Over nearly 25 years, Boulevard Brewing Co. has grown to become one of the largest craft brewers in the Midwest, backed by impressive brands like Boulevard Pale Ale and The Smokestack Series line of artisanal beers. The Boulevard story began in 1988, when founder John McDonald started construction of the brewhouse in a turn-of-the-century brick building on Kansas City’s historic Southwest Boulevard. A quarter of a century later, Boulevard Brewing has turned the page on that entrepreneurial, one-man business plan. Last week, McDonald announced his majority stake in Boulevard would soon be sold to Belgian beer firm Duvel Moortgat — famous in America for brands like Duvel and Brewery Ommegang.
According to the Brewers Association, Boulevard Brewing was the 12th largest U.S. craft brewery in 2012 and now joins Brewery Ommegang of Cooperstown, N.Y., as the second American company owned by the Duvel Moortgat international beer rollup. According to an excellent article on Brewbound, the deal is expected to close before the end of the year, and while terms were not disclosed, “industry sources” have estimated the value of the transaction at least at $100 million. We quote McDonald from the same article:
“It was a very interesting morning for me to come into my brewery, see the smokestacks and realize that henceforth, things will be a little different,” said John McDonald, who started Boulevard in 1989. “I have been working on this for a couple years, trying to figure out the right path for the brewery. I really am excited about this merger. We couldn’t have found a better partner and I am really excited about the future.”
We ran a story in early May about the increasing pressure from bigger beer companies to purchase up-and-coming craft brewers. Editor Jason Morgan noted industry trends that saw craft brewers staying small and independent, snubbing noses at the idea of going Big Beer. In his book, Brewing up a Business, Dogfish Head Craft Brewery founder Sam Calagione notes, “It just seems to me that going public is by definition anti-entrepreneurial. You cannot let the tail of money wag the dog of inspiration.” But as the craft beer industry continues to grow, diversify and demand more market equity, corporate giants and big investors will be soliciting more and more indie craft brewers, and inevitably, famous craft beers will roll into corporate umbrella brands.
Being acquired by a bigger company certainly as its allure — an injection of serious capital for starters. According to the Kansas City Business Journal, Boulevard has been planning a $15 million to $20 million expansion of its fermentation capacity over the next few years. Now that could happen much sooner, coinciding with a major expansion in the size of Boulevard’s U.S. sales force. From that article:
“They looked very carefully at Boulevard Brewery and our brands and came to the conclusion that our beers are not only widely respected — many are critically acclaimed — but many of them have the ability to do well not just in the Midwest, but the balance of the United States and internationally,” [Boulevard CFO Jeff] Krum said. “We have plans that we’ve been working on for some time to do additional expansion here. With the resources that they bring to the table, their financial strength and their depth of resources, they’ll accelerate our expansion plans.”
An expansive and intertwined distribution network is sure to follow. According to Brewbound, the companies’ distribution footprints, which only have 23 states and Washington, D.C., in common, leave plenty of room for growth. Soon, new markets like New York and Florida could be selling Boulevard brands. Actually, considering the international vision of its new owner, Boulevard Brewing Co. could be a global product as well.
But what about McDonald? Why did he decide to sell his majority share of Boulevard Brewing? Why did he decide to sell to Duvel Moortgat specifically? McDonald released this letter to the public on Oct. 17, giving his story behind the situation.
Almost 30 years ago, I was fortunate to spend time traveling around Europe with my wife, Anne Blumer. In each city I visited, one of my favorite adventures was trying different beers. I sipped bitter ales in England, spent my days in Munich drinking pilsners and wheat beers, but it was in Paris, in a Belgian beer bar, that I truly fell in love.
I will never forget the day I walked into the pub, ordered a Belgian ale, and experienced what I can only describe as an epiphany. The beer was brilliant in color, with intensely floral aromas and a flavor bursting with joyous complexity. I went back day after day, sampling a wide array of amazing beers, and was hooked for life.
Last winter my wife and I returned to that same Parisian pub, and the memory of that long-ago experience flooded my senses. It has been many years since that fateful encounter started me on the path to brewing my own beer and founding Boulevard Brewing Company. At the outset, my goal was to make a beer as extraordinary as the Belgian ales I had so fortuitously discovered. With the help of my parents Bill and Mary and my wife Anne, and brewery colleagues, Boulevard has grown into one of the largest craft breweries in the country, and my dream has become a reality. While I always say I don’t have a favorite Boulevard beer, I must admit that some of the Belgian ales in our lineup are as exciting to me as those beers I first tasted in Paris all those years ago.
I have long felt as though I have three children: Boulevard, born in 1989, Jake, in 1990, and Piper, in 1992. I’m not getting any younger, and the long-term future of the brewery has weighed on my mind for the past several years. After long discussions with my family, we determined that we wanted to find a way to take Boulevard to the next level while retaining its essence, its people, its personality – all the characteristics that make our beer and our brewery so important to Kansas City and the Midwest.
I am honored and humbled to announce that I have chosen Duvel Moortgat as the long-term partner for Boulevard. An independent, family-owned craft brewer spanning four generations, Duvel Moortgat produces world-class beers at several breweries in Belgium, and owns and operates Brewery Ommegang in Cooperstown, NY. They bring to us an unparalleled depth of experience, strong resources, and an unwavering devotion to quality. Duvel Moortgat is committed to our people, to the expansion of our Kansas City brewery, and to growing Boulevard brands throughout the US and abroad. After spending a lot of time getting to know the company and its people, I am confident this is the right decision. We share the same values, respect each other’s achievements, and have the same obsession for exceptional beers.
Be assured that this is not goodbye. Although Boulevard is combining with Duvel Moortgat, I will remain closely involved, with a continuing stake in the business and a seat on the board. My commitment to sustainability initiatives will continue, as will Boulevard’s support of Ripple Glass, the glass recycling company I co-founded.
For now, all I can say is thank you. Thank you for making the last 24 years an amazing journey for me and the entire Boulevard family. We will continue to work hard to produce great beers, and to give back to the community. Ultimately, I am determined to make Kansas City even more proud of its hometown brewery, and our dedicated supporters delighted to raise a glass of Boulevard beer.