Kirin now owns 24.5% of Brooklyn Brewery

Discussion in 'Beer News & Releases' started by dauss, Oct 12, 2016.

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  1. dauss

    dauss Zealot (590) Aug 9, 2003 Colorado

    Source: http://www.wsj.com/amp/articles/kirin-holdings-to-take-20-stake-in-brooklyn-brewery-1476251655
     
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  2. jesskidden

    jesskidden Poo-Bah (2,429) Aug 10, 2005 New Jersey
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  3. Todd

    Todd Founder (6,634) Aug 23, 1996 California
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  4. ecpho

    ecpho Aspirant (250) Mar 28, 2011 New York

    Kirin's Spring Valley "craft" Brewery was terrible - and I don't like to use that term lightly.

    I assume this is all about expanding the Brooklyn brewery brand - more than helping Kirin's own craft experiments.
    Brooklyn already had their beer brewed in Japan by Kiuchi Brewery, makers of Hitachino Nest, so I guess that partnership will end?
     
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  5. JackHorzempa

    JackHorzempa Poo-Bah (5,438) Dec 15, 2005 Pennsylvania
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    Sounds like a Win-Win to me.

    Brooklyn gets needed capital infusion without debt obligations.

    Kirin obtains a business partner to help them expand their craft beer portfolio.

    Best of luck to both parties!!
     
  6. HouseofWortship

    HouseofWortship Meyvn (1,327) May 3, 2016 Illinois
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    Brooklyn Brewing: Beer for when you are 75% sure you want a craft beer, but 25% sure you want a macro.
     
  7. hopfenunmaltz

    hopfenunmaltz Poo-Bah (1,875) Jun 8, 2005 Michigan
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  8. jesskidden

    jesskidden Poo-Bah (2,429) Aug 10, 2005 New Jersey
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    Kirin, of course, has long had a close business relationship with Anheuser-Busch. In 1993, the companies set up a joint venture in Japan to sell Budweiser, which was eventually brewed under license in Japan by Kirin.

    Later in the decade, they set up a similar joint venture to import and market Kirin in the US, which eventually led to AB brewing Kirin in the US at their Los Angeles brewery (later expanded to the Williamsburg, VA brewery, too). AB took full control of the US JV in 2008 "..transform(ing) the relationship from contract brewing to licensed brewing..." and on their website lists Kirin beer under "Our Beers".

    Not suggesting at all that this implies a direct connection between AB and Brooklyn, just another case of international brewing industry's "strange bedfellows".
     
  9. jesskidden

    jesskidden Poo-Bah (2,429) Aug 10, 2005 New Jersey
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    #9 jesskidden, Oct 12, 2016
    Last edited: Oct 12, 2016
  10. AZBeerDude72

    AZBeerDude72 Initiate (0) Jun 10, 2016 Arizona

    I have dibs on SamuraIPA name rights

    Cheers

    Note: should have known, looked online already a beer name, LOL.
     
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  11. hopfenunmaltz

    hopfenunmaltz Poo-Bah (1,875) Jun 8, 2005 Michigan
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  12. JackHorzempa

    JackHorzempa Poo-Bah (5,438) Dec 15, 2005 Pennsylvania
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    Jeff, I took note of this paragraph from the article you linked:

    “The American craft beer movement, which has brought back so many traditional styles and developed new styles, is responsible for a beer renaissance talking hold over the world,” Hindy said. “Those great brewing countries are now looking to the U.S. for the most innovative and creative brewing that’s happening around the world.”

    Interesting.

    Cheers!
     
  13. MNAle

    MNAle Poo-Bah (2,348) Sep 6, 2011 Minnesota
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    A quote from the blog post:
    Pretty odd for something like that to be the Number 1 Goal!

    I wonder... where does making great beer rank in their goals? :slight_smile:
     
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  14. J-Bk

    J-Bk Initiate (0) Jul 26, 2014 New York

    They achieved the goal of making great beer long ago.
     
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  15. MNAle

    MNAle Poo-Bah (2,348) Sep 6, 2011 Minnesota
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    They also achieved the goal of being independent long ago...
     
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  16. lordofthemark

    lordofthemark Initiate (0) Jan 28, 2015 Virginia


    The quote says remain independent. I guess they think continuing to make great beer goes without saying, but that remaining independent was more difficult.
     
  17. southdenverhoo

    southdenverhoo Devotee (425) Aug 13, 2004 Colorado

    Exactly like the Lagunitas/Heinekin deal, right Jack? :>)
     
  18. JackHorzempa

    JackHorzempa Poo-Bah (5,438) Dec 15, 2005 Pennsylvania
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    No, not at all since Brooklyn Brewery is only 'owned' less than 25%.

    Percentage of ownership does indeed matter.

    Cheers!
     
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  19. southdenverhoo

    southdenverhoo Devotee (425) Aug 13, 2004 Colorado

    But they have no more or less control than Heineken does, just a sufficiently smaller share of the profits that Brooklyn still qualifies as a BA-defined "craft brewery". It's all semantics.
     
  20. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    Well, actually, control of the budget is what matters.

    As we learned a while back Ron and Bill have not owned more than a minority percentage of Victtory, but they have controlled what goes on there for years.
     
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  21. JackHorzempa

    JackHorzempa Poo-Bah (5,438) Dec 15, 2005 Pennsylvania
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    But it is the Board of Directors which approve the budget; they have ultimate control.

    Cheers!
     
  22. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    Yep. And if I appoint/approve membership in the board of directors I have control over that.
     
  23. HouseofWortship

    HouseofWortship Meyvn (1,327) May 3, 2016 Illinois
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    And if the shareholders have control to get rid of you...
     
  24. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    That would only be possible in a publicly traded company and even then it depends and is not possible in all of them.

    For example, before begining their selective set of purchases in the US, Duvel Moortgat bought back most of the outstanding shares they'd offered some years before in order to raise capital. Currently the family holds a controlling interest and ownership of most of the voting shares.

    It couldn't happen at Boston Brewing, for example, since what is publicly traded has absolutely no voting power at all. All the voting shares of stock are owned by one person by the name of Koch.

    Similarly there are other companies that only put out for sale a percentage of their stock and reserve the rest, e.g., enough to retain controlling interest.

    Not all corporations are created equal. :slight_smile:
     
    #24 drtth, Oct 14, 2016
    Last edited: Oct 14, 2016
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  25. JackHorzempa

    JackHorzempa Poo-Bah (5,438) Dec 15, 2005 Pennsylvania
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    Tom like most things in life it is a negotiation. In the case of the Kirin/Brooklyn partnership the Kirin folks will 'nominate' their representatives for the Board of Directors. I suppose the Brooklyn folks could 'veto' the suggested representatives but...

    Cheers!
     
  26. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    Yes. Also they don't even need veto power over who the Kirin representatives are. As I pointed out in another post. Not all corporations are created equal. :slight_smile:

    Even if Brooklyn had sold 49% of their brewing company, Kirin would still not be able to arbitrarily control the board. With just under 25% ownership they would have a distinct minority voice in cases of disagreement and be unlikely to sway enough of the other voting board members to make a difference.
     
  27. JackHorzempa

    JackHorzempa Poo-Bah (5,438) Dec 15, 2005 Pennsylvania
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    And that was the point I was making when I stated: "Percentage of ownership does indeed matter."

    Cheers!
     
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  28. drtth

    drtth Initiate (0) Nov 25, 2007 Pennsylvania

    Oh, OK. As did others I though you were making a point about staying under the BA 25% rule to still be counted as craft since, in his own way, McGee retained control of the board just as Brooklyn has in theirs.
     
    #28 drtth, Oct 14, 2016
    Last edited: Oct 14, 2016
  29. jesskidden

    jesskidden Poo-Bah (2,429) Aug 10, 2005 New Jersey
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    Not sure if this aspect of the deal was discussed previously (and the OP's WSJ is now for-pay only) but it apparently includes Kirin brewing Brooklyn Lager (and, eventually, other Brooklyn beers) in Japan, according to the Asahi Shimbun, as noted in a recent Brewbound industry round-up (page 1/3 down).
    Through a reciprocal agreement and a joint venture dating back to the 1990s, Kirin brews (or did brew) Budweiser for the local Japanese market. Last year, AB settled a lawsuit over the labeling of the US-brewed Kirin.
     
    #29 jesskidden, Dec 24, 2016
    Last edited: Dec 24, 2016
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  30. southdenverhoo

    southdenverhoo Devotee (425) Aug 13, 2004 Colorado

    I've been trying to make this point around here since the Heineken/Lagunitas announcement but as far as I can tell you are the first person besides me to see it that way. The BeerAdvocate consensus is "hahaha Tony Magee turned out to be a hypocrite sellout hahaha." Nope, Tony got the money and kept the control.
     
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  31. MNAle

    MNAle Poo-Bah (2,348) Sep 6, 2011 Minnesota
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    Just remember... the Brewer's Association is a trade association, not an arbiter of culture.

    They represent the best interests of small(ish) brewers and provide benefits to small(ish) brewers.

    They frequently advocate against macro brewers in matters of legislation, etc.

    They no longer advocate for Lagunitas since they are now a macro brewer in terms of their business. It has nothing to do with who got the money or who got the control in the actual deal.
     
  32. southdenverhoo

    southdenverhoo Devotee (425) Aug 13, 2004 Colorado

    Right. Can't argue with that.

    Lagunitas no longer has the assistance of the Brewers Association as it makes its lonely way through this cruel world, except of course indirectly (when the BA helps "craft" doesn't it also help breweries who are perceived by the public as "craft" whether the BA defines said brewery as "craft" or not, given that the beer is still in the "craft" section at the liquor store and on the menu at the pub?) and without paying dues for it.
     
  33. jesskidden

    jesskidden Poo-Bah (2,429) Aug 10, 2005 New Jersey
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    Contrary to popular belief, the Brewers Association gladly accepts dues money from breweries they don't consider "craft". Lagunitas is still listed as a member on the B.A. website.

    And if one should think that's just an out-of-date website problem (and, given Tony McGee, it very well could be :wink:), type in "Goose Island" (which hasn't been craft for well over a decade, predating the AB purchase of it since they were then partially owned by non-craft CBA). Or "Anheuser-Busch" or "MillerCoors".

    Remember, too, that B.A. dues are based on barrelage - so, no problem at the B.A. with biting some of the hands that feed it.:rolling_eyes:
     
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  34. southdenverhoo

    southdenverhoo Devotee (425) Aug 13, 2004 Colorado

    well you learn something every day.

    I went to what I guess is a different part of the BA website and clicked on "Member Roster" and then "California" and clicked on "Large". There were 11 listings, none of which would be considered "craft" under the BA definition: A-B Fairfield, A-B Los Angeles, Ballast Point (x5 separate locations) Golden Road, Lagunitas, MillerCoors, and St. Archer.

    When the whole data-base is non-craft (and includes A-B and MillerCoors who never were "craft"), I guess we can rule out "they-just-didn't-bother-to-update-the-member-list." I guess all these entities do pay dues, and at the highest rate, to belong to an association which defines them as "non-craft."
     
  35. hopfenunmaltz

    hopfenunmaltz Poo-Bah (1,875) Jun 8, 2005 Michigan
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    Think GABF.
     
  36. MostlyNorwegian

    MostlyNorwegian Initiate (0) Feb 5, 2013 Illinois

    This is about distribution of product. America has no more room to grow long term for a brewery like Brooklyn, or actually. Any of the larger breweries who have achieved national saturation and distribution. Those holes are being filled in by locals and regionals, and I can see most of these larger breweries now expanding into international sales are going to be losing sales domestically on account of those holes in the shelves being filled in, and also with the zombie "craft" breweries who will out compete Brooklyn on price.
    The only recourse for long term viability is to go abroad. That requires people who understand those channels and have access and the means to enter them.
     
  37. MNAle

    MNAle Poo-Bah (2,348) Sep 6, 2011 Minnesota
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    I think you have hit on some of the dynamics at play, but I disagree with the finality of your conclusions.

    I think the large "national" craft brewers will need to plan for slower growth, but that does not mean necessarily sales must decline; market share will likely decline, but not necessarily sales if the overall craft market continues to grow.

    Also, I have seen little evidence of price cutting on the macro-craft brands (but, then, I don't buy them so I don't follow their prices very closely).
     
  38. MostlyNorwegian

    MostlyNorwegian Initiate (0) Feb 5, 2013 Illinois

    I wonder how long it will take for some of these breweries to step back and get out of the growth for the sake of growth pattern.
     
  39. WCKDVBZ

    WCKDVBZ Meyvn (1,409) May 9, 2014 South Carolina

    Brewer's Association definition(s) means nothing. According to them Founders isn't "craft" either, but Yuengling is. "Independently owned" and "craft" aren't the same things.
     
  40. MNAle

    MNAle Poo-Bah (2,348) Sep 6, 2011 Minnesota
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    It doesn't mean "nothing." It just doesn't mean what many people here seem to think it means.

    As I stated, above (https://www.beeradvocate.com/commun...24-5-of-brooklyn-brewery.456140/#post-5189008), the BA is a trade association. Their definition specifies who they represent and who they do not represent when it comes to matters of legislation, etc.
     
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