Why Avery Brewing Selling a Minority Stake Shouldn’t Come As a Surprise

Here we go again. Another day, another beloved brewery is breaking hearts in the craft beer community by relinquishing full ownership of their business. In case you’ve been living under a rock for the past 24 hours, Colorado-based Avery Brewing Company sold a 30 percent stake in its brewery to Mahou San Miguel, a Spanish brewing conglomerate that also quietly acquired a 30 percent stake in Founders Brewing Company in 2014. The news came as quite a shock to devout Avery fans who can’t get enough of the brewery’s barrel-aged flavor bombs that constantly push the boundaries of ABV percentages. But at the end of the day, the news shouldn’t come as a surprise to anyone considering that one of the most consistent trends in the craft beer industry over the past five years is news of bombshell buyouts of mid-size regional breweries following spendy expansions.

Citing exciting growth and expansion opportunities for the brand, Breckenridge Brewery sold out to Anheuser-Busch’s “High End” at the tail end of 2015, just months after the brewery opened the doors to a brand new $35 million, 85,000 square foot brewery located on 12 acres in Littleton, Colorado. When North Carolina-based Wicked Weed Brewing announced their sale to AB-InBev in May of 2017, the craft brewery, who initially entered the market in 2012, had quickly grown to include four facilities in Asheville, one of which a 40,000 square foot, 50 barrel production brewery that opened in July of 2015. When Lagunitas sold a 50 percent stake in the brewery to Heineken International in the summer of 2017, the deal came just three years after the brewery signed a lease to open a second brewery in the city of Chicago, and two years after the announcement of a third brewery location in construction in Azusa, California. Heineken would go on to complete the full buyout of the brand in 2017. In 2011, Boulevard Brewing Company underwent a $3 million dollar expansion of its original brewery in Kansas City. In 2013, the popular midwest brewery was acquired by Duvel Moorgat Brewery for an undisclosed amount. Sensing a pattern here? In an always-changing and fast-growing craft beer industry, the regional brewery is feeling the big squeeze. No longer able to enjoy the simplicity of simply being the local taproom, mid-size breweries with a regional or national footprint are feeling the pressure, and that pressure isn’t just coming from outside investors waiting on the sidelines to snatch up the financially wounded — the pressure begins with craft beer drinkers.

As craft beer consumers, we demand a lot from our favorite breweries. We want the freshest and highest quality of beer. We want more options to choose from. We want our breweries to keep up with ludicrous beer trends. And we want them to expand, to distribute the beers we like to drink far and wide so that we can imbibe on our favorite hometown brews across the country and overseas. But we don’t have the same brand loyalty that we did ten years ago, during a time when the breweries we patronized the most were wrapping up meetings with their accountants and lawyers and business advisors and moving forward with multi-million dollar brewery expansions to capitalize on the exponential growth taking place in the industry, that at the time, didn’t show any signs of slowing. When that second boom of craft breweries flooded the market, revenue growth at breweries across the board started to level out, slowing down from triple and double digit growth to something that reflected a much more normal growth rate for any industry — a change that weighed heaviest on the breweries that had stretched beyond their cash flow to expand.

When that time came, Adam Avery and his family-owned brewery had already signed on the dotted line to begin construction on a $27 million brewery. But it wasn’t just any old commercial production facility that Avery set out to build. It was his dream brewery — something he’d been saving and planning for from the space-deprived hodge podge of buildings in the famed alleyway he had been brewing in since opening Avery Brewing Co. with his dad Larry in 1993. Avery finally pulled the trigger and broke ground on his new 67,000 square foot brewery in 2014, and in 2015, he opened the doors to his dream brewery to the public for the first time, and people loved it. Beer drinkers traveled from all over the gawk at the collection of 720-barrel fermenters that make up the facade of the west side of the brewery. Brewers and homebrewers were in awe at the shiny, fancy new brewery’s automated brewing system which increased efficiency in the brewhouse. And curious visitors meandered along a suspended catwalk on educational self-guided tours of the new facility. In addition to making their way onto the list of the top 50 craft breweries in the country, Avery’s new location also came with the space to open a taproom and restaurant onsite, both of which were equipped with 30 different taps.

When the news broke on Tuesday morning that Avery had handed over a 30 percent stake in his longtime dream, the announcement was delivered along with a personal message from Avery to fans of the brewery with a refreshingly transparent take on the deal. Instead of falling back on fumbled words and blanket statements championing the new growth opportunities the partnership would bring, Avery took a moment to acknowledge the cost of the new brewery, and the debt he had acquired to see his dream come to fruition. In a series of interviews in response to the announcement, Avery recognized that the acquisition will allow the brewery to pay off debts incurred while building the new brewery, affirming that the acquired debt was a factor in making the decision to partner with an outside investor, but wasn’t the only factor. In an interview with Brewbound, Avery said, “We didn’t have to do this. It was an unbelievable opportunity. There is a huge debt reduction, and a bunch of cash to the balance sheet and quite a large sum of money going to employees,” who he notes will be receiving an “appreciation bonus.” In addition to addressing the reasoning behind the acquisition, Avery also addressed no longer being considered a craft brewery in the eyes of the Brewers Association who defines a craft brewery as “small, independent, and traditional,” defining independent as “less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcohol industry member that is not itself a craft brewer.”

“As far as the BA’s definition of what ‘craft’ is, I couldn’t disagree more,” said Avery, who added that he didn’t care that the brewery would no longer meet the BA’s definition of a craft brewery.

As of Wednesday evening, Avery’s candid and unwavering responses to the sale have resulted in a flurry of congratulatory messages and genuine questions on the brewery’s Facebook page from Avery drinkers looking to learn more about partnership.

As the dust settles on another shake-up in the craft beer world, one thing is certain, the calm that follows the news of another acquisition won’t last long. The Avery deal certainly won’t be the last breaking story of a buyout in the industry. Hell, it probably won’t even be the last breaking acquisition story of 2017. But as we wait and speculate which brewery will fall next, craft beer consumers should take a moment to reflect on what ‘craft’ means to them and the role we play in the industry. And brewery owners feeling the pressure and looking to alleviate financial woes brought on from costly expansions should also take a moment to think about what ‘craft’ means to their brand, and take a page from Adam Avery’s book: if the time comes to redefine you brewery dream, don’t sugarcoat or downplay your decision. Like the beers you brew, craft beer drinkers are just looking for something clean and non-artificial to swallow, not a watered down version of the truth.