Thu. Sep 28th, 2023


The Real News Network

Breckenridge Brewery returns to “craft” beer category after sale to Tilray

5 min read

Breckenridge Brewery has not been considered a “craft” operation, per the definitions set by the Brewers Association and the Colorado Brewers Guild, since 2015 when beverage giant Anheuser Busch InBev acquired the stalwart local beer maker in a deal that sent waves throughout the industry. But that’s poised to change following Breckenridge’s sale to global cannabis company, Tilray Brands, which was announced last week.

The cash deal — valued at $85 million, according to a filing with the U.S. Securities and Exchange Commission — includes eight AB InBev brands: Shock Top, 10 Barrel Brewing Co., Blue Point Brewing Co., Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Co., HiBall Energy and Breckenridge. They will join Tilray’s already robust beer portfolio.

The acquisition is expected to close later this year and when it does, the Brewers Association, the Boulder-based national trade group representing craft beer, will begin reporting production data from all of Tilray’s brands in its craft beer figures, said association chief economist Bart Watson.

“They are owned by a company that is not yet large,” he said about Tilray. “We’ll see how many more acquisitions they make, but it’s still well under 6 million barrels. My back of the envelope puts them at about 900,000 barrels after the acquisition,” Watson said.

The Brewers Association limits its members to “craft” companies and defines them as breweries that make fewer than 6 million barrels per year and aren’t more than 25% owned by another alcohol manufacturer that isn’t itself a craft brewery.

By that definition, Tilray is considered craft and is the 9th largest craft brewer in the U.S. by production volume, according to the BA. Company Chairman and CEO Irwin Simon told The Denver Post last week that he believes it will crack the top five once this acquisition is complete.

As a comparison, Colorado’s New Belgium Brewing and Avery Brewing aren’t considered “craft” since they are owned, respectively, by alcohol conglomerates, Kirin Holdings and Mahou San Miguel. Longmont-based Oskar Blues, on the other hand, still falls within the “craft” parameters since its parent company, Monster Beverage, doesn’t specialize in alcoholic beverages.

The Colorado Brewers Guild, meanwhile, limits the production threshold for a “craft” brewery to 2 million barrels annually. Executive Director Shawnee Adelson said she believes Breckenridge Brewery will now qualify and be able to rejoin the guild should it so choose.

“We’re looking at total production of the entire company [Tilray]. So we’d have to double-check all that but I believe so,” Adelson said.

A representative AB InBev’s craft division declined The Denver Post’s request to interview a representative of Breckenridge Brewery for this story.

Individually, Breckenridge Brewery produced 100,000 barrels of beer in 2022, a decrease of 9% compared to 2021, the BA reports. In 2015, production was closer to 69,000 barrels.

A brewery’s ownership or designation may not matter to many people, but Adelson maintained that it’s an important factor when it comes to a company’s access to resources like ingredients, hop contracts or advocacy. The Guild, for example, advocates on behalf of more than 300 small beer makers across the state to ensure their perspectives are represented when laws are changed.

“When you’re looking at an extremely small brewery, the resources they have at their disposal are very limited compared to those that are global brands,” Adelson said. “When you’re looking at larger brands like that, they have the capacity to spend time and energy and resources on their own advocacy.”

Breckenridge Brewery operates a 12-acre, farm-like brewing campus and restaurant, at 2920 Brewery Lane in Littleton, as well as a brewpub in the ski town of Breckenridge, where the company was founded in 1990. The Littleton property opened in mid-2015, just a few months before AB InBev purchased Breckenridge during a buying frenzy that included several other well-known craft breweries across the country.

At the time, AB InBev’s entry into the craft market in that way was a contentious issue for the beer industry nationwide. In Colorado, a battle over whether Breckenridge should be allowed to remain in the Colorado Brewers Guild ended up fracturing the organization when 14 breweries, including New Belgium and Oskar Blues left to start their own trade group that they felt better represented the interest of small brewers.

The split was short-lived and the two groups reconvened about six months later — without Breckenridge Brewery as a voting member.

While giants like AB InBev and Constellation Brands, which were bullish on acquisitions nearly a decade ago, are unloading their craft portfolios, Tilray is snapping up companies to increase its national distribution network and capture market share.

Tilray’s Simon believes the sector has its luster, noting the fact that tequila sales have continually grown while beer sales have largely remained flat — and sees “a big, big opportunity in craft beer to make it cool again,” he told The Denver Post last week.

“How do you steal some of those consumers back from the tequila category to the beer category? From a price standpoint, beer is much cheaper than a shot of tequila and it’s refreshing, but how do you make it fun, how do you make it exciting? That’s something we gotta do,” Simon said, adding he plans to market to different generations of drinkers and explore high-alcohol, low-alcohol and alcohol-free products.

As for Breckenridge Brewery specifically, Simon seeks to create synergy between the brewery and Breckenridge Distillery, which Tilray purchased in December 2021 for $102.9 million. He anticipates the two beverage makers will collaborate on projects and he plans to push Breckenridge beer in markets where the spirits already sell well. The distillery has experienced 30% growth this year, he added.

As a self-described “somewhat Broncos fan,” Simon plans to continue both beverage makers’ partnerships with the local NFL, NBA and NHL teams. On Thursday, Breckenridge Distillery announced two new blended whiskeys to celebrate the upcoming Denver Broncos football season. It will soon release a vodka to commemorate the Broncos’ new white helmet.

Subscribe to our new food newsletter, Stuffed, to get Denver food and drink news sent straight to your inbox.

Source: Read Full Article