Building on its strategic partnership with North Carolina’s Appalachian Mountain Brewing (AMB), Craft Brew Alliance (CBA) today announced it has signed an agreement to become the company’s master distributor.
The new agreement will give the smaller brewer access to CBA’s nationwide network of Anheuser-Busch wholesalers in exchange for an undisclosed per-case distribution fee.
As part of the agreement, AMB will become an “alliance brand,” and CBA – which already owns and produces the Widmer, Redhook, Kona and Omission line of beers — will assume responsibility for marketing, selling and distributing AMB’s core brands, including Long Leaf IPA, Honey Badger Blonde Ale, Black Gold Porter, as well as selections from the company’s small batch series.
“When looking at ways to expand this partnership, there were a number of things we were looking at,” said Andy Thomas, the CEO of CBA. “The obvious first thing is helping AMB grow distribution and the most elegant way to do that is through this master distribution agreement. It was a logical step.”
AMB CEO Sean Spiegelman said the company did not sell equity in exchange for access to CBA’s wholesaler network and management capabilities. Both Thomas and Spiegelman discussed the possibility for a future equity transaction during a phone interview with Brewbound.
“There are a lot of things happening in the beer industry now,” Spiegelman said, referring to the recent surge in craft acquisitions. “At the end of the day, for me representing AMB and Andy representing CBA, both of us don’t see the need of getting into a conversation about what type of equity would be on the table at this point. For us to partner in this way doesn’t require an equity swap.”
Echoing those words, Thomas said the latest agreement will enable AMB to remain “local, authentic and independent.”
“We believe in all of those things and we are trying to be more pragmatic about it,” he said. “We will continue to watch how the relationship develops. I don’t want to say that it will never happen or that we are against it.”
So what’s in it for CBA in the short term? Growing its partnership with AMB will give the company a more “deeply rooted” connection to one of its most important states – North Carolina.
“Widmer Brothers will never be as locally relevant in North Carolina as AMB can be,” said Thomas. “We don’t have a brand in our portfolio that behaves the way AMB can behave. We believe that local should be authentic and real and we are not going to create a brand in a conference room to do that.”
In other words, Thomas believes adding AMB to the portfolio will improve CBA’s chances of putting both Long Leaf and Long Hammer (and Longboard?) on tap in North Carolina and beyond.
“There is a reason why Sierra Nevada and New Belgium are there now,” Thomas said. “It is one of the fastest growing craft beer states and it is a top 10 beer state. I am confident that focusing on North Carolina and the high country and the Appalachian Mountain region will allow both of us to generate serious business results in the coming years.”
CBA said it would also look to extend the partnership with contract brewing opportunities, raw ingredient procurement and recipe development.
“We are pretty hard at work trying to understand the core brands that AMB is commercializing and trying to make available to the people,” said Thomas. “I would hope that before the end of the year, we are brewing in one of our breweries.”
CBA’s Portsmouth facility is currently leading that process, Thomas said.
Both Thomas and Spiegelman said the two companies would continue to assess the long-term growth opportunities and look for additional ways to expand the partnership.
“I think this is beyond geography,” said Thomas. “It is people, culture and brand. I feel like I have been working with Sean for the better part of my career. Our cultures mesh, we share similar values and we want to get the same things done.”
A full press release is included below.
Portland, OR and Boone, NC (March 31, 2015) – Craft Brew Alliance, Inc. (“CBA”) (Nasdaq: BREW), a leading craft brewing company, announced today it will distribute beers for NC-based Appalachian Mountain Brewery, Inc. (OTC: HOPS) as part of a master distribution agreement between both brewing companies. The distribution agreement marks the next phase in CBA’s strategic partnership with the fast-growing NC brewery, and will help extend AMB’s reach in time for North Carolina Beer Month.
“We are committed to bringing distinctive, authentic craft beers and brands that are rooted in community and local heritage to beer lovers across the United States. North Carolina is one of the fastest-growing craft beer states, and the opportunity for Appalachian Mountain Brewery – which is loved just as much for its delicious brews as its leadership in sustainability and community involvement – is tremendous,” said Andy Thomas, chief executive officer, CBA. “We are thrilled to be collaborating with them to bring their beers to more consumers through this distribution agreement, and look forward to continuing to build on our partnership in the future.”
As part of the distribution arrangement, CBA will market, sell, and distribute Appalachian Mountain Brewery’s Long Leaf IPA, Honey Badger Blond Ale, Black Gold Porter, as well as beers from the brewery’s Small Batch Series, exclusively through CBA wholesalers. The beers will continue to be brewed at Appalachian Mountain Brewery’s facility in Boone, and will be available in draught and 16oz can packages. The two companies are also discussing opportunities to leverage CBA’s brewing capacity to increase production of Appalachian Mountain Brewery’s beers to make them available to consumers throughout the Appalachian region before the end of 2015.
“CBA has built a phenomenal national network with its wholesaler partners, and we couldn’t be more excited to become a part of it as we continue to grow our business,” said Sean Spiegelman, chief executive officer, Appalachian Mountain Brewery. “Through this agreement, we expect that AMB beer sales will grow exponentially as we increase distribution in key regions. With NC Beer Month around the corner, we’re looking forward to getting more of our beers into beer lovers’ hands across the state.”
CBA and Appalachian Mountain Brewery entered into a strategic partnership in December 2014. The two brewing companies were introduced after the NC brewery won the Startup Brewery Challenge hosted by Brewbound in Boston. CBA is a four-time sponsor of the contest, in which craft brewery owners have three minutes to present their business models and pour one beer that receives immediate feedback from an expert panel of judges. Following the Challenge, CBA and Appalachian Mountain Brewery had an opportunity to work together on a collaboration beer, and it was during this experience that the companies discovered a strong cultural similarity and mutual interest in exploring a longer-term partnership that would align with both companies’ values and business objectives.
About Craft Brew Alliance
CBA is a leading craft brewing company, which brews, brands and markets some of the world’s most respected and best-loved American craft beers. The company is home to three of the earliest pioneers in craft beer: Redhook Ale Brewery, Washington’s largest craft brewery founded in 1981; Widmer Brothers Brewing, Oregon’s largest craft brewery founded in 1984; and Kona Brewing Company, Hawaii’s oldest and largest craft brewery founded in 1994. As part of Craft Brew Alliance, these craft brewing legends have expanded their reach across the U.S. and more than 15 international markets.
In addition to growing and nurturing distinctive brands rooted in local heritage, Craft Brew Alliance is committed to developing innovative new category leaders, such as Omission Beer, which is the #1 beer in the gluten free beer segment, and Square Mile Cider, a tribute to the early American settlers who purchased the first plots of land in the Pacific Northwest.
Publicly traded on NASDAQ under the ticker symbol BREW, Craft Brew Alliance is headquartered in Portland, OR and operates five breweries and five pub restaurants across the U.S. For more information about CBA and its brands, please visit www.craftbrew.com.
About Appalachian Mountain Brewery, Inc.
We, together with our wholly owned subsidiaries, own and operate Appalachian Mountain Brewery, Inc. Appalachian Mountain Brewery not only makes seriously delicious craft beer, but focuses its business model on community, sustainability and philanthropy. In 2014, AMB participated in the Brewbound Session Boston “Start Up Brewery Challenge” hosted by Craft Brew Alliance (Nasdaq: BREW) and ultimately won the Challenge. AMB also won a silver medal for its Smokey Mountain Schwartz and a Bronze medal for its Crooked Common in the 2014 U.S. Open Beer Championships. Additionally, AMB earned two Gold Medals and won the overall categories in the 2013 U.S. Open Beer Championship for its Honey Badger Blonde Ale and California Common.
FarmToFlame, LLC is a wholly owned subsidiary whose primary function is service at AMB. It is a food truck that features a unique wood fired oven in the truck. This allows AMB to enhance its experience for customers with a casual dining experience that balances innovation and sustainability. FarmToFlame, LLC has been officially certified by ASAP (Appalachian Sustainable Agriculture Project) www.asapconnections.org www.appalachiangrown.org as an AG Partner. It is a prestigious accomplishment for FarmToFlame, LLC to become officially certified as a Western North Carolina grown and produced product. www.f2flame.com
Appalachian Mountain Cidery is a DBA under Appalachian Mountain Brewery, LLC. It expects to begin selling its hard cider line in Q2 of 2015. It currently leased approximately 3,300 square feet of operation space in Boone, NC to begin operations of hard cider using 3rd Generation locally grown North Carolina apples. The production facility will operate (4) 10-barrel fermenters, (4) 10-barrel single wall brite tanks and (1) 20-barrel jacketed brite tank. It has been officially certified by ASAP (AppalachianSustainableAgricultureProject) www.asapconnections.org www.appalachiangrown.org as an AG Partner. It is a prestigious accomplishment for the company to become officially certified as a Western North Carolina grown and produced product.
All of our operations are conducted through our wholly owned subsidiaries, each of which is incorporated or qualified to do business in the states in which it does so.