The Portland, Ore.-based Craft Brew Alliance Inc. (CBA) and Anheuser-Busch (AB), St. Louis, announced a series of new commercial agreements that expand and strengthen the companies’ long-term relationship and create new growth opportunities for both companies, they say. The agreements include an amended and extended master distribution agreement, a new contract brewing arrangement, and a new international distribution agreement.

Through the new agreements, AB will provide additional support and committed resources to accelerate CBA’s growth strategy, which includes strengthening its portfolio of craft brands, maximizing the potential of Kona Brewing Co. as one of the fastest-growing American craft brands, and optimizing CBA’s brewing footprint to drive gross margin expansion and deliver its craft beers to more beer lovers in the United States and around the world, they add.

The following are agreement highlights:

• Master Distributor Agreement: CBA and AB have extended the current fee structure of their existing Master Distributor Agreement for an additional 10 years, now running through 2028. The amended agreement secures CBA’s brands in the wholesaler’s network, enabling continued investment in brand growth and strategic partnerships, such as Appalachian Mountain Brewery and Cisco Brewers, the companies say.
• Contract Brewing Agreement: Under the terms of a new contract brewing arrangement, CBA and AB will work together to transition as much as 300,000 barrels of volume into AB’s state-of-the-art breweries. This agreement will directly support CBA’s ongoing brewery footprint optimization and enable both companies to realize additional operational efficiencies, they say.
• International Distribution Agreement: AB will support the global expansion of CBA’s portfolio of brands through a new international distribution agreement. This agreement builds on CBA’s recent distribution arrangements with AB, which launched Kona in Brazil and Mexico, and creates opportunities to accelerate the growth of CBA’s craft portfolio in additional international markets, the companies say.

Commenting on the new agreements, CBA’s Chief Executive Officer Andy Thomas said in a statement: “We are proud of our long-standing relationship with AB and have always been candid about the competitive advantage of our distribution arrangement, which allows CBA to independently manage our brands and still enjoy the benefits of being a valued part of AB’s exceptional wholesaler network. As both of our companies evolved over the past 18 months, it became clear that our strategic focus and commitment to the growth of craft beer were increasingly more aligned, and we started to explore ways to collaborate more closely. We’re excited to build on this partnership and look forward to the financial and operational benefits, which will positively impact our top and bottom line.”

Felipe Szpigel, president of The High End division at Anheuser-Busch, added: "We have deep respect for CBA and these agreements represent a natural progression of our relationship with them. As a company, we believe in brewing amazing beers and elevating the sophistication of beer and the category as a whole. CBA shares these beliefs, and today’s announcement will help bring CBA's impressive portfolio of craft brands to more beer lovers in the U.S. and around the world. We will support the growth of CBA’s brands and create new opportunities for both companies through our unparalleled network of U.S. wholesaler partners, dedication to quality through our industry-leading breweries and international reach."

CBA is expected to gain significant financial benefits from these commercial agreements that will allow the company to continue investing in its growth strategy and increase its sales and marketing spend behind its brands, the companies say. As a major CBA shareholder, AB is positioned to directly benefit from those gains, along with the expected opportunities the agreements will create for its international distribution system, U.S. wholesaler partners and breweries, they add.

CBA and AB will work together in the coming months to implement the brewing and international distribution aspects of these agreements, they say.

Goldman Sachs acted as financial advisor to CBA, and Wachtell, Lipton, Rosen & Katz served as legal counsel.