Spain’s brewer Mahou buys into craft brewer Avery
AB-InBev may be out of the picture as a shopper of craft brewers, but this does not stop others from clinching deals. Colorado’s Avery Brewing on 29 November 2017 announced the sale of a 30 percent stake to Mahou San Miguel, a Spanish brewing company founded in Madrid in 1890.
Specific terms of the deal were not disclosed. But insiders suspect that with AB-InBev no longer a potential buyer, the pricing pendulum has swung back towards the “old” valuation range (USD 1,000 per barrel beer sold), or possibly even lower figures.
Founded in Boulder, Colorado, in 1993, Avery is the second US investment for Mahou, which purchased a 30 percent stake in Michigan’s Founders Brewing Company, located in Grand Rapids, in 2014.
According to media, Avery’s founder Adam Avery began searching for a financial partner about three years ago, shortly after the company opened a new, USD 27 million brewery.
Adam Avery and his father, Larry, who together own the majority of the company, put together a list of qualities that any investor would need to possess, should the company consider selling a stake.
Top of their list was a “privately held and family-owned firm” which was interested in a long term investment. They also wanted a partner who brought “strategic advantages” and employed “good people with shared values.” Apparently, Mahou ticked all the boxes.
Mr Avery was quick to stress that the sale was not triggered by worries over the brewery’s debt load or increased competition in the market.
Commentators pointed out that Mahou’s investments into both Founders and Avery are strikingly similar. Both companies are 20-plus years old and sold 30 percent stakes; both breweries embarked on sizeable, multi-million dollar expansion projects prior to their transactions; and both brew significant volumes of their lower alcohol flagship brands – All Day IPA for Founders and White Rascal for Avery – while producing more whacky beers as part of their respective barrel-aging programmes.
Of the two breweries, Avery is the smaller one. Its new Boulder facility will eventually be capable of churning out as much as 550,000 hl beer. The company expects to sell about 88,000 hl beer this year, registering 26 percent growth.
Founders, too, is set up for a significant production increase at its Grand Rapids brewery. It is estimated to push out about 520,000 hl beer in 2017, but its brewery will eventually have a capacity in excess of one million hl annually.
Selling a 30 percent stake to Mahou has a downside for Avery, though. It will no longer be considered a “craft brewer” by the Brewers Association (BA), which stipulates that no more than 25 percent of a company can be “owned or controlled by an alcohol industry member that is not itself a craft brewer.”
When asked how he felt about no longer being considered a “craft brewer” by an organisation that is based just nine km away from his brewery, Mr Avery was quoted as responding:
“I don’t care,” he said, noting that private equity’s “infiltration” into the craft industry should be more of a concern than large beer company acquisitions.
“It is so funny how ‘big beer’ is demonised,” he said. “The only way private equity makes money is by selling the business to someone else. Guess who will be the highest bidder in four or five years? Probably Big Beer. As far as the BA’s definition of what ‘craft’ is, I couldn’t disagree more.”
