USA: Canarchy buys one of the fastest growing craft brewers in Texas

Canarchy Craft Brewery Collective signed on Friday an agreement to buy Deep Ellum Brewing from Dallas, Texas, at an undisclosed sum. Deep Ellum produced 45,000 barrels of beer in 2017 and was one of the fastest growing breweries in Texas. The company could increase sales this year by about 15% in 2018.

The transaction helps Deep Ellum to finish a $3 million expansion and gives the craft brewer immediate access to a much needed production capacity at one of the four sites of Oskar Blues Brewing in Austin, Texas.

“Immediately, it helps me finalize this brewery expansion that we’ve been kind of limping through for over the last, probably, year now,” John Reardon, founder of Deep Ellum Brewing told Brewbound, a website dedicated to the US craft beer industry. “I mean, capacity at the flip of a light switch. You really couldn’t ask for anything better. And the fact that it still remains brewed in Texas, which was important to us.”

About four months ago Deep Ellum Brewing already sold a majority stake to Storied Craft Breweries (SCB), an upstart growth capital group led by beer industry veterans Steve Berg and Adam Lambert.

Against the initial plan to sell 56% of the company for a sum of $8 million, SCB only purchased 24.5% and supplied only $1 million in growth capital. The reduced sum did not help to alleviate the financial constraints of Deep Ellum, which was still struggling with its unfinished expansion. Backed with his untouched 72% share of the company, Reardon approached Canarchy, which in the end did not only buy his but also SCB’s shares.

Canarchy and Oscar Blues Brewing, on the other side, are happy to utilize some additional capacity at their Austin facility, which was planned for 100,000 barrels (117,000 hl) but currently uses only one fifth of it.

Canarchy, which changed its name by the end of last year (, 29.11.2017) to reflect better the unique property of its breweries, is one of the largest craft beer groups in the United States with a production of about 360,000 barrels (422,000 hl) last year.

The group is majority owned by Fireman Capital Partners, a Boston private equity firm. In contrast to other groups the breweries within the holding act independently. The fact that the brewers have full control of their business and brand and that they are not majority owned by another mega brewer, makes them a craft brewery according to current Brewers’ Association guidelines.

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