Brooklyn Teams with 21st Amendment, Funkwerks for Sales & Distribution Ops

Dear Client:

The Brooklyn Brewery has just announced that it’s teaming with California brewer 21st Amendment and Colorado’s Funkwerks Brewing Company to launch a new sales and distribution platform effective January 1, 2018.

The combined sales organization includes a field sales and key accounts team of 70 salespeople and 90 brand ambassadors covering 38 states.

Brooklyn has taken out minority investments in both brewers as part of the new operation. Funkwerks and 21st Amendment were represented by First Beverage Group and Spencer Fane LLP in these transactions.

“The changes in the competitive landscape demand creative new go-to-market strategies,” said Robin Ottaway, President of Brooklyn Brewery.

“We consider ourselves incredibly fortunate to have found partners who share our passion for beer, want to remain independent, and hold a long-term view.”

Dave Duffy, VP of Business Development for Brooklyn, will lead the new platform. He says the involved players are “aligned where we need to be, complementary where we need to be, and have a lot of domestic and international territory to grow into together. We can’t wait to start adding value to our retail and wholesale partners in a compelling new way.”

The trio said they “will co-develop annual sales & marketing plans and together look for additional beverage companies to join the fun,” per Brooklyn Blog.

LAGUNITAS ON LUSH

After this morning’s announcement that Lagunitas invested a 19.99% equity stake in Michigan’s Short’s Brewing, we pinged founder Tony Magee to ask more on strategy. Mostly, we wondered about the evolution and aim of LUSH, the Lagunitas U.S. Holdings operation.

WHAT ARE YOU LOOKING FOR IN LUSH PARTNERS?
“…Beyond culture mesh?” we suggested.

“I’m not even sure culture mesh is the thing,” said Tony. “We’re not trying to blend our cultures. We’re looking for people that have a vision about where their business goes; people who are architects of their local beer scenes. Those are the things we hope we have in common. … Scott and Joe have a big influence on that whole Upper Midwest scene. …

“The LUSH thing isn’t really – it’s not, ‘LUSH!’ It’s, ‘LUSH?’ It’s more a process of inquiry: we’re trying to learn … what we can be together. [There’s] no preconceived idea about what we’re gonna do… that might sound like some sort of characterization, but it’s actually how it is.

“We know the investment will grow because these guys, all the members of LUSH are great individuals,” so “the economics of it are easy: these people are going places. We want to help them go further using whatever we have to offer. But the rest is about participating in the regionality of [craft in] the U.S., which I think is increasing in its regional character.”

SO, WHAT DOES LUSH OFFER?

“Not necessarily marketing infrastructure,” Tony answered, because these companies have their way of doing things. “We’ve just walked up the mountain ourselves, we’ve walked up the mountain they’re climbing. We can help them avoid some potholes.” Still, he concedes that what has worked in the past won’t necessarily work in the future. That’s part of Lagunitas’ learning from the partners, too.

Do they plan for synergies among LUSH partners? That hasn’t really played into the valuation work, says Tony.

HOW MUCH DOES GROWTH MATTER? When picking partners?

“It matters a lot,” naturally. “Growth is an indicator of the success of their brand formulations; not just beer, but the formulation of the brand, of the company itself.”

WHY KEEP PARTNERING IN A SLOWING SEGMENT?

“I don’t see a reason not to,” says Tony. “Craft isn’t really slowing down so much — that [phrase], ‘slowing down,’ is so loaded … there’s so much stratification within craft, that growth is everywhere still.”

WILL YOU LOOK TO PARTNER OUTSIDE CRAFT?

“It’s possible,” says Tony, who muses that the “non-alc stuff is interesting. … There’s blurring of all sorts of lines.” As someone from MillerCoors said, things are “fast and fragmented” these days.

Until tomorrow,

Harry, Jenn, and Jordan

“I always wanted to be somebody, but I should have been more specific.”
– Jane Wagner

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