Founders Brewing Co. sells 90% stake in Mahou San Miguel

Founders Brewing Co., Michigan's largest brewery, will hand over majority ownership to its Spanish brewery partner, creating a shockwave on the state's craft beer scene.

Documents filed by the founders last week with the Michigan Liquor Control Commission indicate that the Spanish company Best Beer Inc., a subsidiary of the Mahou San Miguel group, will hold a 90% stake in the company based in Grand Rapids from January 2020. Mahou San Miguel previously bought a 30% stake in December 2014.

Founders co-founders Mike Stevens and Dave Engbers in 1997 will each hold a 5% share.

MiBiz.com has for the first time announced the transaction Thursday afternoon. The founders confirmed this decision in an email to the Free Press soon after.

"Since 2014, we have excellent relations with the Mahou group," said the founders in a statement. "We are fortunate to have a partner with whom we can exchange brewing knowledge and a business strategy, which also reflects our values ​​as a business." Daily activities will continue to be run by the existing founding team We will continue to manufacture the beers we like and have a partner in the Mahou group, who is as passionate about beer and the future of the founders as we are.

"The founders will remain autonomous in the management of their activities, products and teams Engbers and Stevens will continue to be shareholders of Founders and have no intention of leaving, their commitment to the brewery will remain unchanged and their roles and responsibilities will continue as they are now. "

More details of MiBiz.com:

Mahou's investment allows the Founders to buy back the more than twenty-odd minority shareholders accumulated over the years, including family members of various executives, local businessmen and businessmen. Other investors, according to documents filed by the MLCC.

…

According to documents received by MiBiz via a request under the Freedom of Information Act, the acquisition agreement entered into in 2014 by Founders-Mahou for the 30% stake, valued at approximately $ 96.3 million. dollars, included a provision allowing Mahou to acquire the rest of the company from the fifth year. after the initial agreement.

The move involves two things: money and growth. Mahou San Miguel, founded in 1890, is a major international brewer. The 30% minority stake it has bought back in December 2014 has allowed Founders to expand its growth capital and expand its reach around the world in recent years.

It also allowed the founders to overtake the Bell & # 39; s Brewery, which remains 100% independent, as Michigan's largest brewery in 2017, and become the first Michigan brewery to be distributed in all 50 states. in June.

Founders, the 14th brewery of the United States in 2018, produced 563,700 barrels of beer last year, up from 193,000 barrels in 2014. Last April, Founders and Mahou San Miguel bought 70% of the Avery company Brewing, based in Boulder, Colorado. ., allowing the Founders to brew its All Day IPA signature out of state for distribution.

Are the founders still a craft brewer?

Although Founders Brewing Co. says its day-to-day operations will not change and Stevens and Engbers will stay with it, questions remain about its status as a brewer and the future of its beer.

According to the Brewers Association, an American trade group, Founders is no longer an artisanal brewer for nearly five years, when he sold the 30% minority stake in Mahou San Miguel. The guidelines state that a brewer must produce less than 6 million barrels of beer a year and be owned less than 25% by a member of the alcoholic beverage industry, which is not him. – even a craft brewer.

Many consider that the figure of 25% is arbitrary, which allowed the status of Founder as a craft brewery to remain in discussion. But now that Founders is giving away majority control to a foreign company, one may wonder if Founders remains an American company, let alone a Michigan brewer.

Stevens does not seem concerned about these distinctions. He sees this approach as an opportunity to resist the potential storms of American craft beer which, despite the exponential growth of the last 15 years, has seen its dynamics slow down.

"We really have to start looking beyond the craft and this industry," Stevens told MiBiz.com. "We are starting to see a slowdown in this sector, but there are so many opportunities when you really start to look at it and evaluate the beer industry.

"Eighty percent of the population who drinks beer does not drink craft." What does it mean? This means that there is a profusion of opportunities. This opportunity will require a lot of resources – resources far superior to those of all the craft brewers in our industry – on this occasion with Mahou as our common opportunity to penetrate into a much larger segment of the beer industry. "

What about the beer of the founders?

As with operations, Founders says the beer will not change. But what happened with Goose Island Brewery, based in Chicago, should be a telling tale.

Goose Island, one of America's largest and most renowned craft breweries, was purchased for $ 38.8 million by Anheuser-Busch InBev in 2011. This decision surprised the world of craft beer, one of its pillars being "sold" to a big beer and set off a series of events that led to more intense and intense competition among independent breweries across America. Josh Noel, beer author for the Chicago Tribune, covered the saga in his book "Barrel-Aged Stout and Selling Out".

At the time of the sale, founder John Hall had planned to stay in Goose Island for several years, Noel wrote. He left a year later. Meanwhile, Goose Island's seasonal beer releases – summer, fall and Christmas – have been replaced by three now-discontinued IPAs as hop beers were in vogue at the time, and the production of one. Another popular beer, the 312 Urban Wheat, was transferred to the same Bud Light brewing tanks.

Since then, other craft brewers have sold, such as Lagunitas Brewing Company (in Heineken) and Ballast Point Brewing Company (Constellation Brands), to the dismay of many craft beer lovers. AB InBev continued to buy craft breweries, including Four Peaks Brewing Co. in Arizona, Elysian Brewing Company in Washington and Breckenridge Brewery in Colorado.

That similar property decisions affect Founders products is a mystery. For what it's worth, partnership has always been a question of resources for the founders. While expanding its footprint over the past five years on popular beers such as the All Day IPA and the Solid Gold lager, it has continued to offer high quality offerings, such as the Kentucky Breakfast Stout, in March , and brought back his famous Canadian Breakfast Stout. each of the past three years (although this will be a break this fall). The "Mothership Series" also played a crucial role in maintaining the Founders' repertoire of beer in innovative choices.

But yielding majority ownership – and, ultimately, the final decision – to Mahou San Miguel, who has limited experience of craft beer with the exception of Founders and Avery, can only be considered as a risk to the quality of some Michigan residents. most beloved beers.

Brian Manzullo, writer of Spirits of Detroit, covers artisanal alcohol for the Free Press. Contact him: [email protected] and on Untappd, bmanzullo and Twitter, @BrianManzullo and @SpiritsofDET.