On Thursday, Boston Beer, makers of Sam Adams, and Dogfish Head Craft Brewery shocked the beer world by announcing that the two independent breweries would merge. More specifically, Boston Beer acquired a controlling stake in Dogfish, bought with Boston Beer stock. Founder and longtime craft beer cheerleader Jim Koch, majority owner of Boston Beer became the majority owner of Dogfish. While the Dogfish owners—and craft cheerleaders—Sam and Mariah Calagione, became the second largest owners in both operations. In an age of beer when the biggest craft brewers are getting acquired by huge beverage companies, like Ballast Point selling for a $1 billion to a wine and liquor conglomerate, and Lagunitas went for an undisclosed but likely similar amount to Heineken, how does the second largest craft operation buying the 13th largest compare? Or more most importantly, what the hell does it mean for the beer? "The shortest answer is nothing," says Sam Calagione (pictured left). "But our beers will be easier to find, so drink the shit out of Slightly Mighty IPA even if we're at 88-percent capacity on our canning line." Sam, always a straight shooter, is likely right nothing will change for the consumer. And that's largely because of the merger. That canning line capacity problem he mentions is very real. Earlier this spring, Dogfish launched a 95-calorie IPA named Slightly Mighty ( we're fans ). Their initial plan was to brew 5,000 barrels (10,000 kegs or 69,000 cases), but a flood of orders now puts their projections for the beer closer to 40,000 barrels. Continued growth, says Sam, would force the brewery to install additional canning lines at a cost of at least $20 million. Now with access to brewing capacity at Boston Beer's facilities, our stream of low-cal IPA (as well as cans of 90 Minute IPA, also growing) will remain uninterrupted. But there are better reasons to merge than avoiding a new canning line. Both companies may seem strong, they're everywhere after all. But Boston Beer and Dogfish are getting pinched in the middle of the beer market. Below are thousands of smaller taproom-based brewers (rightfully) gobbling up local dollars with their fresh-as-fresh-can-be beers. And above are the international giants of Anheuser-Busch InBev, MillerCoors, and Heineken that have the market share and money to sway the market regardless of taste. Combined, Boston and Dogfish will still comprise less than 2 percent of the U.S. beer market. Even if Boston is holding steady and Dogfish continues to grow, Koch and Calagione know the beer market is as competitive as it's ever been. And the longtime allies saw an opportunity to strengthen both brands with complementary strengths. In short, Dogfish is a leader in being a loud and proud brand capable of creating the most dedicated followers. And Boston Beer offers the marketing, business, and operational acumen to run a true coast-to-coast brand (Dogfish is currently in 44 states). Both have expanded beyond just beer to what they describe as, other beverages for beer drinkers. Boston Beer has Truly hard seltzer and Angry Orchard hard cider, and Dogfish has it spirits distillery. Calagione also points out, half joking, that he could help the Sam Adams team make a continuously-hopped (like their 60 Minute IPA) lager, should they feel the need. Yes, the announcement was a surprise for the beer drinkers, the important news is that Dogfish Head's growth can continue uninterrupted as we hit summer beer-drinking season. This content is created and maintained by a third party, and imported onto this page to help users provide their email addresses. You may be able to find more information about this and similar content at piano.io<doc-sep>Food & Drink Sam Adams and Dogfish Head Just Merged. We Talked to Their Founders About It. Courtesy of Boston Beer Company Thursday, news broke that Boston Beer Company (makers of Samuel Adams, Angry Orchard ciders, and the TRULY brand of hard seltzer, among others) would merge with Delaware’s Dogfish Head Brewery. A joint press release valued the deal at around $300 million in cash and stock; shares in BBC (stock ticker: SAM, because of course) have climbed around 5% since the announcement. Some people will tell you that craft beer is not like other businesses. Boston Beer Company founder and chairman Jim Koch and Dogfish Head co-founder Sam Calagione are two of them. They think beer companies should be led by “brewers first, and businesspeople second,” and that corporate independence -- as defined by the Brewers Association, a trade group on whose board they have both served -- is a critical ingredient of authentic craft beer. But as the number of American breweries ticks past 7,400, macrobrewers have proven they can buy and operate craft brands without facing revolt from the drinking public. Consolidation, not creativity, is the buzzword in the beer industry these days. In other words, instead of looking like America’s “strangest, happiest economic story,” craft beer is starting to look like, well, just another business. Having covered the beer space for the better part of the decade, I’ve interviewed both Koch and Calagione several times. With the precipitous state of the craft beer industry very much on my mind, I spoke to the two men again by phone as they drove from a press event at New York City’s Eataly to Dogfish Head’s brewery in Delaware. This interview has been edited lightly for brevity and clarity. Thrillist: Jim and Sam, thanks for getting on the phone. Congratulations on the deal. Jim Koch: We’re in the car here. Sam Calagione: Lot of road noise. Koch: If you can hear clinking in the background, you can imagine what that is. Calagione: The carrot on the stick at the end of our journey! Nice. I'm in Asheville, North Carolina right now. I want to start with a question on a lot of people’s minds, or at least my own. How is this deal any different from a macrobrewer like ABI acquiring a craft brewery like Wicked Weed? Koch: It's totally different. This is two independent craft brewers joining forces. This is not a big global brewing conglomerate buying a small American craft brewer. Second, both Sam and I have always been strong advocates for transparency and believe that beer drinkers have the right to know who brews their beer. We both had issues with big brewers buying craft brewers without letting the consumer in on that fact. We intend to do what Boston beer has done with our innovation breweries like Angel City, Concrete Beach, and Coney Island. We are very proud to put Boston Beer Company on [their labels] as a brewer. We’re equally proud to have our name on Dogfish Head’s beers. They feel the same way. Calagione: We're very proud to be independent craft brewers, and thankfully that's not a subjective concept. Our trade group, the Brewers Association, which represents the vast majority of America's 7,500 craft breweries, has the definition of indie craft, and we're proud to be within that. We also have a seal that only true indie craft breweries can put on their packaging. Our companies believe in that seal because we believe consumers want to know who makes their beer. And when we believe there's a lot of consumers who will be proud to buy beer made by a true indie American craft brewery and one that has the capability to get our beers coast to coast within the three-tier system. How extensively did you guys consult with Brewers Association while you were putting this deal together? Koch: We didn’t have to, because both Sam and I have been on the board of the Brewers Association. Calagione: While we didn't consult with the Brewers Association, I had a great chat yesterday with Bob Pease, the CEO, and he sees this as yet another example of the creativity and collaborative ethos of the craft brewing community. [In a statement provided to Thrillist, BA president & CEO Pease said: “As industry veterans, Jim and Sam are staunch supporters of the independent beer movement, leading the charge for small brewers and instrumental in growing the overall craft brewing segment [...] They will no doubt continue to champion for the more than 7,400 small and independent breweries in the U.S.”] So the trade group is excited. What about customers? If I’m a diehard Dogfish Head drinker or a diehard Sam Adams fan, why should I be excited about this? Calagione: I’ll start. In a word. Accessibility. It'll amplify the accessibility of both of our portfolios. On a national level, it's very challenging when essentially four international conglomerates control over 80% of America's beer market. It's challenging for the little guys to break through that noise and get our brands to the consumer, no matter how much [the consumers] desire it. Well now with our combined scale or combined creativity are a combined network of, uh, of distributors. We'll be able to get that beer more easily into consumers' hands. Koch: This brings together brewers with a long track record of innovation and creativity. And it's been my experience that when you put creative individuals together, cool things happen that might not happen if they're innovating in their separate silos. Courtesy of Boston Beer Company You’re two very different people with very different definitions of innovation and creativity. How do you fit those two different personality types together to be complementary, rather than butting heads? Koch: Sam and I have already done this. Eight years ago, we brewed the first collaboration beer for a high-end food and beer tasting held by the Brewers Association called Savor. Sam had the idea for it. It was going to be called Savor the Flowers and we were going to use flowers including hops in new and different ways. I thought was very cool. He had this other idea is that we would collaborate on this beer old-school, by writing letters back and forth. The actual experience of sitting there writing a letter to Sam -- folding it, putting it in an envelope, licking the envelope, licking the stamp, writing it, sending it to each other’s homes -- created a whole different set of sensory experiences. I called it the world's first epistolary beer. We were experimenting with this new hop that was not even on the market. [BBC’s] hop dealer in Germany had developed this new hop called 369. They were calling it Tutti Frutti. We made probably the first commercial beer with what is now known as the Mosaic hop. And it's become a staple of craft brewing. Calagione: I just learned something. I didn't realize that we used to be called Mosaic and it was great. Dave, even in your story, I'm actually learning something about that. Jim, I assume that you've been approached many times over about acquisition opportunities with breweries that look like a Dogfish Head, or had a similar portfolio, et cetera. Why Dogfish Head? Koch: You're right on the first assumption, not quite right on the second. I would guess I’ve turned down maybe 100 proposals [for BBC to acquire breweries.] But where you’re wrong: none of them were like Dogfish Head. There’s just a bunch of “soft synergies” here. We share the same mission: the survival and hopefully the prosperity of independent American craft breweries. We have the same company values. A lot of the transactions are out there are basically people wanting to turn their brewery into cash and go sit on a beach somewhere. Over the years, Sam had many such opportunities to do that. He was interested in joining forces with us, and it still is basically not taking a penny out of this merger. So the Calagione family will be the second-largest non-institutional shareholder [after Koch himself.] He is all in on this newly merged company.<doc-sep>At face value, the $300 million decision by Sam Adams maker Boston Beer Company (SAM) to buy Delaware craft beer leader Dogfish Head might just look like another opportunistic move to snag a growing craft brand at a time when beer’s overall popularity in the U.S. continues to sag — but there’s much more to the merger than that. With beer in general losing national market share to wine and hard liquor, according to a recent Beer Institute report, beer makers like Boston Beer have turned to hard seltzer and ciders to help counter the trend. Its spiked seltzer brand Truly and Angry Orchard cider have both done just that for Boston Beer co-founder Jim Koch as sales of its flagship Boston Lager slipped by double digits in 2018, according to retail tracker IRI. Scooping up a quickly growing competitor in Dogfish Head, which saw its popular IPAs and sour beers propel it to 9% growth last year, would be a much needed boost to Boston Beer’s core business, but perhaps even more than just that down the line, especially as Dogfish Head co-founder Sam Calagione grows his role in the merged company. Beer sales drooped in 2018 to fall to just 49% of overall alcohol share in the United States, according to Beer Institute chief economist Michael Uhrich. “I do believe that Sam, who’s shown this enormous creativity within beer, can bring some of that to [our offerings] beyond beer, which is kind of a wide open space in a lot of ways sort of like craft beer was 30 years ago,” Koch told Yahoo Finance YFi PM. “And you have more and more craft brewers thinking about what we did 30 years ago which was expanding.” ‘One best path forward’ Calagione, who has built up a reputation for expanding and experimenting since the 90’s when he started homebrewing with spoiled cherries in his New York City apartment, expressed his excitement at having the opportunity to continue doing so under the Boston Beer umbrella rather than taking the path some other craft brewers have taken, which involves being acquired by major beer conglomerates. In considering a merger, Calagione said he and his wife never even contemplated the latter. Story continues “As we looked at our options and looked at how complementary our portfolios are it really became clear that it was not an option,” he said. “There was [only] one best path forward.” A decline in sales for Boston Beer Company's flagship Boston Lager in 2018 was more than offset by growth in its "beyond beer" brands like Truly spiked seltzers and Angry Orchard ciders. The press release announcing the deal highlights that Calagione is expected to be named to Boston Beer’s board by 2020, joining Koch who serves as chairman. Current Boston Beer CEO David Burwick, 50, is expected to oversee the merged operation. However, industry insiders are already speculating that Calagione, 49, could at some point assume the role considering both founders share certain quirky entrepreneurial similarities and the fact the deal crowned the Calagiones the company’s largest non-institutional shareholders behind Koch by gaining more than 400,000 Boston Beer shares. “I do see kind of that same kind of off-centered spirit in both of us,” Koch said about his new partner before making one last joke about Calagione’s background to finish his interview with Yahoo Finance. “I mean this is a guy who never graduated high school because he got kicked out.” Reflecting on founding his company with his former Boston Consulting Group co-worker Rhonda Kallman, Koch laughed and turned to Calagione saying, “She never went to college, but she did get through high school, so she’s ahead of you.” Cheersing his beer with Koch’s following the roughly $127 million windfall in shares from the merger, Calagione laughed, too. Zack Guzman is the host of YFi PM as well as a senior writer and on-air reporter covering entrepreneurship, startups, and breaking news at Yahoo Finance. Follow him on Twitter @zGuz. Read more: Blue Moon's creator launched a cannabis beer that sold out in 4 hours Constellation Brands shareholders are getting Canopy Growth almost for 'free': Canopy CEO<doc-sep>
Boston Beer Company, the business that makes Sam Adams beer, is acquiring Dogfish Head Brewery. The deal is valued at about $300 million. "This merger better positions Dogfish Head and our coworkers to continue growing within this definition for many years to come," Sam Calagione, the founder of Dogfish Head, said in a statement. Visit Business Insider's homepage for more stories. Boston Beer Company, which makes Sam Adams beer, is acquiring Dogfish Head, a Delaware craft brewery. "Not only are Dogfish Head and Boston Beer two original American breweries, but Jim Koch and I worked hard with other leading craft brewery founders and the Brewers Association to develop and champion what defines independent American brewers," the Dogfish Head founder Sam Calagione said in a statement on Thursday, referring to the Boston Beer founder and chairman. "This merger better positions Dogfish Head and our coworkers to continue growing within this definition for many years to come." Calagione added that he and his wife, Mariah, would be "reinvesting nearly all of the proceeds back into the combined entity," as well as establishing a philanthropic foundation with a portion of their newly acquired Boston Beer stock. The merger of the publicly traded Boston Beer Company, which also produces Angry Orchard cider, with Dogfish Head, the well-known craft brewery prominently featured in the 2009 documentary "Beer Wars," is sure to shake up the brewing industry. The press release said that the transaction was valued at about $300 million and that Boston Beer CEO Dave Burwick would helm the company. Dogfish Head posted a photo on Facebook and Twitter of Calagione sharing a drink with Koch. —Dogfish Head Brewery (@dogfishbeer) May 9, 2019 Though one Facebook user tagged the pair as "shill" and "sellout," not everyone who commented on the post had such a negative reaction. "To the haters: Samuel Adams / Boston Beer may not be perfect, but few people have been as vocal a proponent of craft beer for as long as Jim Koch," one Facebook user said. "I'd much rather DFH merge with them than get bought by Constellation or (gasp!) ABInbev-SabMillerCoors. We know that BBC won't force through drastic changes and expansion into other markets that the brand can't or won't handle." "A lot of you bozos don't understand what selling out is," another person wrote. "Two independent companies merging is WAYYYY different than if DFH went with InBev or another corporation. Relax, it's going to be OK and possibly create a bigger shipping market and MORE BEER." Not everyone was convinced, however. "Sam Adams has been completely out of touch with actual craft beer for a decade at least," one person wrote. "I don't see how this is good." Another added that Dogfish Head was the "last brewery on earth that I thought would sell out." "Not a fan," another Facebook poster wrote. "Dogfish Head has always been fiercely independent with a focus on unique and sometimes challenging beers. I've been to the brewery 6 times, to the brewpub many times. I spent my 31st birthday there and made some incredible memories. This is the last thing that I expected from DFH. What a shame." Yet another poster had a nuanced view, writing that the merger was a "good idea on paper." "Two crafters who are totally not in a competitive market with each other and could definitely compliment the other by being under one umbrella," the poster wrote. "BUT I feel we, as the consumer, are going to lose the unique and off the wall beers Sam and Dogfish Head brought us." More beer lovers posted their thoughts on Twitter: —please kill Bran (@justinsloe) May 9, 2019