Monday, March 28, 2011

Goose Island to be Acquired by AB InBev

Just got this. Goose Island has agreed to be acquired by AB InBev. Important points: John Hall stays on as CEO (no word of Greg Hall's status - update: it's been announced that Greg will be stepping down as brewmaster); this is a 100% acquisition; the two Goose Island brewpubs are NOT part of the deal; ABIB will invest in a brewery expansion immediately; and wholesalers will not be affected. Read on:

GOOSE ISLAND SELECTS CURRENT PARTNER ANHEUSER-BUSCH FOR GROWTH STRATEGY
Chicago Small Brewer, Craft Brewers Alliance to Sell Stakes in Goose Island;
Expansion of Chicago Brewery Planned
CHICAGO (March 28, 2011) – Chicago-based Goose Island, one of the nation’s most‑respected and fastest-growing small brewers with sales concentrated throughout the Midwest, today announced it had agreed to be acquired by Anheuser‑Busch, its current distribution partner, in a move that will bring additional capital into Goose Island’s operations to meet growing consumer demand for its brands and deepen its Chicago and Midwest distribution.
Goose Island’s legal name is Fulton Street Brewery LLC (FSB).  Anheuser-Busch reached an agreement to purchase the majority (58 percent) equity stake in FSB from its founders and investors, held in Goose Holdings Inc. (GHI), for $22.5 million.  Craft Brewers Alliance Inc. (CBA), an independent, publicly traded brewer based in Portland, Ore., that operates Widmer Brothers, Redhook and Kona breweries, owns the remaining 42 percent of FSB and reached an agreement in principle to sell its stake in FSB to Anheuser-Busch for $16.3 million in cash.  Anheuser‑Busch holds a minority stake (32.25 percent) in CBA.
Goose Island sold approximately 127,000 barrels of Honkers Ale, 312 Urban Wheat Ale, Matilda and other brands in 2010.  To help meet immediate demand, an additional $1.3 million will be invested to increase Goose Island’s Chicago Fulton Street brewery’s production as early as this summer.
“Demand for our beers has grown beyond our capacity to serve our wholesale partners, retailers, and beer lovers,” said Goose Island founder and president John Hall, who will continue as Goose Island chief executive officer.  “This partnership between our extraordinary artisanal brewing team and one of the best brewers in the world in Anheuser-Busch will bring resources to brew more beer here in Chicago to reach more beer drinkers, while continuing our development of new beer styles.  This agreement helps us achieve our goals with an ideal partner who helped fuel our growth, appreciates our products and supports their success.”
Hall will continue to be responsible for Goose Island beer production and the expansion of Goose Island’s Chicago brewery, where production will continue and its business will still be based.
“The new structure will preserve the qualities that make Goose Island’s beers unique, strictly maintain our recipes and brewing processes,” Hall said.  “We had several options, but we decided to go with Anheuser‑Busch because it was the best.  The transaction is good for our stakeholders, employees and customers.”
Anheuser-Busch has distributed Goose Island brands since 2006 as part of an agreement with Widmer Brothers Brewing Co. of Portland, Ore., a co-founder of CBA, that provides Goose Island access to the network of independent wholesalers that distribute Anheuser-Busch beers.  Anheuser‑Busch also provides logistical support to all Anheuser‑Busch wholesalers distributing Goose Island and CBA beers as part of that agreement. 
Wholesalers currently servicing retailers with Goose Island beers will continue to do so with no disruption in service.
“These critically acclaimed beers are the hometown pride of Chicagoans,” said Dave Peacock, president of Anheuser-Busch, Inc.  “We are very committed to expanding in the high‑end beer segment, and this deal expands our portfolio of brands with high-quality, regional beers.  As we share ideas and bring our different strengths and experiences together, we can accelerate the growth of these brands.” 
Anheuser-Busch’s purchase of FSB is subject to customary closing conditions, including obtaining required regulatory approvals.  The transaction is expected to close in the second quarter of 2011.
The two Goose Island brew pubs are not part of the deal, but will continue in operation, offering consumers an opportunity to sample Goose Island’s award-winning specialty beers and food selections.
As part of CBA’s agreement to sell its 42 percent block in FSB to Anheuser-Busch, in addition to cash, Anheuser-Busch will provide enhanced retail selling support for CBA brands, will reduce distribution fees payable by CBA to Anheuser‑Busch and will provide CBA additional flexibility with respect to future acquisitions and divestitures.

So...if you're a diehard craft beer type, and you love Goose Island...do you keep drinking it? Or do you immediately stop, and start bitching about how it doesn't taste the same anymore? Or do you just...wait and see and try to stay impartial?

38 comments:

corky said...

Since I can't get their beer down here it won't affect me much, but I'll keep an open mind and try it next time I go through Chicago

Duff said...

I quit drinking it. I'd rather see my money go to an independent than a large global conglomerate. I went out of my way to support AB before they were sold to InBev.

Alexander D. Mitchell IV said...

Well, [bleep]. We just started getting their products in central Maryland in the past year, and they're still not that readily available--it seems a few beer bars/stores still hold a grudge against any beer associated, even by degrees, with the "Evil Empire" of ABInBev.

I love me a good Honker's Ale or Bourbon County Stout, though.......

I asked much the same questions at my blog: http://beerinbaltimore.blogspot.com/2011/03/when-is-microbrew-no-longer-microbrew.html

Come to think of it, I can't remember the last time I saw a Redhook.......

Steven said...

Since most of the beer on shelves right now was brewed under Greg's hand, I'm remaining patient. But I just don't know, and you know home much I like the Goose, Lew.

Russ said...

It seems like GI has been moving in two directions ever since the CBI bought a minority interest in them. On one hand, their high-end lineup (Bourbon County Stout, Matilda, Sofie, etc.) has expanded, which is definitely a good thing. On the other hand, their regular lineup has been somewhat dumbed-down in my opinion, with 312 becoming the dominant brand and old favorites like their Oktoberfest and Hex Nut being dropped. I suspect the trend will continue under AB-InBev. They'd be nuts to drop favorites like Bourbon County Stout, but I have to think the focus will be on 312.

As a consumer, I don't think this will alter my purchasing choices. I have friends at Goose Island so, unless they clean house, I'll still support them so long as the quality doesn't decline. But certainly I (along with every other beer geek here in Chicago) will keep a skeptical eye on how GI continues to do business post-buyout. There are a lot of great breweries here in Chicago (and new ones opening up this year) so it will be easy to pass on the Goose should they slip in quality (or gut their local workforce).

Anonymous said...

Immediately stop and drink wild goose instead

Lee said...

I stop drinking it. I like their beers, but I can drink just as good and better without handing my money directly to InBev. If you’re familiar with their practices I can’t see why you’d you want to help support this company. The question you ask at the end of the post presents an either/or dichotomy that’s inherently false.

Joe Stange said...

InBev has a long-established pattern of buying breweries then cutting costs. That may not bode well, but one would think keeping Hall as CEE is a good sign, for now. So is the fact that Goose Island is like a tiny hair on InBev's global head.

For some people "craft beer" describes only a certain type of product, no matter what company makes it. For me "craft beer" is meaningless unless viewed as a reaction to profit-hungry corporate beer-making. So I don't think I would consider Goose Island to be craft beer anymore, whatever that label is worth. but for now I'll still be pleased to find Honker's Ale in the occasional airport bar.

Steven said...

"...with 312 becoming the dominant brand and old favorites like their Oktoberfest and Hex Nut being dropped."

Russ, they dropped the Oktoberfest, but replaced it with their Harvest Ale -- a pretty good beer too. They also dropped the Oatmeal Stout, a huge loss IMO, but they've also added the likes of their Mild Winter as another seasonal. So while a couple beers have been lost, there is still a decent lineup of regulars -- for now, anyway.

http://www.gooseisland.com/pages/2011_beers/3.php

Lew Bryson said...

Lee, you may have a point with your last statement...but I don't necessarily concede that all choices but yours are bad. I hope.

As for 312 becoming dominant, I can't help thinking that's the market. Widmer Hefe and Boulevard's wheat are pretty damned popular too.

Steven said...

One of my first thoughts when all this news started to break was all of the posts at BA wondering why the Macros never make as good beer as the micros. Maybe this is the best way to do just that: buy a place that's doing a good job at it and reap the profits.

Of course, you then have to buy into the idea that A-B will let Goose run itself. It ain't broke, don't fix it.

Please?

Brian said...

I'm not sure how to feel. Goose Island is an Oasis tap in the craft desert of NW Ohio. I've always been happy to drink Honkers as a low ABV choice, too. Matilda, Sophie, and their other belgian inspired ales have really been dialed in as well. Now, I'm concerned. How long before the InBev accountants determine the little brewery in Chicago isn't efficient enough, and move production to a larger facility?

Canadian Ace said...

t'is a bit of a shame as they were a proud independent brewery always enjoyed drinking their beer after the Berghoff closed left me no other choice. But if you do not live in Chicago land, big whoop. Chances are there is a brewery near you that makes great beer Drink local is what I say

Peter Hand said...

Where was this A-B when my very own and highly celebrated Old Chicago Dark was allowed to find the scrap heap? They were watering down and de-hopping their swill, and making obnoxious commercials, that's where.

Gary Gillman said...

AB/InBev has shown on its own that it can make an excellent APA: Budweiser's American Ale. I was less impressed by most of its other craft-style offerings, but I am sure the taste was calibrated to what it was felt the market wanted, not any lack of craft brewing savvy.

I wonder therefore why it decided to buy an up-and-running operation, perhaps the recognition factor for the brands (the trade marks, etc.) was an important factor. Perhaps InBev/AB sees the brands as having potential for large-scale sales across the country.

I would still drink the beers if the taste doesn't change. I don't care who owns a brewery if the beer is good. Pilsner Urquell is owned by a very large company but it is still the best pilsener beer in the world IMO.

Gary

Joe Stange said...

"As for 312 becoming dominant, I can't help thinking that's the market. Widmer Hefe and Boulevard's wheat are pretty damned popular too."

It certainly is the market. All three are at or near session-strength, too. Hmmm...

Lew Bryson said...

Of course, Joe: that's why true beer geeks hate them.

Steven said...

Wait -- Peter Hand? As a Chicago reader/poster, you, my friend, need to chime in some more here!

sam k said...

God Lew, Steven is goading the ghosts! Oh, the humanity...

Steven said...

Sorry Sam, I'm usually not so subtle in my facetiousness.

JR said...

I find it very hard to believe that A-B was GI's only source of funds, actually I find it comical that John used it as justification for the deal. However I don't think he really cares. John is a businessman, not a fundamentalist, so he sold. Now I never really dug the Goose Island vibe being as though PA has plenty of good beer. I also refuse to consciously let whats left of my US dollar trickle out of the country, so no thanks Goose. This will be a rising trend of A-B. They know how far shocktop, wild blue, and others can take them. So what do you do when your numbers are stagnant at best, buy up breweries that are doing good. Its much easier than sneaking pseudo brands under peoples noses, with less work top boot. Any bets on the next buyout?

Steven said...

"Now I never really dug the Goose Island vibe being as though PA has plenty of good beer."

Imagine A-B buying up Victory, JR. Then you'll be in my shoes.

While I respect the beer that Victory produces, Goose is my home-town brewery and there aren't too many of their beers that I don't enjoy -- and fairly often. Right now, I'm in the "wait-and-see" stance.

Russ said...

While I'm assuming the "that's why beer geeks hate them" comment wasn't directed at me, I feel compelled to defend my hatred of American wheat beers (one of the few styles I genuinely dislike): it takes one of my favorite styles (Hefeweizen) and then removes all the character that makes it one of my favorite styles (i.e. using a neutral yeast instead of a Bavarian Weizen yeast).

That being said, I agree Lew that 312's explosion is market-driven and I don't have a problem with that. I'm just disappointed on a personal level when its explosion leads to the demise of a great beer like their Hex Nut (which, ironically, may return now that they'll have extended capacity thanks to their Belgian overlords; and thus the circle of life continues).

Lew Bryson said...

Oh, no, Russ, it was about the people who -- for whatever strange reasons -- seem to despise lower alcohol session beers. I'm with you on the wheat v. hefe issue, all the way!

JR said...

Imagine A-B buying up Victory, JR. Then you'll be in my shoes.

Steven, I feel ya buddy. Stuff like this is never fun. I'm a Troeg's guy myself. What I meant by the "vibe" comment was that I did a few Sieble courses at Clybourne St and took away some odd sentiment from the people I spoke to that eluded to what just recently happened. However all is not lost IMO, you do have some up- and-comers in the area, Metro, Half Acre as well as several great breweries, Bells, Two Brothers, Three Floyds. All in all its just flat out disappointing that such a small brewery like Goose sold out. Even breweries in the 100K bbl a year range are cruising right along, just fine on their own.

Anonymous said...

Why would any local supporter of Goose Island want to stay impartial? I understand your position seeing all the free beer samples, meals, and comped trips AB and AB Inbev has thrown you like a dog a bone over the years. I don't want AB Inbev's table scraps that you howl for. Sorry if it does not wash for people who happened to like the fact Goose Island was a local, owned by locals, brewed by locals. And liked supporting a local business. Its the same reason I hate chain restaurants. You might be bought and paid for by a few trips on AB's dime, but I'm not. Goose Island is as dead as Rolling Rock. Or were you impartial on that one too?

Lew Bryson said...

Blah blah blah...there's always one out there who sees free beer! free food! free trips! and gets all hot and bothered...Yeah, I'm scared of being cut off from Wild Blue and Stella, and I can't wait to go to the crazy-fun metropolis of Idaho Falls...again. Ouch, my credibility is destroyed (by brave Mr. Anonymous).

If people are concerned about local ownership, that's certainly understandable. But even there, I'd urge wait and see; Miller and Leinenkugel have established a brilliant model on that. Leinie is 100% owned by Miller, yet brewing is still going on in Chippewa Falls; in fact, they've expanded. That's the current plan with Goose Island, too. Jobs stay, John Hall stays. Greg is leaving, but by his own statement, that's his choice, because he's got a great opportunity to start an entirely new life after 23 years at Goose Island. And the guy replacing him, Brett Porter, has been at Goose already, and was the brewer at Deschutes before that...hardly a corporate cog. If you are one of the people who just can't stand seeing money go to AB InBev, well, okay. There are some like you out there, for sure.

But where I am urging wait and see is on the beer. If the beer slips...I don't care who owns it. That's an unequivocally bad thing, and I'll call anyone on it, big or small. All the people who've said over the past two days that the beer will immediately suck, that it will be dumbed-down, that it will be Shock Top in a 312 bottle...why not wait and see? Plenty of time to rant and rave then, and if you're wrong, and the beer's just the same, or even better? Well, that's a good thing, and as one person on Facebook said, "I believe Goose Island will change AB." Maybe that's idealistic...and maybe it's a cool thought that shows a lot of faith in the power of the craft brewing idea.

Cheers. I have to go pour my bathtub full of free beer for my morning ablutions (I rinse with free whiskey, and brush my teeth with free gin).

jp said...

Curious to see how much ABIB was willing to pay compared to other recent transactions. Does anybody know what Goose island did in terms of production or what their operating income was?

Steven said...

"...you do have some up- and-comers in the area, Metro, Half Acre as well as several great breweries, Bells, Two Brothers, Three Floyds."

No doubt at all, but Goose Island was the grand dad of them all -- and much easier to find (and easier on the wallet) than the others.

The "vibe" I have with GI is that I started going to the pub the year they opened, had many a good time there. I was thrilled when they started bottling and expanding their catalog, been a happy supporter for so many years.

I just can't help but feel a big shift has happened, but I'm with Lew in the wait n' see car on this track. Besides, I have a whole 12 pack of Summertime that was bottled last month -- no A-B hand there at all! ;-)

JessKidden said...

@JB

Goose Island's barrelage for 2010 was 127,000 bbl. as noted in the press release.

The problem with comparisons is that many of the recent deals (Anchor, Anderson Valley) were between private owners, and even the PR for the NAB deal to buy IBU (Magic Hat/Pyramid) stated "Financial terms of the transaction were not disclosed."

Also, complicating this deal is the fact that A-B bought CBA's share of GI and then in addition promised them other business considerations.

A-B already owns 1/3 of CBA, so the deal also strikes me as a way to get some cash to that corporation which is doing well in sales but struggling profit-wise. I don't know, maybe there was some finicial/tax benefit for one or the other from doing it that way, too.

Anonymous said...

Lew,

What happens to the brewpubs if they are not part of the deal?

Lew Bryson said...

The brewpubs continue to operate as they are, from what I understand, as a separate company.

Steven said...

"What happens to the brewpubs..."

There has been a plan by a Chicago Alderman to "rejuvenate" the Wrigleyville area, where the second Goose Pub is located, and tear down a whole block of buildings to create some urban-renewall shopping paradise. If the plan is approved by the city, that Goose Island pub will probably close.

On the other hand, the original pub in Lincoln Park is a brew-pub landmark (my opinion, of course) and is supposed to continue business ad infinitum. At least I'm hoping so. ;-)

The pub breweries are great experimental breweries and always have something new and exciting on tap.

Anonymous said...

Who owns the brewpubs? The Halls will continue to own and operate?

August B. Goode said...

Goose Island Renames “312 Beer” to “011 Beer” http://bit.ly/epZzWg

Steven said...

"The Halls will continue to own and operate?"

That appears to be the current plan. After all, the Clybourn pub was the impetus for the whole dynasty, I imagine that's the last thing they'd let go (unless, of course, their lousy landlord tries more shenanigans as he did a couple years ago -- but I think that was a lesson learned).

Anonymous said...

Celis pumpkin head was also brewed by Miller you might as well let the damm Lion Brewery start making this new slop or maybe they can add a touch of lemon and call it Mgd64 lemonade light beer the beer with natural lemon flavor what the hell does that mean also must have forgot the sucralose and the 2.8alc by vol God help the Goose..Twenty years ago might have beer the best Beer on draft ever had...

Lew Bryson said...

You should try posting earlier in the day, perhaps. "Damm" is a Spanish brewery, BTW, no connection to The Lion as far as I know. (Hey, just kidding; I know you have an obsession with The Lion that borders on psychosis.)