Two very different, relatively unique craft deals became public today, one still not finalized but a long time coming and the other among the most unusual ownership transitions we’ve covered. In long-expected move, OH’s Rhinegeist confirmed plan to go employee-owned in 2020 in article published early this morn by Cincinnati Business Courier. Recall, founders Bob Bonder and Bryant Goulding went on the record almost 2 yrs ago with intent to initiate employee stock ownership program (ESOP) and, indeed, formally announced process of finalizing that deal to employees back in June, according to paper. Meanwhile, out in Northern Calif, Humboldt County’s 30-yr old Mad River Brewing announced acquisition by the Yurok Agricultural Corporation, entity run by area’s Yurok Tribe, Calif’s largest Native American tribe, according to Native Business Magazine. 

Just 6 Years In, Over 100K Bbls, Rhinegeist Formalizes ESOP Plan  Rhinegeist employees will start earning shares in the co in mid-2020, Cincy Biz Courier wrote. Founders Bob and Bryant not going anywhere, tho, will cede shares over next 10-20 yrs, per paper. Rhinegeist opened in just 2013 and topped 100K bbls last yr. In home market Ohio, its flagship Truth IPA still growin’ steady 5% by $$ YTD thru Sep 7 in Nielsen all outlet (not including c-stores) off-premise data shared by Black Apple Consulting. And co’s Cheetah Lager came on fast, already a top-25 craft brand in OH scans so far this yr. 

Again, Bob and Bryant have been open with employees and public about intent to go this route. Indeed, CBC article traces discussions the pair had with employees about ownership considerations over past number of years. “If we would’ve just sold to Anheuser-Busch, we’d make out,” Bob told paper. “But we’d be screwing over the 300 people who work here, who have built this. It’s been like that since the early days, and it just wouldn’t be right if they didn’t get to share in the rewards of that.” 

Once ESOP initiated next yr, Rhinegeist will become 2nd major Ohio craft brewer to take this route, following Cleveland’s Great Lakes Brewing, which announced partial ESOP last yr (see vol 9, no 50). And notably, GLBC and Rhinegeist easily #1 and #2 craft players in the state. That’ll make Ohio only state where both of top-2 craft players at least partially employee-owned. Top Colorado craft player New Belgium and #3 Odell both employee owned, as is Left Hand, also among top CO craft brewers. 

Yurok Tribe’s Wholly Owned Corp to Acquire Mad River  In year Mad River celebrates its 30th anniversary, co also takes unique path of selling biz to wholly-owned corporation run by CA’s Yurok Tribe. This is first acquisition of a craft brewery by a Native American tribe in the US, as far as we can recall. A handful of other tribes across the country have announced opening small breweries, tho, either as standalone bizzes or as part of other properties, as Native Business Mag notes. Deal will help the brewery “modernize our plant and develop new markets,” Mad River CEO Richard Hanger said in statement. Like a number of the state’s (and the country’s) oldest craft brewers, Mad River struggled to keep up with the fast-moving craft segment of the last few years. It sold just over 9K bbls in 2018, state tax reports suggest, almost all of it in homestate Calif. That’s down from over 12K bbls in 2017 and over 14K bbls back in 2014-2015. Co didn’t seek a sale, but instead was approached by the tribe-owned corporation, Richard told the Times-Standard. Deal with undisclosed terms expected to close in 2-3 mos. 

But this “niche market business” fits goals of Yurok leadership to diversify its holdings, NBM wrote. “We intend to lead the way for Tribal enterprises who also share the passion for craft beer and exercise our economic sovereignty in this purchase of this dynamic business,” Yurok Ag Corp CEO Tuekwe George said. The brewery’s “story and mission is exactly what we have been looking for in a business,” per YAC prexy Frankie Myers, including its “traditional brewing methods” and focus on Northern Calif, the Yurok’s ancestral land dating back well before European settlement. And Mad River work on waste reduction and other environmental practices “perfectly aligns with the Yurok Agricultural Corporation’s vision of holistic business operations, and the Yurok Tribe’s dedication to its role as a protective steward of the environment,” board member Toby Vanlandingham pointed out. While the tribe operates a small hotel and casino in Klamath, CA, Mad River appears to be the YAC’s first acquisition, according to its website. 

Even in midst of building out two other locations in different parts of VA, Starr Hill will add another brewery/taproom in Lynchburg, VA by early 2020, co announced. The Lynchburg brewery will be 4K sq-ft, sporting a 5-bbl brewhouse. Other brewery/taprooms in Charlottesville and Richmond expected to open sooner after announced in Jun and Feb of this year. So co will have 5 locations thruout VA when all's said and done, including its main production brewery in Crozet and Roanoke pilot brewery. Starr Hill brews 28K bbls total, according to its website. That's down a bit from its peak of 32K bbls in 2016, according to Brewers Assn estimates. And trends remain challenged this yr, CBN understands. But co clearly focused on opening new locations in important mkts thruout VA as one way to counter.

A rough few mos for NY's Empire Brewing Co. This week, landlord for its Syracuse brewpub padlocked the door, claiming Empire defaulted on its rent, Syracuse Post-Standard reported. Just 2 mos back, sister-co Empire Farm Brewery filed for Chapter 11 bankruptcy, remaining open while reorganizing and pursuing sale to Burnett Dairy Coop (see Aug 27 issue). That sale expected next week, tho other potential buyers have til end of this wk to outbid Burnett's $3.25-mil offer, per paper. While the farm brewery and brewpub run separately, both operate under Empire name and currently owned by founder David Katleski. While he hopes to resolve issues with landlord of Empire's Armory Square brewpub, Armory Boys LLC, statement from that group's managing partner Jeffrey Appel insistent that any negotiations must begin with payment of 3 mos of missed rent.

As the 4th quarter wears on and end of 2019 rushes closer, number of announcements showing craft brewers cutting back, closing locations or finding new ways forward ramping up. Calif’s Bear Republic announced tough decision to close its original Healdsburg brewpub, focusing energies on production brewery and newer pub location. Across the country, at last minute, one of equipment suppliers that NY’s Empire Brewing owed in its bankruptcy filing outbid the dairy co that intended to buy Empire, offering up $3.44 mil to acquire the brewery. In Austin, Uncle Billy’s confirmed closing of its brewpub after cutting production months ago, choosing instead to focus on spirits (and leaving closed location to be nabbed by growing Austin Eastciders outfit). Finally, future of Colo’s Dad & Dude’s Breweria seemingly up in the air, despite acquisition by cannabis co Cannabiniers in March. Read on. 

Norgroves Make “Tough Family Decision” to Close Original Bear Republic Brewpub  Richard Norgrove Sr and family opened Bear Republic’s Healdsburg, CA brewpub almost 25 years ago, but the co will close that location in one month, it confirmed to SF Gate over the weekend. “It was a really tough family decision,” CEO Richard Jr told the paper, but move “is what we need to do to be sustainable into the future.” Co will keep operating its production brewery and more recent brewpub, opened in Rohnert Park a couple yrs back. Decision to close Healdsburg spot driven by rising rent costs, needed improvements to building the co leased and changing demographics in the city, co explained to the Gate and North Bay Business Journal. In mid-90s, when pub opened, “the high school graduating class had 300 kids, and this year maybe they’ll have 105,” Richard Jr said to the Gate. The 36 employees of the brewpub can reapply for positions in Rohnert Park, his wife, CFO and Bear Republic co-owner Tami Norgrove told NBBJ. 

Feldmaier Steps Up to Buy NY’s Empire Brewing  As deadline for bids to acquire NY’s Empire Brewing Co thru bankruptcy proceedings neared, one of the co’s creditors stepped up with the winning bid. Feldmaier Equipment Co entered $3.44-mil bid on the co, just over the $3.25-mil price that Wisc-based Burnett Dairy Coop was willing to pay for Central NY farmhouse brewery and restaurant, the Syracuse Post-Standard reported today. Feldmaier was among cos Empire owed funds to, listed in Chapter 11 bankruptcy filing this summer (see Aug 27 issue). Empire owed the tank manufacturer almost $300K, according to filings, part of near $11 mil in debts listed by the brewery. Yet the manufacturer, which operates 7 NY locations, chose to bid on the brewery in attempt to “diversify [its] holdings,” ops veep Colby Clark told the paper. Deal has to be signed off on by bankruptcy court before closing, but new owners “have a plan in place” to keep Empire operating. It’s “obviously good news,” founder David Katleski told the paper, as it provides potential path forward for his brewery. Recall, uncertain future of co’s downtown Syracuse brewpub remains separate saga plaguing Empire (see last issue). 

Uncle Billy’s Closes South Austin Brewpub, Turns to Spirits, Canned Cocktails  Its 13-yr-old South Austin brewpub has been only source of production for Uncle Billy’s beer following co’s decision to cease contract brewing at facility built by Celis Brewing before it filed for bankruptcy earlier this yr (see June 26 issue). Now that brewpub is closed too, Austin 360 reported yesterday, as co plans a new Drippings Springs location focused on Uncle Billy’s spirits and canned cocktails. Taking over the closed location, Austin Eastcider’s, fast-growing regional cider brand, will open its 2nd tasting room in home city, co told paper. 

What’s Up with Dad & Dude’s?  Finally, unclear what future holds for CO co made famous by early moves in cannabis-infused beer space. After being acquired by Cannabiniers/Two Roots Brewing early this yr, Dad & Dude’s Breweria announced closure of its brewpub on Facebook over the weekend, according to Westword. However, that closing announcement apparently removed and not visible on co’s page now. Co did not respond to paper’s further requests for comment, tho co-founder Mason Hembree apparently cited “a very long story,” plus potential for other folks “to keep the concept going at its current location.” However, “we are focusing our energy on asset recovery and preparing for relocation.” Again, Cannabiniers, cannabis-focused co that acquired Dad & Dude’s and CA’s Helm Brewing early this yr (see March 14 issue), plus plans to acquire facility from MI’s Rochester Mill’s (Sep 11), has talked big M&A game (Feb 6), aiming to make big play for cannabis-infused craft beers in US. However, its larger, promised deals have yet to come to fruition (Aug 27). And now this, including comment about “asset recovery.” What gives?

This year's Great American Beer Festival once again showcased craft beer's vibrancy, bottling up all of the segment's energy and contradictions, fed by a steady flow of new (and often very small) breweries. Organized by the Brewers Assn, GABF hosted about 60K attendees across 4 sessions, Thurs evening thru Sat evening, in Denver in early Oct this yr. That's about a couple thousand folks, or around 3% below last yr's attendance, about even with 2015-2017 events, according to BA estimates. But GABF 2019 featured no fewer breweries or beers, still boasting over 800 breweries from 48 states + DC, including well over 100 breweries from CO and CA each, pouring samples of around 4,000 beers. The fest hall still feels charged, kinetic and sometimes frenetic, just as it has for many years.

It hasn't been an easy week for PR and communications professionals at three of the largest US craft brands acquired by much larger brewers. Founders "has finally broken its silence," the Detroit Free Press wrote today (see above). The co went dark on social media Monday, when local and then national press jumped on a leaked excerpt of a deposition in ongoing racial discrimination litigation (see last issue). Separately, folks in the Portland beer scene are none-too-pleased with Lagunitas following choice to close Community Room in the city (see above).

Another slew of closing announcements in brewery-dense Pacific Northwest this wk, in addition to Lagunitas' announcement above. Most notably, 23-yr-old Lompoc Brewing confirmed it will close entirely at the end of the month, the Oregonian and others reported. The brewery had already shuttered a pair of its locations over last couple of yrs, but announced that it will close its brewery and two adjacent taprooms, 5th Quadrant and Sidebar early next wk. The co produced just 2-3K bbls over last decade or so, mostly sold on-site and around town. Owner Jerry Fechter will shift focus to his other separate pub in Portland, Oaks Bottom, while head brewer Bryan Kielty will move to another brewery project and other employees receive severance packages.