Lagunitas Brewing Company creates a joint venture with Heineken

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….