Brewery is separating from crowd
New Holland enters partnership with Pabst Brewing Co. for national distribution of New Holland beers.
With a desire to continue growing in a crowded beer industry, Brett VanderKamp wanted to ensure New Holland Brewing Co. ownership remained independent.
Breweries across the country — and globe — are receiving an influx of cash from private equity firms or being acquired by global brewing giants, such as AB InBev, makers of Budweiser, but VanderKamp sought a more creative growth route.
Earlier this month, New Holland announced a distribution partnership with Pabst Brewing Co., the makers of Pabst Blue Ribbon and a large portfolio of other regional heritage brands. The partnership will allow Pabst to focus on national distribution and sales of New Holland beers and will be “financially incentivized to grow the brand,” according to VanderKamp.
New Holland will remain in control of the brewing operation, marketing, strategy, account visits and “bringing the brand to life.” The partnership will be similar to a relationship an importer has with a brewery and allow New Holland to use Pabst’s sales organization for a piece of profit.
Pabst CEO Simon Thorpe said he believes the partnership with no ownership changing hands is the first of its kind between a large-scale brewer and a smaller “craft” brewer.
“This is a long-term agreement set up so that it can last for the next 20 years and beyond,” Thorpe said. “It is not about Pabst simply selling some New Holland beer for a fee — there is a bigger idea in what we are building together that speaks to mutual trust, true partnership and a long-term vision of what we can accomplish.”
The conversations between the two companies started in March, when Pabst’s vice president called VanderKamp. The pair had a mutual friend running an Indiana distributor who thought they should talk. Among the attractions to New Holland, according to a Pabst release, was Dragon’s Milk, a year-round bourbon barrel-aged stout making up nearly 50 percent of New Holland’s bottom line.
Following a few phone calls, VanderKamp was on his way to the Los Angeles headquarters with no intention of selling any ownership, which happens with most big brewer deals.
“I went out to visit with their team, and we hit it off,” VanderKamp said. “One of the big issues for me was to remain independent and in control of what we’ve built here in West Michigan. It’s the creativity and soul of the brand that needs to remain intact.
“It was a long conversation, but they were cool and flexible and get it. For craft to grow, we needed to remain independent.”
VanderKamp’s desire to remain in control wasn’t blind. He knew New Holland was missing some opportunities in the marketplace, including plenty of retailers in markets in which the brewer currently distributes.
This year, New Holland expects to finish production with approximately 35,000 barrels of beer, and the Holland production facility is running at about 40 percent capacity.
“We have some room to run,” VanderKamp said.
Thorpe did tell industry publication Brewbound the partnership could include the opportunity to produce New Holland products at facilities Pabst already contract brews.
VanderKamp said he met with Pabst Chairman Eugene Kashper and hit it off almost immediately, as he “understands the soul of craft” and the “win-win opportunity for the two brands.”
Kashper partnered with San Francisco-based TSG Consumer Partners to acquire Pabst, founded in 1844, in 2014.
“Brett is a passionate brand owner who knows his business,” Kashper said. “He is programmed with the DNA of New Holland’s brands and is committed to using our platform’s capabilities to maximize success.”
The rollout plan currently is in the works, but Pabst will begin its work in early 2017 in New Holland’s current distribution footprint of more than 30 states.
While other craft beer partnerships and acquisitions with large brewers have been scorned by craft beer fans throughout the world, VanderKamp believes the nature of the partnership, along with the partner, will make a difference.
Look in the back of the fridge of many brewers, and there will be a few PBRs, VanderKamp said. Along with PBR, Pabst also brews brands such as Stroh’s, Old Style, Lone Star, Blatz, Schaefer, National Bohemian, Olympia, Rainier, Schlitz, Colt .45 and Old Milwaukee. PBR also has partnerships with Vermont Cider Company, makers of Woodchuck Hard Cider, and Small Town Brewery, makers of Not Your Father’s Root Beer.
“There may be some detractors,” VanderKamp said. “But I feel that Pabst views very well with a craft consumer.”
VanderKamp said there are no potential controlling mechanisms out there for Pabst to assume any ownership of New Holland. VanderKamp said he agrees with Kashper’s prediction of breweries fully acquired by major breweries will falter and lose their soul, especially to craft-dedicated consumers.
“If we’re successful, this could outlive Eugene and I,” VanderKamp said.