What It Means When a Brewery was Built to Sell

Eno Sarris, October 29, 2015

Hang around beer people long enough, and you'll hear it. "Oh that brewery was sold? They were built to sell." 

To be fair to everyone, the first question should be if that's a fair label for any brewery. It's possible that any brewery has a price, eventually. They are all businesses, after all, and even the most lovingly crafted breweries will face the decision at one point. Try telling Tony Magee at Lagunitas that he spent all those years building his brewery with the goal of selling to Heineken. See how he reacts. 

Still, I've heard it about more than one brewery.

Most recently, I heard it about Golden Road brewing, which was recently bought by Anheuser InBev. The Fortune piece announcing the sale quotes co-founder Meg Gill of Golden Road as saying “We didn’t have a ‘for sale’ sign in the ground, we weren’t looking to sell our business." That's from a linked video where InBev calls the deal a 'craft partnership.' Gill also mentions bankers and not being for sale in other interviews. Clearly motives are a sticky part of this business. 

Motives are the first thing you'll hear about if you prod someone that has used the label to describe a purchased brewery. But it's hard to listen too long to people talking about the intent of the Golden Road founders without wondering if you're listening to gossip, and if the line between good business and cynical intent is too close for us to judge from afar. 

We ourselves proposed a roadmap to opportunity that brewers could use to identify places that were under-represented by breweries. Say you had your eye on Southern California -- still a place that could use more craft beer -- and you wanted to gain funding in order to start your dream brewery. You prepare your business plan, you mention that there aren't many competitors in the region, you move to the area, and you start brewing. What if you're offered money and the opportunity to take that brewery large shortly after you get going? Were you built to sell, or are you a brewer that loves brewing that wanted to make sure his brewery succeeded? 

Far be it for me to say Gill and Tony Yanow weren't just good business people that also loved beer. 

Still, Gill's own statement points to some self-awareness on the subject. And the piece also mentions that Golden Road is "a tiny competitor among craft brands nationwide" as it's expected to sell only 45,000 barrels this year. Gill mentions that the company is only four years old. 

That velocity is something that comes up among those calling Golden Road 'built to sell.' Four years in, they began distributing all over California, before bigger breweries from Southern California had made the leap.

Contrast this with Alex Tweet from Fieldwork, who was raised in the Modern Times brewery, and you'll find (radically?) different approach. Listen to Tweet talk about future expansion in our interview

Sarris: So what about when you get to canning or bottling. Isn't that stuff the first thing to go away? 

Tweet: Aromatics? Yeah, that's why we're never going to really grow past our quality. We are a decent sized brewery, 25 barrell - 

Sarris: But you're not bottling or canning - 

Tweet: No, not yet. We will be bottling hopefully before the end of the year. I don't want to can out of here because it doesn't suite our business model. We don't have flagship beers and we don't do year-round beers. I tell everyone I have a 50-barrel pilot system. 

Sarris: You want to be a chalkboard brewery. It's out, take it down. 

Tweet: Yup.

That echoes what Los Angeles brewery El Segundo said about sending their beer north, too. They talked of working hard with local bottle shops to make sure their sales are high-velocity and their beer is fresh. They said they wanted try to pull all bottles off the shelves in 60 days, and that their bottling company has a date on the bottle now.

Golden Road has dates on the bottom of their cans, which are encased in cardboard that you have to rip open to see the date. That immediately creates friction between brewery, distributor, and retailer. Imagine the conversation about ripped open four-packs. Imagine my frustration in ripping open a four-pack to find a five-month old Golden Road IPA the first time I saw them in Northern California. 

There was some mention about the choice in distributors, too. While many young breweries mix in independent distributors with distributors linked with In-Bev and MillerCoors, it seems that Golden Road went with distributors that mostly travel with Big Beer. MarketWatch said that "roughly 90% of Golden Road's distribution was through AnheuserBusch InBev," making it a "prime target for A-B's craft division." That also meant growing quickly, and probably without the relationships important to freshness-conscious Modern Times and El Segundo. 

Quality of beer was also cited often -- 'safe beer' was the common refrain -- but once again, that's a tough one to say anything definitive about. Certainly it's not a great sign that, among the 496 breweries we have listed with more than 20 Beers Above Replacement in their 'portfolio', Golden Road ranks 458th in average BAR per beer. 

That may not be the perfect way to suss overall quality. Elysian makes the wildly-popular Space Dust and still ranks 455th in the same rankings, after all. And, after founder Dick Cantwell famously resigned from Elysian after they were bought, we probably shouldn't believe that they were built to be bought. 

In the end, though, Golden Road may be one of the more curious of the acquisitions so far. It doesn't have the size of the other acquisitions, nor does it have a flagship beer that will travel easily around the country -- nothing, at least, on the level of Bourbon County Stout or Space Dust. What it does have is a good footprint in an emerging market, and a successful brand. 

Golden Road is a good business, and it was probably good business to buy them. You can make your own mind up about their dedication to the craft, and the easiest way is to go get one of their beers and try it. And that should be easier now that they are part of the In-Bev package coming to a store or bar near you.