Done Going Dutch — Heineken Acquires Remaining 50% of Lagunitas

Michael Kiser

In an announcement today first published by Beer Business Daily's subscription-only email, it was confirmed that Heineken has acquired the rest of Lagunitas. The pair had previously entered into as a 50/50 “joint venture for global expansion of the Lagunitas brand." Shortly after, Lagunitas Founder Tony Magee told a room full of California brewers at a guild meeting that Heineken had options to take more in the future, despite his assurances that this was an independence play for the brand.

Those walls eventually became an obstacles to growth, says BBD. 

In a blog post on the Lagunitas website, Magee went on to explain:

“Some who don’t fully understand it all may say it is selling out,” Magee writes. “Truth is that we did then, and are now ‘buying in.’ Money has value and equity has value too. I am using Lagunitas’ equity to buy deeper into an organization that will help us go farther more quickly than we could have on our own.”

How Heineken acquiring the remaining 50% of Lagunitas enables Magee to buy deeper into a company like Heineken is a bit baffling, but it mirrors his language used from day one as he worked to avoid the “sellout” tag he applied to so many other acquisitions that came before his own.  However, his reluctance toward simpler acquisition deals seems to only have slowed the eventual reality. The relationship between Heineken and Lagunitas now much more closely resembles the AB InBev/Goose Island acquisition that started it all.

In that deal, founder John Hall and brewmaster Greg Hall of Goose stayed on with AB in an advisory role for their growing interests in craft. Since then, the High End re-formulated its strategy for craft, and used the experience and credibility of Goose Islanders as an onboarding tool for new acquisitions. Goose even went on to “acquire” the Virtue Cider brand Greg Hall started after his departure from Goose Island.

In a remarkably similar story, albeit slower and with more cognitive dissonance throughout, Magee is now taking on what they describe as a “leading advisory role as Director of Global Craft to Heineken and its Executive Board on the global and local craft strategy,” exactly as the Halls did. Likewise, Lagunitas has gone on to acquire stakes in smaller brands itself, including Independence Brewing Co. in Texas and Moonlight Brewing Co. in Santa Rosa, California. The affects of this full acquisition on those subsidiaries remains to be seen, but Magee tried to assure BBD that those brands are totally under Lagunitas’ umbrella, which was interpreted as a sort of “High End” portfolio play.

In his blog post about the now-completed acquisition, Magee weirdly compares the move to the story of Jonah, in which a cowardly prophet who refused the Lord's command was thrown overboard by his shipmates when they realized his presence on the boat was causing God's wrath in the form of a storm. Only by tossing Jonah out—into the belly of a whale, no less—did their journey return to normal. In Magee's version, "You hafta imagine Jonah standing on the gunnel of the storm-tossed ship and intentionally leaping into the mouth of the whale to embrace the transformation and emerge to become his own destiny."

Magee then goes on to say that the Heineken deal has worked out so well because of the Dutch approach to colonialism being more geared toward partnerships than control. "It’s actually a cultural thing as far as I can tell, unique to the Dutch. How, I ask rhetorically, is it that a kinda tiny lowland country ever became a global colonial power?" Problematic colonialism metaphors aside (if we must), the Dutch Empire was known for deriving its value and influence from controlling international shipping routes—a method of competition that Magee has both railed against, and now seems happy to employ.

Perhaps most telling is the shift in reporting hierarchy, which the Chicago Tribune’s Josh Noel summarizes like so:

“Lagunitas CEO Maria Stipp, who previously reported to Magee, will now report to Marc Busain, president of Heineken in the Americas. Three American craft breweries in which Lagunitas has bought a stake will continue to report to Stipp. Magee has said he intends to invest in more American craft breweries.”

Lagunitas and Heineken USA in particular will be working “shoulder to shoulder,” which is likely necessary in the increasingly competitive top-end of the U.S. craft market being aggressively pursued by AB InBev.

As Magee is fond of saying, “the future will not be like the past.” He may still believe that’s true as he helps Heineken march one of the largest craft brands in the world across the globe and reshapes the beer world as we know it. But as his deal, supposedly like none other, incrementally starts to look like a conventional acquisition in slow motion, the part of the future that may be most different is the speed at which things continue to change around him.

—Michael Kiser