A-B buying New York's Blue Point Brewing

2014-02-05T12:00:00Z 2015-09-23T11:25:04Z A-B buying New York's Blue Point BrewingBy Lisa Brown lbrown@post-dispatch.com 314-340-8127 stltoday.com

Anheuser-Busch is broadening its portfolio of beers by acquiring a New York craft brewer, seeking to replicate the success that the country’s largest brewer had with its 2011 acquisition of Chicago brewer Goose Island.

St. Louis-based A-B, maker of Bud Light and Budweiser, said it would close on its purchase of Patchogue, N.Y.-based Blue Point Brewing Co. in the second quarter for an undisclosed amount.

Blue Point brewed 60,000 barrels in 2013, with half of that volume coming from its flagship brand, Toasted Lager. That’s slightly larger than St. Louis’ largest craft brewer, St. Louis Brewery, maker of Schlafly beers, which produced more than 56,000 barrels last year.

Founded in 1998, Blue Point makes more than 40 beers, including Hoptical Illusion, Sour Cherry Imperial Stout and No Apologies Double IPA. Its beers are sold in 15 states, primarily on the East Coast. The brewery, which has 32 employees, will maintain its facility on Long Island.

Morningstar senior equity analyst Thomas Mullarkey said A-B would use its scale to grow Blue Point in the same way it has grown Goose Island in Chicago. Goose Island’s sales jumped from 152,000 barrels in 2011 to 208,000 barrels in 2012 after its sale to Anheuser-Busch.

“They’ll follow that same blueprint,” the analyst said of A-B. “Budweiser has breweries all over the U.S., and if a brand takes off, they can make it all over the country.”

The Blue Point acquisition will also broaden A-B’s portfolio of beers that compete with craft beers for shelf space and tap handles, Mullarkey said. “I think it’s a continuation of what A-B has been doing,” he said.

A-B has made several big investments in craft breweries. It is a part-owner in Portland, Ore.-based Craft Brew Alliance, a holding company for Redhook Ale Brewery, Widmer Brothers Brewing, Kona Brewing Co. and Omission Beer.

In 2011, A-B bought Chicago craft brewer Goose Island for $38.8 million. After the sale, Goose Island expanded distribution nationally.

A-B has tapped Goose Island CEO Andy Goeler to provide guidance and assist in the transition of bringing Blue Point under the ownership of the world’s largest brewer.

“We have some experience we can bring to Blue Point, including the transition into more A-B wholesalerships,” Goeler told the Post-Dispatch. “We’ll allow them to do what they do, and not get involved with brewing their beer.”

Blue Point, which has some of its beer brewed under contract, was limited in its ability to grow, prompting the sale to A-B, according to its founders, Mark Burford and Peter Cotter, who will continue to oversee operations.

“More people will be able to drink our beers, and we’re very excited about that,” Cotter said in an interview.

A-B plans to invest in Blue Point’s operational capabilities to extend its distribution beyond markets where its beers are currently sold.

“We look forward to working with Mark and Peter to accelerate the growth of the Blue Point portfolio and expand to new markets, while preserving the heritage and innovation of the brands,” A-B CEO Luiz Edmond said in a statement.

A-B is the North American unit of Belgium-based A-B InBev. While sales of its flagship brands, including Budweiser, are growing globally, domestic sales of its largest beer brands are down. Bud Light volume in the U.S. declined 3.8 percent in 2013, according to estimates by industry publication Beer Marketer’s Insights, and Budweiser dropped 4.8 percent. For all brewers, the top 12 brands in the U.S. declined 3.7 percent in 2013.

Craft beer sales, however, have surged in recent years. Craft beer volume in the U.S. grew 15 percent in 2012 to 13.2 million barrels, according to the Brewers Association, a Denver-based trade group.

That growth has led to some recent acquisitions in the industry. In October, Belgium-based brewer Duvel Moortgat announced a deal to buy a majority stake in Kansas City-based craft brewer Boulevard Brewing Co., Missouri’s largest craft brewery.

“I don’t see it as a trend, but some people who started breweries are getting older and evaluating their exit strategies,” said Brewers Association director Paul Gatza. “Craft beer is growing so rapidly, a lot of people, the big brewers, are looking at how to take advantage of the market, and others are looking at how to get money out of it.”

Lisa Brown is a business reporter at the Post-Dispatch. Follow her on Twitter @LisaBrownSTL and the Business section @postdispatchbiz.

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