It’s been exactly 100 days since Duvel Moortgat, the Belgian owners of Brewery Ommegang in Cooperstown, N.Y., officially closed on its acquisition of Kansas City, Mo.-based Boulevard Brewing. So what’s changed?
Not much on the ground, but a lot in the mind, Boulevard founder John McDonald told Brewbound during a recent conversation at the Craft Brewers Conference in Denver, Colo.
“I have a lot of weight off of my shoulders,” he said. “We needed a higher level of management. I was a brewer and all of a sudden I had 120 employees and had become a businessman. I didn’t love that.”
Although exact terms of the deal — announced last October — were not disclosed, the buyout was pegged at $100 million by sources familiar with the transaction.
The driving force behind the deal, Duvel executives said at the time, was the chance to simultaneously enhance both companies’ distribution footprints, which only have 23 states and Washington, D.C. in common.
“The combination of Boulevard and Duvel makes us a bigger and more important business partner for our wholesalers,” Michel Moortgat, the CEO of Duvel told Brewbound.
But much like assembling a complicated jigsaw puzzle, Duvel and Boulevard executives are still trying to make all of the pieces (in this case, the distributors) fit.
“This isn’t something that we are dying to do,” McDonald said when asked about wholesaler consolidation. “But like every brewery, you look at your long-term plan.”
In Boulevard’s backyard, the distribution rights to the Duvel and Ommegang brands were recently transferred. Glazer’s and Missouri Beverage Co., which had been distributing the Duvel and Ommegang brands, sold the rights to nine wholesalers that currently sell Boulevard products.
Nonetheless, Duvel executives aren’t immediately looking to consolidate distribution in areas of the country where Duvel, Ommegang and Boulevard wholesalers are not aligned, McDonald said.
Synergies
But distribution is just one piece of the puzzle and, in the first 100 days, the pieces have just started to fit. There have been a few financial upsides as a result of the merger as well, McDonald noted.
“The breweries themselves remain independent but there is some financing that can be shared between the two companies,” McDonald said.
Increased access to raw materials, cost savings from bulk purchases on malt, corks, wire hoods and point of sale materials are all benefits of the deal, McDonald said.
Beyond the financial upside, one major advantage the two companies have realized is the ability to learn from each other.
“There have been at least 10 to 15 men and women from Belgium that have come over in the last couple of months,” said McDonald. “They want to come over and see what they have got. I think they have been impressed and I think we have taught them a few things.”
Organizationally, the combined companies now have 60 sales representatives, five of whom are exclusively focused on growing retail chain business.
“I think we went from having one chain person to now having five,” McDonald said. “I think we will start to see some good things happening there.”
In the brewhouse, Boulevard brewmaster Steven Pauwels and Ommegang brewmaster Phil Leinhart have been able to share brewing strategies and improve certain processes, McDonald said.
Still, McDonald maintains that the biggest advantage the two companies have is an intangible one.
“I think this is kind of clichéd, but it is opportunity,” McDonald said. “I don’t think we have really realized the opportunity yet, but we all feel it is there.”
To explain the “opportunity,” McDonald recalled a recent sampling event where he poured both Boulevard and Duvel beers for shoppers at a Kansas City Costco.
“Selling Duvel to people in KC is an easy sell,” he said. “It was like selling candy to kids. It is just a matter of time before we realize all of the potential.”
In the meantime, Boulevard will embark on a $12 million expansion, which the brewery is calling the “Cellar 5 Project.” It includes the addition of nearly 100,000 barrels of fermentation capacity and will begin next week. McDonald hopes the build out will be completed by the summer of 2015.
As for the future, McDonald is optimistic.
“We have combined some great breweries and Duvel has protected the historical entities of its breweries in Belgium,” he said. “That makes me feel comfortable on what their plans will be for us.”