Founders deal will not change brand

(As seen on WZZM TV 13) With a $40 million expansion already in the works, Founders Brewing Co. made another play to solidify its position in the global beer industry last week.

The brewery announced it brought on Spanish brewery Mahou San Miguel as a minority partner. When the deal closes, likely in January, Mahou will own 30 percent of Founders.

For CEO Mike Stevens, the deal allows Founders to ensure the company stays in the family in the future. He said the process started roughly a year ago as he and co-founder Dave Engbers were looking at where the company would be in 30, 50 and even 100 years down the line.

“It’s amazing how quickly the time goes by,” Stevens said, mentioning the past 20 years. “It’s smart to look at the long term and understand the craft space and how much interest there is in this space.

“Now is the time to define the future.”

Stevens said the deal ensures his and Engbers’ children can continue Founders as a multi-generational company, if that is their desire. He pointed to Mahou’s 125-year history as a family-owned brewery as one to emulate.

The desire to be a multigenerational brewery was the No. 1 priority Founders sought in finding a partner.

“We needed a partner who understood our values,” Stevens said. “Otherwise we would move on and continue on the path we’re on.”

Mahou has been family-owned since it opened in 1890 and is Spain’s leading brewing company with seven brewing facilities in the country. It also has a brewery in India. Its portfolio also includes a Canary Islands brand called Reina and Cervezas Alhambra.

Mahou also distributes brands such as Carlsberg and Warsteiner in Spain. It’s only distribution in the United States is in Florida.

The second priority was opportunity for growth. Mahou was seeking a partner so it could be at the forefront of bringing the American craft beer movement overseas.

"Our investment in Founders is a great source of learning, innovation and transformation for Mahou San Miguel to get directly involved in the U.S. craft market,” said Javier López del Hierro, president of Mahou San Miguel. “It’s the most valuable beer market worldwide, a market that sets consumer trends, with excellent prospects for growth. Founders combines product excellence with a level of business acumen that stands out in the craft beer segment.”

To be on the global American craft beer movement’s front end, Founders needed Mahou to maintain the brand’s consistency.

“They understand what we do,” Stevens said, adding respect of Founders is what brought Mahou in. “Nothing changes.”

Mahou’s 30 percent share affords Founders the ability to offer liquidity to some of its long-time investors.

“Many of our early investors are aging and we believe it’s fair that they have the opportunity to realize a portion of their significant investments in the brewery,” Stevens said. “We still own 70 percent.”

International growth is an opportunity presented by the deal, but it won’t come for several years, he said. The company already distributes to several countries but on a limited basis.

Stevens said they will put together an international team that will operate separately from the domestic team.

The deal also is separate from the $40 million expansion that could boost the brewery’s production to 900,000 barrels per year. The brewery made more than 200,000 barrels of beer this year and will likely brew more than 300,000 next year.

A jump to 900,000 barrels would make Founders one of the largest breweries in the country but still behind breweries such as Sam Adams, Sierra Nevada, New Belgium Brewing Co., Stone Brewing Co. and Lagunitas Brewing Co., as well as other West Coast breweries that are opening East Coast locations.

The expansion at the Grandville Avenue location was a decision to keep growth in Grand Rapids, Stevens said. He said the focus for 2015 will be to continue the expansion and brand building in the United States.

Large brewers such as AB InBev and MillerCoors have made a splash recently with acquisitions of craft brewers, but those transactions have upset craft beer fans. Founders’ leaders already have seen some backlash from the community over this deal, but said the Founders family will remain intact and the brand and values of the company will not change.

According to Stevens, the deal will open up long-term growth opportunities to both breweries. He said the deal is the best he’s seen in the craft-brewing industry.

“It’s a great deal for both parties,” said Stevens, who did not divulge the transaction price. “It’s a great time to etch in stone the reputation of our brewery.”