Lagunitas Brewing Company creates a joint venture with Heineken

Discussion in 'Beer News' started by DogTown, Sep 8, 2015.

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  1. DogTown

    DogTown Initiate (0) May 17, 2006 California

    Greetings BA’rs…. For a change, I wanted to be the one to create the thread title and begin a thread about a juicy bit of beer news. This is that. The press release reads something like this…

    The Lagunitas Brewing Company of Petaluma, CA and the Heineken Brewing Company of Amsterdam, Holland today announced that they have entered into a powerful new partnership, which will allow Lagunitas to export the exciting vibe of American Craft Beer globally.

    HEINEKEN and Lagunitas will form a JOINT VENTURE and Lagunitas will continue to operate independently in the US and abroad, maintaining the integrity of its brews and culture. Tony Magee, founder of Lagunitas, 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.

    Both companies will benefit from the partnership. HEINEKEN provides Lagunitas with a global opportunity to present its beers to new communities and Lagunitas provides HEINEKEN with the opportunity to build a strong foothold in the dynamic Craft Brewing category on a global scale, a category that is growing in popularity almost everywhere now.

    Lagunitas founder Tony Magee said, “This venture will create a way for Lagunitas to help HEINEKEN’s global distribution network participate in the growing craft beer category in places from Tierra Del Fuego and Mongolia to the far-flung Isles of Langerhans. Lagunitas will share in the best quality processes in the world and enjoy an open door to planetary opportunities that took lifetimes to build.

    He continued, “This alliance with the world’s most international premium brewer, itself a family-owned company, represents a profound victory for American craft. It will open doors that had previously been shut and bring the U.S. Craft Beer vibe to communities all over the world.”

    Jean-François van Boxmeer, a lifelong beer aficionado and now CEO of HEINEKEN added: “We are very excited to partner with Lagunitas. We recognize and respect the tremendous success of Tony and his people in building one of the great American Craft Beer brands. We look forward to that same team partnering with us to expand Lagunitas globally, so it can reach parts that other craft beer brands have not.”

    There’s a bit more blah, blah, blah, but you get the idea…

    Last month there was something in the papers about us that was so fundamentally inaccurate, and worse it displayed so little imagination, that I wanted to call them up to set things straight, but I didn’t. The reporter retreated to ideas of conventional thinking that read IPO, private equity, minority stake, selling out, cashing in, whatever. It was very far, far from the exciting truth.

    Here’s my thinking on things, if it matters. I’ve watched for the last few years as some good brewers have made their own decisions about their own futures and the futures of their people and brands. I’ve watched and thought strongly that it was a problematic thing. I’ve watched and tried to learn what it was that was happening. Craft Brewing, the thing itself and the environment it lives in, is freakin complicated enough. The entrance of giant piles of money is disturbing. Not because any of you here will be corrupted by it all, but because the distribution and retail tiers can be corrupted. Beer is an old biz in the US and it used to be very orderly. Craft disrupted that and the old order wants to find a way back to the past. It won’t work, but it’s going to try.

    Amid all of this uncertainty, and being 55 years old going on 80, I had to think long and hard about how to steer our ship into these new waters. There are options that range from indifference all the way to going over the transom and selling the business to someone else to steer the ship instead. Selling one’s business entirely is one thing. This is not that. Selling a stake to a PE fund that will need to re-sell it in a few years is another thing. This is not that. ESOPs are cool but they do not pave a road to bigger opportunities for the people and the brand. This is not that either. What we have created in this relationship is a staircase to the sky for all of our people and for our brand as well as for the home-grown vibe of American Craft brewing.

    Some might say I’ve changed my mind. Well, I have. But the world around us has also changed and if learning leads to new insight, then that’s the best kind of change imaginable. The hard part is discovering the uniquely positive change opportunities within the range of possible avenues forward.

    I promised myself, and tacitly promised my people, that any move we would make had to provide way more in opportunity for us than we would share. In this case we established a true 50/50 relationship. This is a true JV. I’ve said a million times that it’s good to have friends and this is the perfect expression of that.

    It took a lot of talking but the thing we have found is not an end point in any way except for the idea that it is the end of our start-up period. Time will tell for certain but I’m totally willing to step out and say that in many ways this is historic. There are many great international brewers but there is only one Heineken. They are charted as #3 in the world, but in reality they are #1. The other global ‘brewers’ are essentially holding companies, bankers by any measure. Heineken is still a brewer first.

    Most don’t know this but Heineken uses no adjuncts. That’s a choice only a brewer would make. Most don’t know this but the founder’s great-granddaughter controls the company, still. Most don’t know this either but they own 165 breweries around the world, the largest of which is over 13 million barrels and the smallest is a couple pints over 20,000 barrels. Only a real brewer would keep those smallest ones open. The CEO/Chairman is a crazy Belgian fella who started with the company working in brewing operations. Here’s an image; Our first meeting at Lagunitas/Chicago and we are walking the catwalk tour route and talking. A young family with a wobbly toddler is walking towards us. The 6’ 4” CEO, Jean-Francois van Boxmeer, instantly peels away from our conversation and begins dancing with the toddler laughing as much as the little kid all the while. Only when the toddler got distracted and wandered off did JF return to our conversation. I couldn’t stop laughing myself. We are all the same.

    This relationship is a meeting of equals, not in terms of scale, for sure, but in terms of mission and meaning and mutual respect. What this represents for us is the construction of a stairway to the sky. In the U.S.A. and elsewhere we will continue to be as completely independent as we are now because even they are inspired by what we American Craft Brewers are doing with beer. Internationally we will have our own Lagunitas people working alongside Heineken’s distribution channels because they believe that the vibe of U.S. Craft can change things everywhere. All of our peeps and all of our suppliers and all of our distributors will, in the future, be just as they are now for all the right reasons.

    First up will be Mexico and an expanded footprint in the EU. Inside of 5 years our people and our brews will be doing things that were undreamt-of previously. Ten years from now…? Well, who wouldn’t want to do pint promotions in Belarus….?

    Just so’s you know: I didn’t discuss the possibility of this sort of relationship with either ABI or M/C. Those would have been dead on arrival anyway because they don’t get it. For them, the news of the future hasn’t yet arrived. We reached out to Heineken ourselves and at that point they did not see themselves becoming involved with any U.S. Craft Brewer. However, after our first conversation and with every subsequent one they began to see what a very exciting thing it would be to bring the news of U.S. Craft brewing to communities around the world. 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.

    Over the last 20 years I’ve noticed that a lot of beer-lovers discover Craft Beer and then want to see it as a set-piece, not an evolving scene as every brewer knows it to be. It is now, and it has always been, a point on a curve. A thing constantly becoming. Craft of 1993 would be unrecognizable to Craft of 2001 let alone Craft of 2015, and Craft of 2025 will be equally different. I have always strived to set Lagunitas in the place Craft is heading to five years out. So far so good. Today I see The World as the next thing. We will always work hardest to be more meaningful here in the U.S. than elsewhere but it’s a small planet and I want to get to it….

    I posted this here early today so that I could express this to you all first-person and I’ll hang around the thread too. If you wanna know more about how my thinking landed here, you could read a Tumblr blog I started a while ago, ‘Fermenting Ideas of Order’. I fingered my way through a lot of the mental gymnastics of it all there.

    My mantra has become: The future will not be like the past. And so it shan’t. Furthur.

    Thanks for the eyeball-time and as always, Chairs to you, BA’rs….
  2. zid

    zid Grand Pooh-Bah (3,036) Feb 15, 2010 New York
    Pooh-Bah Society Trader

    Glad you beat me to it by seconds. :slight_smile:
    MrDave and StarofSahara like this.
  3. AnalogErik

    AnalogErik Initiate (0) Jul 23, 2013 Minnesota

    Cheers! With the scale economics that blending with Heineken provides, will we see any competitive pricing changes, or increased production of products like Sucks?
    ryanhooks81 and yemenmocha like this.
  4. mudbug

    mudbug Pooh-Bah (1,688) Mar 27, 2009 Oregon

    Good Luck! Sounds exciting! So when is the release of Sumpin Sumpin Skunky? Just kidding, Lagunitas is one of my favorite breweries and I never pass through Petaluma without stopping in.
    M_C_Hampton, Raptor66, turfy and 12 others like this.
  5. Jason

    Jason Founder (0) Aug 23, 1996 Massachusetts

  6. emannths

    emannths Initiate (0) Sep 21, 2007 Massachusetts

    So...cans? :wink:

    Curious how you'll handle keeping hoppy beer in code in the EU when it can be a challenge even in the US (I am assume you'll start by exporting beer rather than brewing it there).
  7. cookiequiz

    cookiequiz Initiate (0) Apr 15, 2013 California

    There seems to be some mix-up over details or confusing double-speak. Lagunitas says they will 'form a JOINT VENTURE' that is 'a meeting of equals'---but Heineken says they've made 'acquisition of a 50% shareholding in the Lagunitas Brewing Company'. The former sounds like the creation of a new business venture with shared ownership; the latter sounds like a half-acquisition.
  8. MisSigsFan

    MisSigsFan Initiate (0) Mar 2, 2013 California

    Sucks is already being brewed too much now. Those 32oz bottles are shelf turds.
    Kemosabe, Bshaw22, josmickam and 8 others like this.
  9. jesskidden

    jesskidden Pooh-Bah (2,981) Aug 10, 2005 New Jersey
    Pooh-Bah Society Trader

    Have always wondered if Heineken International, which most sources put at #3 worldwide, would ever enter the US as a brewer. They're in Mexico (they own the old FEMSA [Dos Equis, Tecate, Sol] brewing operations) and once brewed in Canada under the Amstel name (best remembered for "Grizzly Beer" by Americans) and, since they own a large part of India's UB Group, they have business connections to Mendocino/Saratoga brewing group in the US.

    Pretty surprising deal on a number of different levels.
    #9 jesskidden, Sep 8, 2015
    Last edited: Sep 8, 2015
  10. dennis3951

    dennis3951 Initiate (0) Mar 6, 2008 New Jersey

    Is Heineken going to be brewing Lagunitas beer in Europe for sale there?
  11. SedateSix

    SedateSix Initiate (0) Apr 27, 2013 North Carolina

  12. LambicPentameter

    LambicPentameter Initiate (0) Aug 29, 2012 Nebraska

    Honestly, I don't care either way--I'm all for craft brewers finding partners that will help ensure the growth and evolution of their brands after the original visionaries (like Tony Magee with Lagunitas or John McDonald with Boulevard) get to a point in life where they need to start thinking about the long-term future. Partners who will be stewards and continue to steer the brand in question with the passion and integrity upon which it was originally founded rather than as a data point in a diversification portfolio.

    But I think you're right here. 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% share of Company B. Traditionally, the joint venture is a third, separate entity from the two involved companies.

    Perhaps it's not a particularly important distinction, and again, I actually appreciate the idea rooted within the transaction--whatever it's being called--but the choice of description strikes me as odd.
  13. SerialTicker

    SerialTicker Pooh-Bah (2,815) Jun 18, 2012 Michigan

    Lagunitas Sucks is still my favorite beer, so whatever.

    I will say the 32oz Sucks bottles was the dumbest idea.
  14. RCL

    RCL Initiate (0) Jul 23, 2008 Massachusetts

    This is just an excuse to travel to Amsterdam more frequently, isn't it?
  15. Jugs_McGhee

    Jugs_McGhee Grand Pooh-Bah (5,906) Aug 15, 2010 Colorado
    Pooh-Bah Trader

    Can the term "beer aficionado" be unpacked for me? That's astoundingly vague - especially as a descriptor for a CEO of a multinational brewing company.
  16. lordofthemark

    lordofthemark Initiate (0) Jan 28, 2015 Virginia

    Esops do not pave a road to bigger opportunities? But New Belgium appears to be continuing to expand distro, even before completion of their new brewery in NC.

    Perhaps this means not growing at the pace Lagunitas envisions, with their discussion of a large new brewery in Southern California. Heineken had better hope the " craft beer bubble " does not pop.
  17. hoppytobehere

    hoppytobehere Pooh-Bah (1,922) Aug 10, 2012 District of Columbia

    If I can't find fresh Lagunitas in our nation's capital, I'm not sure you're ready to take on the world just yet.
  18. lordofthemark

    lordofthemark Initiate (0) Jan 28, 2015 Virginia

    Presumably a joint venture will be formed, half owned by Lagunitas and half owned by Heineken, which will own all of Lagunitas breweries, brands, etc. And nome of Heineken's. But with US importing rights for Heineken.
  19. Vizualize

    Vizualize Initiate (0) Jun 13, 2014 New York

    I just had a Lagunitas IPA i couldnt even finish the other day it was so weak. Cutting corners has already begun! Make the beer worse and make more of it. It's the corporate way I guess.
  20. AnalogErik

    AnalogErik Initiate (0) Jul 23, 2013 Minnesota

    I want 12 oz.
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