(Ed. Note: I got a frantic call from Meg Gill to meet her at her favorite taco stand if I wanted an interview about her decision to partner with A-B. This taco stand is exactly 38 kilometers south of Tijuana at a surf break, but no matter, I figured I had nothing better to do. So I agreed to go there, where we sat under a palm frond with Modelo Especials and talked about she and her three partners' decision to go with A-B. You, my friends, are a fly on the palm frond.)
So how did the deal come about? The first light bulb went off on a flight back to L.A. from Chicago in May. She presumed her only option for craft beer on the flight was Goose Island's Urban Wheat Ale 312, however, the attendant notified her that they had just gotten Goose IPA as well. "I was like, f***, A-B is listening to their customers," Meg recalls. The past three months of her summer have been getting a better feel for A-B's vision.
Over that timeframe Meg has learned that A-B is not buying "many brands," per se: they buy great brands and find a way to fit them in the market. "Dude, they're not hung up on fitting them into their own portfolio because they're not selling these brands the way they're selling Bud Light," she said.
She believes they will continue to over-index investment in differentiating their craft portfolio with their new high-end group. Just Thursday, all the high-end teams changed their emails. Some of them were "hiding" under the Goose Island e-mails, "and now it's all like high-end.com. And their high-end thing is founded right now. There's no association with A-B, and they've figured that out. I truly think that they'll be successful because they're all committed to it and it's not any one person - it's their entire company. This is like the U.S. turnaround of how they're gonna do it."
THEY WEREN'T "SHOPPING A DEAL." Meg said they weren't "shopping a deal": "Once I understood their vision and that they were going to win, I wanted to be on the winning team," she said. "So it was that, and I've had great financial partners, and there are four partners total in the business.
"Obviously, there's been a ton of M&A activity in California the last three months and I think that at the same time we were recognizing that, my business partners and myself. The truth is that it was the right time for my business partners to see an exit - two of them. Then, two of us are young and we're already operating the company, and now we're just operating the company with a giant organization that can amplify what we're doing."
She's always respected A-B but now that she understands their vision she believes they "get it": "They haven't been blind or stupid. People who have seen their acquisitions and said 'this doesn't make any sense' or 'why the hell did they buy this?' and 'two in the Northwest!' and 'what are they doing?' Soon their consolidations will make sense. I truly believe that A-B will turn out on top of it and I want to be a part of that."
Meg's role at Golden Road will not change but she will become a member on A-B's advisory board for craft.
"IT'S NOT TAKE THE MONEY AND RUN." She mentioned that she's gotten a couple of texts from people who have caught wind of some rumors that said, "take the money and run." Meg said she's not taking much out. "I'm reinvesting most of what I have into this new entity and it's because I don't want to leave the beer business. I'm 30 years old and I want to learn from the best and I believe I've positioned Golden Road in a way that A-B will respect and prioritize our brand within their portfolio." She and her CFO partner Paul Burgis will remain in their roles, and she maintains she will have the freedom and flexibility to be herself, F-Bombs and all.
"This craft thing is a carve out from what they have known and done before. It's not the old A-B. This high-end thing is completely different from everything else they do and it's hipster millennials that they're paying attention to. The message from A-B is 'be yourself,' and I think I've been able to be myself in the last couple of months since I've started talking to them, more so and almost amplified. Because they've thrown so much confidence and so much investment in what they're looking for in Region Seven, and that's what we are and who I am …"
We pointed out that the branches will shed non-A-B craft brands making them weaker in that segment compared to their MillerCoors distributor competitors, who will pick the brands up. For example, after they buy M.E. Fox in San Jose, they're going to shed those other brands and they'll just have A-B.
"It's DBI up there and a couple small craft competitors," countered Meg. "Where in SoCal it's tougher, because you got Reyes and Stone and Stone has done very, very well in the craft bars. That's what I'm telling you, Harry, is that A-B hasn't been blind to that. They've been paying attention to it and they're investing in people, separate people and marketing and operations - which is me, right - to combat this."
WHAT ABOUT BRANCH INTEGRATION? "The integration into the WODs will be good for us," Meg said, fielding the question. "From a sales perspective, we're putting more into our Golden Road-only sales force. So it's not like there's this integration cost cutting. It's all synergistic on the top line side. Then it will be easy on day one to switch it on."
The WODs haven't had a ton of brands to command share in the craft-heavy markets, and now they will. So now "we see it as an amazing opportunity, not an obstacle," said Meg. "The WOD will have a big wad of Golden Road. And nothing else local craft."
In fact Meg's been mostly with A-B distribs since she started (except for the WOD territories). "Their focus and access to market and the Brazilian thoughtfulness in what they do is attractive to me," she said. So now, "having that A-B arm behind us gives us that much more juice to get more and more share of mind. I think those [indie A-B] guys will be happy with this, they've been like fathers, uncles, older brothers to me."
THE RESTAURANT COMPONENT: FLATTENING TIERS? Golden Road has two restaurants in L.A., one public and one private. They're opening another restaurant in downtown L.A. next month. A new tasting room is slated to open up next month in Anaheim as well. "A-B is saying, 'keep doing that. We'll give you what you need in capex.'"
But isn't that flattening the tiers? No, Meg said, "they're staying within their licenses in California."
"SO MUCH MORE TO DO" IN THE SOUTHWEST. We've seen A-B take a number of different routes with the craft brands they've acquired. With Goose they've had a national march. Other brands, like 10 Barrel, Elysian and Blue Point, have stayed put in their regions so far. Meg believes A-B will take the same regional approach with Golden Road. "We have so much more to do in California, Arizona, Nevada that we're going to stay put for a while," she said. "If our demand is outrageous for whatever reason, then we'll branch out."
WHAT IT'S LIKE WORKING WITH A-B. "The men I've met have been nothing but engaged, respectful, family values guys," said Meg. "They're just super professional. These guys are groomed to think big and what typically I've thought of as big vision is nothing compared to what they have for high-end taking over the planet and I'm putting my horses behind it, thinking they're going to do it."
Meg says "this has been the greatest three months" of her entire life. "I've never been so engaged, focused and aggressive," she said. "The A-B guys tell me 'be yourself.' I could be happy working for A-B for another 60 years at this rate."
In fact she had the option to walk away but she looked at the deal and thought the best thing for her, personally, was to stay in "at least several years, if not more, and have a couple different options ... that's it, I'm rolling the dice and have the opportunity for more upside to stay in.
"Harry, you know I grew up in a humble southern, Virginia family with great, awesome parents and a brother and sister. This deal doesn't give me the ability to do whatever I want for the rest of my life but it does give me the ability to build a house in Virginia that we can all share and take care of them a little bit for what they've given me for 30 years. It was very kind of A-B to do that and it's already far more than what I grew up knowing."
How will she respond to the inevitable backlash and the "sellout" allegations? "Ignore them, because I didn't sell out," she said. Meg concedes that she's always admired A-B as a company. It's an "interesting issue" for her because the Brewers Association, she said, has always "supported the hell out of me personally.
"But I buy into a notion that craft beer is what the consumer believes craft beer to be, which is well-made artisan beers with great ingredients. The consumer decides these days. There's options out there and if it's good and the consumer says this is craft - it's gonna be craft and that's ultimately where this whole thing is going."
Meg has a compelling perspective on what's next for the craft definition. For her, the definition should really be about "protecting the quality" so homebrewers "can't brew a bunch of sh*t in their bathtub and call it craft." She thinks the BA is moving on the right track with their appointment of Dick Cantwell as Quality Ambassador. Yes, the current definition is "controversial." But she believes "the ultimate goals of the BA will kind of prevail and it will be kind of like an evolution."
So this is the latest in a record month for big tie-ups, which saw the Heineken/Lagunitas JV, MillerCoors's Tenth & Blake/Saint Archer majority stake, and A-B's Goose/Virtue Cider shareholder deal in the span of a week. A-B sent note this a.m. to wholesalers on this latest deal. It included this video of Meg and A-B's CEO of Craft, Andy Goeler. https://vimeo.com/user44134597
Until tomorrow, Harry
"When you come to a fork in the road, take it." -- Yogi Berra
Don't forget to register for Beer Summit 2016 in New Orleans January 25-26 at The Roosevelt hotel. Lineup will be announced later this month. Tickets go quickly, so reserve your spot today: beernet.com/beer_summit.php
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