Brooklyn Brewery sold its international brand rights in Europe and parts of Asia to long-time collaborator Carlsberg for around $130 million last year.
The Danish multinational beer manufacturer reported the June acquisition of Brooklyn’s brand rights within its 2020 annual report, which Beer Marketer’s Insights first reported Tuesday. The move was one of three acquisitions Carlsberg made last year.
“During the year, we strengthened our footprint in Western Europe through the acquisitions of Marston’s brewing activities in the UK, Wernesgrüner Brewery in Germany and the rights to the Brooklyn brand in all our markets across our three regions,” Carlsberg wrote in the report. “In the U.K., the new combined business, of which Carlsberg owns 60%, will significantly strengthen our business. Carlsberg Marston’s Brewing Company has a strong portfolio of international, national and regional beer brands within lager and ale that brings our customers a wider choice. The business will also benefit from the extended distribution to the Marston’s pub estate.”
Speaking to Brewbound, Brooklyn Brewery CEO Eric Ottaway said the two companies had been in discussions for several years about taking their partnership “to the next level” and the timing had nothing to do with the pandemic.
“It was a natural outgrowth of the relationship that we already had,” he said. “As we continue to grow within the Carlsberg footprint, it became clear that that made sense in order to maximize the potential of the Brooklyn brand to grow.
“It just happened to work out that we finally wrapped it all up in the middle of a pandemic,” he added. “There’s no doubt that that was a welcome injection of cash at a time when the business was way, way off, just as it would have been for anybody.”
The territory in Europe and parts of Asia represented “roughly half” of Brooklyn’s overall business, Ottaway said.
The deal will put Carlsberg in charge of the daily sales and distribution operations of Brooklyn in those markets, while freeing up Brooklyn to focus more on brand development, marketing and research and development, Ottaway explained.
“There’ll be things that they work on, there’ll be things that we work on, and it’ll be things that we work on together, and basically they all contribute to the overall brand story,” he said. “We work closely together on everything and we share it all.”
In a section of Carlsberg’s Annual Report titled “Position for Growth,” Carlsberg discussed “investing in Brooklyn” as part of a strategy of growing its craft and specialty business, which grew 1% last year “despite the severe impact of government restrictions.” The company added that its alcohol-free brews increased 11%, with growth in Western and Eastern Europe, “while the category remained small in Asia.”
Carlsberg’s ties to Brooklyn date back to 2004, when it began importing the New York craft brewery’s beer to Denmark. The relationship has developed in the 16 years since, including a handful of joint ventures around the world: Švyturys Brewery in Klaipėda, Lithuania; London Fields Brewery in London; HK Yau Brewing Company in Hong Kong; E.C. Dahls Brewery in Trondheim, Norway; and The New Carnegie Brewery in Stockholm, Sweden.
According to Carlsberg, the most recent deal “will reduce complexity and increase profitability, supporting future growth of the brand.”
In a FAQ about the transaction shared by Brooklyn, the craft brewery said the previous structure of its relationship with Carlsberg “kept both sides from being able to make the optimal investments in the brand to really drive its growth.”
“With those impediments removed, Brooklyn and Carlsberg are more tightly aligned than ever on their collaboration,” the New York craft brewery said. “Brooklyn and Carlsberg will work together on R&D, marketing, brand awareness, and production in order to drive growth of Brooklyn beers.”
Brooklyn also emphasized that Carlsberg holds no investment stake and “no financial links” in Brooklyn beyond owning its international brand rights in those territories.
Brooklyn itself holds minority stakes in 21st Amendment in San Francisco and Funkwerks in Fort Collins, Colorado. The company also sold a 24.5% stake in the business to Japan’s Kirin Holdings in 2016.