With the announcement of a merger between Victory Brewing of Downingtown, Pennsylvania, and upstate New York's Southern Tier, the beer world is abuzz once again. These two notoriously independent businesses will now operate under Artisanal Brewing Ventures (ABV), a holding company formed by a private equity firm called Ulysses Management. In a time when brewery buyouts are becoming all too common, craft beer fans are beginning to panic: Have two more of their favorite brewers now also sold out? Are these guys even technically making "craft beer" anymore?
Rest assured, this is anything but bad news for beer fans. "They're very much 'nose-in and hands-off,' " says Victory co-founder Bill Covaleski of his new parent company, ABV. He claims that while ABV will provide the two brands with joint management and resources, the company won't be meddling with either brewery's products. Devotees of Victory's stellar Hop Devil Ale and Prima Pils, or Southern Tier's fantastic Pumking pumpkin ale and Choklat imperial stout have nothing to worry about.
The truth is that mid-sized breweries such as Victory (the 28th largest in the country last year) and Southern Tier (the 31st largest) need to make such deals in order to grow. "We can only do so much to attract the attention that we need to keep the sales momentum and see our products properly placed on shelves," Covaleski explains. "But when we walk into wholesalers as now the 15th largest brewing entity, it's a different conversation."
This again begs the question: Are Victory and Southern Tier still "craft" brewers? It's hard to say. After all, the Brewers Association's definition of the term is constantly evolving in order to accommodate a rapidly changing industry. A craft brewer must now make "6 million barrels of beer or less" (i.e. everyone but Anheuser-Busch InBev or SABMiller), and with a combined annual production total of 250,000 barrels, Victory and Southern Tier are safe. But isn't the brewery now "owned or controlled by an alcoholic beverage industry member that is not itself a craft brewer?" Covaleski points out that ABV isn't manufacturing beer, which shouldn't negate the craft designation, but even he doesn't seem so sure about how to categorize this new business. "I wish I was on a more solid footing to either defend or capitulate on this, but I'm not sure where we sit within the craft beer definition, to be honest with you."
Covaleski is sure, however, that the merger is a win for craft brewing values. "The last 20 years of craft beer were very 'kumbaya,' " he explains. "But now there are some really significant sharks in our little fishbowl. This merger is a great way for us to preserve the heritage and innovation and creativity of craft beer. We've created a bigger fish for those sharks to swallow, and we're not fighting one another. We're working together to fight the shark."
And this isn't the first time they've teamed up. For decades, brewers like Covaleski, Victory co-founder Ron Barchet, and Phin and Sara DeMink of Southern Tier have been collectively, permanently altering our perception of beer, wrestling power back from the largest of macrobreweries in the process. "Craft brewers took a world where people didn't care about flavor or freshness in their beer, and changed it dramatically," says Covaleski. "We've won what we set out to do, and we don't want to lose now by standing in front of a freight train."
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