Goose Island and AB

Over the past five years our partnerships with Craft Brewers Alliance and Anheuser-Busch have enabled Goose Island to reach a growing number of beer drinkers. This has fueled our growth to the point that demand for our beers has outgrown the capacity of our brewery. Recently, we’ve even had to limit production of some classic and medal-winning styles. To keep up with growing demand from drinkers we’ve explored a variety of paths too secure new capital to support our growth.

Today’s agreement to consolidate ownership of Goose Island under Anheuser-Busch will provide us with the best resources available to continue along our path of growth and innovation.

I am more excited than ever about Goose Island’s future. With the support and financial backing of our new partner, we will continue to brew our authentic classic styles, develop new amazing beers, and serve our drinkers.

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Revvy said:

According to John Hall's statement on Goose Island's website they've already been in partnership with them for 5 years...



That might me why we can actually GET goose Island products in stores.

As long as GI gets to maintain control of their product, then all it's gonna really do is expand GI's distribution...So to me that's a good thing.

I just don't get bent out of shape about stuff like this, I just try to look at side of things. But then again I don't buy into the whole AHB is the "evil empire" nonsense.

Heck maybe that will mean their annual bourbon barrel stout will be made in a larger run.

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steakandale said:

Shouldn't that say AB-In-Bev ?

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motobrewer said:

there has been another thread about this

the biggest bombshell there is Greg Hall is stepping down as brewmaster.

Yeah, AB has owned 30-some-odd percent of them for the past 5 years. this might be different....i wonder how much "control" of the product John Hall will be able to maintain

we'll see i guess.

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jbrookeiv said:

Terrible news. Another megacorp making ****ty beer just got bigger, which means every time a craft beer drinker buys Goose Island's beer, A/B will profit.

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EricScott said:

Yeah, this. The partnership, up until now, was a distribution partnership. Now GI is losing its Brewmaster. Quite a different arrangement.

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EricScott said:

But Bourbon County Stout was my favorite.

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olllllo said:

i'm sure larry bell engineered this to take heat off himself. Keep those torches lit boys.

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jbrookeiv said:

Indeed. I'm guessing there will be some serious changes to their beer offerings. AB is doing anything in their power to break into the craft beer market. Makes me sick.

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jbrookeiv said:

AB is doing anything in their power to break into the craft beer market. Makes me sick.

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motobrewer said:

this is just way too "f the man!" for me. AB wants to break into the craft beer market?! really?? hm, if you owned AB, what the heck would you do? Lets see, macro beer sales declining, micro beer sales exponentially increasing......ah f it, lets keep doing what we're doing and get some lunch.....

of course AB wants to get into the craft beer market!! why wouldn't they??

i don't see how there would be serious changes to their offerings. I do see how their might be quality/consistency issues when they start brewing GI beer at different facilities.

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motobrewer said:

this is just way too "f the man!" for me. AB wants to break into the craft beer market?! really?? hm, if you owned AB, what the heck would you do? Lets see, macro beer sales declining, micro beer sales exponentially increasing......ah f it, lets keep doing what we're doing and get some lunch.....

of course AB wants to get into the craft beer market!! why wouldn't they??

i don't see how there would be serious changes to their offerings. I do see how their might be quality/consistency issues when they start brewing GI beer at different facilities.

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March 28, 2011
Dear Friends,

When I first started Goose Island Clybourn in 1988, drinkers were just beginnning to explore new beer styles and "craft beer" was a term that no one had even thought of. I couldn't imagine the explosive growth that craft beer has had in the last few years, or the amazing creativity of so many new brewers, and the discovery of the amazing possibilities of beer by a whole generation of drinkers.

I am very proud of Goose Island's contribution too this craft beer movement, of the many awards won by our brewers, our growing number of employees, our support of the communities and life of Chicago, and the friendship of so many beer lovers in Chicago and elsewhere.

Over the past five years our partnerships with Craft Brewers Alliance and Anheuser-Busch have enabled Goose Island to reach a growing number of beer drinkers. This has fueled our growth to the point that demand for our beers has outgrown the capacity of our brewery. Recently, we’ve even had to limit production of some classic and medal-winning styles. To keep up with growing demand from drinkers we’ve explored a variety of paths too secure new capital to support our growth.

Today’s agreement to consolidate ownership of Goose Island under Anheuser-Busch will provide us with the best resources available to continue along our path of growth and innovation.

I am more excited than ever about Goose Island’s future. With the support and financial backing of our new partner, we will continue to brew our authentic classic styles, develop new amazing beers, and serve our drinkers.


Cheers!
John Hall

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Revvy said:

Sounds pretty horrifying to me....

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jbrookeiv said:

It seems as though they could come up with something original instead of gobbling up the little guys.

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Goose Island Selects Current Partner Anheuser-Busch for Growth Strategy


Chicago Small Brewer, Craft Brewers Alliance to Sell Stakes in Goose Island; Expansion of Chicago Brewery Planned

CHICAGO (March 28, 2011) - Chicago-based Goose Island, one of the nation's most‑respected and fastest-growing small brewers with sales concentrated throughout the Midwest, today announced it had agreed to be acquired by Anheuser‑Busch, its current distribution partner, in a move that will bring additional capital into Goose Island's operations to meet growing consumer demand for its brands and deepen its Chicago and Midwest distribution.

Goose Island's legal name is Fulton Street Brewery LLC (FSB). Anheuser-Busch reached an agreement to purchase the majority (58 percent) equity stake in FSB from its founders and investors, held in Goose Holdings Inc. (GHI), for $22.5 million. Craft Brewers Alliance Inc. (CBA), an independent, publicly traded brewer based in Portland, Ore., that operates Widmer Brothers, Redhook and Kona breweries, owns the remaining 42 percent of FSB and reached an agreement in principle to sell its stake in FSB to Anheuser-Busch for $16.3 million in cash. Anheuser‑Busch holds a minority stake (32.25 percent) in CBA.

Goose Island sold approximately 127,000 barrels of Honkers Ale, 312 Urban Wheat Ale, Matilda and other brands in 2010. To help meet immediate demand, an additional $1.3 million will be invested to increase Goose Island's Chicago Fulton Street brewery's production as early as this summer.

"Demand for our beers has grown beyond our capacity to serve our wholesale partners, retailers, and beer lovers," said Goose Island founder and president John Hall, who will continue as Goose Island chief executive officer. "This partnership between our extraordinary artisanal brewing team and one of the best brewers in the world in Anheuser-Busch will bring resources to brew more beer here in Chicago to reach more beer drinkers, while continuing our development of new beer styles. This agreement helps us achieve our goals with an ideal partner who helped fuel our growth, appreciates our products and supports their success."

Hall will continue to be responsible for Goose Island beer production and the expansion of Goose Island's Chicago brewery, where production will continue and its business will still be based.

"The new structure will preserve the qualities that make Goose Island's beers unique, strictly maintain our recipes and brewing processes," Hall said. "We had several options, but we decided to go with Anheuser‑Busch because it was the best. The transaction is good for our stakeholders, employees and customers."

Anheuser-Busch has distributed Goose Island brands since 2006 as part of an agreement with Widmer Brothers Brewing Co. of Portland, Ore., a co-founder of CBA, that provides Goose Island access to the network of independent wholesalers that distribute Anheuser-Busch beers. Anheuser‑Busch also provides logistical support to all Anheuser‑Busch wholesalers distributing Goose Island and CBA beers as part of that agreement.

Wholesalers currently servicing retailers with Goose Island beers will continue to do so with no disruption in service.

"These critically acclaimed beers are the hometown pride of Chicagoans," said Dave Peacock, president of Anheuser-Busch, Inc. "We are very committed to expanding in the high‑end beer segment, and this deal expands our portfolio of brands with high-quality, regional beers. As we share ideas and bring our different strengths and experiences together, we can accelerate the growth of these brands."

Anheuser-Busch's purchase of FSB is subject to customary closing conditions, including obtaining required regulatory approvals. The transaction is expected to close in the second quarter of 2011.

The two Goose Island brew pubs are not part of the deal, but will continue in operation, offering consumers an opportunity to sample Goose Island's award-winning specialty beers and food selections.

As part of CBA's agreement to sell its 42 percent block in FSB to Anheuser-Busch, in addition to cash, Anheuser-Busch will provide enhanced retail selling support for CBA brands, will reduce distribution fees payable by CBA to Anheuser‑Busch and will provide CBA additional flexibility with respect to future acquisitions and divestitures.

Founded by John Hall in 1988, Goose Island Beer Company is one of the Midwest's first small breweries. Located at 1800 W. Fulton St., Chicago, 312-226-1119, http://www.gooseisland.com , Goose Island is acclaimed for creating world-class ales, including 312 Urban Wheat Ale, Honkers Ale, India Pale Ale, Matilda, Pere Jacques, Sofie and a wide variety of seasonal draft only and barrel-aged releases, including Bourbon County Stout, the original bourbon barrel-aged beer.

Based in St. Louis, Anheuser-Busch is the leading American brewer, holding a 48.3 percent share of U.S. beer sales to retailers. The company brews the world's largest-selling beers, Budweiser and Bud Light. Anheuser-Busch also owns a 50 percent share in Grupo Modelo, Mexico's leading brewer. Anheuser-Busch is a major manufacturer of aluminum cans and has been a leading aluminum recycler for more than 30 years. The company is a wholly-owned subsidiary of Anheuser-Busch InBev, the leading global brewer, and continues to operate under the Anheuser-Busch name and logo. For more information, visit http://www.anheuser‑busch.com

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motobrewer said:

if you wanna be "sick" at something, be sick at John Hall. He's the one who sold the brewery. It's not like this is 1988 and this was a hostile corporate takeover....

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The Changing Face of the Craft Beer Industry…

In the early 1980s, American craft beer pioneers dreamt of nothing more than producing a few beers that broke through the monotony of humdrum, mainstream lagers. A group of men and women who had traveled through Europe and had their eyes and mouths opened by local beers or who had adventured to brew their own beers. For these early entrepreneurs, the future was uncertain but filled with hopes of building a few hundred or even thousand barrel brewery.

Fast forward two decades and things have changed beyond anyone’s greatest expectations. Once top of the pops, America’s largest breweries are now reeling on their back heels. Once considered little more than a gimmick, craft beer has enjoyed startling success.

As the beer industry has aged, it has both matured and evolved. From its slow infancy to its turbulent teens, craft brewers are now experiencing the complications of adulthood. What started as a fun experiment for some has led to some pretty high stakes. From hobbyist basement systems costing a few hundred or thousand dollars to gleaming new brewhouses costing a few hundred thousand, the craft beer business is hardly just fun and games.

Times are changing quickly in the American beer marketplace and they’re not going to slow down anytime soon. In response to double-digit growth, breweries recently producing 10-15,000 barrels per year suddenly produce 75,000 barrels per year and have tank space capacity for many times more. To meet market expectations and changes, these brewers have traded sore backs for aching pocketbooks.

We are thankful that times are good right now and that despite a weak economy and financial hardships, craft brewers are not yet seeing a reversion to old buying habits.
But the nature of the industry itself is also changing in other ways. Many craft beer pioneers are now elder industry statesmen. Fritz Maytag bought Anchor Brewing 43 years ago; Ken Grossman started Sierra Nevada 28 years ago; Jim Koch toted his briefcase from bar to bar 24 years ago. Beyond these well-known figures, many founders of regional breweries have been in the business for 20 years or more now. And as with any other small business, many are owned by one person or a small group of aging entrepreneurs who’ve long been toiling in the brewhouse, glad-handing distributors, and hawking product every weekend at beer festivals. For these hard working individuals, vacations are few and downtime almost non-existent.

And as with any other hard driving profession, it eventually wears you down. With high debt levels and decades dedicated to building up their companies and employees, these brewery owners can’t just walk away. Not to the mention the disappointment felt by their loyal customers who they’ve worked so hard to gain. And so we must look to an uncertain future but one where we can be certain of corporate shakeups and where change will be a constant.

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Homercidal said:

Crap. I really liked their IPA and several others.

And to think that AB won't change the recipe is absurd. Of course they will do whatever the hell they want once they get in there.

On the positive side, expect someone as talented as Greg Hall to announce his involvement with another, or even his own, brewery. It happens all the time.

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Homercidal said:

I don't care what AB or Anybody from GI says. Once AB has control, they will do what they WANT. History is here to teach us something, and from many years working in, and watching the auto industry, I can tell you that anything that sounds like, "Nothing will change, and nobody will be replaced." usually means "... until the buyout/merger is complete, then we start cutting costs and anyone who doesn't like what we are doing can take a walk."

The proof will be shown in the future by the quality of the product.

And it's not any harder for a huge corporation like AB to start up a craft brewery than it is for the craft brewery to start up by itself. It's just easier to buy an already established business and make a few "minor" changes to suit your whims.

I guess I'm taking the glass half empty outlook on this. Lots of historic breweries the world over have been closed when they were promised that they would not be.

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CrazedArmadillo said:

Interview with Greg Hall

Reading his response to the last question, it doesn't sound like he'll be brewing anywhere else... "I can’t really talk about what I’ll be doing for another month or so but it won’t be beer."

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Respond to the idea that you guys “sold out.”

People said we sold our souls in 2006 when we signed a distribution deal with AB but look at what’s happened since then. We are still craft brewers. That year we had just brought out Matilda as a seasonal and were eventually able to make it year-round. We introduced Bourbon County Stout and since then we were able to add variations on it, as well as add Sofie, Fleur, Juliet, Madame Rose, Pepe Nero and Nightstalker. That kind of innovation and dedication to producing craft beers is what drew AB to us.

So how did the deal go down?

About six months ago we hired an investment banker to find money to help build a new brewery to keep up with demand. I mean, last year we had to kill three brands—Nut Brown, Oatmeal and Christmas—because we just couldn’t keep up with demand for everything. But as we found people who had the money to help us, they all wanted control and we didn’t want to give up control for obvious reasons. Then our friends at Anheuser-Busch, who’ve done a great job helping build our brand, called and said "Let's talk." We said "Before we talk, we want to make sure you know we want to keep brewing in Chicago, management in Chicago, decision-making in Chicago and we want to grow brands and add capacity." And they said "Great, that works for us." They’ve told us they’re committed to us because of who we are. I sat across the table from Dave Peacock [president of AB USA] and said "Why Goose and not Sam Adams or someone like that?" and he said "We like your beers, brands and innovations, what you’re doing and want to do with beer and food and we like that you’re in Chicago."

Now what changes?

I hate to say nothing changes. Miguel, a brewer who has worked for us for 20 years, walked in to my office and asked the same thing: Is it going to change? And I said "Miguel, when’s the last year that nothing changed?" and he said "Things change every year." Exactly. So we’ll continue to evolve by introducing new brands. Like, we’re about to release Big John, because with AB helping us add capacity it will enable us to add new stuff and keep up with the growth of brands like Matilda, which has grown 100 percent in each of the last three years. [As for] immediate change, they’re going to help us buy a bunch of new outside 400-barrel tanks so we can make more beer. Other than that, probably the biggest difference in the short term is we’ll have even better distribution. We’re not adding new markets because we expect we’ll get better distribution in existing markets.

And what about long term?

Well, we’ll see how the short-term capacity fix works and then it might be time to look toward a new, bigger brewery. And for me personally, I’m going to be here until April 30 in a brewmaster capacity then after that I’ll be on board as an advisor on beers, branding and strategy, working a minimum of three or four days a month.

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