Brew enthusiasts desperately needing an excuse to further loath one particular American craft beer giant got some fairly nourishing sustenance this week. Boston Beer Co. (BBC), the second largest U.S. craft brewer, and Dogfish Head Craft Brewery announced Thursday they will join forces seeking to remain relevant in an ever changing independent brewing marketplace.
The deal between the two industry pioneers is said to be valued at $300 million in cash and stocks, which is mostly a one-way transfer from BBC in those terms. What Dogfish Head brings to the table—besides the 13 spot on the Top Craft Brewing Companies list—is a broad portfolio of moderately priced beers (for craft), still well sought after by aficionados, even though the brand can be found in most of America’s chain grocery stores.
As longtime veterans of the modern craft beer movement, it is apparent that the two companies have congruent business and marketing interests, as both have been revered and now face similar challenges in an industry which has grown from around 1,000 competitors—at the time of the younger’s inception—to currently over 7,000. And in a market where what is trendy is driving lots-o sales, being one of the oldest brands around—however way-paving it’s been extolled—doesn’t well underwrite target demo reach.
Granted, a rusty image is more of a problem for Sam Adams (BBC) in this era than it is for Dogfish Head. The former spent most of its public-facing life going up against the likes of Budweiser and Miller. The phrase craft beer wasn’t around in common usage in 1984 to help shape the initial presentation of Samuel Adams Boston Lager, but that’s not to say founder Jim Koch didn’t draw inspiration from artisanal methods for making beer. In fact, shaking things up was a part of his rebel rousing message at the time.
Despite Koch’s path clearing (some might call it: checkpoint demolishing—that’s if you’re remotely familiar with the despotic reign of Anheuser-Busch), his personality may have gotten in the way of his being regarded as a craft beer hero. After all, he was tied to a campaign against recreational pot, did some self-aggrandizing in the New York Times and most recently praised an unpopular president for being the recipient of a privilege probably very few Sam Adams drinkers shared with him.
Contrast that with the 90s grunge persona of Dogfish Head co-founder Sam Calagione and you might have a recipe for a salvagable craft beer merger. After all, the Rehoboth Beach, MD brewery is a cool 12 years younger than BBC, and Dogfish Sam is well known in the beer-loving community for his “off-centered” taste in life, as well as brewing. Certainly, the prosperity of a craft brewery does not rest solely on the foibles of the face of the company, but both of these brands have tied their identities more closely to the founders’ whims than most.
Regardless of what may arise from this new collaboration—which, although the largest, is hardly a first of its kind; i.e. CANarchy Craft Brewery Collective and Artisanal Brewing Ventures—there is an institutional guarantee that it will be deemed a craft brewery. Previously being privy to tremendous year-over-year growth, Boston Beer Co. has found itself in jeopardy of being stripped of such merit only to be saved by controversial Brewers Association rule changes (increasing production limits on its official craft brewer definition). Even adding Dogfish Head’s several-hundred-thousand barrels of volume, at current trends, will keep BBC under the BA’s 6 million bbl per year cap.
The merger aspects—reflective of an acquisition—will undoubtedly remind many beer lovers of similar moves made by macro beer producers over the past half-decade; however, the actors involved in this transaction say all is good and that this is simply something the two must do to compete in an industry experiencing unprecedented consolidation.
“More than a dozen of our peers have sold to international conglomerates, others have come together through platforms bringing a handful of craft breweries together in roll-ups,” the founders of Dogfish head, Sam and Mariah Calagione, said in a statement. “While neither of those strategies appealed to us, we did realize that Dogfish Head would be a stronger company with the support of our friends at Boston Beer, and vice-versa.”
Critics have long conflated VC injections or minority stake sales to non-brewing capitalists with the anti-competitive, sometimes-illegal behavior of the tax-evading, non-American monopoly AB InBev. Those contrarians will predictably strike upon this announcement with the same tactics. But, rest assured, this instance is nowhere close to being the same as craft beer’s worst enemy buying up local and regional favorites in order to disrupt independent distribution and shut out small brewers’ retail access.