USA: Heineken’s Lagunitas acquires 20% stake in Michigan’s Short’s Brewing Co.

Short's Brewing Co., which until last year used the slogan "Michigan only, Michigan forever," announced on July 26 that it sold a 19.99% stake to California-based Lagunitas Brewing Co., the Detroit Free Press reported.

But since Lagunitas was recently bought out by Heineken, that chunk of the celebrated Michigan brewery is actually in the hands of big beer.

Short's, which is based in Bellaire and Elk Rapids – and known for such beers as fruit ale Soft Parade and IPA Huma Lupa Licious – last year expanded distribution beyond Michigan to several nearby states.

Short's founder, Joe Short, said in the news release on July 26 that he's found success surrounding himself with "the best people," and that the Lagunitas deal is one of many strategic decisions to ensure the brewery's continued success.

"This partnership with Lagunitas is just another part of evolution in the cycle of our dynamic and growing business," he said in the news release, which doesn't mention Heineken.

The partnership comes as many other craft breweries, such as Lagunitas, have been purchased by large, mass-production brewing companies. Short's deal with Heineken is only for a minority stake, so in the eyes of its peers in the national Brewers Association trade organization, it still meets the definition of a craft brewery.

Of course, Heineken's deal with Lagunitas started with a 50% stake in 2015 before acquiring the rest of the company earlier this year.

To many people who enjoy craft beer, this is no big deal.

But people close to the craft-beer business tend to resent the idea of publicly traded, corporate macro-breweries controlling craft beer. Many are concerned that they'll prioritize profit over quality, hoard hops and other resources, and undersell traditional craft brewers. Money spent on local craft beer also feeds more into the local economy – think mom-and-pop stores versus Walmart.

There's also a sense of pride that the demand for craft beer developed from humble beginnings, in many cases with home brewers wanting to share their creations with others. The Brewers Association defines "craft brewer" as a small, independent, traditional brewer — specifically, annual production of 6 million barrels of beer or less. Also, the brewer must be less than 25% owned or controlled by an alcohol industry member that is not itself defined as a craft brewer.

Short's Brewing, with its creativity and frequently successful experiments, is one of Michigan's 10 biggest craft brewers, and it's the largest Up North.

"We are looking forward to upping our game with quality," Short's spokeswoman Emily Sullivan said of the partnership, adding that it will bring access to resources such as materials, goods and packaging.

She said there aren't currently plans to further expand distribution, but it's possible. The brewery was founded by Joe Short in 2004, and the Elk Rapids production facility opened in 2009.

This isn't the first time a Michigan brewery sold a substantial stake to a company outside Michigan. Founders Brewing Co. in Grand Rapids announced in 2014 its partnership with Mahou San Miguel, which is based in Spain and owns a 30% stake. Founders is no longer considered by the Brewers Association to be a craft brewery.

Perrin Brewing Co. in Comstock Park is now part of Colorado-based Oskar Blues, owned by Boston-area investment group Fireman Capital Partners. Fireman's investment allowed Oskar Blues to expand its brewing capacity across the country, and to buy Perrin and Florida's Cigar City Brewing. Each brewery remains run by its local managers, with input from Fireman's Dan Fireman and Oskar Blues owner Dale Katechis, as reported in USA Today.

Under the craft beer industry's Brewer's Association guidelines, Oskar Blues remains a craft brewer because it's owned by a private equity firm, and not a multinational conglomerate brewery, USA Today reports.

From 2011 to 2016, the volume of craft beer produced in the United States has grown from 5.7% to 12.3% of the U.S. beer market as the number of craft breweries grew from 1,977 to 5,234, according to the Brewers Association. Last year, the association reports that craft beer accounted for 21.9% of the market share by dollars; that's $23.5 billion of $107.6 billion.

Meanwhile, the big beer companies have seen losses: In 2016, total volume at Anheuser-Busch declined 2%, including a 1.6% volume decline in North America, the Associated Press reports.

26 July, 2017