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Founders Brewing Co. Announces Minority Partner, Mahou San Miguel

Discussion in 'Beer News & Releases' started by Jason, Dec 17, 2014.

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  1. JamesShoemaker

    JamesShoemaker Initiate (0) Sep 21, 2012 Michigan

    :astonished: Whose beer are you drinking? I don't like Founders that much, but consistency is definitely something they've got going for them.
     
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  2. Dil_thebeerdrinking_do

    Dil_thebeerdrinking_do Disciple (303) Jan 21, 2014 Georgia
    Trader

    hell no, I read the title
     
  3. AnchorDrops

    AnchorDrops Aspirant (222) May 11, 2013 Michigan

    Obviously, carry on.
     
  4. ribby

    ribby Initiate (185) Sep 25, 2009 Michigan

    A lot of money, might be slightly undervalued; last time i checked, founders sales are about 1/10 of SAM, whose market cap is 3.7 bil.
     
  5. mnredsoxfan69

    mnredsoxfan69 Initiate (0) Dec 27, 2013 Minnesota

    I'm wondering what Duvel Moortgat's next purchase will be. The Alchemist? New Glarus? Russian River?
     
  6. mnredsoxfan69

    mnredsoxfan69 Initiate (0) Dec 27, 2013 Minnesota

    Actually, here in the land 10,000 lakes, we've already had our first takeover, when Bent Brewstillery merged with Pour Decision.
     
  7. bluehende

    bluehende Poo-Bah (2,091) Dec 10, 2010 Delaware

    I applaud the fact that they kept control and cashed in. They sold 1/3 of the company for ~100 million. I am sure some of that goes back in to the business, but they are rich men now. What can you buy with 300 million that you cannot with 100 million. I have faith that they will continue to maintain their standards. And now any bad batches can go to Spain.
     
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  8. lillitnn92

    lillitnn92 Initiate (0) Aug 22, 2009 Virginia

    Not a Founders follower, but of the beer I've had, they get mid-high to higher ratings consistently ... so as long as they hold true to their word. ” with continuity in their recipes, processes, facility and staff." I say good for them.
     
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  9. grr32

    grr32 Initiate (33) Nov 7, 2012 Michigan

    I think what they did is the most logical and crafty way to get a little coin for their hard work. The values on these craft breweries are so hard to ignore right now and I can't blame them. They, as announced, could have gone BMC route and lost control and face, gone private equity which would have flipped them in a few years, or gone ESOP which feels good but gives these breweries no long term succession plan. I read into it as San Miguel is into it primarily for the European distribution rights. Being from GR and having met the owners a bunch I'm happy for them. They get some money and still get to keep their brewery.
     
  10. EnronCFO

    EnronCFO Zealot (514) Mar 29, 2007 Massachusetts

    Goldman Sachs advised on that deal, right?
     
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  11. EnronCFO

    EnronCFO Zealot (514) Mar 29, 2007 Massachusetts

    And Craft Brew Alliance's market cap is $255 million.
     
  12. Beervana

    Beervana Zealot (593) Apr 15, 2014 British Columbia (Canada)

    For what it's worth, we already see Founders pretty regularly in Denmark, I know Sweden gets a fair bit of distribution too... not entirely sure on the rest of Europe though.
     
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  13. LambicPentameter

    LambicPentameter Poo-Bah (1,732) Aug 29, 2012 Nebraska
    Society Trader

    This reminds me a lot of the Boulevard sale to Duvel Moortgat. Obviously a little different, in that Boulevard sold 100% to Duvel, compared to Founders only selling 30%, but there are a lot of similarities. The owners of Boulevard and Founders made the decision to sell to companies that were 1) family-owned and 2) international, providing them access to an existing distribution network which would be prohibitively expensive for them to set up on their own.

    Speaking of the similarity to the Duvel/Boulevard transaction... your note makes me wonder how this will impact Founders status as a Craft Brewer. I mean, the BA has modified their definition in the past to ensure certain key players retained their Craft Brewer status (upping production limits, allowing non-"traditional" ingredients as long as they weren't the majority of a brewer's portfolio), so it will be interesting to me to see if they make changes yet again to allow Founders to remain a Craft Brewer.

    I know that Duvel is considered a Craft Brewer, although on the BA Top 50 from 2013, it is listed as being based in Kansas City and Cooperstown, with no mention of the Belgian headquarters.

    I think ultimately, what it says is that there is no single way to view these kinds of transactions. It's part of the reason why the Brewers Association continues to have trouble finding a consistent definition for Craft Brewer, because they are a trade group trying to represent a subset of the larger beer industry that cannot be simplified into hard lines based on barrel production quantity, ownership ratios and ingredients used. The idea of "craft" is much messier in practice.
     
  14. semibaked

    semibaked Zealot (589) Mar 27, 2007 Illinois

    You don't have a clue what you are talking about, try READING and UNDERSTANDING the article.
     
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  15. jesskidden

    jesskidden Meyvn (1,440) Aug 10, 2005 New Jersey
    Society

    Founders is much smaller than that, based on 2013's barrelage figures for both companies:

    Founders - 111,000 bbl. (Brewbound article)
    Boston Beer Co. - 3,400,000 bbl. (BBC 2013 Annual Report - includes their beer, cider and FMB's)
    Even with their continued growth, Founders was on track to brew around 200k bbl. this year.
     
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  16. Black_Rider

    Black_Rider Zealot (535) Mar 26, 2013 California
    Trader

    i don't know that much about Founder's but i remember seeing a mini documentary on them a while back and the whole thing was talking about how proud they were to be 100% family owned etc.. that's the only reason this strikes me as odd
     
  17. THANAT0PSIS

    THANAT0PSIS Crusader (780) Aug 3, 2010 Wisconsin
    Trader

    I don't know how John Kimmich feels, but everything I know about Dan and Deb Carey and Vinnie and Natalie Cilurzo says that NG and RR are two breweries that will never sell out. Both have consistently shown aversion to expansion, yes, even despite New Glarus having a large capacity: they refuse to sell outside Wisconsin, still.
     
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  18. AnchorDrops

    AnchorDrops Aspirant (222) May 11, 2013 Michigan

    Founders maintains control of the company. Their goal is to increase production from around 200k barrels to 900k barrels through a large, and very expensive, expansion. Development loans of this type and size are tricky with banks and costly with investors. Why not tap into the equity that is the brand? And through a partnership with a family owned foreign brewery that can presumably help Founders grow internationally.
     
  19. randylangford

    randylangford Zealot (542) Jun 11, 2008 Pennsylvania
    Trader

    Mahou San Miguel seems to be a fairly small brewer by international standards. Comparing this deal to the ABI buyout of Goose Island is a little crazy. Founders needs money to grow its business and needs international partners if it wants to expand outside of the US. I think that they went about it the right way by partnering with a small family owned international brewer that seems to be Spain's version of Yeungling. I think we will see more and more of this kind of partnership, buyouts by the big guys or by the big craft guys and possibly some more alliances like CBI.
     
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  20. EnronCFO

    EnronCFO Zealot (514) Mar 29, 2007 Massachusetts

    Never is a long time. Founders made the point in their statement that they have a number of older shareholders that were looking to cash out their highly profitable investments. You can't really have a problem with that. NG and RR could face similar issues down the line. These events happen to all businesses when there is a generational shift in ownership. We're just seeing the first examples in craft breweries since the industry really took off in the 90's. Uncle Joe and your roommate from college put up 10% of the starting funds 20 years ago. Now they want to have access to the appreciation. Either pay out of your own pocket, take out a loan to finance their buyout, or find an external buyer of their equity. These deals also allow the ongoing owners to strike an equity value and have a better sense of how to compensate people and/or sell/distribute equity to other employees. The deal itself isn't an issue. It's just a matter of finding the right buyer/partner, which is unknown at this point.
     
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  21. THANAT0PSIS

    THANAT0PSIS Crusader (780) Aug 3, 2010 Wisconsin
    Trader

    Let me rephrase: if I had to make a list of breweries that I could see selling out, NG and RR, along with HF, would be either at the very bottom or left off entirely. Founders doesn't surprise me that much since they always had a bit of a commercial tinge to them in my mind, but NG, RR, and HF (amongst others) always struck me as artisans first and businesses second.

    "On a long enough timeline [and with enough money], the [independence] rate of every [brewery] drops to zero," is basically what you're saying, and while you're not wrong since it's unknown, it feels like a cop out to say "never is a long time."
     
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  22. jcos

    jcos Devotee (476) Nov 23, 2009 Maryland
    Society

    No problem....
     
  23. jesskidden

    jesskidden Meyvn (1,440) Aug 10, 2005 New Jersey
    Society

    Well, I think the B.A.'s reasoning behind the Duvel/Ommegang/Boulevard deal was that, though "foreign", Duvel Moortgat's annual barrelage was still well under 6m US barrels at 766,951 barrels.
    At this point, until the 2014 rankings come out from the Brewers Association, we still don't know which breweries of primarily adjunct lagers will be newly-christened "craft brewers"- it seems they'll do it on a case by case basis.

    And, of course, they have ignored "alcoholic beverage industry member that is not itself a craft brewer" ownership before - Anchor is now owned by the Griffin Group.
     
    LambicPentameter likes this.
  24. lester619

    lester619 Devotee (497) Apr 17, 2009 Wisconsin

    I have a question. Why don't more breweries sell stock in their companies instead of going down the foreign investment route? Maybe there are some publicly traded breweries that I don't know about. I would love to have had some Sierra Nevada or Founders stock twenty years ago before the craft boom.
     
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  25. mnredsoxfan69

    mnredsoxfan69 Initiate (0) Dec 27, 2013 Minnesota

    Bob's Discount Legal Services and Small Engine Repair
     
  26. EnronCFO

    EnronCFO Zealot (514) Mar 29, 2007 Massachusetts

    I could honestly see Shaun giving up and cashing out at some point in the future. Classic troubled artist leaving behind commercial pursuits to refocus on his passion, with a fat check in his pocket. No real reason and I'm sure it wouldn't be for a very long time, but just a hunch.
     
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  27. EnronCFO

    EnronCFO Zealot (514) Mar 29, 2007 Massachusetts

    It's really expensive to do and you lose control of who the other owners are. Especially if you issue shares with voting rights. You want Sierra Nevada battling a hedge fund in a proxy battle?
     
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  28. lester619

    lester619 Devotee (497) Apr 17, 2009 Wisconsin

    No. Not really. It's probably better the way it is. Would have been nice to get in on the ground floor though.
     
    #68 lester619, Dec 17, 2014
    Last edited: Dec 17, 2014
  29. Bshaw22

    Bshaw22 Zealot (547) Aug 29, 2013 Wisconsin
    Trader

    Love this!
    They should probably change their, "Brewed for us," slogan, though
     
  30. LambicPentameter

    LambicPentameter Poo-Bah (1,732) Aug 29, 2012 Nebraska
    Society Trader

    The only thing that I could see becoming a potential issue is when the owners reach retirement age. That's essentially what happened with Boulevard--John McDonald got to the point where he had to start thinking about the future of the brewery after he was gone and wasn't really interested in handing it down to his kids to run the show.

    At some point, all these owners will be forced to make a choice between passing ownership down to their offspring or selling to someone, be it an ownership group, a single company, or to the employees in a sort of New Belgium type approach.
     
  31. THANAT0PSIS

    THANAT0PSIS Crusader (780) Aug 3, 2010 Wisconsin
    Trader

    This is a worry for sure. Only time will tell, I suppose.
     
  32. Oktoberfiesta

    Oktoberfiesta Aspirant (257) Nov 16, 2013 New Mexico

    This reads to me like one needs to sell 30% of their company in order to get in emerging markets? You can't just have good products that people want anymore. International distributors should be lining up at their door with red carpet treatment... Unless I'm reading who gets what wrong.

    btw, that founders blog piece reads like all the others.

    Could you PLEASE have at least 5 week old beers on your shelves in Phoenix. Take care of the markets you already distribute.

    I shall now run over every remaining Founders product I own
     
  33. russpowell

    russpowell Poo-Bah (8,771) May 24, 2005 Arkansas
    Trader

    For Christ's sake they are in Okie & Arkieland, what did y'all do to piss them off??? :stuck_out_tongue:
     
  34. southdenverhoo

    southdenverhoo Disciple (364) Aug 13, 2004 Colorado

    nah, it's family land for centuries, right? He might just quit, beats me, but I absolutely can't see him selling.
     
  35. russpowell

    russpowell Poo-Bah (8,771) May 24, 2005 Arkansas
    Trader

    I will stand by & see what this means. I don't think any really good or bad happens immediately with these kind of deals, they usually happen over an extended time...
     
  36. Vav

    Vav Aspirant (257) Jul 27, 2008 Illinois

    This is not surprising in the least to me. They've wanted to be big for many years now. Seven-someodd months ago some suit from Founders marketing side i'd never met before dropped into my store and immediately started asking for better stack placements, eye level/on the handle cooler spots, and all kinds of other Asks & pitches i'm used to hearing from the very big boys that made me cringe as a longtime supporter. It was the first time i realized just how big they wanted to be.

    I once referred to their market expansion and general growth policy as Scorched Earth, and i guess i wasnt too far off.

    Still, they're a solid brewery with some great people working for them, so i hope it works out and wish them the absolute best.
     
  37. SerialTicker

    SerialTicker Poo-Bah (1,694) Jun 18, 2012 Michigan

    This news doesn't bother me too much.

    I bought a BCBS a couple weeks back. You know, from the company owned by Anheuser-Busch? If the beer's good, I don't really care if "fat cats" get my money. I prefer companies don't "sell out", but it isn't a huge deal to me.
     
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  38. AnchorDrops

    AnchorDrops Aspirant (222) May 11, 2013 Michigan

    Sounds like a solid plan you have there, well thought out. :rolling_eyes:

    Are you complaining about a lack of supply in New Mexico? If so, this partnership will create the capital needed by Founders to triple their production to not only ship overseas but meet demand across the United States.
     
  39. Oktoberfiesta

    Oktoberfiesta Aspirant (257) Nov 16, 2013 New Mexico

    They're thinking globally, not little o'l NM. They already jumped us as they went for the AZ and TX markets. It may happen soon. But even on Founder's facebook page, we see a guy in Chicago who can't even get any of their hoppy beers newer than 4-6 weeks old. I believe this will help distribution as a whole (it can't hurt) so for that, I remain optimistic.

    I was trying to be sarcastic about running over my remaining Founders. I love their breakfast stout. No thanks to 6 wk old IPAs or other hoppy products that will sit. I do like their more burly rich products. I shall wish them luck with a caution to not to try and overlook the small things. Don't mess with hometown happy with visions of world domination.
     
  40. mccorvey

    mccorvey Initiate (0) Dec 3, 2013 North Carolina

    Hell, I would have sold out. 300 million isn't chump change.
     
    misternebbie likes this.
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