Victory Brewing Company announced a deal that will combine the Chester County PA brewer with Southern Tier Brewing Company, Lakewood, NY.
The breweries will maintain their separate identities.
Parent is Artisanal Brewing Ventures (ABV), a company that has the principals of the companies as part of its ownership group. Southern Tier had earlier sold a majority interest to ABV.
The Brewbound newsletter and website reported the deal is valued at upwards of $120 million.
“The new strategic framework between ABV, Victory and Southern Tier provides capital, security, and vision for the future. ABV, formed to unify independent craft brewers and distillers, embraces the collaborative craft spirit while administering crucial growth resources,” a release stated.
Under the umbrella of ABV, Victory and Southern Tier will independently operate their breweries.The alliance creates one of the largest brewers in the Northeast and ranks within the top 15 craft brewing companies in the United States according to Brewers Association criteria with combined 2015 shipments of more than 250,000 barrels.
According to a 2015 list from the Brewers Association, Victory was the 29th largest brewer, with Southern Tier at No. 35. Delaware’s Dogfish Head was 13th.
The combined brewers would rival Dogfish Head in overall size, based on overall production. Last year, Dogfish Head agreed to a deal that gives an investment firm a minority stake in the company.
Brewbound also reported that Victory has the ability to sharply expand production at its brewery in Parkesburg, PA in southern Chester County.
Craft brewers are seeing growing competition as major brewers continue to merge, and some pioneers in the business sell off to big brewers like the parent of Anheuser-Busch. The acquired breweries keep their brand identity, although the affiliation means they are no longer listed as craft beers by the Brewers Association.
Victory operates breweries as well as brewpubs in Chester County that include a new brewpub in Kennett Square. Its beer brands are widely available in Delaware.
ABV will shepherd Victory and Southern Tier in collaborative sales and marketing efforts to strengthen, support and expand its distributor and retail partnerships, a release stated.
Victory and Southern Tier brands will become increasingly available to loyal and new consumers across their combined markets as a direct result of this union, the release stated. Many craft brewers believe they need more heft in gaining wider distribution.
Also, craft brewing giants like New Belgium are adding capacity. The Colorado brewer is nearing the opening of a plant in Asheville, NC.
The conditions have led craft brewers like Dogfish’s Sam Calagione not to rule out a shakeout in the industry.
“The craft beer community is at its most critical moment since its inception as larger brewing corporations have bought into our grassroots movement, irrevocably changing the marketplace. Like-minded brewers such as Victory and Southern Tier can preserve our character, culture and products by banding together,” said Bill Covaleski, founder, and brewmaster of Victory Brewing Company. “Allied we can continue to innovate and best serve the audience who fueled our growth through their loyal thirst.”
“Having gotten to know Phin, John, and the whole management team, I am more excited than ever about the innovations that lie in our collective futures. One walk through their brewery and I knew that Southern Tier had the same belief in quality and excellence that has driven our culture for 20 years,” says Ron Barchet, COO of Victory Brewing Company.
The Victory and Southern Tier leadership teams and employees will remain intact. Bill Covaleski and Ron Barchet of Victory, who will become significant shareholders in ABV, will join the Artisanal Brewing Ventures’ Board of Directors. CEO John Coleman and CFO Bill Wild will lead ABV’s management team.
“This is the ultimate craft beer collaboration. It is an honor to be associated with these pioneering entrepreneurs who have been contributing to the industry since craft’s early days,” said John Coleman, CEO of ABV. “I look forward to guiding these two great organizations forward as they collaborate, innovate and share best practices.”
“I believe this is a watershed transaction for the craft brewing world. This union of two great regional players preserves their independence and distinct cultures while sharing administrative and management functions to support deeper investment in sales, marketing and innovation,” commented Vann Russell, managing director and founder of Arlington Capital.
Bill Covaleski and Ron Barchet of Victory Brewing Company
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