LONGMONT — Oskar Blues is building a national beer empire from its home in Colorado. And this week’s Great American Beer Festival is the unofficial debut.
The Longmont brewer will pour beer from all seven brewers in its Canarchy Craft Brewery Collective side-by-side for the first time at the three-day festival in Denver.
The demonstration showcases the company’s unique path forward in a period of uncertainty for the beer industry and serves as a proof of concept for an alternative to the big-beer takeovers in the craft market.
“As the market has changed, so has everybody’s strategy, and part of our strategy is partnering with other craft breweries and really going at it together,” said Canarchy President Matt Fraser in a recent interview at the Oskar Blues brewery. “We are essentially taking collaboration to a whole new level by essentially partnering with other breweries in our collective.”
The question is how consumers respond and whether the brewers can maintain their craft beer credibility as part of a large company whose majority owner is a Massachusetts-based private equity firm.
“Though the majority of beer drinkers likely don’t know or care about craft beer industry ownership issues, I suspect a growing number are indeed taking interest in the subject, and Oskar Blues walks one of the finest and most interesting lines on the subject,” said Josh Noel, the author of “Barrel-Aged Stout and Selling Out,” the story about beer business that focuses on Goose Island’s sale to Anheuser-Busch InBev.
The majority owner of the Canarchy collective is Fireman Capital Partners, a private equity firm based in a Waltham, Mass. Oskar Blues founder Dale Katechis sold a majority share to the firm in 2013 as part of a transaction to buy Perrin Brewing in Michigan. In addition to those two breweries, the others in the collective are Cigar City from Florida, Deep Ellum from Texas, Three Weavers from California and Squatters and Wasatch from Utah.
The most recent acquisition is Los Angeles-based Three Weavers in July. Lynne Weaver, the founder, said the breweries are all working toward a similar goal. “Now more than ever, it is vitally important for craft breweries to band together to preserve our collective livelihoods and legacies and grow the overall industry,” she said in a statement announcing the deal.
Put more simply: In an increasingly competitive market, the companies are stronger together than on their own. The collective leverages its buying power to buy malt and hops at better rates, and it saves money by consolidating aspects of its business operations.
The smaller breweries in the collective also can expand with a huge investment by using the much larger brewhouses owned by Oskar Blues in Colorado, North Carolina and Texas. And when it comes to getting the beer to consumers, the companies can use Oskar Blues distributors and ostensibly get better product support and placement as a larger customer.
The most visible representation is a first-of-its-kind beer mixed-pack announced by Canarchy in August that features beers from four different brewers in the collective.
“That’s something that other breweries aren’t doing right now, and we think it gives us a step up on our competition and allows us to get the freshest beer in the market,” said Fraser, who joined Canarchy after eight years at an investment firm. “And it allows each of our individual brands that are part of the collective to stay true to who they are and remain independent.”
Beer Marketer’s Insights reported in July that Canarchy’s portfolio is up nearly 20 percent in terms of sales this year, led by Cigar City and its popular Jai Alai IPA. In Colorado, company officials said Oskar Blues continues to grow on its home turf — despite setbacks for other large brewers in the state — after a brand design overhaul and new packaging.
Christopher Shepard, the publication’s senior editor for craft beer news, said the industry is watching closely to see how consumers respond as Canarchy begins to promote the collective rather than individual breweries.
“Nobody knows what that reaction is going to be,” he said in an interview. “Nobody else has really done that, and it’s unclear whether consumers are going to be excited by that, be confused by that, or not care at all.”
The Canarchy collective remains within the Boulder-based Brewers Association’s definition of independent craft brewers because it allows for outside investors — like private equity firms — who are not large brewers. And analysts suggest this helps the collective’s breweries retain their cache in their communities.
Noel’s book looked at the reaction when the family-owned Goose Island sold to Anheuser-Busch, and he said independence is key in the beer marketplace.
“Some people decry (Oskar Blues) for being fueled by Fireman’s private equity money and others assume the worst — that Fireman will choose to recoup its investment like most any private equity firm by ultimately selling the portfolio to the highest bidder, the well-being of the breweries involved be damned,” he said.
“However,” he continued, “there’s also a sound argument to be made that Oskar Blues has forged a bold — and very smart — path, and found a way to grow and stay competitive in the quickly-shifting craft beer industry while effectively retaining its independence as a brewery. Is it retaining its independence as a business? That remains to be seen, but so far it would certainly appear so.”
Erik Miller, a bartender at Star Bar in Denver, doesn’t look at Oskar Blues differently than he did before the sale to the private equity firm and the creation of the collective. And he doesn’t see the company in the same light as Anheuser-Busch, whose acquisitions of craft brewers he called “predatory.”
“Oskar Blues didn’t do that,” he said. “They are just trying to expand their market.”
And likewise, Oskar Blues’ Patrick Daugherty said the brewery is still as independent and each brewery is a local brand in their communities. He said the power of Canarchy is the ability for the company to sell beers across the country that are “infinitely local and nationally accessible.”
“We are craft brewers for craft brewers,” he said.
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