San Diego’s craft brewer Modern Times seeks buyer to ease debt burden
USA | Many thought it was a bad omen for the whole of the industry when San Diego’s craft brewer Modern Times, which a few years ago was expanding rapidly, on 14 February said it would close four of its eight taprooms and lay off 73 people.
Not enough, only ten days later, the brewery’s CEO, Jennifer Briggs, took the unprecedented step and told the website goodbeerhunting.com that Modern Times is looking for an investor or potential buyer to put it back on sound financial footing.
The news came as the craft beer pioneer, Hair of the Dog from Portland, Oregon (700 hl of annual beer output), announced it was going to shutter for good this summer after 29 years, as its founder, Alan Sprints, was retiring.
Many observers concluded that these unrelated events are still symptomatic of the industry: that the boom in craft beer is definitely over and that many craft brewers could be strapped for cash after years of costly expansions, followed by an unforeseen global pandemic and an industry-wide decline in sales.
As Modern Times commented: “Taken together, these [above] factors have stretched our finances and company culture to a point that is simply no longer sustainable.”
Modern Times fell on hard times
The news that Modern Times would contract was followed by hot debates on the internet. As Dan Becker wrote on the website thefullpint.com: “There were long-time haters who claimed the beer was never good or has gone downhill. There were plenty of “financial analysts” who had run the numbers and knew this was going to fail. I read conspiracy theories surrounding the workplace fallout involving [former] CEO Jacob McKean leading to investor pull-out. One of the best takes I read across any platform was that Modern Times’ business was on a downward spiral because they offered a plant-based food menu.”
In all likelihood, Modern Times Beer was forced to contract because its business model cost more money to operate than it was bringing in.
Having spent 12 years with craft brewer New Belgium as its HR vice president, Ms Briggs joined Modern Times’ board of directors in July 2021, was made interim CEO in October, and officially took over the role in January. The previous CEO Jacob McKean, who had founded the brewery in 2013, had stepped down in May 2021 amid accusations of a hostile work culture where harassment went unchecked.
In 2019, Modern Times sold about 70,000 barrels of beer. In 2021, only 39,000 barrels were produced. Ms Briggs declined to say how much money Modern Times owes.
How much is Modern Times worth today?
Modern Times valued itself at USD 264 million prior to a crowdfunding campaign in 2019, which translates into USD 3,700 per barrel beer. At the time of the fundraising effort, Modern Times valued itself at a higher per-barrel rate than even Ballast Point (USD 3,600 per barrel). Ballast Point was sold for USD 1 billion to Constellation in 2015.
Ms Briggs does not have a current valuation for Modern Times. As part of its Employee Stock Ownership Programme, whereby workers have been controlling 30 percent of the company since 2017, Modern Times will revalue itself in May or June of this year.
Other regional breweries have made similar decisions to pull back sales closer to their home markets in recent years, including San Diego’s craft brewers Green Flash and Alpine (sold to SweetWater/Tilray in January for USD 5.1 million or USD 151 per barrel), and Colorado’s Ska Brewing.
Ms Briggs says she expects that Modern Times’ valuation this spring will be “pretty low” as a result of the taproom closures and general competition within the beer industry.
