Sightlines — $90 Million of Private Equity Investment in Stone Brewing Revealed by SEC Filing

Michael Kiser

THE GIST
According to Brewbound, an SEC filing made in June by consumer-product focused firm VMG Consumer Partners reveals that almost $90 Million was invested in San Diego’s Stone Brewing. The investment has been placed into a recently formed limited partnership called the “VMG Stone Brewing Coinvestment”. This follows news that broke in April of Stone Founder Greg Koch’s plan to launch a $100 million fund for investing in “real” food and beverage companies called “True Craft.”

WHY IT MATTERS
Like a number of craft brewers, Koch and Stone Brewing have always asserted themselves as the underdog. Part of this rhetoric was railing against the “fizzy yellow beer” that individuals such as Koch saw as part of the problem craft brewers faced when trying to establish their businesses. 

Now brewers such as Stone, as well as other breweries that have either been acquired or taken on large investments, such as Lagunitas, Ballast Point and Oskar Blues, are losing their underdog status, even if they still remain minuscule compared to giants like SABMiller and AB-Inbev. But while their position in the industry may have shifted dramatically as their business has grown, the rhetoric has remained the same – creating dissonance amongst consumers' perceptions. 

This investment marks another step in a huge period of transition that Stone are currently going through. Koch himself will be stepping down from his position as CEO as he transitions into a new role as Executive Chairman and Brewmaster Mitch Steele is to leave and pursue a new project. Their Arrogant Bastard brand has spun off into its own company, even though it's still made at Stone. Meanwhile beer has now begun shipping from Stone’s new $25 million facility in Berlin and last week it tapped the first keg of Stone IPA from its new $75 million brewery in Richmond, VA.

Koch’s was quoted as saying his “True Craft” investment fun will “help craft breweries remain craft breweries.” As the rhetoric continues to widen the gap with the reality of Stone's otherwise impressive business ventures, perhaps the brewery that needs this help the most could be his own.

— Matthew Curtis