Huge news out of the craft beer world today as it was announced that Heineken International will take a 50 percent stake in beloved U.S. craft brewery Lagunitas Brewing Co.
News broke early in the day about the partnership, which will close in the fourth quarter of 2015.
All we know is that the deal gives the Petaluma-based Lagunitas brewery the backing and global distribution power of the third-largest beer company in the world, aka Heineken. Lagunitas is not expected to sacrifice its recipes and operations, which put it on track to produce 825,000 barrels this year, making it the sixth-largest craft brewer in the United States.
In a post on his personal Tumblr page, Lagunitas founder Tony Magee frames the partnership as a means to “export the exciting vibe of American craft beer globally.” Limited details listed in a press release state that Magee “will remain at the helm, with the same leadership and staff, same brewers, same recipes and same suppliers and distributors helping to drive the brand forward.”
This partnership provides Heineken the opportunity to play a role in the craft beer industry on a global scale, sharing craft brews with the parts of the world that have yet to experience it. Jean-Francois van Boxmeer, CEO of Heineken, says he looks forward to the opportunity to “expand Lagunitas globally, so it can reach parts that other craft beer brands have not.”
However, in a world where acquisitions, buyouts, cultural dilution and subsequent dismantling by Big Beer are becoming more common, craft beer lovers are skeptical about what this deal really means. Some question whether it’s a partnership at all.
Commenters weighed in on a thread posted by Tony Magee on BeerAdvocate.com.
User LambicPentameter reiterated the general consensus: “There is a bit of double-speak going on. Obviously, without being privy to the details of the transaction, it’s hard to say for sure, but this doesn’t seem like a joint venture, at least not in the way the term is often used. I’ve never heard of a joint venture between Company A and Company B where the primary thrust of the transaction was Company A owning/purchasing a 50 percent share of Company B. Traditionally, the joint venture is a third, separate entity from the two involved companies.”
While some users made claims that Magee was a hypocrite for “slamming other brewers for doing the same thing he just did,” others kept a level head: “I think the biggest thing we’re missing is that we don’t know yet what’s going here.”
One thing is for certain: Lagunitas is out to expand its brand. With production facilities in Petaluma, California, and Chicago, and one on the way in Azusa, California, Lagunitas is fighting to keep up with domestic demand while finding ways to grow.
“I had to think long and hard about how to steer our ship into these new waters,” Magee writes. Heineken currently has more than 160 production facilities, some as big as 13-million barrels and some as “few” as 20,000. However, Magee is adamant that all domestic production will remain solely independent and that internationally his brand will have its own people working alongside Heineken’s distribution channels. “We’re all for spreading the gospel of craft beer, as long as the soul of what we love isn’t lost.”
In a previous interview on the issue of mergers and acquisitions, Magee stated, “when you start making deals that involve movement of equity, if you’re doing it because it’s your time to step aside, well that might be the thing to do. But to do it in a way to grow and accelerate your growth, I think represents a bit of impatience.” How then, are we to view this move, which shifts 50 percent of the company to Heineken? Was this the only way Lagunitas could find a way to grow? Was this the only way Lagunitas could take a step onto the world stage?
Perhaps it was foreshadowing when Magee jokingly answered, “greater Mongolia and the lower Uzbek Valley,” when, in 2012, he was asked where he saw Lagunitas in five years. Mongolia is mentioned in the official press release as a possible future port of distribution (most likely in jest, mostly). But who’s to say that’s so far flung? With the reach of Heineken and Lagunitas’ delicious products, anything is possible. All we know is that the plan is to start expansion in Mexico followed by entry into EU markets.
The board of decision-makers will be comprised of three representatives from Heineken and three from Lagunitas; Magee remains CEO. For all intents and purposes (at least cosmetically), Lagunitas “proper” will still have final say. Magee is excited about what this deal means for his brewery and for American craft beer: “Heineken recognizes U.S. craft brewing as the nucleation point for the future of beer world-wide. Lagunitas will provide the connectivity to it, and they will connect us to the rest of the planet.”
So, what does this partnership really mean and what is it really about? Only time will tell. We’ve discussed the trend of Big Beer buying out craft breweries and how it’s not always the end of the world. As far as this deal, though? “This relationship is a meeting of equals, not in terms of scale, for sure, but in terms of mission and meaning and mutual respect.” If that means continuing to make the same delicious beers that we’ve come to expect in the way that they’ve always done it, that’s all that matters.
What do YOU think this means? Is this a good thing for the world of craft beer? Leave your answers in the comments below.
