Craft Beer News – 11/23/18

Artisanal Brewing Ventures Execs Discuss ‘100 percent’ Acquisition of Sixpoint Brewery

After four years of discussions with Sixpoint Brewery founder Shane Welch, Artisanal Brewing Ventures (ABV) finally completed a deal to purchase 100 percent of his Brooklyn-based craft brewery this week.

Even though ABV had been courting Sixpoint for several years, it wasn’t until this summer when negotiations really began to heat up, John Coleman, CEO of ABV, told Brewbound.
As the deal came together, ABV — which is backed by family office Ulysses Management and was formed in 2016 via the merger of Victory Brewing and Southern Tier Brewing — turned to Wells Fargo to help finance the acquisition.

Coleman declined to share specific financial terms of the transaction.
Unlike ABV’s partnerships with Victory and Southern Tier, whose founders have remained involved in the businesses they started, Welch is exiting the company he founded in 2004 to focus on other “craft beer-related businesses,” including a smartphone app that helps facilitate direct-to-consumer sales at breweries.

Although ABV’s past strategy has focused on retaining its partner breweries’ founders, the company decided it needed to be more flexible when it came to Sixpoint, Paul Barnett, managing director of Ulysses Management, told Brewbound.

“Shane has a lot of other outside interests, which he’s passionate about,” he said. “He struggled with the idea of the obligations that are inherent in being an active founder partner like Bill [Covaleski] and Ron [Barchet of Victory] and Phin [DeMink of Southern Tier].”
Now, Sixpoint brewmaster and chief product officer Eric Bachli will lead the company. Last year, Welch hired Bachli away from popular Massachusetts craft brewery Trillium Brewing.


According to Coleman and Barnett, Sixpoint was an attractive acquisition target for ABV due to its geographical presence in New York City, where the brewery sells more than half of its volume, as well as its alignment within the Sheehan Family network of wholesalers.

“We think there’s a lot of growth potential in metro New York as well as all of the surrounding areas,” Coleman said. “And from a brewing standpoint, the brands are all very complimentary with Southern Tier and Victory brands.”

According to Coleman, Sixpoint is on pace to produce 55,000 barrels of beer by the end of 2018. The company did not report production figures to the Brewers Association last year, but in 2016 it reported production of 74,500 barrels.

Finally, Barnett and Coleman said ABV isn’t done buying, and they mentioned a focus on breweries located in the Mid-Atlantic, Northeast and Southeast regions of the U.S..
“The east of the Mississippi geography we find is really an attractive market,” Barnett said.

TTB Accepts Offer for Trade Practice Violations

TTB and Elgin Beverage Agree to $325,000 Offer in Compromise
The Alcohol and Tobacco Tax and Trade Bureau (TTB) yesterday announced the acceptance of a $325,000 offer in compromise from Illinois distributor Elgin Beverage Co. for alleged violations of tied house provisions.

Elgin, based in Bartlett, about 35 miles from Chicago, distributes products from Constellation Brands, Pabst Brewing and FIFCO USA, among others.

In a press release, the TTB said Elgin had “aided and abetted another industry member in the use of a third party to pay retailers to carry and promote their products.”

The pay-to-play scheme, the TTB argued, gave Elgin an “unfair advantage” in the marketplace.

“TTB remains committed to putting an end to anti-competitive practices that hurt law-abiding businesses and prevent consumers from enjoying a wide selection of products,” the agency wrote.
Earlier this month, the TTB issued an industry circular reminding alcohol beverage companies that it was “committed to ensuring a fair and level playing field nationwide.” In that announcement, the TTB noted that it had “significantly intensified” its enforcement (which began in 2017), and that it was focused on snuffing out “exclusive outlet, tied house, commercial bribery, and consignment sale violations.”

“The high incidence of unlawful activities and deliberate concealment of such activities raise serious concerns,” the agency wrote. “These activities are of particular significance because of their nationwide occurrence and their impact on trade and fair competition.”

In May, the TTB accepted a $900,000 offer in compromise from Warsteiner Importers Agency Inc. — “the largest single offer in compromise for trade practice violations” ever accepted by the agency.
The Ohio-based company was accused of engaging in illegal tied house, commercial bribery and exclusive outlet violations committed in order to compromise a retailer’s independence from January 1, 2015, through April 19, 2018.

BA Chief Economist: Brewery Visits are Good for Beer Industry Health

In his latest blog post, Brewers Association chief economist Bart Watson said “getting people into breweries is a good thing for the beer industry.”

His rationale? Recent Nielsen CGA data that suggests beer drinkers who visit breweries drink more beer, while those who do not visit breweries drink less.

Conversely, 24 percent of more than 4,300 consumers who hadn’t visited a brewery in the last year and were also asked about their consumption habits said they were drinking more beer, while 28 percent said they were drinking less.

“Now, as someone who cares about good analysis, I won’t pretend that this means going to a brewery is causing people to drink more beer,” Watson wrote. “The causality might run the other way: people who are drinking more beer might be seeking out breweries.”

Nevertheless, Watson said all players throughout the three-tier system need to “actively try to recreate the reasons people go to breweries.”
His pitch to beer distributors, some of whom have expressed concerns about the proliferation of brewery taprooms?

“If these beer lovers are drinking a typical amount, their beer consumption is going up far more than at-the-brewery sales alone, suggesting once again that brewery visits spill out into the wider market and help build brand beer,” he wrote.


Massachusetts to Commence Recreational Cannabis Sales on November 20

The first legal recreational cannabis sales east of the Mississippi will occur next Tuesday in Massachusetts, The Boston Globe reported Friday.

In a press release, the state’s Cannabis Control Commission announced that it had approved two companies — Cultivate Holdings, LLC and New England Treatment Access, LLC – to begin selling marijuana and marijuana products.

“This signal to open retail marijuana establishments marks a major milestone for voters who approved legal, adult-use cannabis in our state,” commission chairman Steven J. Hoffman said via a press release. “To get here, licensees underwent thorough background checks, passed multiple inspections, and had their products tested, all to ensure public health and safety as this new industry gets up and running.”

It took lawmakers and regulators more than two years to finally approve cannabis sales after Massachusetts voters passed a 2016 ballot initiative making recreational cannabis legal.

Source of News Stories: Brewbound
https://www.brewbound.com/

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