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Discussion in 'Beer News & Releases' started by Todd, May 9, 2019.
It appears so - see page 7 of the document:
BBC gets a strengthened and more current beer portfolio;
DFH gets stronger distribution and a share of the non-beer hard beverages market (and, oh, BTW, money).
There is more, but at first blush, that is what occurs to me.
I enjoy Dogfish offerings more than Sam Adams, but being a Sierra Nevada loyalist, it really doesn't affect my view of either brand. Better than selling to Inbev I guess.
Hopefully they use their size to bring smaller craft along with them.
Let's hope this doesn't streamline their individual beer offerings and see them decline in quality.
Money is more than a BTW here IMO.
This looks like the DFH owners seeing the writing on the wall for larger regional craft breweries, and cashing out while the getting is still good.
Definitely could be. I think how much so swings on the question of how much, if any, voting shares the DFH owner(s) obtained, as @jmdrpi questioned.
BBC's 2017 Annual Report:
but the Brewers Association only counted 2M bbl as "beer" for their purposes. (Which is also why Yuengling is #1 on the Craft Brewers list from the B.A., even though their barrelage for '17 was 2.7M bbl.)
I'd guess that a LOT of that City Brewing Co. production is "non-beer". For instance, in 2015 the Annual Report stated:
BBC's Pennsylvania brewery alone was once rated at between 5M bbl/yr (Schaefer, the original owner) and 4-3.5M bbl/yr (Stroh, which bought the latter in the early 80s) but BBC's capacity, for whatever reasons, has been stated at 2M bbl/yr. (BBC brews smaller batches than the 3 previous macro owners [inc. Pabst] - lagering times might be longer, non-adjunct beer brewing might have an affect, etc).
Hmm, those differences are indeed a bit confusing.
If the brewing capacity of the Allentown brewery is closer to 3.5 - 5M bbl/yr it would appear that a consolidation of brewing operations could occur at this facility improving operating costs of this new 'combined' brewing company. Maybe this could be the fundamental reason for the 'merger'?
I’m excited about this, and eager to see where this goes.
You left out a few other things that are involved.
This is very interesting and a bit shocking. Time will tell how it shakes out, but these two pioneers have survived thus far in a transforming national market. I will watch these two regional innovators navigate uncharted waters. Should be fun to follow.
Yeah, don't know the full story but after BBC bought it, their VP, David Grinnell explained:
...but more than the single "brew size" a brewery's capacity is more dependent on fermentation and lagering space. Capacity ratings are always theoretical of course, and many factors can go into why a brewery's yearly barrelage is under (or even over) capacity. But, yeah, BBC's less than half of Schaefer's capacity rating is a mystery. But still, the old Schoenling brewery in Cincinnati has been upgrade and expanded to the point since BBC bought it in the '90s, I thought it was nearing 1M bbl/yr.
But I don't think the deal was one just to fill BBC breweries' capacity. I'd be surprised if they did much brewing of DFH brands initially at BBC's breweries - maybe some 60 Minute Ale or other high volume/in-demand brands to relieve the Delaware brewery during heavy summer periods?
BBC's beer production in 2017 was about 2M bbls and in 2018 they are producing 4.3M bbl of everything. Their 2018 annual report said that beer volume shrank and the entirety of their growth was in hard ciders and FMBs. So will over half their production is non-beer products.
90 minute Boston lager
So Sam got about $128 million worth of SAM stock. Compared to the sales of a few years ago that isn't a whole lot. He must really believe in this and value being able to keep some control over his brand.
Wish you all the best. Both of your breweries were my introduction to the world of better beers.
Hotdammit, I sure hope so!
Absolutely - how much square footage and how many tanks.
Maybe we will learn more in the near future. Consolidating brewing operations into the Allentown facility will be a notable money saver.
I would like to see them team up on a new version of Fat Jack for this fall.... Now that would be cool.
Yeah, usually how things work out and evolve. Lots of time what the breweries THINK is gonna happen and say is gonna happen, just don't happen that way...
Not sure Schaefer built one of those electronic football games into the Allentown brewery - how can they brew 60 Minute Ale without one?
That was anticipated and why the Brewers Association (again) changed their "Craft Brewer" definition, for the third aspect (after "Small" and "Independent") going from:
Looks to me like they are looking to the future, both short time but more importantly, long time, of their respective businesses. Neither fella is getting any younger.
I don't support this merger. Boston Beer is a PC brewery that brews mediocre beer. Dogfish Head's beer portfolio is vastly superior. So only Boston Beer benefits from this merger, not Dogfish Head. My goto IPA is actually Dogfish Head 60' IPA. So, hopefully, Sam can protect his flagship beer from the changes no doubt yet to come from this senseless merger.
Beer for Breakfast aka Scrapple Beer all year long
Very interesting. My first thought of how this'll be a benefit is Sam getting access to the other parts of Sam Adam's holdings and opening them up to "radical brewing". Beer is only a secondary component. I think the two are looking in other areas for future vitality.
Both of these companies have been off the radar for years.
Jumping the shark.
I wonder if affordability will be on DFHs new plate. I remember Sam being quoted as liking DFH being seen as premium priced for a prermium product. Will that perception remain now that he sold out?
I can get 60 min 6 packs all day long for $9.99, I don't think this is very premium in today's craft world.
First and foremost, congrats to all parties who invested in this endeavor and were rewarded - that’s the way business works. But this is a simple tale of PE and investors expecting a return.
That PE juice is tasty when it starts rolling in, but when those folks come knocking you best be able to make that payment. No matter how Sam spun those PE dollars and his steadfastness to pay it back and remain independent, that rarely happens.
SAM likes DFH for the high dollar price/case and innovation, and Sam likes SAM for taking care of the buyout of those buyout dollars.
Synergies, efficiencies and innovations are simply words that companies use to show their desire to move forward and continue to be successful.
This will be interesting to watch moving forward.
Are you sure it isn't time for a colorful metaphor?
It's gonna take time for me to process this one, but initial thoughts are that at least the brands don't seem to have much overlap. Maybe the synergy is in trying to forge a complementary relationship between the two brands, and hopefully get DFH into more places.
Best wishes to them both going forward.
Dogfish Head's owners/investors get $300 million
Does this mean we get a Chocolate Lobster Bock during the holidays?
To me, this makes a lot of sense - and I hope it works out. Think about it:
-Chain restaurant taps. It's not uncommon to see SA handles at restaurants and bars that otherwise don't offer much (if anything else at all) in the way of craft. DFH 60 minute is still fairly popular within their distro, as well. If you're concerned about Big Beer taking over tap handles - in particular with Goose IPA, and Lagunitas IPA has certainly become much more common since the buyout - this gives SA/DFH more "oomph" from a distributor standpoint to keep their beers on tap.
-Distribution. DFH is still not in all 50 states. Between production and distribution, this has to improve their footprint, right?
-Stick with what you know. Koch doesn't want to brew IPAs ... and now he doesn't have to, realistically. Each company can really focus on what they want, without fear of missing out on market share.
-Dog-eat-dog. As with the above, if each brewery focuses on what they do best, they don't have to compete in overlapping brews. We keep discussing the challenge craft beer currently faces: too many options on the shelves and in local breweries, far more than we can purchase. If each brewery contracts their lineup, focusing more on what they want to brew and eliminating brews that compete with each other, they can avoid some of the cannibalization craft brewers are inflicting with each other.
I see some serious potential here. Still didn't stop me from going full Keanu "WHOA!" when I read the news.
I am truly disappointed to hear this as I have never been a big fan of Boston Beer Company and I cannot belt Dogfish Head would do this.
My first taste of craft beer was Sam Adams Boston Lager, I hope this merger ensures the survival of the Sam Adams brand and in particular Boston Lager.
It’s an acquisition not a merger
Will DFH have lower prices now?
Will we see tons of old 60 minute on shelves?
Not sure how I feel till I hear about what really is happening.
Pretty much my initial thoughts (as posted above) and I truly hope it works out that way.
But after reading @oneraindog 's post above mine, it all makes sense as to what the driving factor was in making this deal. This may have been the best of all possible scenarios, actually.
Does Dogfish Head really represent a younger hipper image though?
I think both Dogfish Head and Sam Adams are seen as "older" craft brewing companies.
I could see this being the case if Sam Adams bought a company like Trillium or Toppling Goliath for example.
neither needs branding help, nor broader distribution that the other could provide, not brewing capacity or expertise...doubt financing infrastructure or staffing...fear of the big monster that is only going to pay more attention to them now....no
The street likes the deal. Up over $6 in after hours.
When can Sam sell his shares?