Monster Energy acquires one of the nation’s largest craft brewers
Monster Energy, the energy drinks company, announced Thursday that it will acquire CANarchy, one of the nation’s largest craft beer producers. The deal is reportedly worth $330 million.
CANarchy is one of the top 10 craft beer producers in the nation and its brands produced 489,626 barrels of beer in 2020, according to reports from Brewbound. CANarchy is a single craft beer company that includes a few different breweries: Oskar Blues, Cigar City, Deep Ellum, Squatters, and Wasatch. A private equity firm, Fireman Capital Partners, brought the assemblage of breweries together starting in 2012.
“This transaction provides us with a springboard from which to enter the alcoholic beverage sector,” said Hilton Schlosberg, Monster’s vice chairman and co-CEO, in a release. “The acquisition will provide us with a fully in-place infrastructure, including people, distribution and licenses, along with alcoholic beverage development expertise and manufacturing capabilities in this industry.”
“The addition of CANarchy and its brands to the Monster beverage portfolio represents an excellent opportunity to further grow our already robust product offerings,” said Rodney Sacks, Monster chairman and co-CEO. “We are excited to build and expand upon CANarchy’s existing brands with innovative new products.”
In the press release, Monster said that CANarchy “will function independent, retaining its own organizational structure and team…”
According to the report, the news of CANarchy’s sale comes as no surprise to those who’ve tracked the company’s recent history. Fireman Capital, which created CANarchy, is no longer in control of the company and apparently no longer exists. Somewhere around 2020, HPS Investment Partners assumed control of CANarchy. Ultimately, HPS was the seller.
News of the transaction spurred conversation among craft beer enthusiasts and industry observers regarding the nature of independence. Although combined into one large entity, before the acquisition CANarchy still met the Brewers Association’s definition of a craft brewer. Now that it has been acquired by Monster, it still retains its status as independent according to the Brewers Association (BA).
The news prompted the Brewers Association to issue a statement about the acquisition. The organization, which represents the interests of the nation’s small and independent breweries, pointed out that even with the sale to Monster CANarchy still meets the current definition of a craft brewer.
“The Brewers Association (BA) is aware of CANarchy Craft Brewery Collective’s pending sale to Monster Beverage,” said the statement sent out to Brewers Association members. “Based on our current information, CANarchy meets the Brewers Association’s craft brewer definition under the ownership of Monster Energy as presently constituted. In this instance, Monster is not a beverage alcohol industry member, so this new ownership structure does not affect CANarchy’s independence in regard to the beverage alcohol industry.”
A quick look at Twitter and forums like Beer Advocate indicate that many people question the nature of what the Brewers Association considers independence.
The Brewers Association definition of craft brewer has changed over the years. In 2010, the description of small was changed, raising the ceiling from 2 million barrels per year to 6 million barrels per year. In 2018, the term traditional was removed from the definition entirely.
The statement from the Brewers Association, which was sent to its members within hours of the acquisition announcement, could suggest that the next change to the definition of craft brewer might involve the nature of independence.
In simplest terms, CANarchy was created by an equity firm that, over time, purchased a major interest in a few different craft breweries. Because Fireman Capital was not itself “a beverage alcohol industry member that is not itself a craft brewer,” CANarchy and its individual components qualified as craft brewers. Now, CANarchy is part of Monster Energy, which is also not a non-craft member of the alcohol industry.
Although the definition outlined below seems quite simple, the world surrounding the modern craft beer industry is not at all simple. As more large players get involved, be they energy drinks companies or capital investment firms, the nature of the term independence has changed.
The Brewers Association defines small and independent craft brewers as:
- Small: Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to a brewer according to rules of alternating proprietorships.
- Independent: Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by a beverage alcohol industry member that is not itself a craft brewer.
- Brewer: Has a TTB Brewer’s Notice and makes beer.
One tweet that summed up what seems the prevailing public sentiment said: “A brewery collective owned by a national sports drink company is independent. This may make sense within the halls of the [Brewers Association], but nowhere else.”