Are beer nerds still miffed when they hear about a great craft brewery that sells out? It sounds like a philosophical thought experiment. If a tree falls in a forest and no one is there to hear it, does it make a sound? The answer is probably yes to both, but what even defines a craft brewery? For us, in the press, apparently, membership in a professional organization definition. This definition, which has changed and evolved over the years, has been a big point of contention on the internet, because what other are we Go talk about?
Last week there were a number of craft beer deals, but the biggest heard Monster Beverage Corp. announce that it will acquire CANarchy Craft Brewery Collective for $330 million in cash. CANarchy owns beer brands such as Cigar City, Oskar Blues, Deep Ellum, Perrin Brewing, Squatters and Wasatch, and the company ranked #6 on the Brewers Association Top 50 craft breweries for 2020, based on beer sales volume. Internet outlets had initially noted that this transaction would no longer make CANarchy a craft brewery under the BA definition. Not so!
Shortly after the announcement, the BA sent out a statement:
The Brewers Association (BA) is aware of the upcoming sale of CANarchy Craft Brewery Collective to Monster Beverage. Based on our current information, CANarchy meets the Brewers Association definition of a craft brewer under Monster Energy ownership as currently incorporated. In this case, Monster is not a member of the alcoholic beverage industry, so this new ownership structure does not affect CANarchy’s independence with respect to the alcoholic beverage industry. The Brewers Association defines small independent craft brewers as:
Small: annual production of 6 million barrels of beer or less (about 3% of annual sales in the United States). Beer production is allocated to a brewer under alternate ownership rules.
Independent: less than 25% of the craft brewer is owned or controlled (or an equivalent economic interest) by a member of the beverage alcohol industry who is not themselves a craft brewer.
Brewer: Has a TTB brewer rating and makes beer.
These are not small businesses. CANarchy is a collective of craft breweries supported by Fireman Capital Partners, a private equity firm run by former Reebok bigwigs. The company has 16 pubs and bars across the country and eight manufacturing sites. It is quite a large and diverse beast. Over the past two years, the collective has shared reports of growth. The CANarchy report from last February (the latest we have) noted:
Sales to wholesalers (STW) increased from 480,000 barrels in 2019 to 490,000 in 2020, an increase of 10,000 barrels, or 2%. The collective also grew retail sales (STR) at a higher rate than shipments at 5%, indicating that retail velocity was strong. 2020 saw the following developments in the $ trend for IRI analytics data for Total US Multi-Outlet and Convenience:
An 18% increase in CANarchy’s beer portfolio, outpacing total craft trends by +9%
An increase of 33% when taking into account the additional growth of the Hard Seltzer brand
All CANarchy breweries up year-to-date vs 2019
Cigar City Brewing grew 27%
Oskar Blues brewery grew 53%, including seltzer water
Three Weavers Brewing Company grew 67%
Strong performance in home markets including Florida, Texas, North Carolina, Colorado, Utah, Michigan and Southern California
Many things have happened since that report, including a pandemic, seltzer water softening and Three Weavers Brewing reaching a OK with CANarchy for the founder and new investors to take over the brand.
Monster Beverage Corp. is a holding company for a variety of global beverage brands, from Monster Energy, Juice Monster Energy, Java Monster, Espresso Monster, Rehab Monster, Monster Hydro Energy Water and various other Monster and non-Monster energy drink brands such as Relentless or Power play. According to Monster Beverage Third Quarter 2021 Financial Results results, the company’s third-quarter 2021 net sales rose 13.2% to $1.41 billion from $1.25 billion in the same period last year. According to the same report: As of September 30, 2021, Monster had $1.71 billion in cash and cash equivalents, $1.22 billion in short-term investments and $28.3 million in long-term investments. term.
Soon Monster will be a craft brewer. Well, at least according to this definition above.