We Need to Dial It Back a Notch
Yesterday, Tony Magee announced that he had sold off half the brewery he founded—Lagunitas—to Heineken. There have been too many of these kinds of announcements recently for beer fans to be genuinely surprised by this. It’s true that Lagunitas’ brand has been as anti-corporate as any American brewery—but as we saw earlier this year, cultivating an anti-corporate brand doesn’t preclude absorption by the corporate borg. I might have let the whole thing go by, but then I read Magee’s personal announcement, and had a brief epiphany. In a very long, rambling Tumblr post, he characterized the sale of half of his beer company as something profound and important.
About the same time we launched Lagunitas in Ireland and I met people there who were big fans of U.S. Craft flavors, some of whom were themselves newly minted brewers, and I realized that the whole damn world of humans may well want to enjoy these same flavors. When I got back home I thought long and hard about how to aim at that truth, how can we get there, to the whole world?
…This is not the end of anything at all at Lagunitas, except maybe it is the end of the beginning, meaning that we are now standing at the threshold of an historic opportunity to export the excitement and vibe of American-born Craft Brewing and meet beer-lovers all over the Planet Earth, our true homeland. This could one day even be seen as a crucial victory for American Craft Brewing.
Wait, what? When did craft brewing become Craft Brewing? When did the manufacture and sale of a fermented malt beverage become some kind of sacred crusade? When did the poor, benighted Irish ask to be rescued from their sorry state by American breweries? As Magee continues his tale, he invokes, stoned-undergrad-style, a—what else—protracted Nietzsche analogy, and that’s when things truly go over the top:
There’s a pertinent Friedrich Nietzsche parable about a ‘madman’ who comes into a town square holding a lighted lantern declaring to the town that he has important news. He tells his story and the people laugh and berate him in disbelief, throwing stones to drive him off. Finally he gives up saying, ‘I have come too soon’’. He drops the lantern, the light goes out, and he departs….
When we, the Madman in the Parable, came into the square with our lantern, holding up the light of our ideas, we was stunned to see that that one particular brewer understood what we were talking about. They welcomed a dialogue about these crazy ideas of order. They saw what we saw- a global beer business in a state of change, and they wanted to work together to explore this brave new world. We had indeed NOT come too soon.
Look, it’s just beer. Magee may believe European beer drinkers need him, but I have a hunch they’re doing all right on their own. I’ve traveled around Europe and I can confirm that they have a few decent breweries there—even if they don’t call themselves Craft Brewing. (And Sally, my astute wife, pointed out that American beer companies have sought to saturate foreign markets in the past. “How’d that work out,” she asked?)
I am 100 percent with those who characterize beer as something ineffable—it’s one of the few truly international human practices that unites us through time and space. Sitting with friends drinking beer made by a local family in the next room is as ancient as civilization itself. I used to write about politics, and as I shifted over to beer, I realized how the two worlds had inverse goals. Politics is adversarial by design; it divides people. Beer, on the other hand, brings them together. Since the Sumerians sat in the shade sipping the world’s first ale through straws, it has been a social lubricant, a thing that brings people together in a social space.
But beer companies? They are organs of commerce, however wonderful the brewers and publicans they employ may be. We feel good about beer, so we place that good feeling on the institution of private businesses. And in many cases, that feeling is well-placed. Breweries are collections of humans, after all. When they make good beer and create a wonderful space to enjoy it, they rightly earn our loyalty. But they’re also businesses, and sometimes their owners decide to sell to different owners—and then we have to make new judgments all over again.
The world of American brewing is so hot right now that it’s hard to announce anything without lapsing into hyperbole. Everything’s the best thing ever, always. And, when a brewery sells itself to a larger brewery, it is the worst thing ever. Magee’s announcement is a spectacular Trump-like masterpiece of overstatement, and for me it was the moment Craft jumped the shark into over-seriousness. Going forward, I’m planning to focus less on the specific products and breweries of the commercial sphere—they will come and go, inevitably—and more on the act of sharing a beer with someone I enjoy. And I definitely won’t be thinking of any brewery as so important that it can change the trajectory of history. It’s time to dial everything back a notch.
Jeff Alworth is the author of the book, The Beer Bible (Workman, 2015). Follow him on Twitter or find him at his blog, Beervana.
It’s rare I disagree with your beervanic wisdom, but I think we need to amp it UP a notch. Beer is an industry recovering from some very odd laws in the US, and it had tremendous potential to the upside for the small business owner. These examples of owner exit strategies point to this all the more – but we need to pay MORE attention to this, not less. We need to explain the financial concept of ‘exits’ to new brewers, we need to give examples and discuss the economics of substitute goods, we need to point to craft beer as one of the better (and easier to understand) markets to watch how small and large players with differential levels of entry can join and exit a marketplace. The oddity of America’s legacy of prohibition and distribution make it all the more fascinating.
Yes, these places will come and go, but that is important! Watching it tells us so much about where we are in the new history of beer in America, and how this emerging shift in market plays globally. And it is a global market like the which we have never seen before – when is the last time it was this inexpensive to import and export such a relatively heavy product so easily. New markets will be created, new players will enter, old world boundaries and ideas will fall.
I can’t think of a time to be more enthusiastic about the market positioning of beer, and how it will change in a global environment… even while drinking a pint from the guy down the street.
“… brewer down the street.” Some of my favorite beers are brewed by women – gotta choose my words more appropriately.
Nah…people just need to quit being so damn politically correct! The quirky thing about political correctness is eventually you’ll offend EVERYONE in some shape or form.
Hi Dann: I read your comment and I could not discern ANY intent on your part to offend anyone. There are many of those “easily offended” people out there who are extremely touchy, some of it by design. So write what you feel. Say what you mean and mean what you say, because no matter what you say, no matter you do, SOMEBODY out there is not going to like it.
I’ll be hoisting one today in your honor. SALUD!
“You know what’s awesome-everything
Trees, frogs, clogs they’re awesome
Rocks, clocks and socks they’re awesome
Figs and jigs and twigs that’s awesome
Everything you see or think or say is awesome
Everything is awesome
Everything is cool when you’re part of a team
Everything is awesome
When we’re living our dream”
If you’re ever in Ventura, stop by for a backyard beer; I try my best.
Well said, Jeff. I completely agree. Picked up your “Bible” at the library. It’s perfect to read after I enjoy a UScraft/Belgian/English/irish/Scottish/Czech/German/French/Jamaican/Mexican/Japanese/Homebrew and other country beer. Cheers!
Great perspective. Tony has always had more than his fair share of narcissism.
Well put señor and you’re right, it is time to dial it back a notch. I’m one of those that when I hear about one of my favorite breweries selling to one of the big boys, I immediately want to boycott them. I don’t. So good for Mr Magee and Lagunitas.
I don’t need to boycott – they’ll probably boycott me.
I used to enjoy Red Hook. Then A-B bought them. I haven’t seen Red Hook on the shelves here in Ohio for several years. And the shelf space given to Goose Island is significantly less too.
Actually AB doesn’t own Red Hook. They have right to 33% of Craft Brew Allaince until 2018 when the “master distribution” contract they signed with AB expires. Please know your facts. It’s people like you who flood our industry with false information. Thank you.
Craft Brew Allaince? What’s an Allaince? Please check your spelling while you jump on other people.
Sorry for the misinformation. I was only going by what the employees at the brewery told me the day after the deal. I just happened to be vacationing in Seattle that day.
Whatever, the so called Master Distribution Agreement appears to have meant no distribution in my area.
Right now there are a lot of big checks being waved at brewery owners. In this case it was half a billion dollars. The owner can over-dramatize and defend his business decision all he wants. He knows that at the end of the day, whether or not anyone anywhere wants his beer, he walks away with enough money to dampen the shouts of criticism that will inevitably come his way. There is a lot of money out there for beer business partnerships. At least for now. Others will hear the calling and jump in while it’s still profitable to do so. I personally hope that more small breweries start and that everyone has a good local pub, brewing quality beer in a convivial atmospere within walking distance from where they live.
Except that there were no checks being waved at Tony Magee. He sought out Heineken.
And he went to Heineken because he said InBev “doesn’t get it” which goes against pretty much everything I’ve read about InBev’s actions in the last three years.
Right now there are a lot of big checks being waved at brewery owners. In this case it was half a billion dollars. The owner can over-dramatize and defend his business decision all he wants. He knows that at the end of the day, whether or not anyone anywhere wants his beer, he walks away with enough money to dampen the shouts of criticism that will inevitably come his way. There is a lot of money out there for beer business partnerships. At least for now. Others will hear the calling and jump in while it’s still profitable to do so. I personally hope that more small breweries start and that everyone has a good local pub, brewing quality beer in a convivial atmosphere within walking distance of where they live.
Dann, I don’t think we’re at odds. You describe a different kind of information. It seemed like Tony was characterizing this deal like it was akin to Gandhi leading a salt march. That kind of empty-calorie hype isn’t doing the world any favors. (Though if I’d sold half my company to Heineken for millions, I’d be pretty hyped, too.)
Glenn–thanks!
i have had a soft spot in my heart for lagunitas since the intoduction of “under cover investigation shutdown ale”. i always tend to root for the underdog. allow me to quote wilt chamberlain, “nobody roots for goliath”.i will be removing lagunitas from our shelves tomorrow and replacing them with another up and coming brand. congrats to tony on selling the business.
I don’t see this as an issue. Sure, half the company was sold and the owner made a butt-load of money. But it should not affect us here in the USA nor should it change the quality of their beer. From what I read, their beer will simply be available in places outside the USA, like Ireland. Now if that Heineken swill starts affecting their beer in the USA THEN we have a problem.
I highly doubt that the only thing that changes after this deal will be the introduction of the brand into the global market. I’d expect to see significantly more Lag taps at bars and more shelf space being taken up here in the U.S. That is not good for the little guy and up and comers. Good for Tony’s bank account…absolutely. His spin on leading the way for craft is laughable. It came down to the cash, pure and simple.
I like some of their beers so being able to get them on tap at more places will be good. As far are store shelf space, I’m fine with them getting more as well, hopefully they will push off that blueberry and/or pumpkin spiced garbage.
Timothy, why exactly do you feel you need to remove their beer?
Heineken beer bought 50% of lagunitas.
Nietzsche? More like Ayn Rand. After all, she had the more formidable moustache. Is it possible that Tony got in a bit of an expansionistic bind and is now going Dutch?
Great article, Jeff! We craft beer enthusiasts love the almost mythic homebrewer to multi-millionaire tales of Magee, Grossman, Jordan, the East and West Coast Kochs, etc. But they’re all human, and they’ve all been working really hard for decades. Why shouldn’t they be allowed to cash out and spend more time doing what they want to? In the coming years, we’re bound to see a lot more sales and mergers.
It’s unromantic to say so, but we craft lovers have to come to terms with the fact that breweries producing hundreds of thousands of barrels per year are a very different animal than our favorite local brewpubs where (insert name of your local brewer) produces at most one or two thousand barrels a year.
I think all the changes, and the speed of them, scare us a little. The micro/macro distinction used to be clear and simple. Not so anymore.
Magee has always been the most self-aggrandizing of the large-volume craft beer bunch, so this shouldn’t be surprising.
The weird thing about his BlogSpot post for me was that (whilst he talks about Mexico etc.) in the UK & Europe, in a ~year of importing, Lagunitas are already the most widely available US brewery. This was done organically, without the help of a big behemoth of a company. Surely if what he was saying was actually the case, Lagunitas would’ve been able to continue to grow and expand worldwide without ‘selling out’ their ‘ideals’? It’s a shame because, when I visited them a year ago, every member of the company was so proud to work for Lagunitas, and really embodied the spirit you see in the branding – they were so open and welcoming. Heineken on the other hand is a spectacularly shit, corporate entity. I don’t want to drink dumbed down Lagunitas, made by Heineken somewhere in Europe, when at the moment I’m getting it fresh from a refrigerated container within weeks of being brewed.
“Going forward, I’m planning to focus less on the specific products and breweries of the commercial sphere—they will come and go, inevitably—and more on the act of sharing a beer with someone I enjoy.”
This.
I hope Lagunitas doesn’t start smelling/tasting like skunk water now.
I guess it’s all perspective. Once someone’s given you a load of money your perspective can change. And you can afford to get all philosophical about stuff. Just wait until those ‘punks’ at Brewdog sell up. Everyone’s got their price.
I know this goes against accepted wisdom, but I’ve come to believe that the real ‘craft brewing’ — or ‘Craft Brewing’ — is on the homebrew level. It’s a hobby, yes — but it’s where hobby meets ‘craft’ and ‘obsession’ and — dare I say it — generosity. There’s no money involved. Money spending on grain and equipment — the latest HERMS, the latest chiller, the stainless pumps — but there’s no money in the sale. It’s just beer — drinking, talking, and sharing.
The idea that these pro-brewers — and I lump everybody pro in here: Goose Island/InBev, Laguitas/Heineken, even “smaller” breweries like New Glarus, Two Brothers, etc. etc. — the idea that these brewers are still “craft brewing” or “Craft Brewing” is somewhat absurd. It’s big business. Not free whatsoever. Not free in terms of money and certainly — certainly — not free from bureaucratic, post-Prohibition tangle of crazy rules, distribution laws, and alcohol moralizing by by those still carrying on a modified version of Carrie Nation’s zeal.
The whole idea of packing in existential parables — madmen, mad women, making it to the Castle, leaping into the abyss, pushing boulders up mountains — is an attempt at shading (poorly) that the move from homebrew to pro-brewer is business — and that’s all it is. Any attempt to pretend otherwise — especially with crappy parables — is absurd. Say it’s business. Accept it. Get rich from it. Whatever. But don’t pretend you’re still standing just inside your garage on a rainy day with a 10 gallon Blichmann mash tun, propane burner going full blast, trying to keep the mash at 152F for another 30 minutes.
It ain’t the same. Never was. Never will be.
Word!
I think the right type of equity investor can have a place in the craft beer community. I think the key is focusing on what the objectives are. If you own a brewery and you would like to accelerate growth without giving up control over decision making, selling 20 – 30% could generate additional funds that could be used to cover a lot of the necessary expenses for expansion. If you are the owner and you are looking to retire and there is not an heir apparent in your company capable of taking over, you need to protect the brand long-term by looking externally to an investor who can make sure that your vision is carried on and that there is not a drop off in quality. I think what rubs craft beer enthusiasts the wrong way is when somebody completely sells out to a huge conglomerate that doesn’t have any plans to continue to make the same high quality beer or worse has nothing but negative things to say about craft beer, even as they are making significant investments into craft beer companies.
Huh? What happened to my post?
Was it that bad?
It will be interesting to see what, exactly, Heineken is looking to do with this brand. Will it be “dumbed down”? Is the “Craft Beer” market(s) in Europe at the level of discernment required to care if it is? Ultimately, I think this is a very good thing for American Brewers; even those who do not plan or wish to distribute their beer in Europe. Let American brewers take a legitimate place in the international beer pantheon and see how news of that effects craft beer sales in the States. I imagine the intangible, if tiny, element of pride such recognition would give current craft beer drinkers can be extrapolated to future generations. The sense that “my” often regional beer is better than “yours” fueled market growth in the states for decades before the current craft boom and has stayed a driving force in the growth of that segment. Having full flavored and thoughtfully crafted beer to base that conversation on moving forward may be just what the current craft beer market needs to mature. Or it might not make any difference at all. Either way, good on Lagunitas.
He’s full of it! It’s the great big paycheck and the waxing philosophical is his defense mechanism. Lagunitas was truly one of my faves. Scribble scribble. You want to share your brew with the world? Do what Stone did…..open a brewery in Europe. I’ll stay loyal to the guys who are driven by their love of brewing……not who can cut me the biggest check. What’s next? Corona buying Dogfish Head?
I think Laguitas sees Stone opening in Germany, Duval going with FW and In-Bev brand expansion and thinks they better get with global distro as soon as possible. As Dann says, as a business, there’s only so many exit strategies and selling a business – in any commodity market – is considered a winning strategy. Of course, Tony also could have sold Lagunitas to his employees and maybe he will still sell the other 50% to them. He certainly doesn’t need the money now.
As a life long musician and artist this topic has been a source of frustration for decades: artists who create art out of a passion and love for the art, but as soon as they get a small taste of $$$ all of their philosophies, principles and magnanimous beliefs disappear like a fart in the wind. Nashville is to music what Budweiser is to beer. It’s difficult to think of an example of any form of art or creativity that was improved after a corporation took control – beer is no exception.
Fortunately – Lagunitas wasn’t the last craft beer brewery standing. I say good riddance. They had some decent beers, but so do the tens of thousands of small craft breweries worldwide who haven’t sold out. It’s not like this one act of greed left a huge gaping hole in the universe. Raise up a glass of beer to Tony Magee and wish him all the best. He’s made his choice.
“… their philosophies, principals and magnanimous beliefs disappear like a fart in the wind” Some farts last a looooong time in the wind!
I love this post. Tony Magee’s narcissism and dogma have truly shone through in this latest maneuver. I love the crusade analogy because it fits extraordinarily well, as if Lagunitas is some on evangelical brewing mission to save the rest of the dark, unenlightened, non-American world from its collective unconsciousness and imminent plunge into beer purgatory. Spare me.
Great take, good article.
Sellout, plain and simple !!!
LOL. I bet you would _jump_ on the chance to do the same thing if you had a company of value to sell and someone was willing to pony up that kind of cash.
I think he made a very smart move, and the quality of the products don’t have to suffer (Goose Island ‘s products actually improved in both quality and availability after their deal with AB-I).
Besides…there’s plenty of solid proof on the store shelves and taps across the nation that in the world of beer, smaller is most definitely not always better.
I don’t blame him for selling, but I think he’s drastically overstating the impact Lagunitas is going to have on the rest of the beer drinking world as he attempts to justify the sale in a grandiose manner. The Lagunitas beers I’ve had have been solid, but nothing earth -shattering. Plus they try a little too hard to be cool with their packaging. Maybe I’m just jaded, idk.
You know what…I’m proud I’ve bought into craft beer just like I bought into Ice Cube’s “True To The Game” (see analogy here: https://youtu.be/r_zSt-qQfn4) Cube’s point seems racial but it’s bigger than that…it’s STOP SELLING OUT! I feel that way about modern rap (i.e. see Lil Wayne, and every rapper famous since ’08) and the “exit strategy” and now “world access” brewery owners.
I’m ALL for embracing capitalism. JUST OWN IT when you sell out for the money! I can respect that, I don’t have to like it, but I respect it. I can’t respect this non-sensesical diatribe about how he’s not a sellout! It’s about global access…yeah for you! Because the money you made on the deal just gave access any place on the globe!
Like Cube says…”They just send they boss over put a bug in your ear…and now you crossed over.”
The REAL irony…Cube recorded this and he’s the become the biggest hypocrite of his own lyrics. Eventually we’ll just accept, expect and enjoy it. Just like modern rap.
#LagunitasREALLYSucks
“Eventually we’ll just accept, expect and enjoy it. Just like modern rap”. Nope!
Well, I will have to say all the comments have been really interesting and certainly covered all the bases! I have been a professional Head/Master Brewer for 11 years. Funny thing, I was at a Craft Brewers Conference a few years ago and got into a somewhat heated discussion with this Tony guy about, Whole Hops versus pellet Hops for dry hopping. I use whole Hops (amazingly so does Sierra Nevada, big can be high quality) for dry hopping. Most Brew Houses are only able to use pellets, for Brew day. But after fermentation, whole hops are superior.
As the years went by, I would enjoy a Lagunitas IPA on draft. But, the Hop Character seemed somewhat sterol and manufactured. At some point I found out they utilized Hop extracts, instead of Hop matter of any kind. The advantage is, Hops steal precious Wort from making it to the Fermenter and are dumped down the drain with the Trub pile. Sometimes high quality, is worth the price!
So I think their leanings were already Big Business.
That said, Brewers work isn’t easy, and if I had been busting my ass all those years, I would probably take the check too, and spend more time traveling with my wife and riding my Motorcycle.
Thank you very much!
Magee has blasted “big beer” in the past, slamming breweries that want to do business with them. Strikes me as being a hypocrite.
The best breweries are the ones you can walk or ride your bike to, ie the small ones. Lagunitas fans better hope their beer doesn’t go the way Heineken has…(down)
Money changes everything…a quote from Mr. Magee a few years ago, “TM: Selling out happens when you forget why it is that you are in that position in the first place. It’s easy to believe your own press. In our case, we realize that, as ever, we still suck and have a lot of work to do to earn a place in the world. Like I said above, beer-lovers are driving our bus and we do respect the bus driver!
It’s more about the money and less about the beer.
Of course it’s about the money! I was at an AHB “rally” at the new Chicago brewery about a year ago, and wondered how the hell does he finance this? If you took a picture of the brewery and didn’t know what brand was made there, you could easily believe it to be Bud or Coors – 250,000 square feet with 80 – 750 barrel fermenters! I wondered if he had made some kind of “deal with the devil” and now I know he did.
I also think it’s pretty cute that Tony took a jab at ESOPs in his diatribe, saying they don’t create real opportunities for people. Really?? Tony, how exactly is taking the profit yourself a better opportunity for people than sharing the profit with your employees? Maybe take a lesson from Kim Jordan for once instead of continually hating on her.