Thursday, news broke that Boston Beer Company (makers of Samuel Adams, Angry Orchard ciders, and the TRULY brand of hard seltzer, among others) would merge with Delaware’s Dogfish Head Brewery. A joint press release valued the deal at around $300 million in cash and stock; shares in BBC (stock ticker: SAM, because of course) have climbed around 5% since the announcement.
Some people will tell you that craft beer is not like other businesses. Boston Beer Company founder and chairman Jim Koch and Dogfish Head co-founder Sam Calagione are two of them. They think beer companies should be led by “brewers first, and businesspeople second,” and that corporate independence -- as defined by the Brewers Association, a trade group on whose board they have both served -- is a critical ingredient of authentic craft beer.
But as the number of American breweries ticks past 7,400, macrobrewers have proven they can buy and operate craft brands without facing revolt from the drinking public. Consolidation, not creativity, is the buzzword in the beer industry these days. In other words, instead of looking like America’s “strangest, happiest economic story,” craft beer is starting to look like, well, just another business.
Having covered the beer space for the better part of the decade, I’ve interviewed both Koch and Calagione several times. With the precipitous state of the craft beer industry very much on my mind, I spoke to the two men again by phone as they drove from a press event at New York City’s Eataly to Dogfish Head’s brewery in Delaware.
This interview has been edited lightly for brevity and clarity.
Thrillist: Jim and Sam, thanks for getting on the phone. Congratulations on the deal.
Jim Koch: We’re in the car here.
Sam Calagione: Lot of road noise.
Koch: If you can hear clinking in the background, you can imagine what that is.
Calagione: The carrot on the stick at the end of our journey!
Nice. I'm in Asheville, North Carolina right now. I want to start with a question on a lot of people’s minds, or at least my own. How is this deal any different from a macrobrewer like ABI acquiring a craft brewery like Wicked Weed?
Koch: It's totally different. This is two independent craft brewers joining forces. This is not a big global brewing conglomerate buying a small American craft brewer. Second, both Sam and I have always been strong advocates for transparency and believe that beer drinkers have the right to know who brews their beer. We both had issues with big brewers buying craft brewers without letting the consumer in on that fact. We intend to do what Boston beer has done with our innovation breweries like Angel City, Concrete Beach, and Coney Island. We are very proud to put Boston Beer Company on [their labels] as a brewer. We’re equally proud to have our name on Dogfish Head’s beers. They feel the same way.
Calagione: We're very proud to be independent craft brewers, and thankfully that's not a subjective concept. Our trade group, the Brewers Association, which represents the vast majority of America's 7,500 craft breweries, has the definition of indie craft, and we're proud to be within that. We also have a seal that only true indie craft breweries can put on their packaging. Our companies believe in that seal because we believe consumers want to know who makes their beer. And when we believe there's a lot of consumers who will be proud to buy beer made by a true indie American craft brewery and one that has the capability to get our beers coast to coast within the three-tier system.
How extensively did you guys consult with Brewers Association while you were putting this deal together?
Koch: We didn’t have to, because both Sam and I have been on the board of the Brewers Association.
Calagione: While we didn't consult with the Brewers Association, I had a great chat yesterday with Bob Pease, the CEO, and he sees this as yet another example of the creativity and collaborative ethos of the craft brewing community.
[In a statement provided to Thrillist, BA president & CEO Pease said: “As industry veterans, Jim and Sam are staunch supporters of the independent beer movement, leading the charge for small brewers and instrumental in growing the overall craft brewing segment [...] They will no doubt continue to champion for the more than 7,400 small and independent breweries in the U.S.”]
So the trade group is excited. What about customers? If I’m a diehard Dogfish Head drinker or a diehard Sam Adams fan, why should I be excited about this?
Calagione: I’ll start. In a word. Accessibility. It'll amplify the accessibility of both of our portfolios. On a national level, it's very challenging when essentially four international conglomerates control over 80% of America's beer market. It's challenging for the little guys to break through that noise and get our brands to the consumer, no matter how much [the consumers] desire it. Well now with our combined scale or combined creativity are a combined network of, uh, of distributors. We'll be able to get that beer more easily into consumers' hands.
Koch: This brings together brewers with a long track record of innovation and creativity. And it's been my experience that when you put creative individuals together, cool things happen that might not happen if they're innovating in their separate silos.