Kirin takes a minority stake in Brooklyn Brewery
You’d have thought that the promiscuity of brewers was a thing of the past. But no, it’s having a comeback among craft brewers. Kirin, Japan’s number two brewer, will acquire a stake of 24.5 percent in Brooklyn Brewery for an undisclosed sum, the companies said on 12 October 2016, which will make Carlsberg exceedingly jealous.
US media think that the price tag could be in the hundreds of millions of dollars as Ballast Point, a craft brewery with a similar production volume to Brooklyn, was sold to Constellation Brands last year for USD 1 billion.
Brooklyn Brewery and Kirin said they will form a Japanese joint venture in January 2017 to roll out the Brooklyn brand in the country. The capital contribution will be Kirin 60 percent and Brooklyn Brewery 40 percent. There are plans to take it to Brazil as well, where Kirin bought the local brewer Schincariol in 2011.
Ranked 12th-largest US craft-beer maker in 2015, Brooklyn Brewery is expected to sell 360,000 hl beer in 2016, half of which will be exported. Under the deal, privately held Brooklyn Brewery will issue new shares to Kirin Brewery, but the company will remain independent with its management intact.
The whole point of Kirin only taking a minority stake in Brooklyn Brewery is that this arrangement will allow Brooklyn to remain a craft brewer under the terms of the Brewers Association. They stipulate that a brewery can be deemed independent as long as a Big Brewer controls less than 25 percent.
Brooklyn Brewery will use the investment from Kirin to build a new brewery in New York, allowing it to brew all of the beer it sells in the US in-house.
The Brooklyn Brewery deal follows Kirin’s purchase of a 33 percent stake in Japanese craft label Yo-Ho in 2014. To draw patrons of specialty beers, Kirin opened two brewpubs last year. In Japan, craft beers command a market share of perhaps 4 percent.
Most importantly, what will Carlsberg make of this transaction? Together with Carlsberg, Brooklyn Brewery already operates two craft breweries in Stockholm and Trondheim (Norway). In September 2016, the two signed a distribution agreement for the UK. It must be a concern for Carlsberg, which distributes Brooklyn beer in Europe, as 25 percent of their partner is now owned by a competitor.
Besides, in Australia, the Adelaide-based Coopers Brewery has been brewing Brooklyn Lager since 2015 under a licensing agreement. It will be a measure of Kirin’s influence on Brooklyn Brewery’s management if this agreement will be revoked and the brand transferred to Lion.
Australia’s number two brewer Lion, which is fully owned by Kirin, has had to contend with a 10 percent loss in market share following the transfer of AB-InBev brands, including Corona Extra, to its rival CUB, formerly owned by SABMiller and now by AB-InBev.
Surely, Lion could do with popular international craft beer brand.
