US breweries are for sale—but who’s buying?

With Australia looking to the US for beer style trends, will the latest business trend – breweries putting up the For Sale sign – also take hold here? Kate Bernot of Good Beer Hunting’s Sightlines looks into what’s driving the growing move towards breweries looking to sell in the US, and whether buyers are there…

The United States can count more breweries today—just over 9,000—than at any other time in the nation’s history. But there’s a truth that’s slowly becoming clear: Many of these breweries are quietly (or not so quietly) for sale.

Big names in US craft beer have already sold this year: Modern Times to Maui; Bell’s to Kirin; Stone to Sapporo; the CANarchy Craft Brewery Collective (Oskar Blues, Cigar City, etc.) to Monster Energy. But perhaps even more notable is breweries’ willingness to publicly shop themselves around. Modern Times CEO Jennifer Briggs told Good Beer Hunting months before the company went into financial receivership that it was seeking a buyer. Melvin Brewing publicly stated in June that it sought a “strategic partner” to buy the business.

On industry website ProBrewer, the number of brewery and brewery equipment auctions this summer has been enough for the website to make note of.

“One is an outlier. Two is coincidence. But three is a trend,” says ProBrewer co-founder Mark Silva. “And these are serious-size players and equipment.”

What’s behind the sales spree? A combination of a maturing craft beer market, increased competition on the shelf from both beer and non-beer alcohol, the effects of the COVID-19 pandemic, and a generation of craft brewery founders reaching retirement age.

Coming off a few years of slower craft beer segment growth—compared to the double-digit growth rates less than a decade ago—some owners are simply ready to get out of the business. Others believe their breweries could scale up with proper investment, but aren’t keen to take on that next phase.

“If they don’t have a succession plan in place, founders are like, ‘I don’t want to do this for another 10 or 20 years.’ The grind they’ve been going through for the past few years with COVID and whatnot isn’t sustainable,” says Kimberly Clements, managing partner of Pints LLC, a beverage industry consultancy.

“Therefore you’re seeing a lot of inquiries out there: ‘Is there an appetite for a purchase?’”

Who’s Selling

Today’s craft acquisitions aren’t all like the craft acquisitions of the 2010s, which saw multinationals including Anheuser-Busch InBev, Molson Coors Beverage Co., and Constellation Brands snap up growing craft breweries including Goose Island, Elysian, Terrapin, Saint Archer, and Ballast Point (for a record $1 billion), with the intention of scaling them nationally. Some still fit the pattern of larger companies eyeing strong brands, but many do not.

“Back six or eight years ago when everyone was buying, they were on a shopping spree for breweries that are doing well, that have good balance sheets and scalable potential,” Clements says.

“Now you’re seeing the breweries who are in trouble really being more vocal like, ‘Hey we’re for sale.’”

The COVID-19 pandemic has been difficult for many US craft breweries, especially smaller ones saw their taprooms mandatorily closed for periods of time due to public health guidelines.

Those that didn’t have the ability to package their beer for sale in distribution especially struggled; now that taprooms have reopened though, owners face higher costs for labour, ingredients, and packaging materials.

The Brewers Association’s mid-year report quoted a brewery owner whose malt costs were up +45% per batch and monthly fuel costs for deliveries were up +266%.

“It’s become a struggle to keep the doors open,” the owner said. Meanwhile, governments’ financial relief programs that provided cash to restaurants and breweries during the earlier portion of the pandemic have largely been depleted.

Jeff Whitman is the owner of one of these small breweries who has listed his brewery for sale. His company, Selkirk Abbey, is located in Post Falls, Idaho, and produced 1,715 BBLs (2,012 hectoliters) of beer, mostly in Belgian styles, last year.

Whitman, who is approaching 60 years old, has been at the helm of the brewery for a decade and feels the time is right for him to get out of the brewing business. Brewing is “hot, heavy work,” he says, and he’d like to spend his time working on legislative changes that would help small breweries. He is asking US$725,000 (AU$1.02 million) for the business.

“I’m not in a terrible hurry to sell. I know a lot of people are,” Whitman says.

“The industry is suffering mightily. … I’m watching a lot of them make a lot of really simple mistakes. They keep taking on debt and eventually that’s going to come back and bite them.”

Whitman has received one “nibble” of interest since he posted the listing four weeks ago, and says he’s willing to be patient to find a buyer who sees the value of the brewery and its brand.

“It’s not an emergency. I don’t have to sell,” Whitman says. “But I would like to sell.”

Who’s Buying—and Why

Multinational companies proved this year that they’re still interested in acquiring breweries—if those breweries (like Bell’s and Stone) include sizable production capacity and iconic brands. But smaller breweries, too, have proven interested in becoming buyers, too, with the auction for Modern Times drawing bids from Maui Brewing, Brewery X, and others.

Ethan Stienstra, founder and chief brand strategist of Ahead of the Curve Strategy, lays out a few reasons why companies find certain brewery purchases attractive in 2022:

● Brand runway: Some beer brands clearly still have national or regional relevance that make them attractive acquisitions. “There have been some breweries that have sold and are wonderful brands but that need some tender love and care … They’re ready to be rejuvenated,” Stienstra says.

● Production: A brewery might be an attractive pick-up if it provides another company production space and sizable equipment, such as tunnel pasteurizers or state-of-the-art canning lines, to brew and package beers or non-beer products.

● Geography: Where a brewery’s physical production space is located, and where it enjoys strong sales territories. can make it attractive. In the case of Maui’s purchase of Modern Times, the Hawaii-based brewery gained instant brewery space and a greater share of distributors’ attention on the mainland U.S.

● Distribution: Instant access to a strong national or regional distribution network can also make a brewery attractive for acquisition. Monster, for example, acquired CANarchy in order to gain access to its beer distribution network, which Monster will use to launch a new, Monster-branded flavoured malt beverage later this year.

What’s tricky in the current environment, Stienstra says, is valuation. The eye-popping numbers of the Ballast Point era are now widely considered overblown, but the industry seems to be in a period of figuring out what valuations should be given current market conditions.

“It’s not a sure bet right now; that’s the whole thing,” Steinstra says.

“Everyone knows to sell high and buy low, but no one know where the high is and where the low is.”

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