A few weeks ago we reported on a bit of a Twitter feud between The Full Pint and the rest of the craft beer media world. TFP had reported that, according to credible sources, that Cigar City was going to be bought by AB InBev. Turns out they were right, but in a round about sort of way.
Today Oskar Blues agreed to buy a controlling interest in Cigar City, in what was a seen as an attempt to steal the brewery from AB InBev. The deal is valued at $60 million. Cigar City produces about 60,000 barrels a year. The value is derived from a barrel being worth about $1,000.
According to Brewbound, Oskar Blues, using capital from it’s majority owner Fireman Capital, stepped in for the buyout when AB failed to send a formal purchase order before the expiry date. Fireman Capital also owns a controlling interest in Perrin Brewing, Wasatch and Squatters brands. Instead, one of craft beer’s biggest decided to ante-up and purchase the oft buyout discussed Cigar City. As Brewbound reported,
With the Cigar City pickup, Fireman Capital, via the United Craft Brews consortium, squarely positions itself as a formidable force within the craft sector. Collectively, all five companies produced more than 320,000 barrels in 2015 and ranked as a top-15 craft producer. In addition to its presence in Utah, the group has beachheads in the major craft markets of Colorado, North Carolina, Michigan and Texas.
Oskar Blues, pushed by Fireman Capital’s equity position, has been looking to buy up small craft breweries since Fireman Capital bought a controlling stake in May 2015.
This event is another change in the landscape for craft beer. Recently, Southern Tier merged with Victory to form a larger company called Artisanal Brewing Ventures. Their joint production exceeds 800,000 barrels. Perhaps we’ll see Artisanal buy up smaller breweries, like United Craft Brews/Fireman Capital has positioned themselves to do. One of the best known collectives is the Craft Brew Alliance that includes, Redhook, Widmer, Kona and Omission. They recently purchased Square Mile Cider out of Oregon. These larger “collectives” allow breweries to combine their forces to increase distribution (in the face of fierce competition), distribute capital and expand volume and brand reach. As the Denver Post reports,
Since the Oskar Blues acquisition, Perrin has been able to can and distribute its beers in its home state, Melis said. Cigar City hit a capacity ceiling, so Oskar Blues hopes to help solve that problem, he said.