May 12, 2019 at 04:32AM
On Thursday, Boston Beer, makers of Sam Adams, and Dogfish Head Craft Brewery shocked the beer world by announcing that the two independent breweries would merge.
More specifically, Boston Beer acquired a controlling stake in Dogfish, bought with Boston Beer stock. Founder and longtime craft beer cheerleader Jim Koch, majority owner of Boston Beer became the majority owner of Dogfish. While the Dogfish owners—and craft cheerleaders—Sam and Mariah Calagione, became the second largest owners in both operations.
In an age of beer when the biggest craft brewers are getting acquired by huge beverage companies, like Ballast Point selling for a $1 billion to a wine and liquor conglomerate, and Lagunitas went for an undisclosed but likely similar amount to Heineken, how does the second largest craft operation buying the 13th largest compare? Or more most importantly, what the hell does it mean for the beer?
"The shortest answer is nothing," says Sam Calagione (pictured left). "But our beers will be easier to find, so drink the shit out of Slightly Mighty IPA even if we're at 88-percent capacity on our canning line."
Sam, always a straight shooter, is likely right nothing will change for the consumer. And that's largely because of the merger. That canning line capacity problem he mentions is very real.
Earlier this spring, Dogfish launched a 95-calorie IPA named Slightly Mighty (we're fans). Their initial plan was to brew 5,000 barrels (10,000 kegs or 69,000 cases), but a flood of orders now puts their projections for the beer closer to 40,000 barrels. Continued growth, says Sam, would force the brewery to install additional canning lines at a cost of at least $20 million.
Now with access to brewing capacity at Boston Beer's facilities, our stream of low-cal IPA (as well as cans of 90 Minute IPA, also growing) will remain uninterrupted.
But there are better reasons to merge than avoiding a new canning line. Both companies may seem strong, they're everywhere after all. But Boston Beer and Dogfish are getting pinched in the middle of the beer market. Below are thousands of smaller taproom-based brewers (rightfully) gobbling up local dollars with their fresh-as-fresh-can-be beers. And above are the international giants of Anheuser-Busch InBev, MillerCoors, and Heineken that have the market share and money to sway the market regardless of taste. Combined, Boston and Dogfish will still comprise less than 2 percent of the U.S. beer market.
Even if Boston is holding steady and Dogfish continues to grow, Koch and Calagione know the beer market is as competitive as it's ever been. And the longtime allies saw an opportunity to strengthen both brands with complementary strengths. In short, Dogfish is a leader in being a loud and proud brand capable of creating the most dedicated followers. And Boston Beer offers the marketing, business, and operational acumen to run a true coast-to-coast brand (Dogfish is currently in 44 states).
Both have expanded beyond just beer to what they describe as, other beverages for beer drinkers. Boston Beer has Truly hard seltzer and Angry Orchard hard cider, and Dogfish has it spirits distillery. Calagione also points out, half joking, that he could help the Sam Adams team make a continuously-hopped (like their 60 Minute IPA) lager, should they feel the need.
Yes, the announcement was a surprise for the beer drinkers, the important news is that Dogfish Head's growth can continue uninterrupted as we hit summer beer-drinking season.
On Thursday, Boston Beer, makers of Sam Adams, and Dogfish Head Craft Brewery shocked the beer world by announcing that the two independent breweries would merge.
More specifically, Boston Beer acquired a controlling stake in Dogfish, bought with Boston Beer stock. Founder and longtime craft beer cheerleader Jim Koch, majority owner of Boston Beer became the majority owner of Dogfish. While the Dogfish owners—and craft cheerleaders—Sam and Mariah Calagione, became the second largest owners in both operations.
In an age of beer when the biggest craft brewers are getting acquired by huge beverage companies, like Ballast Point selling for a $1 billion to a wine and liquor conglomerate, and Lagunitas went for an undisclosed but likely similar amount to Heineken, how does the second largest craft operation buying the 13th largest compare? Or more most importantly, what the hell does it mean for the beer?
"The shortest answer is nothing," says Sam Calagione (pictured left). "But our beers will be easier to find, so drink the shit out of Slightly Mighty IPA even if we're at 88-percent capacity on our canning line."
Sam, always a straight shooter, is likely right nothing will change for the consumer. And that's largely because of the merger. That canning line capacity problem he mentions is very real.
Earlier this spring, Dogfish launched a 95-calorie IPA named Slightly Mighty (we're fans). Their initial plan was to brew 5,000 barrels (10,000 kegs or 69,000 cases), but a flood of orders now puts their projections for the beer closer to 40,000 barrels. Continued growth, says Sam, would force the brewery to install additional canning lines at a cost of at least $20 million.
Now with access to brewing capacity at Boston Beer's facilities, our stream of low-cal IPA (as well as cans of 90 Minute IPA, also growing) will remain uninterrupted.
But there are better reasons to merge than avoiding a new canning line. Both companies may seem strong, they're everywhere after all. But Boston Beer and Dogfish are getting pinched in the middle of the beer market. Below are thousands of smaller taproom-based brewers (rightfully) gobbling up local dollars with their fresh-as-fresh-can-be beers. And above are the international giants of Anheuser-Busch InBev, MillerCoors, and Heineken that have the market share and money to sway the market regardless of taste. Combined, Boston and Dogfish will still comprise less than 2 percent of the U.S. beer market.
Even if Boston is holding steady and Dogfish continues to grow, Koch and Calagione know the beer market is as competitive as it's ever been. And the longtime allies saw an opportunity to strengthen both brands with complementary strengths. In short, Dogfish is a leader in being a loud and proud brand capable of creating the most dedicated followers. And Boston Beer offers the marketing, business, and operational acumen to run a true coast-to-coast brand (Dogfish is currently in 44 states).
Both have expanded beyond just beer to what they describe as, other beverages for beer drinkers. Boston Beer has Truly hard seltzer and Angry Orchard hard cider, and Dogfish has it spirits distillery. Calagione also points out, half joking, that he could help the Sam Adams team make a continuously-hopped (like their 60 Minute IPA) lager, should they feel the need.
Yes, the announcement was a surprise for the beer drinkers, the important news is that Dogfish Head's growth can continue uninterrupted as we hit summer beer-drinking season.