The last week of August saw a lot of turbulence in the craft/independent beer business.

There have been a lot of headwinds slowing growth in sales, but as of now, have not slowed the growth of the number of breweries opening. In 2010, there were just 1,700 breweries in the United States. At the beginning of 2019, there are more than 7,000 breweries.

Increased competition, slower growth, lack of shelf space and pressure to sell to multinational corporations have all affected the industry in massive ways.

Locally, the largest news of the week was the majority buy out of Founders Brewing Company of Grand Rapids, Michigan by Spanish minority partner Mahou San Miguel Group. In December 2014, Founders co-founders Mike Stevens and Dave Engbers struck a deal to sell a 30-percent stake in the company for a reported $96.3 million. Under the terms of the original contract, Mahou San Miguel would have an option to purchase the remainder of the company after the fifth year of the deal. It is reported that this purchase is a different agreement than that of the original terms, and the full purchase price has not been disclosed at this time.

The original influx of money allowed Founders to expand their operations to both a fully national as well as international markets. Long in the shadows of Comstock, Michigan based Bell’s Brewing, Founders surpassed the production level of their in-state neighbor to become Michigan’s largest brewery in 2017 and the first Michigan brewery to be available in all 50 states earlier this summer.

Under the terms so far released, Mahou San Miguel will hold a 90-percent stake in Founders beginning in January, with Stevens and Engbers each retaining a 5-percent ownership stake. The purchase will also clear the books of a number of minority owners. Day-to-day operations and management is not expected to change with this purchase, with the current Founders hierarchy remaining intact.

Another partnership that appears to not be working is Anheuser-Busch InBev with Craft Brew Alliance. A-B, which owns a 31.4-percent stake in CBA had an Aug. 23 contractual deadline to either make an offer of at least $24.50 per share to purchase the remainder of the company or pay a one-time $20 million fee. Although many expected the purchase to go through, A-B opted for the one-time payment, putting the future of this partnership in question.

Portland, Oregon based Craft Brew Alliance is the parent company for national and regional brands including Kona Brewing, Widmer Brothers, Redhook, Omission, Square Mile Cider, Wynwood Brewing, Cisco Brewers and Appalachian Mountain Brewing, plus a joint startup venture pH Experiment that is working on emerging categories like hard seltzers, canned cocktails and non-alcoholic marijuana beers.

This payment will not effect the current terms of the partnership which allows the Anheuser-Busch wholesale network to continue to distribute the beers and for A-B breweries to continue to brew the beers. (This is why you’re Kona Beer is most likely brewed in Portsmouth, New Hampshire or Fort Collins, Colorado.) Both stocks have been hurt by the announcement, with Anheuser-Busch (BUD) down in the 1-2 percent range following the announcement and Craft Brew Alliance (BREW) off more than 30 percent since the news.

With craft/independent beer growing in the low single digits and macro brews volume trending flat (which is actually an improvement), look for more turbulence in the beer business ahead.

Matt Thomas is a cicerone at Gay’s Hops-N-Schnapps.

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