Goose Island and Bud

I read in this weeks paper that there is a deal for Anheuser Busch to purchase a minority share of Goose Island. I'm worried as Goose Island and Three Floyds are my favorite local and fresh beers. What will Happen, has this happened before, have other local brewers been able to maintain quality and choice, after such a merger.

Sometimes it means they keep making great beer and have better distribution. Sometimes it means they stop making good beer. Only time will tell.

At the Budweiser booth at the FMI show, I sampled beers from Redhook and Widmer's. Other than a packaging change for the Redhook (apparently they're killing the "Ya, Sure, You betcha" guy) the beers are still good. As long as it's a minority stake in Goose, I doubt it'll be a problem.

A couple of days ago I saw a little news report in which it was stated that Anheuser Busch has bought Rolling Rock from whatever it is that Interbrew is currently called (Interbrew fused with a Brazilian bevvy corp. a year or two ago). They will allegedly maintain the glorious tradition...

A-B seems to be on the march.

Antonius

Yeah, Redhook went from being a small regional beer to being the only small regional beer you could get at 7-11. So that's not bad.

Mike G wrote:Yeah, Redhook went from being a small regional beer to being the only small regional beer you could get at 7-11. So that's not bad.

Maybe not.

I was talking to Erik Larson of Marion Street Cheese Market today, and we were lamenting the decline in quality of Maytag Blue, now available at Costco. The Wife picked up a wedge some weeks ago, and it was not good: chalky, no blue veins, just not very interesting. Erik's assessment was that given the need to turn out larger quantities of cheese for a larger distribution channel, the Maytag folks (whose cheese I had first at Trotter's) are cutting corners and turning out a less good product. So that's not good.

Hammond

David Hammond wrote:[Maytag folks (whose cheese I had first at Trotter's) are cutting corners and turning out a less good product. So that's not good.

Hammond,

I noticed the decline in quality of Maytag blue as well, which I mentioned in this post.

To my taste Point Reyes Blue, whose web site cryptically refers to their cheese maker coming from Newton, Iowa (home of Maytag blue), is very much like, if not better, then Maytag Blue of old.

Enjoy,
Gary

Most people have been disappointed with what happened to Redhook and Widmer after Bud bought them. Hopefully the same won't be said of Goose Island.

I agree with the comment above. I lived in Seattle when Redhook began brewing and became very familiar with their beers (a friend of mine maintained their yeast strains in the early years when they were too small to have their own lab). The current Redhook beers bear very little resemblance to the stuff made in the old trolley barn.

As David pointed out, the problem with having A-B distribute Goose Island is that they won’t likely be content until they distribute a lot of it (preferably snuffing out as many competitors as possible). Then there will be pressure to make those huge quantities of beer more “efficiently.” I hope we’re wrong. I’d say enjoy your Goose Island while you can.

I heard yesterday that buying Goose Island happened after Boulevard Brewery in Kansas City spurned A-B's advances.

The beer geeks at Beer Advocate (of which I am one) have been debating this issue at length.

http://beeradvocate.com/forum/read/747174

It was announced today that Widmer brewing bought Goose Island. Now Widmer is 40% owned by Bud, so basically that is how Bud is buying them. They say that they wont be expanding their distribution area nationwide, but I don't Bud will let Goose Island stay local for too long.

Inbev/A-B moves up from a distributor to owner of Goose Island:

Anheuser-Busch to take over Goose Island

Statement from Goose Island:
http://www.gooseisland.com/pages/press_ ... 11/215.php

Edited to fix link.

Gah, you beat me to it, Darren72!

But yeah, while there has been a distribution agreement for a while now between Goose and AB, it looks as though that relationship will be changing. From a press release that went out this morning:

Goose Island's legal name is Fulton Street Brewery LLC (FSB). Anheuser-Busch reached an agreement to purchase the majority (58 percent) equity stake in FSB from its founders and investors, held in Goose Holdings Inc. (GHI), for $22.5 million. Craft Brewers Alliance Inc. (CBA), an independent, publicly traded brewer based in Portland, Ore., that operates Widmer Brothers, Redhook and Kona breweries, owns the remaining 42 percent of FSB and reached an agreement in principle to sell its stake in FSB to Anheuser-Busch for $16.3 million in cash. Anheuser‑Busch holds a minority stake (32.25 percent) in CBA.

The brewpubs are operated independently of the production brewery so no changes are expected there (though I wonder if there are going to be licensing concerns since they use the same trademarks, etc? Eh, something for the lawyers to figure out).

Different sources (the Trib, Crains, Goose Island's own website) can't seem to agree about Greg Hall remaining with the company, but it looks like John Hall will continue to be CEO. As he put it in the Trib

"They didn’t buy us to change what we’re doing," he said. If AB was going to water down the product, "I wouldn’t have done it. I wouldn’t have worked 23 years to build what I have to (throw) it away in five minutes."

I have my doubts. It’s hard to argue that AB-InBev doesn’t know how to market and distribute beer and if Goose gets to keep brewing the way they have been for years… Given the choice to support a local, small operation like Half Acre, Metropolitan or, in about a year, Revolution, rather than a portfolio company of a giant multi-national, I’m going with the little guy. Also, companies like AB-InBev don’t turn into giants without squeezing any/every inefficiency in its company. Obviously, there’s no real way to answer this, but would AB-InBev have signed off on the Bourbon County Rare? Or Vanilla?

I read that Greg Hall is leaving and a guy named Brett Porter (mmmm sounds like a tasty beer), formerly of Deschutes, will be coming on as brewmaster

I am not in favor of this deal but they didn't consult me. Dammit.

Funny, I have often said that Honker's ale is my version of Bud. It is my go to party beer, when I want to serve something that is palatable enough not to drive away real beer drinkers, but innocuous enough so as not to make Bud swillers leave half empty bottles all over my house (like Sierra Nevada). It might actually be a good fit. It may improve the outlook for this summer's parties if Bud-heads learn to accept GI as one of their own (I will still sneak in a bottle of hop oil drops) I do fear for the future of their specialty beers, though.

JimTheBeerGuy wrote:

I read that Greg Hall is leaving and a guy named Brett Porter (mmmm sounds like a tasty beer), formerly of Deschutes, will be coming on as brewmaster

I am not in favor of this deal but they didn't consult me. Dammit.

I really like some of Deschutes offerings. Maybe there is hope yet. All I can say is thank Dog for Nick Floyd.

Yes, Deschutes is a fine brewery and I've enjoyed the beers I've had from there.

On the other hand, http://www.anheuser-busch.com/beerverified.html

Another loss for Chicago, Goose Island has been bought by Anheuser-Busch for $38 million & a bit.


http://www.wbez.org/story/anheuser-busc ... pany-84359


I hope they will continue to make their delicious root beer & grape soda.

Why is this a loss for Chicago? They aren't moving.

Beernews.org re-posted the following information: Update 6: Per Beernet, "Just spoke with A-B ceo Dave Peacock: A-B will NOT brew Goose Island beers in St. Louis. Will expand capacity in Chicago and brew there."

Having said that, I think most of these statements have a silent "... for now" at the end (at least for some - myself included).

Given that non-craft beer sales have been stagnant (I think - please correct me if I'm wrong), one way for the big guys to grow is through craft offerings. I don't think there are any craft-like beers from the big guys that have taken off, with Blue Moon maybe being the exception. It makes sense, then, that they would just buy an existing craft brewery. Unfortunately, the backlash against Goose may damage the brand and defeat the entire purpose of the acquisition.

And yes, the usual caveat remains about immediate, internet-based comments. I'll be curious if there winds up being a noticeable dip in sales or if the brewpubs get less traffic moving forward.

It's clear that Goose Island wanted to expand anyways. The question is whether they would do it themselves or through a larger company, such as A-B. Those who seem to lament the purchase by A-B either think that Goose Island wouldn't have expanded on their own (which seems incorrect) or would have done it on their own but managed it differently than A-B will.

Darren72 wrote:It's clear that Goose Island wanted to expand anyways. The question is whether they would do it themselves or through a larger company, such as A-B. Those who seem to lament the purchase by A-B either think that Goose Island wouldn't have expanded on their own (which seems incorrect) or would have done it on their own but managed it differently than A-B will.

I think if GI was expanding on their own people wouldn't be concerned about it, because their wouldn't be the involvement of a giant corporation that mainly pushes shitty beer that uses shitty ingredients. I think what most people are worried about is losing beers like Bourbon County Stout and it's varieties and the 3 sisters in favor of just expansion of 312, Honkers etc, because the former beers take a lot of time, ingredients and money to create.

Interview with Greg Hall
http://timeoutchicago.com/restaurants-b ... user-busch

So how did the deal go down?
About six months ago we hired an investment banker to find money to help build a new brewery to keep up with demand. I mean, last year we had to kill three brands—Nut Brown, Oatmeal and Christmas—because we just couldn’t keep up with demand for everything. But as we found people who had the money to help us, they all wanted control and we didn’t want to give up control for obvious reasons. Then our friends at Anheuser-Busch, who’ve done a great job helping build our brand, called and said "Let's talk." We said "Before we talk, we want to make sure you know we want to keep brewing in Chicago, management in Chicago, decision-making in Chicago and we want to grow brands and add capacity." And they said "Great, that works for us." They’ve told us they’re committed to us because of who we are. I sat across the table from Dave Peacock [president of AB USA] and said "Why Goose and not Sam Adams or someone like that?" and he said "We like your beers, brands and innovations, what you’re doing and want to do with beer and food and we like that you’re in Chicago."

Just have to hope that what Greg says about the decision-making remains true in the future.

the wimperoo wrote:I think if GI was expanding on their own people wouldn't be concerned about it, because their wouldn't be the involvement of a giant corporation that mainly pushes shitty beer that uses shitty ingredients. I think what most people are worried about is losing beers like Bourbon County Stout and it's varieties and the 3 sisters in favor of just expansion of 312, Honkers etc, because the former beers take a lot of time, ingredients and money to create.

Right. The point I was getting at is that it seems just as likely to me that if GI was going to expand on their own, they'd make the same trade-offs that you fear A-B would make. I mean, if they could simply scale up with they were currently doing, they would have done it already.

If what happened to the taste of RedHook and Widmers are any indication, it does not bode well for GI. But I didn't know AB owns Leffe and Czechvar. That is interesting since Czechvar's real name is Budweiser, but it couldn't be marketed here under that name, because of trademark infringement issues. I wonder if AB aquired the Czech Budweiser just out of spite, and does it still taste the same or does it taste like American Bud now?

I thought A-B only distributed Czechvar/Budvar, but did not own any of it.

Prominent craft beer writer Andy Crouch came out in favor of the deal (http://www.beerscribe.com/2011/03/28/wh ... raft-beer/) and points out that this acquisition could signal a different strategy by the big guys. In particular, the idea of buying a smaller brewery and leaving it alone (ie. Leffe) is what InBev would typically do. This is in contrast to what Miller did with Leinies and what many are fearing AB will do to Goose. Hopefully, we'll see something more along the lines of what InBev would do.

It's interesting that in the Time Out interview, Hall suggests that selling to AB-InBev actually gave them more freedom/security. Of course, it's not like anyone is going to come out today and trash the deal and its details.

Darren72 wrote:
Right. The point I was getting at is that it seems just as likely to me that if GI was going to expand on their own, they'd make the same trade-offs that you fear A-B would make. I mean, if they could simply scale up with they were currently doing, they would have done it already.

Not necessarily. Many other breweries have scaled up their core beers while maintaining a strong experimental/one-off component of their operations. See New Glarus, Bells, Sierra Nevada, Dogfish Head, etc.... The four previous mentioned breweries had to do it slowly because of the amount of capital required (difficult to obtain without giving up a large amount of control). With the sale Goose Island has sold their control for the expediency of rapid expansion and capital infusion. Hopefully A-B sees the value in the culture that Goose Island has created, largely due to their specialty beers and unique offerings, and nurtures it and maintains it. I think it makes people uneasy that the only thing preventing A-B from cutting corners and sacrificing quality and uniqueness is its word.

KSeecs wrote:Not necessarily. Many other breweries have scaled up their core beers while maintaining a strong experimental/one-off component of their operations. See New Glarus, Bells, Sierra Nevada, Dogfish Head, etc.... The four previous mentioned breweries had to do it slowly because of the amount of capital required (difficult to obtain without giving up a large amount of control). With the sale Goose Island has sold their control for the expediency of rapid expansion and capital infusion. Hopefully A-B sees the value in the culture that Goose Island has created, largely due to their specialty beers and unique offerings, and nurtures it and maintains it. I think it makes people uneasy that the only thing preventing A-B from cutting corners and sacrificing quality and uniqueness is its word.

This doesn't make a lot of sense. First, the only thing preventing A-B from cutting corners is its word. But apparently if Goose Island had expanded on its own, it had something other than its word to prevent it from cutting corners? Doesn't the fact that they chose to sell to A-B instead of expanding on their own tell you something?

Second, Bells and New Glarus currently have capacity (according to their websites) to produce about 130,000 barrels of beer per year. Dogfish Head produces about 75,000 barrels. Goose Island produces 111,000 barrels. So it is already at the same size as three of the four breweries that you suggest expanded while maintaining a strong experimental component.

Look, I'm not predicting that Goose Island will go down the tubes. I'm also not predicting that it stays the same as it currently is. All I'm saying is that criticism of A-B is misplaced. If you don't want Goose Island to change, you should be complaining that the owners wanted to expand, not that they sold to A-B.

Goose Island produces about 110,000 barrels of beer.