Did the Dogfish get caught in the net?

Jacopo Mazzeo

Jacopo Mazzeo

14 May 2019

As brewing giants phagocytise more and more smaller craft breweries, beer aficionados have become particularly sensitive to buyouts. This time however, the beer community has taken the news with mixed feelings. Jacopo Mazzeo reports on the merger of Dogfish Head and Boston Beer

On Thursday afternoon last week the global beer community was shaken by the announcement of two iconic American craft breweries, Dogfish Head and Boston Beer Company (BBC), merging in a $300 million deal.

It may have been advertised as a merger, but the deal will see Massachusetts-based BBC absorbing Dogfish Head, with the new company being led by current BBC CEO Dave Burwick. As a payment, Dogfish Head’s co-founders Sam and Mariah Calagione will receive around 406,000 shares of Boston Beer – each currently valued at circa $314.60 – plus $173 million in cash. Sam Calagione will also join Boston Beer’s board of directors in 2020.

Many have welcomed the announcement as a move that won’t affect Dogfish Head’s quality and innovative character. Others, however, claim that BBC is too big a player to allow Dogfish Head to retain its independence (BBC is currently rated second largest craft brewery in the States).

In an open letter sent to rating website Beer Advocate, Calagione and BBC’s founder Jim Koch assured the beer community that the new venture will retain  its craft brewery status: ‘We’re creating a uniquely robust craft beer company,’ they said, as opposed to ‘those larger international beer conglomerates [which] are still more than 50 times our size... Our combined company’s volume will represent less than 2% of the beer sold in the US.’

Size matters

Brewers Association (BA), the US body that regulates the definition of a craft brewery, set six million barrels as the threshold beyond which a brewery can no longer be called craft. As it stands, BBC is, and will remain, well within the guidelines.

The definition has its critics though. Many beer aficionados claim that the BA repeatedly adjusted the guidelines with the purpose to keep BBC within it, notably when the original two million barrels threshold was tripled in 2010.

But if BBC is today perceived as too big to be craft, the purchase of Dogfish Head will certainly help bring some craft beer vibe back into the business. Sam Calagione is widely acknowledged as a real hero of the craft revolution. His iconic 90 Minute IPA took the world by storm when released in 2001, helping to shape the very meaning of innovation in modern brewing.

Keep it craft

Following last week’s announcement, Calagione stressed his and BBC’s commitment to work within the craft beer boundaries: ‘Not only are Dogfish Head and Boston Beer two original American breweries, but Jim Koch and I worked hard with other leading craft brewery founders and the BA to develop and champion what defines Independent American brewers. This merger,’ he explained, ‘better positions Dogfish Head and our co-workers to continue growing within this definition for many years to come.’

The BBC-Dogfish Head merger is paving the way for the development of a more competitive, quality-driven and diversified offer

Skeptics might argue that such definition will ‘grow’ hand in hand with the new BBC, but the real implications of this merger go beyond the mere interpretation of what craft beer is.

Sandwiched between brewing giants and small artisans, the merger is potentially shaping a new, middle-tier category made by businesses that benefit from both significant shelf space and understanding of the value of beer quality.

The BBC-Dogfish Head merger is paving the way for the development of a more competitive, quality-driven and diversified offer, and the beer community should welcome it with open arms.

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