Coronado Has a Change of Heart: Plans to Sell Recently Acquired Monkey Paw Brand
Citing a need to “refocus on its core business objectives,” Coronado Brewing has announced plans to sell the Monkey Paw Brewing brand, a company that Coronado acquired less than a year ago.
Why the change of heart? A few reasons, according to the San Diego Union-Tribune.
WE DON’T NEED MONKEY PAW TO ATTRACT YOUNG DRINKERS. When Coronado Brewing purchased a majority share in Monkey Paw last July, Coronado felt the San Diego-based craft beer brand could help them win over more young millennials. Now, Coronado feels Monkey Paw’s “punk sensibility” is not needed, and they can attract young drinkers on their own.
“Really, Coronado Brewing can do some of the same things, if we push ourselves and push our boundaries,” Coronado CEO Brandon Richards told the Union-Tribune. “We can become a little edgier.”
SOURED RELATIONSHIP WITH MONKEY PAW FOUNDER. Then there’s the fact that the relationship between Coronado and Monkey Paw founder Scot Blair has turned sour. When the deal was announced last July, Scot was said to remain “intimately involved” with MonkeyPaw, heading “conceptualization and growth of the entire portfolio,” per West Coaster SD.
But once the integration began, Scott reportedly “complained that Monkey Paw beer recipes were being changed and that there were delays in canning and distributing the beers,” and he eventually parted ways with the company, per Union-Tribune report.
“It is really hard to build a brand without the co-founder’s involvement,” Brandon told the paper. “He’s no longer involved.”
Though we would note that Scot is still in the picture for Coronado. He filed a breach of contract suit against Coronado last month, claiming the brewery owes him $33,534, plus interest, based on a promissory note, by September. The next hearing for the suit will take place on September 28, per Union-Tribune.
RATHER JUGGLE TWO BRANDS THAN THREE. The third and final reason for the sale outlined in the report is Coronado’s feeling that they may have too much on their plate. As you may recall, Coronado placed an investment in SouthNorte Brewing Company, a Mexican beer themed startup headed by Coronado head brewer Ryan Brooks, about two months prior to their purchase of Monkey Paw.
And the Union-Tribune reports that Coronado has no plans to “divest” of the SouthNorte brand. “That’s part of the discussion: can we handle one brand or three brands,” Brandon said. “Right now, two brands makes the most sense.”
SO WHAT’S NEXT FOR MONKEY PAW? Coronado will continue to operate the tiny brewery, which produces about 650 barrels per year, until a sale is complete. There is no price tag on the brewery as of now, but Brandon told the Union-Tribune that they’re “open to selling the brand, brewery, equipment, furnishings and even the building – or any combination of those elements.” Just “depends on what the buyer is looking for,” he said.
MORE ON THE GREAT LAKES ESOP: NOT AN IMMEDIATE SUCCESSION PLAN
Last week Great Lakes announced they’d be the latest craft brewer to introduce an ESOP. But this one isn’t like some of the others.
It really doesn’t have anything to do with liquidity for the founders right now, Bill Boor, CEO told CBD.
These deals are “generally much larger initially,” and they often involve debt to fund shares.
“Ours isn’t like that,” says Bill. “Pat and Dan [Conway, founders], at least initially, are contributing shares into the ESOP. So they’re not getting any sort of liquidity now.”
Employees will get a small percentage of their earnings (over and above their regular compensation) in an ESOP account. That makes the percentage the ESOP comprises of Great Lakes business a bit hard to decipher at the moment.
“We have to figure that out as we get close to end of year,” says Bill. It “depends a bit on the valuation we end up with. What’s gonna drive the number is giving employees a percentage of their income. So there’s going to be a number: [those employees will] get ‘X’ percentage of their income in the account â€¦ but it’s very small to start. It will build up.”
The ESOP is bright news to commemorate the brewer’s 30th anniversary. It’s otherwise been a challenging 2018.
“It’s been a tough start to the year,” Bill says. They ended last year just slightly up at 141,000 barrels. This year they’re seeing trends more consistent with the rest of the industry, which is up only about 4% in dollars YTD to IRI, and less so in volume.
“Our biggest strength we’ve had is what I call super seasonals,” says Bill. Conway’s Irish Ale has been a highlight so far for the year.
But they’re especially known for Christmas Ale. In fact, that’s their second highest volume brew, despite only being in the market for about eight weeks (November through December).
Point is, with their Oktoberfest and Christmas Ale yet to be released, “our gains are ahead of us,” says Bill.
Jenn, Jordan, and Harry
“It is better to have a permanent income than to be fascinating.”
– Oscar Wilde
———- Sell Day Calendar ———-
Today’s Sell Day: 21
Sell days this month: 23
Sell days this month last year: 23
This month ends on a: Thurs.
This month last year ended on a: Wed.
YTD sell days Over/Under: +1