In an Eye-Popping Merger, Boston Beer Co. Has Acquired Dogfish Head

Step away from your desk for a minute, and miss the biggest beer industry story in recent memory. Isn’t that always how it goes?

Suffice to say, the news that was broken this afternoon, first by Brewbound and then by others, is nothing short of earth-shaking as far as craft beer is concerned. It is this: Boston Beer Co., known simply to many drinkers as “Samuel Adams,” has acquired one of the OG’s of craft beer’s “extreme” era, Dogfish Head. The “merger,” as it is of course being phrased, because that sounds nicer than “buyout” or “acquisition,” will see the creation of what may be the biggest “craft” brewery company in the U.S.—it’s unclear if the added production numbers brought by Dogfish Head would lead to Boston Beer Co. surpassing Yuengling in terms of overall production.

The move certainly makes a heck of a lot of sense for Boston Beer Co. in particular. The company’s core beer portfolio has been struggling for years, with decreasing sales of flagships such as Boston Lager, coupled with an increased focus on hard seltzer, hard iced tea and even hard cider. Just last year, the Colorado-based Brewers Association, the craft beer industry’s advocacy group, once again changed its definition of what constitutes a “craft brewer,” seemingly in order to keep Boston Beer Co. in the fold. The company’s overall production of beer had slipped below the 50 percent threshold necessary to qualify as a “craft brewer” by the organization’s old definition, and so the definition was changed. At this point, Boston Beer Co. could largely abandon the Samuel Adams brand altogether and still remain a craft brewery in the eyes of the Brewers Association.

At the same time, Dogfish Head represents the kind of “legacy brewer” that has successfully reinvented itself to stay relevant. Its SeaQuench gose has been masterfully marketed as a low-ABV, low-calorie beer to health-conscious drinkers, to scintillating results, leading the company to declare it was blazing a trail for more “healthy” alcohol products. Or in founder Sam Calagione’s words, they aim to be the “number-one active, lifestyle-oriented craft beer brand.”

One might even wonder what is in this deal for Dogfish Head, a brewery with a special place in the hearts of Paste’s founders for its early expansion of beer style boundaries. It makes a bit more sense when you read that Dogfish co-founders Sam and Mariah Calagione will be receiving 406,000 shares of Boston Beer Co. stock (NYSE: SAM) for their trouble, currently valued at more than $314 per share. That’s a paltry … $127 million for the pair. Ah, now we can see the enticement. Calagione, of course, is careful to immediately explain how he’ll be giving “a percentage” to charity, and that “nearly all” proceeds will find their way back to the combined company.

“Not only are Dogfish Head and Boston Beer two original American breweries, but Jim Koch and I worked hard with other leading craft brewery founders and the Brewers Association to develop and champion what defines independent American brewers,” Calagione in his full statement. “This merger better positions Dogfish Head and our co-workers to continue growing within this definition for many years to come. In fact, Mariah and I believe so much in the future of our merged companies that we are all in, and personally we’re reinvesting nearly all of the proceeds back into the combined entity. We’re also proud to announce that we intend to devote a percentage of the Boston Beer stock that we receive to establishing a foundation and funding various local charitable programs.”

The press release also states that the combined company will “maintain its status as an independent craft brewery, as defined by the Brewers Association,” suggesting that someone got a thumbs up from the BA before announcing the acquisition. The company created by the merger will be among the biggest beer companies in America, but it does its best in the statement to still make itself sound small, saying “it will be better positioned to compete against the global beer conglomerates within the craft beer category that are 50- and 100-times its size, while still representing less than 2% of the beer sold in the United States.”

The fact of the matter is that “2%” of all the beer sold in the U.S. is a hell of a lot of beer, and whether or not it wants to be called one, the combined force of Boston Beer Co. and Dogfish Head is indeed “a global beer conglomerate,” or close to it. Last we checked, Sam Adams beers weren’t sold exclusively in the U.S., or in North America for that matter.

“We believe we are creating the most dynamic and diverse American-owned platform for craft beer and beyond,” said iconic Boston Beer Co. founder Jim Koch. “Dogfish Head has a proud history as a craft beer pioneer with a brand that is beloved by American consumers and highly respected by the industry. Sam and I have stood shoulder to shoulder in some of the defining efforts in Craft brewing including the creation of the Brewers Association, the craft beer definition, the craft brewer seal and the creation of the SAVOR food and beer event. This combination is the right fit as both Boston Beer and Dogfish Head have a passion for brewing and innovation, we share the same values and we will learn a lot from each other as we continue to invest in the high-end beer category. I am very happy that Sam will join the Board of Directors at Boston Beer. He is a tremendous friend, innovator and brewer, and I could not be more excited to work together with him for many years to come.”

The shock waves of this deal are going to be reverberating around Beer Twitter for days no matter what happens, but it will be fascinating to see how this all shakes out. Will massive Boston Beer Co. facilities start churning out huge quantities of Seaquench? Will Dogfish Head go back to its extreme roots and revive the famously abrasive Sam Adams Triple Bock? Will the two collaborate on the next batch of Utopias? We’ll have to wait and see.