BREWING:

BREWING: Deal, Reported to Be $165M, Set to Close in August

Sapporo snatches up Stone for a reported $165 million.

North County-based Stone Brewing has agreed to be acquired by Sapporo U.S.A., the two companies announced on June 23. The major Japanese brewer’s deal to acquire craft brewer Stone for a reported $165 million is expected to close in August.

“This is the right next chapter for

Stone Brewing,” said Greg Koch, executive chairman and co-founder of Stone Brewing.

Stone will retain its existing brands, management and workforce under Sapporo, the businesses said.

In addition to producing Stone’s craft beers, Sapporo plans to brew its Sapporo-branded beers for U.S. distribution at Stone’s facilities in Escondido and Richmond, Virginia. Sapporo has plans to expand the production capacity of the breweries. Sapporo also plans to continue the businesses’ hospitality arm by operating Stone’s seven Tap Rooms and World Bistro & Gardens.

Distribution to Split Off

The transaction does not include Stone Distributing Company, which handles 42 brands of craft beer, including Stone. The distribution arm will become an independent company under current ownership and maintain current leadership of day-to-day operations, Stone said.

Sapporo said it plans to make capital investments and intends to brew 360,000 barrels in the U.S. by the end of 2024. “This will essentially double Stone Brewing’s current production and provide ample opportunities for growth for both brands,” the brewer said in a joint statement.

Kenny Sadai, chairman of Sapporo U.S.A., laid out the genesis of the transaction in the statement.

“We approached Stone Brewing seeking a partner for our growth plans in the U.S., and we quickly recognized they were an ideal partner with bi-coastal brewing capacity, loyal fans, superb management, shared cultural values, and commitment to the highest quality standards,” Sadai said. “This acquisition puts the resources and legacy of the largest Asian beer brand in America together with one of the most innovative and recognized craft beer brands in the world.

It’s a perfect fusion of east meets west that is an ideal marriage for Sapporo’s long-term growth strategy in the U.S.”

It is not Sapporo’s first U.S. purchase. It bought San Francisco-based Anchor Brewing Company, maker of Anchor Steam Beer, for $85 million in August 2017. Sapporo approached Stone about a joint business venture about 10 months ago, said a Stone Brewing spokeswoman.

A key moment in striking the deal came when Sapporo executives got a boots-on-theground look at Stone’s plant.

“The pivotal moment was when they had the opportunity to visit our breweries and meet the team, particularly our Brew Crew,” said Sean Monahan, chief operating officer. “They were impressed with the facilities and the attention our team placed on quality. These first impressions gave them the confidence they had a found a partner with similar values that they could entrust with the Sapporo brand.”

Charismatic Leadership

Stone was founded in San Marcos in 1996 by Koch and Steve Wagner, who will be selling their stakes along with investor VMG. Koch, who has long been the face of the company and its charismatic spokesman, previously said he would never sell Stone Brewing.

He recalled making such statements in a June 24 blog post.

“The world has changed dramatically in the last few years. The beer industry changed with it. And, so have I,” Koch wrote. “… I’ve run the calculus every which way (over and over in my head for years now), and this is the most pragmatic decision to ensure this beautiful thing I care so much about has a future.”

Stone Brewing’s feisty attitude landed it in the pages of the print media, including the front page of the Wall Street Journal.

Stone came to the craft beer market with a certain amount of swagger. Its attitude was summed up on its bottles of Arrogant Bastard Ale, which said: “This is an aggressive beer. You probably won’t like it. It is quite doubtful that you have the taste or sophistication to be able to appreciate an ale of this quality and depth.”

Stone is the ninth largest craft brewery in the United States, measured by production.