Craft Brewers Boston Beer Company and Dogfish Head Announce Merger

This past week, two of America’s largest independent craft brewers, Dogfish Head Brewery and Boston Beer Company (Samuel Adams), announced they were brewing up a sizeable merger valued at nearly $300 million.

In the deal, Dogfish Head shareholders will receive $173 million in cash and Dogfish co-founders Sam and Mariah Calagione will be receiving 406,000 shares of Boston Beer stock (NYSE: SAM), valued at nearly $128 million. This will make them the largest non-institutional shareholders in the company, behind only Boston Beer founder Jim Koch.

The move follows an industry-wide trend toward consolidation. With large conglomerates like Anheuser-Busch buying up craft brewers left and right, the merger helps the two companies keep their independence while remaining competitive in a rapidly-evolving category.

“It’s a way for them to kind of push back against the huge conglomerates that are eating up these little independent beer companies,” says Yahoo Finance’s Dan Howley. “A lot of the beer you see on the store shelves now that markets itself as ‘craft beer’ is actually owned by a larger conglomerate. So, it doesn’t really have the spirit of a craft beer company anymore.”

That innovative spirit is something that Boston Beer clearly values very highly, and bringing Dogfish Head founder Sam Calagione into the fold should help America’s second largest craft brewer continue to push the envelope. The charismatic Dogfish Head leader will be joining the board of directors for Boston Beer in 2020, and will no doubt play a key role in the future of the company.

For Dogfish Head the move represents not only strength in numbers, but diversification in a category that has been slowly shrinking. Beer’s market share vs. other alcoholic beverage categories has fallen in recent years, dropping below 50% in 2018.

Boston Beer is well-diversified in their “Beyond Beer” portfolio, which includes brands such as Twisted Tea and Angry Orchard Hard Cider. Dogfish Head slips nicely into the fold for Boston Beer, with strong performers in several beer subcategories where Boston Beer’s brands don’t already have a top tier presence.

“The portfolios have a nice synergy between them,” says Boston Beer Chairman, Jim Koch. “They make the #1 sour beer, they make one of the top national IPAs. Sam Adams makes the #1 craft lager, the #1 craft seasonal program, and then some other Beyond Beer products that we’re also proud of. It was just a very comfortable fit.”

“We wanted to work with another great American indie craft brewery,” Dogfish Head Founder, Sam Calagione, added in an interview with Yahoo. “As we looked at our options and how complimentary our portfolios are, it really became clear it was not an option – there was one best path forward. How complimentary our companies are made this an easy choice for us.”

What do you think about this merger between two of America’s top craft brewers? Do you think other craft breweries will begin to follow suit to avoid being swallowed up by conglomerates? We’d love to hear what you think. Sound off on social media now and join the conversation.