Brewscape: The Latest Craft Beer Brand News

Court Approves Sale of Modern Times to Brewery X

A judge in Orange County Superior Court has approved the sale of San Diego-based Modern Times Drinks to BX MT BAMF LLC – a limited liability company connected with Anaheim, California-based Brewery X – for $20 million.

Judge John Gastelum signed and filed an order approving the auction sale of Modern Times on June 24. Brewery X was required to send the full $20 million in cash to Modern Times’ receiver Thomas Hebrank within seven days, with the sale closing no later than July 7 – 14 days after Judge Gastelum’s sale approval, per the asset purchase agreement (APA). The sale closing will be “deemed effective as of 5 p.m. Pacific Time on the day prior to the closing date,” according to the order.

Hebrank named Brewery X’s bid as the “highest and best bid” in an auction on June 17, which came under fire from another bidder.

The decision was disputed by MTD Asset Acquisition – a group referred to in the auction as the Wilmington, North
Carolina-based brewery TRU Colors – which submitted a bid of $20.1 million, with a 120-day maximum closing period, and a request for Hebrank to file for Chapter 11 bankruptcy.

MTD filed an objection order on June 20, claiming Hebrank attempted a “change of rules in the middle of the auction,” by giving priority to Brewery X’s bid, despite it being $100,000 less than MTD’s bid. The company also submitted a new offer of $21 million with a 30-day closing window, and no bankruptcy filing. Details of the contested auction events were replayed in partial auction transcripts included in additional declarations filed in support of MTD’s objection.

“All objections to the auction, sale and the sale process, if any, have been considered by the court and are overruled,” according to the sale approval order.

Should Brewery X fail to close the sale “timely or otherwise,” the sale will go to the backup bidder, Aumakua Holdings, Inc., which participated in the auction on behalf of Kihei, Hawaii-based Maui Brewing Co. Hebrank accepted Maui’s backup bid at $15.3 million with a 120-day closing window. MTD was first offered the position of backup bid, but declined, according to Hebrank’s declaration in support of the auction sale and results, filed June 20.

Once the sale is closed, Brewery X will retain all assets, property leases, contracts, production equipment, permits (excluding
liquor licenses), intellectual property, and “all net proceeds” “earned between the auction date and closing date,” from Modern Times, according to the APA.

Brewbound has reported that Modern Times pays $140,836 in rent each month across nine properties, and owes a total of
$222,938 in back rent across the leases. Those properties are listed as assumed liabilities in the APA. The schedule for those payments “may be updated and modified at [Brewery X’s] sole discretion at any time prior to closing,” according to the APA.

Brewery X will not have any “obligations whatsoever for any compensation or other amounts payable to any current or former employee,” at Modern Times, “including without limitation, hourly pay, commission, bonus, salary” “for any period at any time on or prior to the closing date.” Additionally, “nothing in this sale order or the APA requires the buyer to offer employment to any employees of Modern [Times],” according to the judge’s filing.

In a statement, Modern Times CEO Jennifer Briggs said she is proud of what the Modern Times employees from November 2021 through June 2022 accomplished, taking “a company from near liquidation to a sale of an ongoing concern.”

“With a turnaround like we did, it cannot be measured by IRI data,” she said. “It can be measured by selling everything we produce. This generation of employees (November 2021 to June 2022) worked for each other to make this happen.

“In terms of the future – [Brewery] X stepped up to the plate in the sale and they will be taking the Modern Times brand to their next level,” she continued. “This next chapter will be their story to tell.”

COOP Ale Works Strikes Deal for OKC Armory

Oklahoma City’s COOP Ale Works is pressing forward with its plan to convert a former Armory building into a hospitality complex according to the Oklahoman.

The project dates back to July 2018 when the brewery won an RFP to revitalize the 23rd Street National Guard Armory and transform the vacated 87,000 sq. ft. space into a manufacturing brewery, restaurant, event space and boutique hotel. The purchase includes two additional buildings that will be demolished for parking. The facility will include 12 villas with a speakeasy, as well as a beer garden and pool.

The project is expected to take two years for demolition and construction with a target of opening in 2025. COOP CEO Daniel Mercer told the outlet that the company has budgeted around $55 million for the project.

Stone Brewing to be Sold to Sapporo Holdings

Stone Brewing Company is being sold to Sapporo Holdings.

On June 24, Sapporo announced that it has entered into a “membership interest purchase agreement” to purchase the San Diego craft brewery, following Stone’s distribution business being “carved out and transferred to the newly established subsidiary of Stone Holdings.”

The deal, valued at around $165 million with potential for additional payments based on business performance, is expected to close in August.

“This is the right next chapter for Stone Brewing,” Greg Koch, Stone Brewing co-founder and executive chairman, said in a press release. “For 26 years, our amazing team has worked tirelessly to brew beers that have set trends and redefined expectations. To have the interest of a company like Sapporo in continuing the Stone story is a testament to the great beers we’ve created and will continue to create for our fans across the globe.”

“We approached Stone Brewing seeking a partner for our growth plans in the U.S, and we quickly recognized they were an ideal partner with bi-coastal brewing capacity, loyal fans, superb management, shared cultural values, and commitment to the highest quality standards,” Kenny Sadai, Chairman, Sapporo U.S.A., added. “This acquisition puts the resources and legacy of the largest Asian beer brand in America together with one of the most innovative and recognized craft beer brands in the world. It’s a perfect fusion of east meets west that is an ideal marriage for Sapporo’s long-term growth strategy in the U.S.”

In Stone, Sapporo secures the ninth-largest, Brewers Association-defined craft brewery by volume in the U.S. in 2021, the 18th largest brewing company overall in the U.S., and one of the most recognizable names in the craft brewing movement, which was founded by Koch and Steve Wagner in 1996.

Arlington Capital Advisors served as the advisory firm for Stone.

Sapporo, Japan’s oldest beer brand having been founded in 1876, previously acquired pioneering craft brewery Anchor Brewing for $85 million in 2017.

Stone, which produced 326,281 barrels of beer in 2021 (-2%), operates production facilities on both coasts, in Escondido, California, and Richmond, Virginia. The company also operates restaurants in Escondido and Liberty Station in San Diego, as well as a restaurant at the San Diego International Airport, taprooms in Oceanside, Pasadena, and San Diego, California, plus one at its production brewery in Richmond, Virginia.

As part of the deal, Stone facilities will produce offerings for Sapporo, which plans to add 360,000 barrels of volume brewed in the U.S. by the end of 2024. Taking on Sapporo’s stateside production would effectively double Stone’s output.

Not included in the transaction is Stone Distributing, the craft brewery’s San Diego-based self-distribution arm in its home market, one of the largest distributors of craft beer in the country. The wholesaler will spin off and operate independently.

In addition to Stone offerings, Stone Distributing also sells craft products from 21st Amendment, Avery Brewing, Bear Republic, Brooklyn Brewery, Great Divide, CANarchy (Oskar Blues, Cigar City, Wild Basin), Russian River and Societe, as well as hard kombucha from JuneShine, Boochcraft and Jiant.

Since its founding, Stone and Koch, in particular, have championed the independent craft brewing movement, with an axiom “pledging to never, ever, sell out to the man.”

In testimony during the craft brewery’s trademark infringement lawsuit against Molson Coors in March, Stone Brewing CEO Maria Stipp said the company has considered a sale process with investor VMG/Hillhouse owed $464 million.

Stipp added that the San Diego craft brewery’s business had declined 20% — or $174 million — in the wake of Molson Coors revamping the branding of its economy line Keystone Light in 2017.

The downturn in sales coupled with a looming June 2023 repayment date to VMG/Hillhouse had forced the brewery to consider a sale process. However, Stipp said VMG/Hillhouse has given the company wiggle room on repayment.

“I was given no timeline. I knew it would take time to build back the company and [VMG/Hillhouse] was giving me some time,” she said during questioning.

VMG — a firm that specializes in food and beverage investments — invested $90 million in Stone in mid-2016 via a limited partnership called “VMG Stone Brewing Coinvestment.” The investment was initially earmarked for what Stone called “True Craft,” a platform to keep craft breweries independent, which never got off the ground.

Stipp, via the press release announcing the transaction, said she is “thrilled that we have the opportunity to join forces with Sapporo.”

“This unique partnership allows us to preserve the Stone legacy that our fans know and love and will add exponential opportunities for growth, from production to more investment in people, equipment, sales, and marketing,” she added.

New Belgium to Launch Free Bar and Restaurant Training Program to Create Safe Spaces

New Belgium Brewing, in partnership with HospitableMe, a firm specializing in diversity, equity and inclusion training, will launch the Poured For All Initiative this fall, a free safety and inclusion training program for all bars and restaurants aimed at welcoming underrepresented communities into craft beer.

The Poured For All Initiative’s overarching goal is to foster “more inclusive and welcoming environments in thousands of bars and restaurants,” including those that serve New Belgium and Bell’s Brewery offerings. The training will also be extended to the taproom employees of both New Belgium and Bell’s.

Via the Poured for All Initiative, New Belgium and HospitableMe will develop a custom training program that will empower hospitality staff “to better understand and exhibit inclusive behaviors that foster a truly welcoming space for all identities, including people with LGBTQ+, BIPOC and intersectional identities who are currently underrepresented in craft beer spaces and elsewhere,” the company said in a press release.

The program was spurred by the dwindling number of LGBTQ+ bars, which accelerated during the COVID-19 pandemic. “In the 1980s there were an estimated 200 lesbian bars, but that number is now down to 15, per NBC and other news sources,” the company said in the release.

The training, which is intended to complement programs such as Safe Bars, will be available via HospitableMe’s digital platform, combining lessons with personal stories in order to help bar and restaurant staff members better understand the experiences of underrepresented patrons and create a more welcoming and inclusive environment for people of all backgrounds and identities. The training program will launch this fall and establishments whose entire staff go through the program will receive a digital certificate and a window cling. Businesses interested in participating can follow this link to pledge to join the program.