New Belgium Brewing group buys Magnolia Brewing

A group led by New Belgium Brewing Company, which also includes Elysian Brewing founder Dick Cantwell and Belgian producer Oud Beersel, has agreed to purchase San Francisco’s ailing Magnolia Brewing Company for US$2.7 million.

Magnolia Brewing’s Smokestack.

Magnolia Brewing was founded in San Francisco in 1997 by Dave McLean and is known for its British-influenced, cask-conditioned ales, in particular its lower-alcohol session beers such as Bonnie Lee’s Best Bitter and its flagship brands, Kalifornia Kölsch and Proving Ground IPA.

After expanding in 2014 with the launch of Smokestack, a barbecue restaurant attached to a 30-barrel production brewery, the company started to struggle financially, eventually filing for Chapter 11 bankruptcy protection in November 2015.

The partnership, officially called Ripple by the Bay LLC, will be a majority-owned subsidiary of New Belgium. Minority partner Dick Cantwell will be in charge of brewing operations at Magnolia, alongside Magnolia founder McLean. Cantwell founded Elysian Brewing in 1996, serving as head brewer until 2015 when he was forced to sell to AB InBev.

Belgian lambic producer Oud Beersel is also a minority partner and will be joining “the partnership as a contributing experimenter”. Located in Beersel, the brewery was founded in 1882 and makes traditional lambic beers – a process that despite modernisation, retains the basic principles of spontaneous fermentation using wild yeast, maturation in wooden barrels, and mixture or blending of various lambic casks and vintages.

The brewers are joined by a fourth silent partner, who, according to New Belgium co-founder and executive chair, Kim Jordan, is involved in the consumer packaged goods industry and is based in Portland, Oregon.

The new owners will continue to run both Magnolia locations (the Magnolia gastropub at the Haight Street brewery and Smokestack in the Dogpatch area) as well as employ all existing staff.

In terms of brewing, the owners plan to retain Magnolia’s existing brands and tap lineup and gradually introduce new beers to the range. Referring to it as “brewing with friends” it will be “an alliance that brings varied talent and experience to a combination of old and new”.

In the future, it is hoped that Oud Beersel will ship its beers – which to be labelled ‘lambic’ have to be made in Belgium – to the US for blending with Magnolia’s craft ales. This will make the Magnolia brewery “the world’s first dedicated lambic blendery outside of Belgium”.

New Belgium are established beer blenders, having already worked with Oud Beersel, and also Brouerij Boon, on the collaborative brew Transatlantique Kriek, combining beer shipped from Belgium with New Belgium wood-aged beer.

In a statement, New Belgium said that it “is likely to ship beer to San Francisco for blending from its Fort Collins, Colorado brewery”. As its name suggests, the Colorado-based brewer makes Belgian-inspired brews including Fat Tire Belgian-Style Ale as well as thirteen year-round beers and a reduced-gluten line.

Commenting on the venture, Cantwell said: “I’m tremendously excited to be back in the beer business and am looking forward to working with the team at Magnolia to develop new beers and new ideas.”

Magnolia’s gastropub and brewery.

“This project is the natural evolution of a longstanding strategy of collaboration between myself, New Belgium and Oud Beersel”.

Jordan of New Belgium added: “We’ve been looking for ways to diversify our assets and expand our community. These two tap rooms are right in the heart of historic San Francisco neighbourhoods, a place Dick (Cantwell) and I call home. Magnolia makes excellent beer and plays an important role in the community. We’re excited about the possibilities and look forward to continuing our journey while honouring Magnolia’s history and presence”.

Citing the recent sale of San Francisco’s Anchor Brewing to Japanese brewing giant Sapporo, Jordan said: “I just think it’s a really sweet opportunity for Dave, for us, and for the craft brewing community to do something like this”.

In a frank assessment of his time at Magnolia, Mclean said: “Magnolia has had quite a journey in San Francisco for nearly two decades, including some very challenging and difficult times in recent years.”

“I’m incredibly grateful for this opportunity to see Magnolia start a new chapter and to be working with New Belgium, Dick Cantwell and Oud Beersel to preserve what we all love about Magnolia while embarking on some exciting new craft beer adventures together”.

The transaction is expected to close in September.

This follows news of several US craft beer acquisitions in recent months. This month has already seen two ‘big beer’ buy-outs, as Constellation Brands announced its purchase of Florida’s Funky Buddha Brewery while Sapporo snapped up Anchor Brewing for US$85 million.

In July, Brooklyn Brewery revealed that it had purchased a minority stake in 21st Amendment, and in May, Heineken bought the remaining 50% stake in Lagunitas, taking complete control of the company.

In Britain, Carlsberg bought London Fields Brewery in July, and in May, Charles Wells sold its brewery and the majority of its beer brands to rival Marston’s.

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