New Belgium Brewing announces sale to Lion Little World Beverages (Kirin Holdings Company Limited)

Discussion in 'Beer News & Releases' started by ypsifly, Nov 19, 2019.

  1. AWA

    AWA Aspirant (276) Jul 22, 2014 California

    No. I honestly don't know how they live. A 1 bedroom with a bath in a someone else's house rents for 1800 here. 30k is poverty wages.
     
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  2. bwarner2015

    bwarner2015 Initiate (74) Mar 25, 2016 Connecticut

    The $100K was likely in the employee stock ownership plan (ESOP), as it was an employee owned business. When employees leave, they are entitled to their share of that money (if they are vested). When the company sold, that money had to be distributed. However, there could have been negotiations during the sale to bump up the per-person-payout (based on lost future gains, interest, etc due to the sale of the company). So it does not mean that there won't be a 401k offered with the new company. Their likely will be, since there will no longer be an ESOP.
     
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  3. eppCOS

    eppCOS Meyvn (1,090) Jun 27, 2015 Colorado
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    A pretty sad day for those folks who enjoy NB products; can't say I was ever sold on their stuff, and the only time I've had NB beers in the last year or two was when I got stuck in Denver's airport and needed to kill some time.
    I'll lift my glass to the employees, the legacy of NB, and wish them well.
    But NB had plans for this kind of acquisition long ago, so it's no surprise at all...
     
  4. Genuine

    Genuine Devotee (437) May 7, 2009 Connecticut

    That is pretty much the norm in the industry. If you're making $45-50K you're seen as doing very well. However, not much is offered in the way of benefits unless you're working for one of the bigger craft breweries out there. I was offered a brewing position earlier this past year however once learning about the pay, no benefits or retirement, I couldn't take such a huge pay cut. It's sad that those guys aren't making what they should.
     
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  5. southdenverhoo

    southdenverhoo Disciple (389) Aug 13, 2004 Colorado

    Somebody in Boulder is feverishly drafting proposed redefinitions of “craft brewer” which somehow stanch the flow of, and maybe reclaim some of the ocean of, lost “craft beer” barrelage...

    It takes a lot of new 200-509 bbl a year breweries to make up for a New Belgium or a Lagunitas.
     
  6. Domingo

    Domingo Poo-Bah (2,633) Apr 23, 2005 Colorado
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    Apparently they were already planning on killing off Abbey prior to this.
    That's a permanent staple in my fridge and there aren't really any suitable replacements on my shelves. The few that are are around (mostly Belgian imports) cost upwards of 2x as much.
     
  7. NickTheGreat

    NickTheGreat Crusader (764) Oct 28, 2010 Iowa
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  8. jesskidden

    jesskidden Poo-Bah (1,916) Aug 10, 2005 New Jersey
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    Yeah, and yet some in the industry and many among the craft beer geekery defend practices like using illegal "volunteer" workers, paying brewery workers less-than-minimum wage "tipped employee" wages and attack the Anchor workers when they attempt unionization.

    Yeah, as someone who's lived through a company sale and a plant-closing/forced retirement or transfer, I'm sure the NB worker-"owners" will have to spend many hours reviewing documents and attending meetings to make their decision - while some of us here on the forums can have snap opinions with little or no specifics :grin:. As noted by others above, while there are specific rules that ESOPs must follow, there are also varying ways to set them up, so no blanket statements can really be made without knowing New Belgium's actual ESOP agreement and the proposed deal with Kirin's subsidiary.
     
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  9. MNAle

    MNAle Poo-Bah (1,661) Sep 6, 2011 Minnesota
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    How do you define "making what they should"?
     
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  10. mikeinportc

    mikeinportc Meyvn (1,022) Nov 4, 2015 New York
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    "We will have helped a significant number of people realize the upside of having equity in something, being a part of the American Dream!”
    .....& we'll no longer be doing that. :wink:
     
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  11. jesskidden

    jesskidden Poo-Bah (1,916) Aug 10, 2005 New Jersey
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    Australian and Japanese corporate executives have dreams, too....:grin:
     
  12. JackHorzempa

    JackHorzempa Poo-Bah (4,325) Dec 15, 2005 Pennsylvania
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    And perhaps when this new definition for what constitutes a "craft brewery" comes out perhaps Founders Brewing will be welcomed back?

    Cheers!
     
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  13. jesskidden

    jesskidden Poo-Bah (1,916) Aug 10, 2005 New Jersey
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    In the meantime, it sounds like they're giving up:
    Brewers Association president and CEO Bob Pease shared the following statement on the proposed New Belgium sale to Lion.

    “As mass market lager and light lager have been volume challenged in developed markets, we’ve seen global brewers look to tap into the dynamism of the craft segment. The craft brewing market has also become considerably more competitive in recent years, particular for regional brewers with a widely distributed footprint and significant capacity. A decade of double-digit growth for craft brewers has decelerated into a more mature market. As such, global brewers acquiring small U.S. brewers has generally slowed as a trend. Every brewer will make their own independent decision about how to respond to this competitive market, and we’ve seen a number of independent brewers choose acquisition by a strategic partner as their route.”

    Even more succinct:
     
  14. thesherrybomber

    thesherrybomber Initiate (146) Jun 13, 2017 California
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  15. officerbill

    officerbill Devotee (436) Feb 9, 2019 New York
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    From the owner's letter
    The article
    New Belgium is at number 4 (5 if you agree Pabst is now a craft brewery :wink:) and has reached a point where they can no longer grow on their own. Using their own resources it's unlikely they would ever be able to displace SN, let alone Boston, and would always have to worry about fending off 5, 6, and 7.

    The company has peaked under the current ownership system and the only way to raise the capital needed to expand (additional/modernized facilities, wider distribution, increased advertising) is to either go public or find a larger brewery to subsidize that expansion; one who shares your goals & ideals, which Kirin apparently does.

    Over the past couple of years many of the larger craft breweries have either sold to big breweries or formed some sort of cooperative umbrella. You'll see more of that as breweries are squeezed by big multinationals on one end and micro/locals on the other.

    In 2019 New Belgium is a desirable addition to a big brewery's portfolio so the owners can negotiate a good deal, who knows if that would hold true in 2021.
     
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  16. MNAle

    MNAle Poo-Bah (1,661) Sep 6, 2011 Minnesota
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    If the Brewers Association gives up on their increasingly quixotic quest to define a market segment on their own terms, then perhaps the term "craft beer" can be then be used by rational people.

    Also, as I've posted before, I believe their definition of "Independent" is also illogical, if, indeed, it is intended to imply that a brewer is in control of his own choices. That is, breweries owned by private equity firms or venture capital firms are still considered to be "independent" by the BA, when clearly they are not independent in a normal use of the word.
     
  17. joerooster

    joerooster Initiate (52) May 15, 2018 Virginia

    If you're drinking NB in 2019, get your head out of your ass. They are the definition of mediocrity with a terrible lineup of IPAs.
     
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  18. JackHorzempa

    JackHorzempa Poo-Bah (4,325) Dec 15, 2005 Pennsylvania
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    Given the current craft beer market conditions (i.e, the rate of craft beer consumption as measured by volume slowing down in comparison to 5 - 10 years ago) does it make any sense to you for New Belgium to be considering "expansion" right now (or the near future)?

    Cheers!
     
  19. officerbill

    officerbill Devotee (436) Feb 9, 2019 New York
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    This came up in the Pabst thread. By the BA definition Pabst is an independent craft brewery.

    @JackHorzempa
    The expansion would come by going international and/or greatly increasing mainstream advertising and brand recognition. Things the will be able to do now.
     
    #99 officerbill, Nov 20, 2019
    Last edited: Nov 20, 2019
  20. donspublic

    donspublic Poo-Bah (1,807) Aug 4, 2014 Texas
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    I think yes, but probably not here in the states. This is just another riff on the Heineken/Lagunitas deal where I am sure NB will start having a presence in other parts of the world
     
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  21. dele

    dele Initiate (55) Mar 13, 2019 Massachusetts

    And here's the point of frustration for me and presumably others. Why does New Belgium need to expand? This company has built a highly regarded brand that is a major part of the community and identity of its city. It employs hundreds of people at above average wages, stimulates its local economy, and does all of this in an industry that both satisfies its proprietors creatively and intellectually and brings a wonderful product to millions of people.

    But this isn't good enough. Apparently New Belgium can't be satisfied with being one of the best-respected beer brands in the country. What matters is growing MORE, retaining or improving its position in a meaningless ranking system. Continued expansion, continued growth. But for what purpose? More profit? Probably so, but at what cost to the company's image, to the employees who have made it what it is, and to the community that they live in and support? Why does New Belgium have to be bigger than number 3 to be successful? Who cares if it gets passed by number 5? What's wrong with just being a damn good brewery that supports great people by making a great product?

    It's a sad world when a supremely successful business can't be happy with simply maintaining its success, but instead has to pursue continued growth and expansion to such degree that it throws out the independence that made it successful in the first place.
     
    #101 dele, Nov 20, 2019
    Last edited: Nov 20, 2019
  22. JackHorzempa

    JackHorzempa Poo-Bah (4,325) Dec 15, 2005 Pennsylvania
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    Does the Brewers Association ‘know’ that?

    On their website’s list of members there is no upside down bottle icon associated with Pabst, they are denoted as being an “Associate Member”, and there is a statement of “Greater than 25% ownership by Pabst Brewing Co (Corp office)” which intimates that Pabst in not an independent craft brewery.

    https://www.brewersassociation.org/directories/breweries

    Cheers!
     
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  23. Brewday

    Brewday Initiate (148) Dec 25, 2015 New York

    I would guess the equipment to brew some of their own brands and distribution into a crowded market. No doubt their taking a huge risk. I wonder if we'll see employees throwing boomerangs instead of riding bikes.
     
  24. JackHorzempa

    JackHorzempa Poo-Bah (4,325) Dec 15, 2005 Pennsylvania
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    It will be 'interesting' to see how well New Belgium branded beers will sell overseas.
    I am not a big believer that "adverting" is the panacea for increasing beer sales. It seems to me if this was the best strategy then AB and MillerCoors would not be in such dire straits as regards beer sales of their products.

    I have had a number of New Belgium products from Fat Tire to their Belgian beers to Voodoo IPAs to... They make good beer but nothing that 'stands out' compared to competing craft breweries. I suppose they could 'throw some money' at their advertising budget but I would be greatly surprised if this led to a cost effective increase in domestic beer sales.

    Cheers!
     
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  25. southdenverhoo

    southdenverhoo Disciple (389) Aug 13, 2004 Colorado

    you know, given Heinekin's relationship with Cuahtemoc and OXXO, I really thought by now I would be seeing at least Lagunitas IPA in the OXXO 50 feet from the condo I stay at in Puerto Vallarta, or the OXXO 250 feet from the condo, or the OXXO 300 yards from the condo, or the one 400 yards from the condo...

    so far, no such luck.

    Are there parts of the world outside the US where Lagunitas is readily available? I've mostly been in Mexico every time I've left the country, the last 4 years.
     
  26. donspublic

    donspublic Poo-Bah (1,807) Aug 4, 2014 Texas
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    They made a big push into the UK after the merger. I don't think Mexico is on anyone's radar as far as craft beer (they have some local breweries and they are doing quite well in the more affluent areas, my daughters brought me back a few bottles when they were in Mexico City and they were well made). They will most likely try to push into markets where there is $$ to be spent and a lack of existing breweries. But I think this is only short term as when other regions meet the pace of the US market they are going to find themselves in the same situation there.
     
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  27. southdenverhoo

    southdenverhoo Disciple (389) Aug 13, 2004 Colorado

    Thanks. I'll be in London in June, will be mostly drinking cask ale in pubs but will look to see how Lagunitas is represented. Probably won't be drinking anything I can get at home though!

    I figured England as obvious first step.

    PS Colima's Piedra Lisa is an excellent and sessionable tropical IPA, probably the main thing I drink in PV other than Bohemia Oscura and the beers at Monzon Brewing Co.
     
    #107 southdenverhoo, Nov 20, 2019
    Last edited: Nov 20, 2019
  28. JackHorzempa

    JackHorzempa Poo-Bah (4,325) Dec 15, 2005 Pennsylvania
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    The “craft” beer scene is getting competitive in many places.

    There are above posts mentioning the UK and London. There is now a “craft” beer drinking experience in London referred to as the Bermondsey Beer Mile where you can do a 1+ mile beer stroll and drink “craft” beer from 16 different breweries/taprooms. You can read more here:

    https://secretldn.com/bermondsey-beer-mile-guide/

    Cheers!
     
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  29. officerbill

    officerbill Devotee (436) Feb 9, 2019 New York
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    Personally I believe any significant Founder's growth will come from the European & Indian presence of Mahou while NB will grow with Kirin's knowledge and position in the Asian market.

    How much name recognition does New Belgium have among the average beer drinking public? I have a vague recollection of maybe seeing a Fat Tire ad, but, TBH I can't swear I've ever seen a New Belgium ad. An ad campaign for their more mainstream beers would probably garner though new business to subsidize the beers I buy.
    Thanks for that link, we'll be there next September
     
  30. JackHorzempa

    JackHorzempa Poo-Bah (4,325) Dec 15, 2005 Pennsylvania
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    Needless to say I have no corporate knowledge here. I have seen many a New Belgium ad via the print medium (e.g., beer magazines, etc.).

    There is little doubt that increased advertising will increase name recognition but I will circle back to what I posted earlier: "I would be greatly surprised if this led to a cost effective increase in domestic beer sales."

    Needless to say but Marketing/Sales folks will opine that increasing their advertising budget is a wise investment but hopefully there is some COO person in charge that has the ability to discern BS.

    Cheers!

    P.S. ‘Results’ of AB spending millions of dollars for Super Bowl advertising:

    “America’s top-selling beer was off 8.8 percent in the four-week period since the Super Bowl, deteriorating significantly from its previous sales trend and plunging the brand farther into the red for 2019, according to Nielsen all-outlet and convenience data through March 2.

    The results offer the first comprehensive look at Bud Light’s performance since it spent millions airing a series of TV spots taking aim at Miller Lite and Coors Light for using corn syrup as an ingredient.

    And instead of winning over drinkers with its promises of “transparency,” the opposite appears to be happening: Since the new campaign launched, Bud Light sales volume is off 9.2 percent, compared to down 6.7 percent in the 12-weeks leading up to the Super Bowl. The brand’s share of total beer also worsened, down 1.2 points of share versus down 1.1 points heading into the holiday, per Nielsen.”
     
    #110 JackHorzempa, Nov 20, 2019
    Last edited: Nov 20, 2019
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  31. Genuine

    Genuine Devotee (437) May 7, 2009 Connecticut

    Basing it off of what they're responsible for and the knowledge that goes into it, I wouldn't have expected minimum wage or less. A brewery can be a very dangerous place. Then again, it is a job in production.
     
  32. officerbill

    officerbill Devotee (436) Feb 9, 2019 New York
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    I guess I just don't subscribe to the magazines NB advertises in.
    I feel like, with the exception of Mich Ultra, Big Beer advertising had been aimed more toward keeping their customers than gaining new ones. I really don't know how effective a Blue Moon, Corona, Dos Equis, or even a Stella Artois style ad campaign would be, but now New Belgium has the money to try.
     
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  33. southdenverhoo

    southdenverhoo Disciple (389) Aug 13, 2004 Colorado

    here's what I could piece together re their volume. Some from Wikipedia, some from Brewbound, some from the Fort Collins Daily Coloradan:

    2013 792,000 bbl
    2014 945,000 bbl (!)
    2015 914,000 bbl (first year-over-year decline)
    2016 958,000 bbl
    2017 955,000 bbl (second y-o-y decline, but tiny)
    2018 can't find, maybe jesskidden can help (I don't have a New Brewer subscription any more)

    I know they are frequently said to have capacity of 1.5 million bbl combined between Ft. Collins and Asheville, and that Asheville is frequently said to have cost $140M (Forbes, July 2017) or maybe even $175M (Asheville Citizen-Times, September 2014), so it wouldn't surprise me if they are both cash-strapped and in need of new markets to more efficiently use their production capacity surplus.

    edit to add: Lagunitas, for some of those years, per an October 2018 story in goodbeerhunting.com:
    2015 791,000 bbl
    2016 921,000 bbl
    2017 984,000 bbl
     
    #113 southdenverhoo, Nov 20, 2019
    Last edited: Nov 20, 2019
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  34. Crusader

    Crusader Aspirant (296) Feb 4, 2011 Sweden

    As per New Belgium's website from june 2019 they sold 844,937 bbls in 2018, so quite the drop in sales inbetween 2017 and last year.
     
  35. southdenverhoo

    southdenverhoo Disciple (389) Aug 13, 2004 Colorado

    I couldn't get to it on the site--904 error, forgot about the wayback machine. So that's an 11.5% drop year over year.
     
  36. JackHorzempa

    JackHorzempa Poo-Bah (4,325) Dec 15, 2005 Pennsylvania
    Society

    So, in summary:

    2013 792,000 bbl
    2014 945,000 bbl (!)
    2015 914,000 bbl (first year-over-year decline)
    2016 958,000 bbl
    2017 955,000 bbl (second y-o-y decline, but tiny)
    2018 844,937 bbls

    The percentage change drop from 2017 to 2018 is -11.52% which is quite significant.

    So a combination of having the brewing capacity of two large brewing facilities (and likely a significant debt load for the newer brewery in Asheville) plus declining beer sales seems to be quite a financial burden for New Belgium Brewing.

    I suppose that Lion Little World Beverages (Kirin Holdings Company Limited) with a ‘broader’ business plan thinks they can turn things around and make New Belgium Brewing a financial success going forward?

    Cheers!
     
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  37. CigarDawg

    CigarDawg Disciple (344) Apr 14, 2011 Georgia
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    As long as you can find another job quickly and put away what's let after taxes and let it grow until you retire for good. Otherwise, not such a great deal if you have to live off of it until you can find another job.

    UPDATE AFTER READING OTHER POSTS: If this amount represents just a cash-out of their ESOP, then they won't be able to touch it without penalty and life will go on, whether at the same place under different corporate oversight or on the street looking for a new place without a cushion.
     
    #117 CigarDawg, Nov 20, 2019
    Last edited: Nov 20, 2019
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  38. MNAle

    MNAle Poo-Bah (1,661) Sep 6, 2011 Minnesota
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    I agree with this, but it cuts both ways.

    That is, if someone can be trained to do a job in a day or so, or a week or so, then the wages will be low, I would expect. If the person becomes dissatisfied with their pay, and quits, the loss to the company is not great. Hire another person, train them in a day or two, and carry on. Basically, the wages are set high enough so the company can be choosy (regarding such things as character, reliability, etc.), but they don't have to be too high since training a replacement is so cheap. Example: Walmart, etc.

    In a brewery, the brewer(s) are highly skilled, need to have specialized knowledge, creativity, etc., for sure, and have a lot of influence over the success and reputation of the company, and should be compensated for that.

    If the brewery is large enough to have a lab for quality control, then the lab workers would have specialized knowledge.

    The tap room staff are hospitality workers, like you would find in any restaurant or bar. If there is a requirement for cicerone training, or the like, then I would expect that knowledge to be compensated; otherwise, they are wait staff.

    Other than that, what kind of specialized knowledge is needed by the remainder of the workers? I don't know enough about the operations side to say, but I would expect some to be relatively low skilled workers, lugging sacks and kegs around, cleaning tanks, etc.
     
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  39. southdenverhoo

    southdenverhoo Disciple (389) Aug 13, 2004 Colorado

    per Forbes Kirin already owns 24.5% of Brooklyn which owns undisclosed percentages of both 21st Amendment and Ft Collins's other brewery (well, one of them), Funkwerks. Also as part of the New Belgium deal Kirin gets 100% of Magnolia.

    So they're putting together a portfolio kind of like CBA. Or CanArchy, or whoever.

    (speaking of which I didn't know until poking around today that Kona is going to sell 500,000 bbl of beer in 2019. And growing fast.)
     
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  40. thuey

    thuey Aspirant (286) Nov 13, 2015 California

    I know you're just trolling, but ...

    "terrible lineup of IPAs" - like that is the stick all breweries should be measured by? :rolling_eyes:

    Granted I don't like most of their portfolio, but Err on the Side of Awesome was pretty... awesome.
     
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