SCHLAFLY BREWING SELLS OUT “THE RIGHT WAY”

If you had told me yesterday that I would be reading a headline proclaiming the sale of St. Louis’ Schlafly Brewing in the afternoon and would later that evening be writing why it was a good thing, I probably wouldn’t have believed you. After all, Schlafly is a large company*, one that exists right in the shadow of Anheuser Busch, craft’s ancestral foe. It’s almost inevitable, then, that if you live around that area and see the words “Schlafly bought out,” your immediate reaction is going to be automatic, paralyzing terror that somehow, the AB eagle is swooping in to rend and tear a beloved local brewery assunder. But it turns out I needn’t have worried–or so it seems, anyway.

*The #42 largest U.S. craft brewery in 2010, which doesn’t take into account the 20% growth in volume the company experienced in 2011.

Schlafly has in fact laid out a template for every regional brewery that is considering its own “endgame.” This sale shows that it’s not impossible to sell a brewery without kowtowing to the big boys–that there is in fact a practical way to “sell out right” with respect to the company’s legacy. As covered in detail by St. Louis Post Dispatch beer writer Evan Benn (who was quite helpful during my beer trip to St. Louis earlier this year), Schlafly co-founders Tom Schlafly and Dan Kopman chose to avoid a sellout to a larger brewer like Anheuser, Miller-Coors or Tenth and Blake by selling a majority stake of the brewery to a group of 13 local investors.

As Kopman states in Benn’s post, the move allows he and Tom Schlafly to begin a retirement process while still remaining involved and putting the beer in the hands of local businessmen he trusts:

“We’re very happy — and, in many respects, relieved — that the succession framework we outlined 18 months ago is exactly what wound up happening. We kept our focus narrow by only considering local investors who were passionate about St. Louis and adamant about keeping our business here.”

The timing is particularly poignant, given that Schlafly just celebrated its 20th anniversary as St. Louis’ first craft brewer last week (with a “1991 menu prices” event, from what I’ve heard). And although I’m not a St. Louis native or resident, I’ve met (and drank with) enough of them to know that Schlafly occupies a special place in the craft beer consciousness of the city. It should not be forgotten that newer brewery openings like Urban Chestnut, 4 Hands, Perennial Artisan Ales and The Civil Life are the modern day descendents of Schlafly, and that without everything the brewery achieved, things could be quite different in St. Louis today. In short: Schlafly beer was the brew that taught St. Louis that there was more to the beer world than the friendly neighborhood Busch.
 
It’s reassuring, then, that the guys who have bought the brewery, Sage Capital LLC (although that website…yikes), seem quite earnest about their desire to not mess with what Schlafly has built. As co-founder Wesley Jones states in Benn’s post:
 
“As a St. Louisan, I have a tremendous fondness for the industry and heritage that beer has provided this town. To get to be a part of that is both a privilege and an honor.”
The big takeaway from this should be that’s it’s possible for even a fairly large regional brewer to find local buyers, if the owners want to transition to a smaller role in the company or retire. This is an alternative to the likes of Tenth and Blake, who have publicly stated their intent to gobble up and acquire as many craft breweries as possible to bring under the Miller-Coors banner in 2012. Better yet, this was a way for Schlafly to keep its ownership local and accountable for the future of the brewery.
 
As a Chicago native, I can’t help but wonder, could Goose Island not have sought out a similar cadre of local investors instead of selling out to Anheuser Busch? If the size gap between Goose Island and Schlafly’s production is too great, how about Terrapin? Could they not have located some Georgian investors to take partial ownership?
 
Obviously, selling out to a bigger brewer also brings along the benefits of access to a huge distribution network, but if the option is out there to expand or sell the brewery without metaphorically getting into bed with the enemy, then breweries that still make the choice to sell to Miller-Coors or Anheuser will have to be held accountable for that decision without being able to say “Well, it was the only way to grow the business.” Craft beer fans in this country will be in charge of asking those former brewery owners, “Could you not have sold your company to the people who are opposing all the other breweries just like yours?”
 
Indeed, I expect this Schlafly buyout will become a measuring stick of sorts. It’ll be the event we all can point to when we hear that another brewery is being sucked into the glut of Tenth and Blake like a nameless extra in “The Blob.” Craft beer is on the rise, year by year, and it’s not surprising that investors want to get in on it. With that kind of interest comes options, and the luxury of being able to find just the right people to hand ownership of your brewery over to. And I think we can all agree that choice is a good thing.
 
What do you folks think? Is there anybody not optimistic about this deal?
 
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6 comments

  1. I especially like the part of the deal where employees get to buy 10% of the company.

  2. Two different blog posts in two days with the same title. Interesting…

    http://beerandwhiskeybros.com/2012/01/04/schlafly-sells-out-the-right-way/

  3. My previous comment sounds snide and accusatory. I didn’t mean for that. What I meant is that the news truly is interesting and, simply, that it’s funny that both authors chose the same title.

  4. That is funny Jamie… but I must note, Kid put “The Right Way” in quotes while the Beer and Whiskey Brothers put them around “Sell Out”. So our title is, in fact, completely different.

    Plus I think bloggers are allowed to copy whatever they want from other bloggers, it’s some kind of Internet law.

  5. Whoops. I actually wrote this on the evening of the fourth, so I guess theirs was up then. I didn’t even know until you posted it here, though.

    Whelp, you know what they say about great minds…

  6. Herr Hordeum · · Reply

    Drinking a Schlafly Reserve Stout tonight. You know what is great about this beer?

    No one else realizes how good it is*, so I can buy it whenever I want, and it is cheap for the style.

    *ok, fine, hyperbole

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