Victory Brewery and Southern Tier Brewing companies are setting up an alliance to make a big presence in the global beer industry. The mid-size operations are tough to enhance market share and profitability. Realizing the value of doing big, the two craft beer mid-sized breweries are combining their strengths and synergies under the parent company Artisanal Brewing Ventures (ABV).
Victory Brewing Company, a Downingtown, Pennsylvania-based brewery, and Lakewood, New York-based Southern Tier Brewing are setting up a new brewing company. This will function under the parent company Artisanal Brewing Ventures. For mid-sized companies, it's inevitable to make a big push in the global brewery segment to stay afloat.
CNBC reports that under the Artisanal Brewing Ventures, the two breweries will function independently. However, the two firms will take leverage from combined marketing, sales and distribution forces to enhance top line. The combined forces will focus on strengthening distributor and retail partnerships.
The global majors in brewing activity have bought into mid-sized companies' grassroots movement changing the market dynamics. Bill Covaleski, founder and brewmaster of Victory Brewing, said: "Like-minded brewers such as Victory and Southern Tier can preserve our character, culture and products by banding together."
The latest announcement from Victory and Southern Tier will be the first major deal in 2016. The both the entities will form Artisanal Brewing Ventures (ABV), which is a private equity (PE) backed holding formed by Southern Tier founders Phineas and Sara DeMink and Ulysses Management LLC. However, specific details about the combined entity were not disclosed by the both the companies, but sources put the deal valuation at $120 million, as reported by Brewbound.
The combined strength of Victory and Southern Tier will account for over 250,000 barrels in the production based on 2015 volume. This will put the combined entity among the top-15 craft brewers in the US as per the rankings of Brewers Association. Individually, Victory Brewing was at 29th position and Southern Tier at 35th position as on 2014, according to Brewers Association.
Beer Street Journal further adds the annual production after the teaming up of both the breweries will be 800,000 barrels annually. The deal is expected to be completed in 60 days. Bill Covaleski and Ron Barchet of Victory will be major shareholders in Artisanal Brewing Ventures. They're expected to join the Board of Directors.
Industry analysts feel that the 2014 rankings may be understatement as the global beer segment changed significantly in a short span of time. 2015 witnessed over a dozen deals in the brewing business. AS a result, the operational scalability and volumes of business have been changed considerably.
Join the Conversation