The Power of Two

Last week, two of the most visible, popular breweries in the craft beer industry announced they were merging. Delaware’s Dogfish Head Craft Brewed Ales and The Boston Beer Company—makers of Samuel Adams brews—said they’ve made a $300 million deal to merge, making Sam and Mariah Calagione the second-largest shareholders in Boston Beer.

The Boston Beer Company got its start in 1984 after founder Jim Koch invested $100,000 of his own money, along with funds borrowed from family and friends, to get the company going. Koch was the sixth generation of firstborn sons to take up the brewing profession, doing so only after receiving BA, MBA and JD degrees from Harvard University.

In the brewery’s early years, Koch did not maintain his own facility. Instead, he rented excess capacity from other breweries, which brewed his recipe when not brewing theirs. In 1997, Koch bought one of those breweries, Hudepohl-Schoenling Brewery in Cincinnati. He had a sentimental attachment to the place—it was the brewery where his father had apprenticed in the 1940s.

Since then, Boston Beer—often called  ‘Sam Adams,’ for the first beer it produced—has diversified into hard cider, with its Angry Orchard line, as well as malt beverages, with the Twisted Tea line, and hard seltzer, under the Truly Spiked & Sparkling brand name.

Dogfish Head, under the guidance of Sam Calagione, became known as the brewery that’s not afraid to try new things. Often, Dogfish brewed beers outside the norm—Calagione even attempted to brew beer based on historic recipes. Many brews that emerged from Calagione’s fertile imagination were deemed ‘extreme,’ for various reasons. As his 120 Minute IPA is brewed, hops are being added continuously—for 120 minutes—to create a beer with extensive hop flavor and higher alcohol (15 to 20 percent) than most beers on the market.

Calagione is also known for his Ancient Ales, a series of beers created with the able assistance of molecular archaeologist Dr. Pat McGovern, of the University of Pennsylvania Museum, Philadelphia, where he’s an adjunct professor of anthropology. These brews were produced based on the analysis of chemical residue found on pottery at archaeological sites.

Merging Boston Beer, America’s second-largest craft beer brewer after Yuengling, and Dogfish Head, in the No. 13 slot, creates a larger company, but it still qualifies as a craft brewery, falling within the Brewers Association limits. Under BA rules, a brewery cannot brew more than 6 million barrels of beer a year and still say it’s a craft brewer.

“This combination is the right fit, as both Boston Beer and Dogfish Head have a passion for brewing and innovation. We share the same values and we will learn a lot from each other as we continue to invest in the high-end beer category,” Koch said, in a press release.

“Not only are Dogfish Head and Boston Beer two original American breweries,” Calagione added, “but Jim Koch and I worked hard with other leading craft brewery founders and the Brewers Association to develop and champion what defines independent American brewers.”

As the growth of the craft beer segment continues to subside, it’s likely we’ll see more mergers like this. Positioning the product within the beer market, it seems, is the new mantra of craft brewers.