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Heineken buys 50% stake in independent California brewery Lagunitas - but the state's craft beer community is up in arms

Founder Tony Magee has defended the sale as 'an historic opportunity to export the excitement and vibe of American-born Craft Brewing'

Tim Walker
Thursday 10 September 2015 22:11 BST
Lagunitas is best known for its India Pale Ale but makes more than 20 different beers
Lagunitas is best known for its India Pale Ale but makes more than 20 different beers (Getty)

California’s craft beer community is up in arms. Its values – and the product it consumes – will be watered down by its association with “Big Beer”, it says.

They believe their beloved brew, produced by one of America’s leading independent brewers, is under threat following a deal with Heineken.

The Dutch lager giant, the world’s third-biggest brewer, is buying a 50 per cent stake in California’s Lagunitas Brewing Co, the fifth-largest craft brewer in the US and the second-largest in California. The two companies said the deal would help Lagunitas to expand overseas, and give Heineken a foot in the door of the fast-growing US craft beer market.

While the financial terms were not disclosed, analysts believe it values Lagunitas at $1bn (£650m), a far cry from the brand’s beginnings in 1993, when founder and executive chairman Tony Magee started brewing in his northern California kitchen.

The company, based in Petaluma, near San Francisco, is best known for its India Pale Ale, but makes more than 20 different beers, including Undercover Investigation Shut-Down ale, named in honour of a drug bust at Lagunitas HQ in 2005, when several employees were arrested for marijuana possession. The charges were later dropped.

The company already exports to the UK, Japan and Sweden, and is expected to produce more than 800,000 barrels of beer in 2015 from its breweries in Petaluma and Chicago, with projected annual sales of $200m. A third brewery is set to open near Los Angeles in 2017.

California has close to 600 craft breweries, the most of any state in the US, where craft beer brands now make up more than 10 per cent of a market long dominated by big-name mild lagers such as Budweiser and Miller. In 2014, US craft brewers exported $100m of beer, an increase of 35 per cent on the previous year.

In the past four years, Anheuser-Busch InBev, the world’s biggest beer company, has bought up several small craft brands including Goose Island, Blue Point and 10 Barrel. Mr Magee, 55, has been outspoken in his criticism of the trend – saying, in 2013: “Selling ones brewery is selling all of ones best friend’s careers, their hearts, the portion of their lives they spent working for you.”

This week, in a blog, he defended his decision to sell a large stake in Lagunitas, describing the deal as “an historic opportunity to export the excitement and vibe of American-born Craft Brewing and meet beer-lovers all over the Planet Earth.”

The Lagunitas founder quoted Friedrich Nietzsche, the Greek philosopher Heraclitus and the Firesign Theatre comedy troupe. Lagunitas will retain its own management team, brewers and recipes, he insisted, calling the agreement with Heineken, “a mutual respect society, a meeting of equals, a partnership of peers.”

Heineken Chief Executive Jean-Francois van Boxmeer referenced his company’s own famous “refreshes the parts other beers cannot reach” slogan. “We recognise and respect the tremendous success of Tony and his people in building one of the great American craft beer brands,” he said. “We look forward to that same team partnering with us to expand Lagunitas globally, so it can reach parts of the world that other craft beer brands have not.”

By the rules of the US Brewers Association, a beer can only keep its “craft” designation as long as “less than 25 per cent of the craft brewery is owned or controlled... by an alcoholic beverage industry member that is not itself a craft brewer,” meaning Lagunitas will technically cease to be a craft beer.

Some expressed scepticism over the deal online, with the presenters of California’s beer-themed podcast The Perfect Pour tweeting: “Even though the deal looks as good as one can be 4 #Lagunitas, they get their craft beer coolness card pulled, IMO.”

Fire destroys world’s largest biker bar

The Full Throttle Saloon in Sturgis, South Dakota, which described itself as “The World’s Largest Biker Bar”, was gutted by fire this week, hours after hosting the town’s 75th annual motorcycle rally.

The bar, and its owner, Michael Ballard, are well known locally and beyond, after featuring in the reality series Full Throttle Saloon on the truTV channel from 2009 to 2014. Due in part to a lack of fire hydrants nearby, dozens of firefighters were powerless to extinguish the blaze before the venue burnt to the ground. No one was harmed in the fire, the cause of which has yet to be determined. The Full Throttle’s mascot, a donkey named Emmett, also escaped unscathed.

At least 15,000 people typically attend the rally. The saloon, which opened in 1999, included music stages, a tattoo parlour, a wrestling ring, shops, rental cabins and parking spaces for thousands of bikes. Its centrepiece was the “Wall of Death”, a vertical motorcycle stunt ring.

Tim Walker

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