True Craft is a $100-million attempt to rescue craft breweries from cost-cutting investors and Big Beer, say Stone Brewing co-founders Greg Koch and Steve Wagner, who announced the venture last week.
The new organization will buy small stakes — no more than 25% — of interested craft breweries. That will allow breweries to expand or fund other improvements without compromising their independence by borrowing from banks, dealing with venture capitalists or selling to multinational conglomerates.
"This gives craft brewers another option to selling out to Big Beer," Koch said Friday in Monterey, Calif., at the E.G. Conference, an annual gathering that focuses on innovation and creativity. "This gives them the financing and flexibility they need to flourish while keeping their soul and control."
Stone, based in Escondido, and its unnamed partners are funding True Craft with an initial $100 million, Koch said, and "a lot more in discussion."
The details, though, are sketchy. How much is Stone contributing? Who are its partners? Where will True Craft be headquartered? Who will lead it? What financial data will breweries have to share to be considered?
"TBD," a Stone spokesman replied. "More to come soon!"
Does anyone understand what's happening here?
"No," said Tom McCormick, executive director of the California Craft Brewers Assn. "I don't understand it."
Yet even this bare-bones proposal intrigues many in the business, especially at smaller breweries.
"All we know is this general idea," said Tom Kiely, director of sales and logistics at Thorn St. Brewery, a neighborhood operation in a converted North Park home. "At least in theory, I love it. I think it's a really important step to combat the new challenges facing craft beer."
In recent years, industry titans including Anheuser-Busch and MillerCoors have bought craft breweries and then placed their beers in stores, restaurants and bars, often displacing smaller independent competitors.
Although Koch and Wagner have been working on True Craft for more than a year, recent developments led them to announce this venture before all the details were settled. Koch was upset by news that an Anheuser-Busch-owned brewery, 10 Barrel, intends to open a brewpub in East Village this year.
"When you have 10 Barrel coming into our backyard," said Ian Wendlandt, Koch's former chief of staff, "that makes him angry."
Investor groups have also been shopping for attractive breweries, which are then required to meet quarterly earnings projections.
"That's the thing that scares me," said Paul Sangster, co-founder of Rip Current Brewing in San Marcos. "A lot of the breweries that have been bought up in the last few years are the ones that were bought up by investor groups."
Smaller, under-funded breweries often struggle with success. "With growth comes the need to expand, but it's very expensive to increase capacity," McCormick said. "There's only so many ways to get financing — you can either 'sell your soul' to Big Beer or go the venture capital route."
"On the surface, this looks very interesting and attractive."
True Craft, Stone public relations specialist Nickie Peña wrote in an email, is seeking breweries that "want to remain in it for the long haul, and retain their Soul and Control along the way; a brand with an excellent reputation and of like philosophical mindset (e.g., focus on quality); and have a need for an alternative investors and wish to join forces to compete more effectively."
Peña also noted: "More to come!"