She said.......
It's about the beer
                       He said........

Gina Miller            and                Bill Keeper
GINA-

Hey Bill,  

It's the deal heard round the beer world.  Sam Adams brewer Boston Beer Co. just announced
it would buy Dogfish Head Brewery in a cash-and-stock deal valued at about $300 million.  The
pact, which marks the biggest acquisition in Boston Beer’s 35-year history, represents one of
the biggest craft beer deals in an era of consolidation.  This deal is a little different to me in
that it is “brewer on brewer,” and one of the first times we’ve seen one craft brewer buying
another.

My first thought on hearing about it is that the deal is taking away Dogfish’s innocence,but
logically it might be smart just to wait and see what happens, considering that the merger
secures Sam Calagione, Dogfish's founder, a spot on Boston Beer’s board, as well as 406,000
shares of the company’s stock. That move will make Calagione and his wife, Mariah, the
largest shareholders behind founder Koch.  So he has a significant interest in continuing to
make great beer.

Both companies will retain their status as craft brewers by the Brewers Association’s. definition,
which requires that craft companies brew less than six million barrels of beer annually, and
have less than 25 percent ownership by a “beverage alcohol industry member that is not itself
a craft brewer.  Bill I know you disagree with the always changing definition but that's the way it
is so deal with it.

My initial reaction was surprise, as Sam — while he took on a financial partner a few years ago
— has been one of the most vocal proponents for independence. Now he will be a part of a
publicly traded company with quarterly earnings, analyst expectations and the pressure that
comes with that.

Bill, even you have to admit that Boston Beer has done an incredible job of innovating outside
of their traditional beer portfolio with Twisted Tea, Angry Orchard and Truly. Conversely,
Dogfish Head’s innovation within their beer portfolio has been equally as impressive. Dogfish
Head probably spends 98% of their time thinking about beer and beer innovation, with the
other 2% spent on their craft spirits play. Given the scale of Jim Koch’s portfolio in beer
adjacencies, Boston can’t spend as much time on beer as they probably would like. So, I think
this gives Jim and his team a trusted friend in Sam who can continue to innovate within and
around more traditional beer. On the other side, this gives Dogfish Head instant access to a
national supply chain capability, a larger sales team and strong chain relationships.

To me the merger is a win for Sam, a win for Dogfish, and a win for craft beerdrinkers.

That's it from me, chug-a-lug, Bill.....see you next time!
BILL-  

Hello Gina -

I too was surprised at the merger but I think this is good news for the craft beer industry and
craft beer lovers everywhere.

It makes both companies less vulnerable to being bought out by a major corporation.
Within craft beer there are at least two tiers: At the local level are microbreweries with small
footprints but fierce brand loyalty. Then there’s a second tier occupied by Boston Beer
Company and Dogfish Head, brands that you can find in almost any American grocery store, but
that have maintained their independence.

The latter group is a major target for companies like MillerCoors, AB In-Bev, and Constellation
Brands, the three largest beer companies in the United States. All three do a remarkable job of
buying craft breweries and then obfuscating the fact that they’re owned by multibillion-dollar
corporations. (Think MillerCoors–owned Blue Moon, AB In-Bev–owned Goose Island, and
Constellation Brands–owned Ballast Point.) But by pooling their resources the two companies
will likely be too powerful on their own to ever consider selling. Through Boston Beer Company,
Dogfish Head will join one of the largest distributors of craft beer in the country without losing its
identity.

A merger like this, between two well-known craft breweries shows that an alternative to
shuttering or “selling out” could be consolidating resources with another craft brewery with the
same values and dedicated following. Others can now follow this pathway.

Gina, think of the merger as a giant middle finger to beverage corporations.You may recall that
not once, but at least twice AB In-Bev, has fired shots at the craft beer industry. First, in 2015,
with a Super Bowl ad which states that they proudly brew “macro beer” that’s “not brewed to be
fussed over” and again in 2017 with a national ad that criticized the use of unusual ingredients
in craft beers. For the most part, craft brewers and people who love their beers have had to
take these not-so-subtle digs on the chin, but a massive merger like this between two
independent breweries is as significant screw you from  the craft beer industry.

Lastly I'm hoping we beer lovers will get some great new beer collaborations out of this.  I know
you remember  that back in 2011, the two breweries collaborated on Savor Flowers, a barrel-
aged beer made with rosewater, lavender, hibiscus, jasmine, rosebuds, and a obscure hop
varietal known as #369.  If they came up with that imagine what they might do now!

Here's looking at you Gina
Round 91
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