THE GIST
Years from their peak production and with an eye toward future stability, two long-tenured California breweries announced they would come together this week. First reported by SiliconValley.com, San Leandro’s Drake’s Brewing Co. unveiled plans to acquire Cloverdale’s Bear Republic Brewing Co. for an undisclosed amount. The sale includes all of Bear Republic’s recipes, formulas, and intellectual property, but not their brewery space. Drake’s will relocate the production of all Bear Republic’s beers to San Leandro, including flagship Racer 5 IPA.
“This acquisition represents a significant step forward in our company’s future growth and our mission to bring people together over craft beer,” Drake’s owners John Martin and Roy Kirkorian wrote in an internal memo obtained by The Full Pint. “With the addition of the Bear Republic brands, including the iconic Racer 5 IPA, their other recipes, and the brand’s wide recognition, we are now better positioned to achieve that goal.”
According to the SiliconValley.com report, Bear Republic president and CEO Richard Norgrove and brewmaster Peter Kruger will remain on staff following the sale. Bear Republic’s Norgrove and Drake’s Martin have been longtime friends and even business partners, opening Berkeley’s Triple Rock Brewing together in 1986. This time around, the hope is another partnership will infuse new excitement into both breweries.
According to data from the Brewers Association (BA), Bear Republic hit an all-time high of volume in 2016, selling 81,800 barrels of beer, but that total declined to just under 37,000 barrels in 2021, the most recent year of data.
Drake's production went as high as 44,086 in 2019 but was down to 29,700 in 2021, per the BA.
Drake’s did not respond to a request for comment by the time of publication.
WHY IT MATTERS
As the business climate for craft beer gets tougher, the two California breweries are echoing a recurring refrain of strength in numbers that has been heard from breweries across the Midwest, Southeast, Mid-Atlantic, and beyond. Through merger, acquisition, or some form of new partnership, these deals represent what’s increasingly seen as needed support during a more challenging time to sell craft beer, which includes higher ingredient and operational costs.
Drake’s, founded as Lind Brewing in 1989, and Bear Republic, founded in 1995, are stalwarts of the Golden State and—at one time for Bear Republic—the national beer scene. For most of the 2010s, Bear Republic was among the top-50 craft breweries in the country, as defined by the BA. While still producing significant volumes, the brewery was hampered by climate change in 2015, forcing a reduction of volume and drastic pullback of distribution during a historic drought in California. It hasn’t been able to fully recover since.
By selling its brand to Drake’s, the move is positioned as a way to reinvigorate interest in a legacy brand that has been losing share of mind among consumers. From 2017-2022, Bear Republic’s chain retail sales volume tracked by market research company IRI declined nearly -60%, roughly the same amount its flagship Racer 5 has lost. Things haven’t been easy for Drake’s, either, whose chain retail sales are -25.5% in the same timeframe. There are some bright spots, however:
Drake's has found success with bigger and bolder beers. Its Denogginizer Double IPA (+12.1%) and Hopocalypse Double IPA (+35.1%) both showed significant volume gains in chain sales last year.
Bear Republic also struck some gold last year with new releases, including a IPA variety pack and Tropical IPA that showed promise in stores.
Comments this week from brewery leadership focused on the opportunity they see moving forward instead of past hardships, although for Bear Republic, change has come fast in recent years. In 2019, they closed their original Healdsburg location, and their co-founder and CEO, Norgrove’s father, stepped down. This December, facing seasonal challenges and continued competition with a food-focused location, Bear Republic shuttered their Rohnert Park taproom for the winter and furloughed 40 workers.
“I just don't know how survivable it is under its current format,” Norgrove told the Santa Rosa Democrat Sentinel in December 2022. “That's where we needed to make some changes. I mean, we're just not making money.”
Drake’s descent has been less dramatic, and the company has found a strength in creating on-premise experiences. In 2015, they converted an old Dodge dealership in Oakland into a 10,000-square foot beer garden, and in 2018, they opened Drake’s Barn in Sacramento, a two-acre event space with a gigantic, International Design Award-winning pavilion erected in the center. The team-up between Drake’s and Bear Republic could follow this trend. Drake's leadership told SiliconValley.com that satellite taprooms could be in the future for Bear Republic, likely in Sonoma Valley.
Renewed attention to in-person experiences may be key to both companies moving forward. Craft beer’s retail sales haven’t grown in years, and sales in California stores are led by imports more than ever. With the two breweries combined volumes basically halved since their peak, finding any advantage in a difficult climate will be to their benefit. In an interview with SiliconValley.com, Martin and Norgrove said the move “makes them both stronger” for what’s to come.
“We have always admired Drake’s Brewing Company’s passion for craft beer and their community as well as their commitment to quality,” Norgrove told SiliconValley.com. “Joining forces with Drake’s will allow us to bring our beers to even more customers, and we’re excited to be a part of the Drake’s family.”
Words by Jerard Fagerberg