Photo by Michael Kiser
Facing declining sales and a desire to more quickly pay off debt incurred while building a new production facility in 2014, Avery Brewing Company announced this week it would sell a 40% stake in the business. The amount is on top of 30% sold to Spanish brewer Mahou in 2017.
But this time around, Mahou has another partner. Founders Brewing Company is also in on the new 40% stake for an undisclosed amount. It's another synergistic connection between the three breweries, as Mahou also purchased 30% of Founders in 2014 and last year, Founders shared plans to brew All Day IPA at Avery's Colorado facility as the business deepens its connections out West.
Avery hasn't shared updated totals for its current production volume, but despite a new brewery with max capacity of 150,000 barrels, production flattened from 2016-2017 at around 63,000 BBLs. Viewed under that lens, its new partnership to brew for Founders makes plenty of sense. In IRI sales alone, Founders' flagship brand sold around 164,000 BBLs across grocery, convenience, and other stores in 2018.
In an interview with Brewbound, Avery founder Adam Avery explained he and his father, Larry, will remain minority owners of the last 30% of the company and that Mahou will have increased decision-making for the direction of the business.
“We can use all the expertise we can get,” Avery told the outlet. “There is some crazy shit going on in our industry, and it is awesome to have investors who look at this as a long term play and not as a short-term, turn-and-burn type of thing."
Long term will be needed for Avery, which has seen its packaged beer sales collapse in its home market of Colorado. Since hitting a peak in 2016, the Avery portfolio lost 44% of volume sales in state liquor stores, where full-strength beer was exclusively sold until the start of this year. In dollar sales, Avery decreased by 16% 2017-2018 in Colorado liquor stores and 22.5% across its entire distribution footprint.
Founders, meanwhile, can do no wrong, adding more than 100,000 BBLs of production from 2017-2018 while aiming to finish last year around 580,000. All Day IPA grew by 32% volume in IRI stores last year.
The contrasting scenarios are a reason for the additional sale, according to Adam Avery, who told Brewbound the new round of investment will help pay down debt from a nearly $30 million project for Avery's Boulder facility. Avery said that the company's debt load was "very high," although it's managed to pay down "almost all" of it.
This move is the latest as the business reflects and rebuilds in a way. A year ago, Avery rolled out an updated line of rebranded packaging and last summer used a round of layoffs to restructure its sales force and areas of supply chain and logistics.
Nevertheless, the last 13 weeks of 2018 showed slight improvements for Avery brands compared to the final quarter of 2017 on a national level, and sales to start 2019 have stayed equally—if not more—strong.
Given the broader business adjustments made by the company in the last two years, this may not be seen as a full-on righting of the ship, but things appear to be headed in a good direction aided by Mahou and Founders. Plans are underway to identify areas of overlap with Founders, including ingredient costs, and staying open to additional contract brewing opportunities. Volume is one way to measure success, but finding efficiencies and revenue streams is what will help the most in the short term as debt is paid off and long term plans are put in place with guidance of Mahou.
“The road map has not been laid out,” Adam Avery told Brewbound. “It is definitely an evolution and nothing is set in stone. With our industry being as fluid as it is, we will develop a game plan as we move on.”
Words by Bryan Roth