Anheuser-Busch to buy craft brewer Blue Point Brewing Co.

St. Louis Post-DispatchFebruary 6, 2014 

ST. LOUIS -- Anheuser-Busch is buying Blue Point Brewing Co. in New York and plans to grow sales of the craft brewer's beer to new markets.

Anheuser-Busch, maker of Bud Light and Budweiser, will close on the deal early in the second quarter. Terms of the acquisition were not disclosed.

Blue Point, founded in 1998 by friends and home brewers Mark Burford and Peter Cotter in Patchogue, N.Y., brewed 60,000 barrels in 2013, with half of that volume coming from its flagship brand, Toasted Lager. That's slightly larger than St. Louis' largest craft brewer, St. Louis Brewery, maker of Schlafly beers, which brewed more than 56,000 barrels last year.

Blue Point is the 34th-largest craft brewer in the U.S., with more than 40 beers, including Hoptical Illusion, Sour Cherry Imperial Stout and No Apologies Double IPA. Its beers are sold in 15 states, primarily on the East Coast. The brewery has 32 employees and will maintain its facility on Long Island, where it's currently based.

Blue Point, which has some of its beer brewed under contract, was limited in its ability to grow, prompting the sale to Anheuser-Busch, according to Burford and Cotter, who will continue to oversee operations. "More people will be able to drink our beers, and we're very excited about that," Cotter said in a phone interview.

Anheuser-Busch plans to invest in Blue Point's operational capabilities to extend its distribution beyond markets where its beers are currently sold.

"As we welcome Blue Point into the Anheuser-Busch family of brands, we look

forward to working with Mark and Peter to accelerate the growth of the Blue Point portfolio and expand to new markets, while preserving the heritage and innovation of the brands," Anheuser-Busch CEO Luiz Edmond said in a statement.

Anheuser-Busch has made big investments in craft breweries before. In 1994, the comany bought a minority stake in Seattle's Redhook Ale Brewery, and later became part-owner in Portland, Ore.-based Craft Brew Alliance, whose brands include Redhook, Widmer Brothers Brewing, Kona Brewing Co. and Omission Beer.

In 2011, Anheuser-Busch bought Chicago craft brewer Goose Island for $38.8 million. After the sale, Goose Island expanded distribution nationally. A new 312 Urban Pale Ale debuting next month will be brewed at Anheuser-Busch's Baldwinsville, N.Y., brewery, where Goose Island's 312 Urban Wheat Ale is made.

Anheuser-Busch has tapped Goose Island CEO Andy Goeler to provide guidance and assist in the transition of bringing Blue Point under the ownership of the world's largest brewer. "We have some experience we can bring to Blue Point, including the transition into more A-B wholesalerships," Goeler said Wednesday. "We'll allow them to do what they do, and not get involved with brewing their beer."

Morningstar analyst Thomas Mullarkey said Anheuser-Busch will use its scale to grow Blue Point in the same way it has grown Goose Island. "They'll follow that same blueprint," Mullarkey said of Anheuser-Busch. "Budweiser has breweries all over the U.S., and if a brand takes off, they can make it all over the country."

St. Louis-based Anheuser-Busch is the North American headquarters for Belgium-based Anheuser-Busch InBev. While sales of its flagship brands, including Budweiser, are growing globally, domestic sales of its largest beer brands are down. Bud Light volume in the U.S. declined 3.8 percent in 2013, according to estimates by industry publication Beer Marketer's Insights, and Budweiser dropped 4.8 percent. For all brewers, the top 12 brands in the U.S. declined 3.7 percent in 2013.

Craft beer sales, however, have surged in recent years. Craft beer volume in the U.S. grew 15 percent in 2012 to 13.2 million barrels, according to the Brewers Association, a Denver-based industry organization that defines craft brewers as small, independent brewers that produce less than 6 million barrels annually.

That growth has led to some recent sales in the industry. In October, Belgium-based brewer Duvel Moortgat announced a deal to buy a majority stake in Kansas City, Mo.-based craft brewer Boulevard Brewing Co., Missouri's largest craft brewery.

"I don't see it as a trend, but some people who started breweries are getting older and evaluating their exit strategies," said Brewers Association director Paul Gatza. "Craft beer is growing so rapidly, a lot of people, the big brewers, are looking at how to take advantage of the market, and others are looking at how to get money out of it."

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