Making waves today in the US craft beer industry, is the announcement that 12th-largest craft beer brewery, Boulevard Brewing Company, has been sold to the Belgium-based brewery conglomerate, Duvel Moortgat. In an open letter from Boulevard owner, John McDonald, he explains his position on the sale, and what he hopes to achieve by selling:
"I am honored and humbled to announce that I have chosen Duvel Moortgat as the long-term partner for Boulevard. An independent, family-owned craft brewer spanning four generations, Duvel Moortgat produces world-class beers at several breweries in Belgium, and owns and operates Brewery Ommegang in Cooperstown, NY. They bring to us an unparalleled depth of experience, strong resources, and an unwavering devotion to quality. Duvel Moortgat is committed to our people, to the expansion of our Kansas City brewery, and to growing Boulevard brands throughout the US and abroad. After spending a lot of time getting to know the company and its people, I am confident this is the right decision. We share the same values, respect each other's achievements, and have the same obsession for exceptional beers."
The sale comes as McDonald, having recently celebrated his 60th birthday, and with two children too young to hand the reins to, sought to ensure the longevity and legacy of the brand he'd spent nearly 30 years bulding.
Duvel, which is best known for its Belgian Strong Pale by the same name, had also aquired Brewery Ommegang of Cooperstown, NY in 2003; which appears to be something of the model they intend for Boulevard as well. Boulevard expects no major changes in management or production, and rather than the layoffs that might have come with other larger conglomerates, this partnership is only expected to increase the jobs and production at the Boulevard brewery, which will remain very much based in Missouri.
Kansas City Star reporter, Kevin Collison, has McDonald quoted saying, "This is not what happened in St. Louis (with Anheuser Busch and InBev), it's totally different. We will add jobs and investment and not cut two-thirds of our work force. They are very collaborative. We’re going to be partners going forward, but they will have control."
Collison also reports that, "Though Duvel sees its purchase of Boulevard as an opportunity to grow in the U.S., there are no plans to brew its products here or Boulevard products in Belgium. McDonald said Boulevard’s marketing arrangements with Sporting Kansas City at its stadium Sporting Park and the Kansas City Royals at Kauffman Stadium also would remain unchanged. The firm also will continue to be involved with its Ripple Glass recycling program and other local commitments."
Stephanie Strom of The New York Times has quoted Michel Moortgat, CEO and one of three brothers who own Duvel, as saying, "We have made acquisitions in the past and always really, really made sure that we respect their specificity, their traditions, their authenticity. Instead of chasing synergies and cost-efficiencies, we try to develop them along the lines they would have if we were not involved."
That same NY Times article goes on to say that, "He said Duvel would continue to invest in Boulevard's production facilities and equipment, and that Boulevard's sales team would market Duvel's beers in its regions while Duvel USA's team would sell Boulevard beers on the East and West Coasts of the United States. 'One of the things we have come to realize is that American craft brewers are more creative, more daring than we are in Europe, and we don't want to change that,' he said."
Chris Furnari of Brewbound is reporting that "Boulevard, which sold 173,793 barrels of beer in 2012, and Brewery Ommegang, which sold 37,800 hectoliters (approximately 32,200 barrels), will be rolled into a holding company that will also control all of Duvel Moortgat's import brands in the U.S. In 2012, the company sold a combined 63,200 hectoliters (about 53,800 barrels) in the U.S."
That same article goes on to quote Moortgat as saying, "In the beginning, nothing will change at Boulevard. They are doing a great job and you never change a winning team. We will learn why and how they do things and how we can implement some of their learnings into the Ommegang brewery and the other way around."
There are possible rumors that the brewing and packaging of Boulevard's specialty Smokestack Series may be relocated to the Ommegang brewery in Cooperstown, NY however. This appears to be speculation at this point, without any direct quotes to support it, but it is a distinct possibility, among other changes that will likely come over time.
Other concerns include the fact that this new partnership could technically take Boulevard outside of the Brewing Association's definition of "craft breweries," which is closely tied to the number of barrels produced and the ownership of the brand. The same ripples caused by this controversial definition of craft brewing have been felt previously, when Goose Island was bought up by Belgian-based Anheuser-Busch InBev in March, 2011 for $38.8 million.
While the terms of the sale were not disclosed, McDonald himself has indicated that he has been given a seat on the board. He is also reported to receive preferred stock in the new US holding company that will result from the purchase. Other industry sources have estimated Boulevard's purchase to be valued at somewhere around $100 million, according to the aforementioned Brewbound article.