Finestkind Brewing, the parent company of New Hampshire’s Smuttynose Brewing Co., has acquired Brooklyn, New York-based Five Boroughs Brewing Co.
Financial details of the transaction were not disclosed. The deal closed on October 23 and was announced to employees at both breweries Tuesday afternoon.
“Smuttynose is a craft beer pioneer, and we share their commitment to high-quality craft beers,” Five Boroughs co-founder and CEO Blake Tomnitz said in a press release. “Under their leadership, we’re confident in the brand’s continued growth, reaching even more craft beer consumers across the tri-state area and beyond.”
Five Boroughs co-founder and CFO Kian Oveissi added: “We are incredibly proud of the foundation laid by the entire team here at Five Boroughs over the last six years. Each team member, past and present, has contributed to the success of the company and collectively propelled us to where we are today. I am fully confident that Finestkind will be great stewards, leveraging resources and economies of scale, to ensure the continued growth and future of what the team here has built.”
In the coming months, Five Boroughs’ production will be shifted to Smuttynose’s facility in Hampton, New Hampshire. However, Five Boroughs will maintain its taproom in the Sunset Park neighborhood of Brooklyn as an innovation-focused hub for small-batch beers.
Runnymede Investments acquired Smuttynose via a foreclosure auction in early 2018 and formed Finestkind as an operating company for its beverage-alcohol investments.
In addition to Smuttynose, Finestkind’s portfolio of brands includes spirits-based, ready-to-drink Island District Cocktails. The company is also exploring expansion into non-alcoholic offerings, and is open to further expansion as a geographically diverse beverage platform.
“We do have a large appetite for more M&A – we have additional capacity that is not utilized,” Finestkind CEO Steve Kierstead told Brewbound. “In the short term, the focus is to really make sure that we’re doing right by Five Boroughs and focusing on the brand Five Boroughs and learning the brand and long term growing the brand, but we do have a big appetite for building a platform.”
One of Five Boroughs’ largest draws for Finestkind is how different the two companies are in terms of geography, portfolio and drinkers, Kierstead said.
“We’re just really excited to be able to acquire a brand that is so strong in a dense community and population,” he said. “We just don’t have that in rural northern New England, and we’re not strong in those markets where they are.
“It really doesn’t appear that there’s any brands in the portfolio that will cannibalize,” Kierstead continued. “It’s a much more youthful brand than Smuttynose, so the complements were there. They have new age IPAs, we have the West Coast, old age IPAs and for those reasons, we have different demographics and different customer base for the most part.”
Kierstead praised Five Boroughs’ ability to zero in on its key offerings with minimal distractions.
“They’ve done a tremendous job with the brands that they have and their core is really strong,” he said. “They don’t have this big wide portfolio and a long tail, and I think there’s something to be said about that – the consumer is very, very engaged with their brand and, for the most part, with their core.”
The only wholesaler Five Boroughs and Smuttynose will share is Remarkable Liquids, which distributes both portfolios in New Jersey. Five Boroughs’ largest wholesaler is S.K.I Beer, which covers New York City, Long Island, and Rockland, Westchester and Putnam counties. Kierstead said Finestkind is “excited” to work with S.K.I.’s team.
There are no current plans to bring Five Boroughs’ products beyond its three-state footprint of New York, New Jersey and Connecticut, Kierstead said.
“At this point, the strategy is not to take the brand and go into seven new states,” he said. “I’m a big believer in going deeper rather than wider. If there comes a moment where Five Boroughs is so deep and so strong in the footprints that we’re already in, and there’s a call to bring it to a contiguous state, sure, we’ll consider that, but that is not the initial plan. The initial plan is to really get to know the brand better.”
Tomnitz, Oveissi and Kevin O’Donnell co-founded Five Boroughs in 2017. The team had fewer than years of experience under their belts before the COVID-19 pandemic fundamentally changed the industry, particularly in their hard-hit home city.
“Usually, you have that first 12 to 24 months of that equalizing trial by fire post-launch and we went from one trial into the next,” Tomnitz told Brewbound. “Our team has been amazing, and we’ve just been heads down and continuing to get beer on shelves and tap lines up.”
Some Five Boroughs employees will have the opportunity to stay on after the integration, and the company is working with those whose jobs will be eliminated to find safe landing, Tomnitz said.
“It’s imperative to acknowledge that Five Boroughs wouldn’t have reached its current position, let alone become an acquisition target, without the unwavering dedication and hard work of our entire team,” he said. “Our commitment extends to ensuring that we provide resources and support to the greatest extent possible for those who won’t be continuing with us after the transaction. Our aim is to ensure that these individuals are well taken care of, can seamlessly transition into new opportunities, and continue their journeys within the craft beer and beverage industry.”
Five Boroughs produced an estimated 10,079 barrels of beer in 2022, a -7% decline from its peak of 10,804 barrels of beer produced in 2021, according to the Brewers Association. The brewery is on track to produce 8,500 barrels in 2023 following a price increase, Tomnitz said.
Smuttynose produced an estimated 19,150 barrels of beer in 2022, an -11% decline from the 21,500 barrels produced the previous year. The brewery is expected to produce about 18,000 barrels of Smuttynose branded beer in 2023 and nearly 9,000 barrels of contract production. The facility’s annual capacity is 65,000 barrels in its current configuration, but could produce up to 200,000 barrels with additional fermentation vessels, Kierstead said.
Editor’s note: This story was updated at 10 a.m. ET on November 8 to clarify Five Boroughs’ territory covered by S.K.I. and reflect that the wholesaler will not be carrying Smuttynose.