The Craft Brewing Industry

Wicked Weeds, Why Did You Sell Out When You Could Have Sold In???

"HOW DARE WICKED WEED AND LAGUNITAS SELL OUT TO THE MACROS! THIS IS A BETRAYAL OF THEIR LOYAL CUSTOMERS AND THE CRAFT INDUSTRY!!” This seems to be the overwhelming theme of any article, Blog, Podcast or social media post I have seen over the last 2 weeks. Lets take a moment to look at the why and what potentially could have been done differently. The craft brewing and distilling business has exploded over the last decade due in part to the relaxation of many states liquor laws combined with the growing support for buying local. Yet the trend that is developing is that craft brewers find themselves in need of capital for expansion, distributions to original equity investors,
Learn how to run your business as a business early on. As David Walker of Firestone Walker Brewing Company recently said at the Brewers of PA event The Meeting of the Malts; “A reckoning is coming and if you’re not running a real business your f***ed!” Many craft brewers and distillers are getting into the industry because of a remarkable passion for the art of making the product. This passion and talent for creating a product and brand does not mean you will be able to successfully run a profitable business. This can and will create pressure from outside investors who are looking to recoup their investment. It also potentially makes you a target for Private Equity/ Macro – Brew / Roll-up operations who know how to run a company. They are going to quickly realize that they can acquire you for a deep discount because of what they view as “simple operational fixes” that will increase margins and
These can be identified as the continued boom in new breweries, the 3 tier distribution system which can make fighting for shelf space difficult, the increased difficulty in sourcing quality ingredients and the contraction of the beer market share to spirits (great for craft distillers). Expanded collaboration can and will help with some of these challenges. At the same time it is sad to see what has been happening to the craft industry. Breweries and distilleries open and gain traction among a small but loyal group of customers who share in the vision of what the brewer or distiller is trying to accomplish. As the word of mouth grows, product penetration grows and the macro conglomerates are opening up their wallets in the hopes of gobbling up the smaller boutique labels. Some companies in the craft industry are looking for ways of preserving the company’s integrity, brand loyalty and employee and brand satisfaction while still rewarding the founders. Creating strategies to financially divest the founders who took financial risk in setting up the company and deserve to mitigate their ongoing risk and create some liquidity diversification is a struggle that is not unique to the craft industry. These solutions can be accomplished provided the owners have access to the intellectual capital that is available within the industry and through its partners in adjacent