Anheuser-Busch to buy out Kona Brewing parent company

  • The Kona Brewing Co. is pictured. Anheuser-Busch to buy out Kona Brewing parent company. (Laura Ruminski/West Hawaii Today)

KAILUA-KONA — Kona Brewing Co. is soon to become wholly owned by beer giant Anheuser-Busch.

Portland, Ore.-based Craft Brew Alliance, parent company of Kona Brewing Co., and Anheuser-Busch (A-B) jointly announced the agreement Monday to expand their partnership, with A-B agreeing to purchase the remaining Craft Brew Alliance shares it does not already own.

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“By combining our resources, our talented teammates, and dynamic brands, we will look to nurture the growth of CBA’s existing portfolio as we continue investing in innovation to meet the changing needs of today’s beverage consumers, all while delivering certainty of value to our shareholders,” Andy Thomas, CEO of Craft Brew Alliance, said in a media release.

Prior to the agreement announced Monday, A-B owned just over 31.2% of stake in the alliance and will buy the remaining shares at $16.50 per share in cash. The transaction, which is subject to closing conditions, including approval by a majority of Craft Brew Alliance shareholders, is expected to close in 2020.

The vast majority of Craft Brew Alliance’s brands, which also includes Redhook Brewery and Widmer Brothers Brewing, among others, are already distributed through Anheuser-Busch’s network of independent wholesalers per the companies’ existing commercial agreement. Craft Brew Alliance acquired Kona Brewing Co. in 2010.

“We’ve had a really great relationship with Anheuser-Busch over the past 17 years being our local wholesaler,” Bill Smith, Kona Brewing Co. general manager of Hawaii operations, said Monday. “Mainly, it doesn’t change much immediately for us. Our focus is still the new brewery and getting that built. But what it does is give us a better relationship with Anheuser-Busch and moving forward with our wholesalers.”

Smith said the agreement over the years with A-B helped lay the ground work for the local brewery to grow substantially utilizing the beer giant’s distribution network to get Kona Brewing Co. brews from the West Coast to the East Coast.

“It allowed us to use their seamless wholesaler network, but we were just part of their discussion, we were part of the repertoire of what they had when they went into an account to sell beer,” Smith said. “Now, with the future of us merging together, we will totally be part of the brand family and part of their focuses and initiatives for the year.”

And that could mean more markets to enter, including international ones. Currently, Kona Brewing Co. is sold in Scandinavia, Europe, Asia, Australia and now Brazil, which the company broke into earlier this year, Smith said.

“This is just going to be able to give the financial boost and support that Kona needs and has earned over the years as a brand that Craft Brew Alliance couldn’t fully give,” he said. “This is going to be a great partnership.”

Meanwhile, construction is progressing at the site of Kona Brewing Co.’s new brewery off Pawai Place in Kailua-Kona. Completion remains set for March.

The 30,000-square-foot brewery and canning facility at full operation will turn out upward of 100,000 barrels per year — the equivalent of 200,000 kegs. The current facility, where tap beer offered in Hawaii is brewed, puts out about an eighth of that, at just 12,000 barrels annually.

“We’re shooting for at least having it tour-able or at least some sort of celebration 25th anniversary of the Kona brewers festival,” Smith said of the event slated for March 14, 2020, with tickets going on sale in January. “That’s a big target for us to focus on.”

Cameron Healy, who co-founded Kona Brewing Co. with son Spoon Khalsa back in 1994, said in a statement Monday that he is proud of the company’s “ability to grow and spread its craft beef products throughout the U.S. and around the world while remaining true to its core and staying steadfastly committed to our community here in Hawaii.” He also thanked customers, employees and partners for their support over the past quarter-century.

“Kona Brewing Co. has enjoyed a positive partnership with Anheuser-Busch for the past 17 years through our affiliation with Craft Brew Alliance, and I expect the relationship to continue prospering under this new structure for years to come,” Healy said. “I am excited to see where Kona Brewing Co. goes next, with the new brewery opening in Kona in early 2020 and through the numerous investments we continue to make in our local communities.”

Smith said the company’s focus of giving back to the community and having a positive impact on the environment won’t go away.

“Nothing’s going to change immediately,” he said. “Hopefully, this will allow us to be able to even give more. I know Anheuser-Busch Hawaii has been a big part of community as well on their own end and so bringing the two entities together, I think, is just going to be beneficial for Hawaii.”

If the transaction closes, Craft Brew Alliance will join A-B’s Brewers Collective — a collection of craft partners spread throughout the country committed to providing consumers with innovative, quality beers and investing in their local communities, according to the joint announcement Monday. Anheuser-Busch said it has invested more than $130 million in its craft partners, allowing them to expand production volume by an average of 31%.

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The company said its craft partners have created nearly 1,000 new jobs in their home communities to support their growing breweries.

“The beer industry in the U.S. is competitive and dynamic, with more choices available to consumers than ever before,” said Marcelo “Mika” Michaelis, president, Brewers Collective, Anheuser-Busch. “CBA’s diverse portfolio of regional breweries and innovative lifestyle brands is an excellent complement to our family of craft partners and would continue to help fuel the growth of the craft beer category.”