In this highly competitive era of brewing, the daily news delivers a steady drumbeat of brewery buy-outs, closings, and mergers. The rate has rendered many of these bulletins mere background music, barely acknowledged if at all. But some brewery sales can still reverberate as loudly as a gong at a silent retreat. On May 9, news broke wide that Boston Beer Company, the makers of Samuel Adams beer, bought Dogfish Head Craft Brewed Ales for $300 million, putting two of America’s most iconic craft breweries beneath a single umbrella.
“Together in the marketplace, we’re exponentially more powerful than one or the other of us,” says Dogfish Head founder Sam Calagione, who notes that it’s a “challenging moment to be a mid-size brewery.”
The move may seem a little left field on the surface, but a closer look uncovers a couple reasons for the purchase. For Boston Beer Company, the namesake beverage is an increasingly smaller slice of its economic pie. Sales of the flagship Sam Adams Boston Lager are eroding like a surf-battered sandcastle, the daily tide bringing in fresh waves of competition.
In turn, the beer company has become a formidable beverage company. Boston Beer’s suite of beyond-beer products includes Twisted Tea, Angry Orchard cider, Truly Hard Seltzer, Tura Alcoholic Kombucha, and the Wild Leaf hard tea. Its combined sales far outweigh Sam Adams suite of beers.
Enter Dogfish Head. The beer-steered brewery makes its bones on America’s most popular styles of craft brews, the IPA and tartly approachable sour beers such as the fast-growing SeaQuench Ale. In particular, SeaQuench has found a following with fitness-minded beer drinkers battling the (beer belly) bulge, part of Dogfish Head’s big play in the better-for-you beer category. (This year, it rolled out Slightly Mighty, a 95-calorie session IPA.)
“Craft brewing has always been the heart and soul of Boston Beer Company,” says founder Jim Koch. Buying Dogfish Head can be seen as “our statement that this remains at the heart of the company.” (Boston Beer Company’s A&S Brewing subsidiary also owns Brooklyn’s Coney Island Brewing, as well as other smaller breweries including Miami’s Concrete Beach and Angel City, located in Los Angeles.)
By joining forces, the breweries can build a beverage powerhouse able to stand strong, no matter which direction the trendy winds gust. “When we looked at our portfolios, we thought, ‘Wow, these are so complementary,’” Calagione, whose brewery also operates a growing spirits division, told us. “It felt like we were building this beautiful Amish quilt and we had all these little squares that we could hand-sew together. OK, here’s the distilled-spirits square. Here’s the cider square. Here’s the ales square. Here’s the lagers square. It felt very natural.”
In addition to the Voltron-unite synergies, safeguarding against an uncertain drinking future, Dogfish Head will eventually grow into Boston Beer’s broad, robust distribution network, meaning six-packs of 60 Minute IPA will never be far from hand. “We hope our beers are easier to find,” Calagione says. Greater placement will hopefully lead to greater sales, especially in the face of hop-scented headwinds.
“Every new brewery that opens, their flagship beer is an IPA,” Calagione says. “We’ve got to make sure that 60 Minute returns to growth.” Supermarkets, convenience stores, gas stations, liquor stores, and more are especially important to both breweries, which sell around 99 percent of their beer through the traditional three-tier system, not directly out of taprooms.
Don’t expect Dogfish Head to outsource production to Boston Beer breweries, tweaking recipes and techniques. “We wouldn’t be doing this if Dogfish Head weren’t making great beers in their brewery,” Koch says.
What might happen, though, is if there’s heightened demand for certain Dogfish Head brands, Boston Beer can help clear a production bottleneck by brewing and packaging beer. Even if that happens, the ownership will be clear. In the future, expect Dogfish Head and Sam Adams logos on all bottles, cans, and packaging materials. “We can set an example for…other breweries about being transparent with the consumer about who makes the beer,” Koch says.
Additionally, the breweries will share talent and brainpower to design new beers and beverages. Everything is on the table. It’s a new world of brewing, one that welcomes and even demands restless creativity. From hard cider to culinary focused beers, Sam Adams and Dogfish Head have long been ahead of the curve, creating trends instead of following them. The union of deep distribution and forward-thinking ownership augurs well for the future, no matter if we’re drinking double IPAs, hard tea, or another wild new fermentation.
“When you bring two innovative brewing teams together, you’re going to get magic,” Koch says.