Last Friday, July 29th, mega beer conglomerate MillerCoors announced its purchase of a majority stake in Eugene, Oregon’s Hop Valley Brewing Co. , via its “craft” brand subsidiary, Tenth and Blake. The news came as normal, with much controversy, but there was also less surprise than usual. Hop Valley has quickly grown to be a major player in Oregon beer and was the fastest growing brewery in Oregon sales numbers last year. Rather than postulate on the sale and what it means, we reached out to Hop Valley partner, Vice President, and now Tenth and Blake board member Walter MacBeth for an interview.
The big question is why? Hop Valley is I believe the fastest Oregon growing brewery of the last year. You don’t seem to be needing any help.
A number of reasons, including timing, future growth potential and synergies. It’s an increasingly competitive craft landscape today and we saw a lot of benefits of aligning with a company that shares our passion for beer and a desire to see their beers enjoyed by more consumers.
What is MillerCoors getting out of the deal and how much of the company does it control?
The partnership gives Tenth and Blake a strong partner in the “IPA/hoppy” beer space in the highest indexing craft market in the US. Hop Valley’s approach is very much like Tenth and Blake’s in that it offers high-quality, innovative craft beers – yet it brings heavy IPA experience which will complement Tenth and Blake’s portfolio.
Tenth and Blake will have a majority interest in Hop Valley, and the management team at Hop Valley will continue to lead the business and retain an ownership interest.
Will there be board seats or positions for MillerCoors execs?
Yes, there will be board seats available to Tenth and Blake. Current board management will remain in place.
Who will be running the company from here on out?
The Hop Valley management team (Chuck Hare, Jonas Kungys, Trevor Howard, and Walter Macbeth) will continue to run the day to day business, with Ron Howard and Walter Macbeth reporting to Tenth & Blake as Board Members.
When does the sale close?
The transaction is expected to complete in the third quarter of 2016.
I think I know the answer here, but what changes can we expect from Hop Valley after the sale?
Business will run as usual after the sale. The Hop Valley team will continue to be creative and brew its beer in Eugene with the same recipes, the same techniques and the same commitment to quality that attracted Tenth and Blake in the first place.
What can you do now that you could not do before?
First and foremost, this is about growth; job one is expanding the availability of Hop Valley’s great beers to more retailers and consumers in the Pacific Northwest. The Tenth & Blake procurement capabilities will allow us to realize some cost synergies, but at this time our focus is on getting Hop Valley beer to its fans.
Will you disclose at any time how much the MillerCoors investment is?
We cannot disclose the terms of the transaction.
How do you feel about the effects of Hop Valley’s position in the industry, i.e. being excluded from the Brewers Association, the Oregon Brewers Guild, etc.?
We’re focused on continuing to be creative and brew beer with the same recipes, the same techniques, and the same commitment to quality we always have. To us, craft is about care, quality, style, and authenticity.
Are you at all worried about a local consumer backlash?
While that’s always a concern, we hope that consumers will realize that nothing at Hop Valley is changing in a negative way. Hop Valley will continue to be run by the existing, full management team, brewing the same great beers fans have come to love.
What are the 5 and 10 year plans for the company?
Job one is to continue to fuel the strong growth in Hop Valley’s current markets. Tenth and Blake and Hop Valley management will determine future expansion opportunities when the time is right.
So to recap, Mr. Macbeth stuck tightly to the usual statements and promises of little to no change and a focus on making quality beer while expanding distribution. Oftentimes this huge growth after acquisition does not pan out, such as with recent contaminated (sour) batches of Goose Island Bourbon County Stout and beers being brewed at contracted breweries across the country. While I respect Hop Valley for making some damn good IPAs and I cannot fault anyone for collecting a big paycheck, Hop Valley is not known for innovative new beers or cutting edge techniques.
Will you still buy Hop Valley?