calagione gets to cash out without "Selling out", and Jim Koch gets to save Sam Adams from a beer scene that no longer tends to care about beer you can buy in a supermarket. It's hugely beneficial to both of them, and I can guarantee this is the tip of the iceberg. DFH will not be the only beer company under this umbrella over time.

What's interesting to me is how they're planning on showing both brewery logos on each beer label, no matter if it's Sam Adams or DFH you're drinking. This is huge because it's a motion being made to have transparency. You know what company gets your dollar for that beer. This is important because mega-corps like AB InBev have spent the last decade buying up small indie breweries, then pushing their previously local beers to shelves all over the nation. When you grab that bottle of Elysian Space Dust, you have no way of knowing that Anheuser Busch brewed that beer in a massive facility on the other side of the state of origin. I would love to see this sort of transparency more widely adopted.

UPSLynx

@Cliff_Forster said:
and slowly one by one the smaller IPA Bro's are going to have to fold. There is simply way too much competing product.

I disagree, and this move by Boston Beer is proof of that. I can't remember the last time I bought a six pack of beer at a grocery store or liquor store. Now that small, hyper-local breweries are all over the nation (now 7,000+) each having their own unique take, specialty or gimmick on beer, everything you'll find in my fridge are fresh cans of stuff made within 10 miles of my house. Packaged by the hands that created it, the beer is guaranteed fresh and properly stored, always trying new styles/hops/strengths, and always delicious.

I love Sam Adams and DFH, but it's a losing proposition for me to go to the store to buy a pack of 90 minute IPA when it's almost guaranteed to have sat on a warm shelf for weeks, if not months at a time. Old, inappropriately stored beer on a shelf is, to me, the modern day equivalent of the 1970's of beer where there was no choice and everything was pilsner/lager. Freshness matters to consumers, and so does supporting your local economy. Rather than send my beer dollars to a company six states over, why not give that money to the brewers in my hometown doing exciting new stuff?

Thrax

Gotta agree. Can't say I represent everyone, but I'm going local as possible when I buy booze.

RyanMM

I feel out of touch in situations like this because I am in a very small segment of consumer that doesn't buy 4-packs or 6-packs ever - I can't. I have [redacted] beers that I haven't even tried sitting in my cellar, so at best I'm going to buy a single bottle of a new tick to try out.

Sam and Dogfish are both two of my favorite large-scale craft brewers. I can't think of a better combo from the top 50 in production volume.

The entire "merger" aspect is something I lamented in a beer chat:

Usually with a merger you lose one identity entirely or fuse them to create a new one. It's odd to see a merger in the craft beer world because clearly both brands have immense value and it'd be a bad move to phase out either.

It seems like they've figured that part out by co-branding and recognizing that the Sam portfolio and brand represents different things than the Dogfish portfolio and brand - and they're not going to be dispensing with either.

I'm happy to see more stuff like this to strengthen craft brewing against the forces of Macro, because while Macro is weaking that makes them dangerous because they are still so big.

This brings to mind the partnership that Perrin, Cigar City, and Oskar Blues have formed based on their acquisition by Fireman Capital. They are sharing distro networks, brewing resources, collaborating on brews, and generally doing cool stuff they couldn't do apart. It's a way better situation than what the brands acquired by ABI find themselves in, or that whole Ballast Point/Constellation boondoggle.

Cliff_Forster

@UPSLynx said:

@Cliff_Forster said:
and slowly one by one the smaller IPA Bro's are going to have to fold. There is simply way too much competing product.

I disagree, and this move by Boston Beer is proof of that. I can't remember the last time I bought a six pack of beer at a grocery store or liquor store. Now that small, hyper-local breweries are all over the nation (now 7,000+) each having their own unique take, specialty or gimmick on beer, everything you'll find in my fridge are fresh cans of stuff made within 10 miles of my house. Packaged by the hands that created it, the beer is guaranteed fresh and properly stored, always trying new styles/hops/strengths, and always delicious.

I love Sam Adams and DFH, but it's a losing proposition for me to go to the store to buy a pack of 90 minute IPA when it's almost guaranteed to have sat on a warm shelf for weeks, if not months at a time. Old, inappropriately stored beer on a shelf is, to me, the modern day equivalent of the 1970's of beer where there was no choice and everything was pilsner/lager. Freshness matters to consumers, and so does supporting your local economy. Rather than send my beer dollars to a company six states over, why not give that money to the brewers in my hometown doing exciting new stuff?

@UPSLynx I agree with your sentiment in local consumerism, but I think we are more the exception than the rule. I do think there are some exceptional brands that will expand, and with that expansion you may see more regional production of popular craft varieties. I don't think there will be a total bust in local tap houses, but I do think the bubble will burst at some point and we are going to see a major reduction in small breweries. In Maryland Guinness opened a massive tap house where they brew some interesting local product. It's wildly popular, and it's putting a hurting on some of the smaller craft brew houses. Macro is already adjusting their strategy, and this move by Boston Beer Company tells you that they are aligning themselves as well. Plus lets face it, this is a nation that voted for Donald Trump, they drink Bud Light man... It's just the way it is.