Could craft breweries survive by merging into supergroups?

Craft breweries temporarily merging could become the answer to them surviving the next few years of price hikes.

Following the lead from US breweries Bear Republic and Drake’s Brewing’s “new collaborative partnership”, other brewers that are looking for new ways to exist during tougher times, can choose to reach out for likeminded breweries also looking to reduce costs.

In recent local reports, Cloverdale’s Bear Republic Brewing Company (BRBC) owners Rich and Tami Norgrove disclosed plans to join forces with John Martin and Roy Kirkorian of Drake’s Brewing to reveal the sale and purchase of certain assets of Bear Republic to Artisan Brewers LLC — Drake’s business name.

The two companies said in a joint statement: “Racer 5 is shifting gears once again, beginning a new collaborative partnership with The Drake’s Brewing Co. The iconic West Coast IPA, once at the forefront of the California craft beer boom, is merging lanes to accommodate industry-wide challenges, while keeping a firm ‘pedal to the metal,’ moving forward.”

The new deal, which sidesteps both brewery closure as well as selling out to big beer, showcases a route for both breweries to co-exist symbiotically by recipe sharing in exchange for kit-sharing. In essence, using the partnership as a template, Drake’s will acquire all of Bear Republic’s recipes, formulas and intellectual property and Drake’s will produce the full Bear Republic lineup of beers as their own brands.

Rich Norgrove explained: “We have always admired Drake’s Brewing Company’s passion for craft beer and their community as well as their commitment to quality. Joining forces with Drake’s will allow us to bring our beers to even more customers, and we’re excited to be a part of the Drake’s family.”

Still keeping a firm foothold in the brewery, the Norgrove will continue to lead the brand by representing it in the manufacturing, production and sales of BRBC’s recipes.

The move, which has been outlined by Norgrove as “not a straight sale” is more like “not coming in and buying the car, but buying the engine and driver” and answers many of the issues breweries and small businesses are facing being forced to close their doors due to increased utility bills -issues that have contributed to the challenges faced by breweries recently announcing closure.

Norgrove and BRBC head brewer Peter Kruger, will continue to work with the brand, and their beer will continue to be brewed in Cloverdale, however the brewing will transition will move to San Leandro over the coming months. According to both BRBC and Drakes, this deal “makes them both stronger” and is solidified by both Norgrove and Martin being long standing friends.

The merger, according to Martin offers “so many cool things from a synergistic point of view” and has already provoked talk about future satellite locations, showing the big global brewers that there are new avenues for craft breweries – whether those be reestablishing the business for good, or temporarily merging, there were always other options to folding the business completely or selling out.