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Home | News | Craft Brewers | Heineken targets craft growth

Heineken targets craft growth

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Tony Magee: "leaping into the mouth of the whale"

Transaction gives Dutch sole ownership of Lagunitas

For the record: Heineken last month acquired the remaining 50% of shares in Lagunitas that it didn’t already own, giving the Dutch brewer sole ownership of the American craft brewer.


Heineken had acquired its initial 50% stake back in 2015, and subsequently Lagunitas has operated as an independent entity within the multinational’s structure.


According to Lagunitas founder and executive chairman Tony Magee, the last 18 months have proven to be an introduction to Heineken’s culture and operating systems while having “genuine autonomy.”


Magee, writing in a blog posted on Tumblr, explained, “This genuine autonomy allowed us to get to know our new investor/partner and figure out how to work together without anything being compulsory. It worked really, really well.


“It also allowed us to ‘earn our stripes’ and for Heineken to come to understand us without the ability to eat us.”


But, Magee noted, the price of autonomy is to limit abilities, particularly when it came to obtaining financing with a limited balance sheet and expansion beyond the United States.


“Money has value and equity has value, too. I am using Lagunitas’ equity to buy deeper into an organisation that will help us to go farther more quickly than we could have on our own. You hafta imagine Jonah standing on the gunnel of the storm-tossed ship and intentionally leaping into the mouth of the whale to embrace the transformation and emerge to become his own destiny.”


As for the whale, aka Heineken, it’ll be calling on Magee’s experience more with his appointment as Director of Global Craft. While remaining as Lagunitas’ executive chairman Magee will have a consulting role to Heineken’s executive board. (This marks possibly the first instance where a leader of one of the rash of craft brewers recently acquired by a multinational brewer has been promoted to a leadership role within the acquirer.)


As for Heineken, for an undisclosed sum that’s probably around US $500 million based on the initial transaction’s terms, it acquires full control of the market leader in the IPA segment, the fastest growing within the American craft beer market. Lagunitas volumes exceeded one million hectolitres in 2016.


Heineken says that it will continue to expand Lagunitas’ internal presence. Since the initial transaction it has introduced its brands in France, Italy, Spain and Mexico, amongst others, as well as extending availability in markets including Canada, Netherlands, Sweden, Japan and the United Kingdom.


According to the Heineken press office there is sufficient capacity available in Lagunitas’ breweries in Chicago and Petaluma, California to meet both domestic and international demand.


But that may change as demand grows. According to the spokesman, “We may consider opening a brewery overseas when the time is right.”


The transaction was completed with immediate effect. In the current year the Lagunitas acquisition is expected to be slightly margin dilutive.

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