Oregon’s Full Sail Brewing Company sold to private equity firm
Isn’t that strange? U.S. craft brewer Full Sail is sold to private equity and no outcry ensues? Is it because the buyer was not AB-InBev?
In early March 2015, the iconic brewery from Oregon was sold to the private equity firm Encore Consumer Capital from San Francisco. The deal cashes out 78 employee shareholders. But investors said all of those workers have the option to stay on.
Full Sail was founded in 1987 and reportedly produced 115,000 barrels (135,000 hl) beer in 2014.
Media say that two things make this a particularly interesting acquisition. One, Full Sail was owned by the employees by virtue of an ESOP (Employee Stock Ownership Programme). So this was the employees’ decision. Two, it wasn’t AB-InBev or another brewery seeking to acquire Full Sail: it was an investment group with no relationship to the brewing industry.
Oregon Craft Brewers Co. is the name of company that bought Full Sail. It is described as a company “comprised of a group of local Oregon investors and Encore Consumer Capital”. Details about the investors, along with the price of the transaction, were not disclosed. No one in the industry seems to know who these investors from Oregon are. Forming a company called Oregon Craft Brewers certainly helps make this takeover sound more innocuous.
As was reported, Full Sail’s founders, Irene Firmat and brewmaster Jamie Emmerson recommended that Full Sail’s employees accept the bid.
Again, reportedly, the founders could have made the deal happen regardless of how the employees voted.
Encore Consumer Capitol is a private equity firm which, like all such outfits, thrives on purchasing companies and then selling them to larger players in related industries.
Is that what lies in store for Full Sail, some observers wonder? “Will they simply get the brewery’s ducks in a row and then sell it, at a profit, to Anheuser-Busch or Miller-Coors?” one asked.
As far as Full Sail’s immediate future is concerned, Ms Firmat was quoted as saying: “We [the founders] have committed to stay a year to insure that this transition goes smoothly. After that we will see.”
For now, it was pointed out, Full Sail’s employees get a payout and keep their jobs. This outcome is probably more agreeable to lovers of craft beer than what happened to Elysian Brewing’s employees. When that company was sold to AB-InBev recently, they didn’t lose their jobs, but they had no say in the matter. They simply woke up one morning as AB-InBev’s employees.
The sale of Full Sail highlights another fast-growing trend in brewery ownership: the influx of private equity money.
U.S. media compiled a list of the latest transactions: Last year, Southern Tier Brewing Co. in Lakewood, NY, accepted a private equity offer after watching its volume grow 40 percent in 2014 and 48 percent on average since opening in 2003.
Around the same time, Sweet Water Brewing Co. in Atlanta sold a stake to TSG, which last year had partnered with Russia’s Oasis Beverage to purchase Pabst Brewing.
Finally, Uinta Brewing Co. of Salt Lake City sold a stake to The Riverside Company after watching production spike 40 percent in 2014. That came just two years after Boston-based private equity firm Fireman Capital Partners spent USD 35 million to buy into Utah Brewing Partners and their Wasatch and Squatters beers.
None of these transactions elicited the kind of response from craft beer lovers as did the purchases by Anheuser-Busch. Is this because only Anheuser-Busch has been singled out as “the enemy” by them so that any other buyer, no matter what its business terms are, is deemed ethically sounder?
Perhaps the ultimate verdict on private equity’s impact on the craft beer industry has merely been deferred – until the current private equity owners pass their interests on to the next round of buyers in a few years’ time. Hopefully, the craft beer industry will not be in for a rude awakening.
