Victory Brewing Company and Southern Tier Brewing Unite Under New Holding Company

Further blurring the line* between "craft" and "macro", some more info on some of Southern Tier's current management, From Brewbound:

John Coleman previously was the Pabst Brewing Company president and COO during the short Metropoulos era. "Prior to joining Pabst, Coleman spent more than 22 years as a vice president of sales with Anheuser-Busch InBev."

ST's VP of sales and marketing, Brendan Smith, had a "17-year career at Anheuser-Busch, where he climbed to the rank of senior sales director in both North Carolina and South Carolina".

Southern Tier Brewing has hired Sean Lavery, a former Anheuser-Busch (A-B) brewmaster, to serve as its newest director of brewing, the company announced this week.

Bill Wild's LinkedIn entry shows he was an Anheuser-Busch executive (numerous positions) from 2001-2013.
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* Of course, that "line" was never too exact, and contrary to the myth of "Craft Beer" promoted by the Brewers Association and others, brewers and other personnel have come from the "macro" side of the industry almost from the beginning of the "craft" era in the US.

 

Hmm, my first thought is, "What the Helles going on here?"

 

I am so confused. What the point of this transaction? It this basically ST buying a piece of Victory?

 

I wonder if this is the ultimate future for midsize and regional craft breweries. Otherwise growth gets very tricky. On a regional and national level you're fighting the macro beer marketing machine for the public's attention, and market by market you're competing with several beloved locals. The ultimate path may be consolidating marketing and production efforts so you can effectively stay competitive on price.

 

None of these happenstances should surprise anyone, but this one kinda did! It's all about money, marketing networks, and the growth of the industry. Going forward, I would assume that many unexpected alliances will have been in the works for a good while, and we'll see them being reported with a growing regularity. It makes room for more small great breweries and should never be seen as a threat to anyone.....except for maybe some of the BIG companies.

 

You could have stopped there.

Cheers!

 

Seems smart. Increased purchasing power has to help with supply chain. They can prolly brew at each others facilities if capacity becomes an issue. Joint sales efforts. I wish them luck.

 

As long as quality doesn't drop (especially you, Victory... Which happens to be one of my absolute favorite breweries), power to them. If they can maintain the quality, increase product and reduces costs and all that... Perhaps they are a gateway for other craft breweries expanding in the future to help with distribution and such... Think about it, BMC owns almost all of the distro stuff now, right? Maybe this is to create a bigger competitor against the BMC products going forward.

Let's just hope it all goes well...

 

I'll be waiting for all you "drink independent" people to add your Victory and Southern Tier swag and cellared bottles to your boycott list with your Oskar Blues, Dogfish Head, Ballast Point, Terrapin, Goose Island, Boulevard, Ommegang, Elysian, 10 Barrel, St. Archer, etc. burn pile.

Oh wait, that would require that crowd to be intellectually honest with themselves about how the beer industry works....

 

Until someone actually bashes them over this move, that's a lovely Straw Man you got there.

 

Ah here we go. Some background from 2014:

So this is basically the second PE deal in the craft beer space made by Ulysses.

 

Not sure exactly what you mean by "distro stuff" but if you're suggesting that Anheuser-Busch and MillerCoors owns "almost all" the beer distributors in the US, that's not right.

AB owns about two dozen of their approx. 500 distributors, MillerCoors owns one (or two) of theirs. The rest of the 3,300 (NBWA figure) beer wholesalers in the US are independently-owned.

 

I'll bet you a case of beer it happens within 24 hours.

 

For a situation like this one we're seeing described above I suspect self-protection could be a bigger factor than the money per se.

 

I think two independently owned craft breweries combining is a little different than some of the complete buyouts you listed above.

I have no problem with this, it seems odd since the two companies are fairly geographically close together. I don't immediately see how this improves distribution for either company. I wonder if being a larger commodity as a joint ABV company helps them to be more appealing to other breweries/investors interested in the group.

 

A little more info from Philadelphia's leading beer writer:
http://www.joesixpack.net/2016/02/16/exclusive-victory-joins-southern-tier-in-private-equity-deal/

 

Perhaps. I like to hope not. But I'm naive.

I think there's a pretty big difference between an investment firm buying part or all of a brewery (or two craft brands merging), and supporting a brand that is in AB's cabal of fake craft brands that they use (many times illegally) to reduce consumer choices and bully the market. And no, I don't and will not buy Bourbon County.

 

Interesting stuff. No where does it mention how much capital is being put in for how much ownership. Unless I missed something.

 

Very interesting. We get Southern Tier around here, although not all of their offerings. I haven't seen any Victory on the shelves. Maybe we'll start getting it all...?

I also find their new name abbreviation funny. Did they plan that out?

 

They're "partnering" (this is another word for being purchased) by a New York private equity fund. It isn't a couple of small breweries deciding to join together to grow. The logical goal for Ulysses Management is to either cash out via IPO or eventual sale to another beer marketing company/macro brewery.

Erm, if you want to call....really anything from Goose Island, 10 Barrel, Elysian, Golden Road, etc. "fake craft", I suppose that's your right, but that doesn't make you right. So, are we on? Case of beer of loser's choice, shipping included to the winner if this is deal is/isn't bashed in this thread within 24 hours.

 

Quick cash infusion for expansion while maintaining some ownership. The other option is to go to a bank and take out a loan and pay interest. I guess the amount of ownership given up is less than the interest on a bank loan?

 

This will be a craft brewer. Independent of any alcoholic beverage firm that is not a craft brewer.

And I have not heard that hiring someone from big beer disqualifies a brewery as craft. So many straw men around here.

Or maybe people pissed that an ABI acquisition target got snatched away?

 

A question for the business experts out there:

The Brewers Associations definition for a craft brewery has the part of: “Independent - Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer.”

As I understand this new business structure, both Victory and Southern Tier are owned by “parent company Artisanal Brewing Ventures (ABV)”.

In the original post: “About Artisanal Brewing Ventures

Artisanal Brewing Ventures is located in Charlotte, NC and was formed by Phin and Sara DeMink and Ulysses Management LLC, a New York based family office, with the vision of creating a home for like-minded, best-in-class craft breweries in close partnership with their founders.”

Is Artisanal Brewing Ventures an “alcoholic beverage industry member”? To the best of my knowledge ABV is not a craft brewer per se.

I suppose a simpler question is does this newly created business create issues wrt defining Victory and Southern Tier as being craft breweries under the current Brewers Association definition?

Cheers!

 

Note ABV owned a minority stake in ST. It is not clear to me what their stake in the combined ST/Victory will be. Anyone know?

 

What is it that leads you to believe that Ulysses is purchasing the whole shebang (Victory, Southern Tier, ABV) rather than being a limited partner in ABV?

 

I think the likely (but intellectually questionable) answer is that they will no longer be a craft brewer per the current brewer's association definition, but considering how hard the brewers association works to keep anybody who isn't purchased by AB/MC as a craft brewer with their constant moving the goalposts to accommodate Sam Adams, Yuengling, etc. that there will likely be some carve-out for just this scenario.

 

Oskar blues essentially took out a loan from a private equity firm. That's not really the same thing as Elysian, 10 Barrel, Ballast Point, or Goose Island.

 

Seems to me the best thing to do is wait to see how this shakes out for Victory and Southern Tier and if it works, how it may affect other mid-sized regional breweries. If this becomes a trend, there may be some hope for calling all brewed beverages "beer".

 

I don't trust the unwashed masses quite that much

 

Another Wall Street plot...We'll see how this play ends very shortly, folks..Cheers!

 

MWA mentions Ommegang, which BA still considers a craft brewery. Is this that different?

 

Ommegang is owned by another brewer (Duvel Moortagat) considered by the BA to fall under the craft brewery umbrella.

 

From a post above:
"Southern Tier, a rapidly growing regional craft brewer located in upstate NY, has sold undisclosed stake to family office Ulysses Group. (That stake is a majority, CBN understands). And simultaneously, Southern Tier has hired a new prexy, John Coleman, formerly prexy of Pabst Brewing, an AB region vp out west and a NY native. John starts Monday.

Deal allows owners Phin and Sarah DeMink to simultaneously cash out and stay in. They retain stakes in company, but get infusion of patient capital from Ulysses Group, which has sought to enter beer space before, even looked at a sizable beer distrib."

 

Magic Hat/Pyramid's former parent company was called "Independent Brewers United" (IBU).

They haven't made a lot of exceptions for the "Independent" clause - Anchor (owned by Griffin Group) and Gambrinus (began life as one of two US Corona importers) being the notable ones. But Redhook/Widmer/Kona-CBA and Mendocino/Olde Saratoga are all "non-craft" because of their ownership. I think the B.A. has stated that Lagunitas and Founders will drop off the "Craft" list but Duvel Moortgat-owned Firestone Walker/Boulevard/Ommegang will remain?

Did anyone imply it was? I think the hiring of AB and Pabst execs is very interesting - but I think it's probably the craft beer geekery's kneejerk reaction to those hirings that had them leave that info off the Press Release, but facts they are.

One might suppose they have the experience and the desire to compete with their former employer.

 

This is not a Victory for taste.

 

ABV owns 100% of Southern Tier and Victory.

 

I wonder how this will change things, if at all. Increased distribution, better pricing? (though ST and Victory already have pretty stellar pricing for the quality). Either way, as long as the quality doesn't change, I doubt I'll see much of a difference here, considering my proximity to both breweries (Though Victory's line-up could be a little more robust here- ST is already everywhere and in quantity)

 

And what fraction of ABV do the former owners of ST and Victory hold? That's the key consideration, I'd think.