One of the leading craft breweries in the U.S. announced a sale that will further consolidate the industry and could start a wave of M&A activity in the space.
What Happened: Larry Bell, who founded Bell’s Brewery in 1985, announced his company is being sold to Australian-based brewer Lion. The deal will unite Bell’s and New Belgium Brewing, which Lion acquired in 2019, as two great American craft brewing brands merged.
Bell announced he is retiring from the company in the future and that health issues led to his departure and the sale.
“I’m retiring from Bell’s and the brewing world,” Bell said in a video message. “The folks at New Belgium share our ironclad commitment to the craft of brewing and the community-first way we’ve built our business."
Together, the two companies will sell popular beer brands in Voodoo Ranger, Fat Tire, Two Hearted Ale and Oberon Ale. Two Hearted consistently ranks as the top beer on top beer lists by industry experts nationwide.
“We couldn’t be happier to welcome the entire Bell’s team,” New Belgium CEO Steve Fechheimer said. “Joining together will immediately strengthen our ability to serve and expand the craft community, deliver more value for our partners and continue to redefine how business is done in a world facing historic economic, social and environmental challenges.”
Bell’s beer is distributed in 43 states, the District of Columbia and Puerto Rico.
Related Link: The Story Of Bell's Brewery: Larry Bell Grows From Stoner Beer Baron To Craft Beer Icon
Why It’s Important: The sale comes after Bell’s has prided itself as an independent craft brewer, something not many leading breweries can say thought an industry that has seen consolidation.
Bell’s ranked seventh on the Brewers Association top 50 craft brewers list for 2020. Boston Beer Co Inc (NYSE:SAM) is ranked second behind Yuengling. Bell’s ranked 16th overall for beer production domestically when counting in non-craft brands. New Belgium ranked 11th on the non-craft list, which will take the combined company into the top 10.
Bell’s is number two by production volume in Michigan, trailing Founder’s, who sold a majority stake to San Miguel.
Boston Beer acquired Dogfish Head in 2019 taking one of the leaders from independent to owned by a larger beer company.
Heineken NV (OTC:HEINY) acquired Lagunitas Brewery in 2017, taking out one of the top craft brewers.
Anheuser-Busch Inbev (NYSE:BUD) and MolsonCoors Beverage Co (NYSE:TAP) bought up craft brewers over the years to capture growth of the industry as domestic beer sales were falling.
The larger beer companies have also entered into distribution deals with craft brands. Yuengling entered into a distribution deal with MolsonCoors to expand its presence in new states.
Benzinga's Take: Some have argued that craft brewers can’t make it on their own, eventually needing to sell a stake in the company or enter a distribution deal to compete with the giants.
The sale of Bell’s, a brand many thought would never sell, could be a sign that the right price tag and conditions will make a craft brewer consider a deal.
Anheuser-Busch, MolsonCoors, Boston Beer and Constellation Brands (NYSE:STZ) will all likely consider additional craft beer purchases going forward.