A Belgian Devil has partnered with the Lion and Bear of Paso Robles.
Firestone Walker, the 16th largest craft brewer in the United States, announced July 16 that Duvel Moortgat, the 144-year-old, fourth generation family-owned Belgian brewer, has made a hearty investment in the maker of the popular 805 beer.
Industry rumors first put the investment at $100 million, but Adam Firestone, the company’s co-founder, said that number isn’t close to accurate, noting that their new partners like to keep transaction details close to the chest. According to industry watcher Beer Marketer’s Insights, the deal is probably closer to $250 million.
“We’ve been looking for the right partner for about two years,” Firestone told the Business Times. “The world is getting bigger and more competitive and our business benefits by having strategic relationships. It’s all part of growing up and joining the real world.”
Recently craft breweries have become acquisition targets for larger brewers and Firestone Walker, looking at its growth potential, wanted to find a way to expand without having to sell out to the Anheuser Busches of the world or have a banker for a partner.
Looking around at the moves of colleagues and friends in the industry, Firestone said there are just a couple ways to skin the cat in the effort to grow. “A lot of brewers have gone to equity markets, hedge funds and some cases put together pretty sophisticated deals,” he said. “We didn’t want a banker for a partner, we wanted a brewer.”
However, to say yes to the right alliance, Firestone Walker needed to find a cultural fit and the ability to stay independent, which Duvel offered.
“We didn’t want it to be like what we’ve seen in other craft deals, where the bigger company comes in and consolidates the mothership,” Firestone said. “That was a non-starter for us.”
Even though the deal, which is being cast as a collaboration, put new resources at Firestone Walker’s fingertips, not much is expected to change right away. Firestone said operations are expected to be business as usual but the company does plan to hire a few more employees.
As for physical expansion, some capital projects are already in the works, including a 50,000-square-foot warehouse build out to increase barrel capacity at the Paso Robles facility. The company also has a handful of projects in design, which could be announced as early as the fall. Through the deal, Duvel has pledged some capital commitments as well.
Duvel, which translates to Devil in Ghent and Antwerp dialects, has made a string of acquisitions and major investments in other breweries since the late 1990s, starting with Brewery Ommegang in Cooperstown, New York — the brewer famous for its Game of Thrones-inspired beers. Shortly after taking control of of Ommegang, Duvel formed Duvel Moortgat USA to handle stateside operations.
In September 2006, Duvel Moortgat bought fellow Belgian brewery Brasserie d’Achouffe. Four years later it acquired 100 percent of the shares of Antwerp-based De Koninck Brewery, expanding Duvel’s portfolio of specialty beers.
In October 2013, Duvel acquired Kansas City, Missouri-based Boulevard Brewing Co., which was the 12th largest brewer by sales volume in 2012, according to the Brewers Association. That year, Firestone Walker was ranker 20th.
After growing up in the wine industry and remembering when Santa Barbara County wines eventually gained recognition and then exploded to the world stage, Firestone said he hopes this deal can some how help replicate that progression.
“This definitely opens new growth,” he said. “Like the wines here, we hope our local beers will have the same participation where you might one day be able to find our beers in Antwerp or Munich. This is a great way to export what we do on the Central Coast.”