The Craft Brew Alliance Inc. is kind of the OG of this new era of craft beer mergers and acquisitions. You almost kind of forget about them amid today’s flurry of transactions, but Anheuser-Busch certainly hasn’t forgotten. The two entities just announced a series of new commercial agreements that expand and strengthen the companies’ long-term relationship and create new growth opportunities for both companies. The agreements include an amended and extended master distribution agreement, a new contract brewing arrangement and a new international distribution agreement.
Through the agreements, AB will provide additional support and committed resources to accelerate CBA’s growth strategy (more on that here), which includes: strengthening its distinctive portfolio of craft brands; maximizing the potential of Kona Brewing Co. as one of the fastest-growing American craft brands; and optimizing CBA’s brewing footprint to drive gross margin expansion and deliver its craft beers to more beer lovers in the United States and around the world.
“We are proud of our long-standing relationship with AB and have always been candid about the competitive advantage of our distribution arrangement, which allows CBA to independently manage our brands and still enjoy the benefits of being a valued part of AB’s exceptional wholesaler network,” said Andy Thomas, CEO of CBA. “As both of our companies evolved over the past 18 months, it became clear that our strategic focus and commitment to the growth of craft beer were increasingly more aligned, and we started to explore ways to collaborate more closely. We’re excited to build on this partnership and look forward to the financial and operational benefits, which will positively impact our top and bottom line.
1. Master Distributor Agreement
CBA and AB have extended the current fee structure of their existing Master Distributor Agreement for 10 additional years, through 2028. The amended agreement secures CBA’s brands within its wholesaler network, enabling continued investment in brand growth and strategic partnerships, such as Appalachian Mountain Brewery and Cisco Brewers.
2. Contract Brewing Agreement
Under the terms of a new contract brewing arrangement, CBA and AB will work together to transition up to 300,000 barrels of volume into AB’s state-of-the-art breweries. This agreement will directly support CBA’s ongoing brewery footprint optimization and enable both companies to realize additional operational efficiencies.
3. International Distribution Agreement
AB will support the expansion of CBA’s portfolio of brands globally through a new international distribution agreement. This agreement builds on CBA’s recent distribution arrangements with AB, which launched Kona in Brazil and Mexico, and creates opportunities to accelerate the growth of CBA’s craft portfolio in additional international markets.
CBA is expected to gain significant financial benefits from these commercial agreements that will allow the company to continue investing in its growth strategy and increase its sales and marketing spend behind its brands. As a major CBA shareholder, AB is positioned to benefit directly from those gains, along with the expected new opportunities the agreements create for its international distribution system, U.S. wholesaler partners and breweries.
CBA and AB will work together over the coming months to implement the brewing and international distribution aspects of these agreements.