15 July 2022
Sapporo and Stone - the Japanese rollup continues
USA | And here goes another US craft brewer. The sale of San Diego’s craft brewer Stone to Japan’s fourth-ranking Big Brewer Sapporo was not exactly predictable but certainly plausible. Think of it: Who else would buy a largeish craft brewer these days?
The Big Brewers AB-InBev and Molson Coors are probably done with shopping in the United States. They have enough craft breweries under their belts. Third-ranked Constellation Brands, meanwhile, has all but exited craft brewing. It got its fingers burnt and had to dispose of craft brewer Ballast Point.
Coming late to the party
This leaves us with the Japanese brewers. In the brewing industry – and especially among western commentators – they used to be ridiculed as latecomers and overpayers. So, when Kirin rolled up US craft brewer New Belgium from Colorado in 2019, after having acquired a stake in Brooklyn Brewery in 2016 – and before it would take over Bell’s from Michigan in late 2021 – many cynical observers would have thought: “Which Japanese brewer will be the next one to raise its arm and say: ‘Look at me, I am in this game too!’”
It was in this vein that they would have interpreted Sapporo’s announcement in March 2021 that it is planning to set up a brewery in the US by the end of 2024 to cope with rising demand. “I would like to have a production base on the West Coast,” Hiroyuki Nose, Sapporo Breweries’ vice president of marketing, said in an interview with Bloomberg. “We make and import most of it from Canada and there are logistical costs. This is a challenge for us.”
Zooming in on Stone
If I am not mistaken, last year’s announcement was seen as the usual spin by Japanese brewers about their long-term plans. Little did we know that Sapporo had already set its eyes on Stone.
According to goodbeerhunting.com, Stone had been on the market for years, despite Greg Koch, one of its founders, insisting that the brewer was not for sale. Per the website, when Sapporo’s envoys paid Stone a visit almost a year ago, curious employees were told that the Japanese were only checking out if they could use Stone’s facilities to contract brew for them. It has since come to light that Sapporo and Stone were in discussion were ten months before they had a deal hammered out.
Was Stone expensive? That depends
Stone does fit Sapporo’s bill. Like San Francisco’s Anchor brewery, which Sapporo bought in 2017, it provides production capacity for Sapporo’s products. And it was not excessively expensive. For USD 168 million, Sapporo will get two breweries, seven taprooms, and a restaurant business.
Besides, Stone sports 700,000 barrels in installed capacity. The San Diego brewery was expanded to 500,000 barrels in 2012 and its plant in Richmond, Virginia, to 200,000 barrels only this spring.
Following the agreement with Stone on 24 June, Sapporo has already let it be known that it plans to make Stone’s business profitable by next year, and that it will produce 860,000 barrels beer in the US by 2024.
Sapporo also felt compelled to say that it will not take on any of Stone’s debt, which makes people wonder how Stone will repay its debt of USD 464 million.