There is one story that has been keeping everybody in the craft beer world occupied over the last 3 weeks or so: Beavertown.
For those of you who are not really that in to craft beer, let me give you a bit of back ground- Beavertown started out in the kitchen of a barbecue restaurant in London called Duke’s in 2011. After first making beer to be served with the barbecue food in the restaurant, they later expanded to a full range of styles. In 2012, the brewery was beginning to sell so much beer that it was no longer practical to make it in the back of the restaurant so they moved production to a new, purpose built brewery in Hackney, East London. As the brewery grew further, it then moved to a bigger brewery in Tottenham, also in London, in 2014, where they would be comfortable for the next few years.
But Logan Plant, the founder and owner of Beavertown, is an ambitious man. He wanted an even bigger brewery, at the centre of a beer theme park that he wants to call Beaverworld. He also wanted to stay in London, one of the most expensive cities in the world for real estate, so he needed money. A LOT of money.
For those of you who are not really that in to craft beer, let me give you a bit of back ground- Beavertown started out in the kitchen of a barbecue restaurant in London called Duke’s in 2011. After first making beer to be served with the barbecue food in the restaurant, they later expanded to a full range of styles. In 2012, the brewery was beginning to sell so much beer that it was no longer practical to make it in the back of the restaurant so they moved production to a new, purpose built brewery in Hackney, East London. As the brewery grew further, it then moved to a bigger brewery in Tottenham, also in London, in 2014, where they would be comfortable for the next few years.
But Logan Plant, the founder and owner of Beavertown, is an ambitious man. He wanted an even bigger brewery, at the centre of a beer theme park that he wants to call Beaverworld. He also wanted to stay in London, one of the most expensive cities in the world for real estate, so he needed money. A LOT of money.
This brings us to the present day, and the story that has been keeping the craft beer world busy for the last few weeks. Rumours about Beavertown’s expansion plans had been doing the rounds on message boards and Facebook groups for a while, but Logan kept schtum. Every time he or Beavertown were asked directly if the rumours were true, he evaded the question with some throwaway remark or by saying he had no idea what everyone was talking about.
Then, on 22 June, the news finally got out: Beavertown had sold 49% of their company to Heineken.
This was bad news.
Heineken, you see, is one of the most hated companies in the craft beer world. The other one is AB-Inbev, the biggest brewery conglomerate in the world, a Brazilian/American/Belgian behemoth that sells beer in every corner of the world, most of it bland, flavorless lager.
Now let me first start by saying, that I repect everyone’s business decisions. Logan Plant built Beavertown from nothing so if he thinks this is best for the expansion of Beavertown, then it is his decision to make.
But the sale to Heineken is bad news in more ways than one.
Then, on 22 June, the news finally got out: Beavertown had sold 49% of their company to Heineken.
This was bad news.
Heineken, you see, is one of the most hated companies in the craft beer world. The other one is AB-Inbev, the biggest brewery conglomerate in the world, a Brazilian/American/Belgian behemoth that sells beer in every corner of the world, most of it bland, flavorless lager.
Now let me first start by saying, that I repect everyone’s business decisions. Logan Plant built Beavertown from nothing so if he thinks this is best for the expansion of Beavertown, then it is his decision to make.
But the sale to Heineken is bad news in more ways than one.
One of the first things that brought the rumours into the media, is Beavertown’s own festival. They organize a huge beer festival in London each year, called Beavertown Extravaganza, which is generally regarded as one of the best craft beer festivals in the world, surpassed only, perhaps, by Mikkeller’s Beer Celebration Copenhagen that takes place in May each year.
One of the breweries who were invited to Beavertown’s festival, the legendary US brewery The Veil, had heard about the Heineken rumours and had asked Beavertown, first privately, then publicly, if the rumours were true. When Beavertown repeatedly refused to deny any deal involving Heineken, The Veil were the first to take action, and publicly proclaimed that they would no longer be attending the Beavertown Extravaganza. This was even before Beavertown officially announced the Heineken deal.
As soon as news of the Heineken deal went public, others started to follow in droves. Cloudwater from England and Scottish craft beer punks BrewDog were first out of the blocks, but many others soon followed. As it stands at the moment of writing, about half of the 90 breweries originally scheduled will no longer be attending as they do not wish to be associated with Heineken. Beavertown Extravaganza is about to collapse.
There are more things happening though, as a result of the deal. Many craft breweries no longer wish to work with Beavertown. Many craft beer bars have publicly confirmed they will no longer sell Beavertown. My own local craft bar is owned by a brewery and they had recently made a collaboration brew with Beavertown. They will sell that beer as it had already been canned and kegged but once that’s gone.. No more Beavertown in any of their bars. And they are not alone. Again, BrewDog were quick out the blocks by announcing that their bars will no longer sell Beavertown beer. Many others have followed suit, so while Beavertown may now have a global distribution partner in Heineken, the craft beer heartland has excommunicated them.
There are 2 main questions that keep everybody busy:
1. Why sell to Heineken? Were there no other ways to finance this?
2. Why does everyone hate Heineken so much?
Let me explain this to you.
When you need a large amount of money in breweryland, there are typically 3 ways to get your hands on it: You can sell part of your company to another, bigger brewery with lots of money (say, Heineken), you can you can get money from an investment company, who usually want quick and substantial returns, or you can try to reach your target by crowd funding.
Most people immediately pointed at crowd funding. Yes, that was my idea too, but there are some issues with this. I am a shareholder in BrewDog. They have been doing crowdfunding for 9 years now and they have been extremely succesful with this way of financing. This, however, does not mean that this is the Golden Solution for everyone. BrewDog have, from the start, had a loyal following of shareholders, who have been invested in the company for a long time. Because of this, they have raked in large amounts of money without losing a crucial stake in the company.
Another point worth noting in this is that BrewDog have their breweries in out-of-the-way places like Ellon in the North-East of Scotland and on the outskirts of Columbus, Ohio, in the USA. Had BrewDog want to build facilities in, say, London and New York City, they wouldn’t have been able to do this. The way they spend their money makes it go much further than when you insist on building a huge facility in the middle of London. So acquiring 40 Million Pounds (the amount Beavertown needed for their plans) is in no way guaranteed when you do a crowd funding round, especially because you are looking at a relatively small pool of potential investors, a lot of whom have already invested considerable stakes in companies like BrewDog. So crowdfunding probably wouldn’t have generated money to the level that Beavertown needed.
By far the dumbest remark on this subject I’ve heard, and I’ve heard it quite a number of times, is that Logan Plant should have simply asked his father for the money. His father, you see, is Robert Plant, the front man of legendary 70s rock band Led Zeppelin.
By far the dumbest remark on this subject I’ve heard, and I’ve heard it quite a number of times, is that Logan Plant should have simply asked his father for the money. His father, you see, is Robert Plant, the front man of legendary 70s rock band Led Zeppelin.
Yes, Robert Plant is immensely wealthy. If you do a quick Google search on the subject, you will find that most sources agree that he is worth around 170 million Dollars, which is an insane amount of money and probably more than anybody who reads this will ever have, even remotely. The thing is, even with this vast wealth, that doesn’t mean that he can simply give his son 40 million Pounds. That is about a third of his total net worth, a big chunk, and then, he doesn’t have all that money laying around in a warehouse, like Scrooge McDuck, so that Logan can just pull up in a Securicor truck and load it in.
Most of that money is tied up in assets like real estate and stocks and other investments. So, no, not even Robert Plant could have financed this out of his personal effects.
So now to the next point- why is everybody getting so worked up over this? There are other craft brewers that are part owned by bigger companies, and that doesn’t excite nearly as furious a reaction. Well, there are several points to this. First of all, it reminded everyone of the Lagunitas deal from a few years ago. Lagunitas announced that they had sold 49% of the company to Heineken, but they remained in control of the business, holding on to 51%. Guess what happened? With a year and a half of the original 49% deal, news got out that Heineken had acquired the remaining 51% and that Lagunitas was now a fully owned subsidiary of Heineken. Several leading experts in the craft beer world have already indicated that something similar will happen to Beavertown, because Heineken don’t do minority deals. It’s all or nothing.
Which brings us to the next problem. Heineken is a large multinational corporation whose main interest isn’t expanding the reach of craft beer, or making the best beer- it’s making as much profit as possible. There is one simple way for making more profits: cutting costs. And how do you cut costs? By using cheaper ingredients, or simplifying the production process.
There are numerous examples from the past where we have seen that Heineken bought a brewery and then started fucking around with the ingredients, the recipe and the production process. One that I quite clearly remember is when they bought Wieckse Witte, a small Dutch brewer of, mainly, traditional Belgian style witbier. It was always quite tasty, but when Heineken took over, within a year, they had changed the fermentation process, added artificial ingredients that made the beer cloudy (this was normally established by a natural process) and eventually the beer was a shadow of its former self. I could write a separate story about all the other shady business practices that Heineken has been involved in over the years, like countless huge fines for breaking competition laws, numerous lawsuits over bribery, and many, many other things, but there are 2 things that stand out mostly to craft beer people. First, they try to simply make it impossible for other brewers to exist. In the last few years, Heineken have bought several huge hop producers, and then promptly refused to sell hops to anyone else, even though they did not need all the hops themselves. If you’re a brewer, you must be able to buy hops, otherwise you simply can’t make your product. And then, on a more local scale, Heineken has an army of sales people who constantly pester pubs around the world, trying to convince them to remove other beers and replace them with Heineken product. One bar I drink in quite regularly all of a sudden got rid of their Budweiser and Carlsberg taps, and replaced them with additional Heineken taps. When I investigated this, I found that this happens all the time and pubs get offered discounts or free kegs of Heineken if they remove competing beers. They also constantly try to get craft beer taps removed and have them replaced by either former craft brands that are now owned by Heineken, or fake craft beers that Heineken invented.
See, buying up a brewery is one thing. Trying to make competitors’ lifes miserable is a whole other order of evil.
So what will the future bring for Beavertown? They will get access to a global distribution network through Heineken, but they’re shunned now by most of the craft beer community. Maybe we will soon see Gamma Ray (or what’s left of it) on taps around the world, from Times Square to Johannesburg to Hong Kong. Only the future can tell. The question is though.. What do you want as a craft brewer? Be present in every airport in the world with one or two beers, or make many interesting beers that may not be available everywhere? The overarching feeling in most of the craft beer world was the same: this one hurt.
Most of that money is tied up in assets like real estate and stocks and other investments. So, no, not even Robert Plant could have financed this out of his personal effects.
So now to the next point- why is everybody getting so worked up over this? There are other craft brewers that are part owned by bigger companies, and that doesn’t excite nearly as furious a reaction. Well, there are several points to this. First of all, it reminded everyone of the Lagunitas deal from a few years ago. Lagunitas announced that they had sold 49% of the company to Heineken, but they remained in control of the business, holding on to 51%. Guess what happened? With a year and a half of the original 49% deal, news got out that Heineken had acquired the remaining 51% and that Lagunitas was now a fully owned subsidiary of Heineken. Several leading experts in the craft beer world have already indicated that something similar will happen to Beavertown, because Heineken don’t do minority deals. It’s all or nothing.
Which brings us to the next problem. Heineken is a large multinational corporation whose main interest isn’t expanding the reach of craft beer, or making the best beer- it’s making as much profit as possible. There is one simple way for making more profits: cutting costs. And how do you cut costs? By using cheaper ingredients, or simplifying the production process.
There are numerous examples from the past where we have seen that Heineken bought a brewery and then started fucking around with the ingredients, the recipe and the production process. One that I quite clearly remember is when they bought Wieckse Witte, a small Dutch brewer of, mainly, traditional Belgian style witbier. It was always quite tasty, but when Heineken took over, within a year, they had changed the fermentation process, added artificial ingredients that made the beer cloudy (this was normally established by a natural process) and eventually the beer was a shadow of its former self. I could write a separate story about all the other shady business practices that Heineken has been involved in over the years, like countless huge fines for breaking competition laws, numerous lawsuits over bribery, and many, many other things, but there are 2 things that stand out mostly to craft beer people. First, they try to simply make it impossible for other brewers to exist. In the last few years, Heineken have bought several huge hop producers, and then promptly refused to sell hops to anyone else, even though they did not need all the hops themselves. If you’re a brewer, you must be able to buy hops, otherwise you simply can’t make your product. And then, on a more local scale, Heineken has an army of sales people who constantly pester pubs around the world, trying to convince them to remove other beers and replace them with Heineken product. One bar I drink in quite regularly all of a sudden got rid of their Budweiser and Carlsberg taps, and replaced them with additional Heineken taps. When I investigated this, I found that this happens all the time and pubs get offered discounts or free kegs of Heineken if they remove competing beers. They also constantly try to get craft beer taps removed and have them replaced by either former craft brands that are now owned by Heineken, or fake craft beers that Heineken invented.
See, buying up a brewery is one thing. Trying to make competitors’ lifes miserable is a whole other order of evil.
So what will the future bring for Beavertown? They will get access to a global distribution network through Heineken, but they’re shunned now by most of the craft beer community. Maybe we will soon see Gamma Ray (or what’s left of it) on taps around the world, from Times Square to Johannesburg to Hong Kong. Only the future can tell. The question is though.. What do you want as a craft brewer? Be present in every airport in the world with one or two beers, or make many interesting beers that may not be available everywhere? The overarching feeling in most of the craft beer world was the same: this one hurt.
