Beer Man

Oskar Blues Stuns Industry, Buys Florida's Cigar City Brewing

Longmont-based Oskar Blues, one of the fastest-growing craft breweries in the country, announced today that it's rolled up industry darling Cigar City Brewing, bringing the Florida beer maker under the umbrella of Fireman Capital Partners, the private equity firm that also controls Oskar Blues, Michigan’s Perrin Brewing, and the Squatters and Wasatch breweries, both in Utah.

The move may have also kept Tampa-based Cigar City away from Anheuser-Busch InBev, which was reportedly seeking to buy Cigar City as well. AB InBev has purchased seven craft breweries in recent years, including Colorado’s Breckenridge Brewery.

This puts “months of of acquirement rumors to rest,” Oskar Blues said in a statement. “The decision is driven by mutual irreverence, respect and desire to stay true to craft beer roots."

"They are at a spot where they want to grow and need to grow," Oskar Blues spokesman Chad Melis tells Westword. "The demand is out there for their brand. It feels very similar to where we are at. If you want to grow, you need resources, but you want to do that without sacrificing your culture.

"Joey said all along that he was taking calls from all interested parties, because having conversations about your business is always productive," Melis says of Cigar City founder Joey Redner. "In the end, he wanted to go with something that preserved his culture and was good to his people. We like to do business with people who we like to hang out with, and I think he is the same way."

"Cigar City is facing next-level challenges and we needed to develop next-level skills and resources to meet them. But, we got into beer out of passion and an unwavering desire to travel our own path. We didn't want to just shove our round peg into some fucking square hole and hope for the best,” Redner said in his own statement. “Florida craft beer drinkers want something they can proudly stand behind. These guys [Oskar Blues] get that. They wrote the book on keeping it real.” 

The deal is just the latest in a recent wave of change in the craft-beer industry, which has included everything from strategic mergers between breweries to buyouts by large overseas breweries to investments from private-equity firms, like Fireman, and other companies.

Cigar City is the second brewery that Oskar Blues has purchased with the backing of Fireman. In late March 2015, Oskar Blues announced that is had purchased Perrin and that it planned to buy other breweries as well if the opportunity arose. But the real news was that Fireman had raised $132.8 million in private equity and then taken a significant financial stake in Oskar Blues itself — although both Fireman and Oskar Blues have steadfastly refused to discuss the terms of the deal or how big of a stake.

Melis says that the combined organization, which raised money under the moniker United Craft Brews, is loosely referred to as Oskar Blues Holdings; it includes representatives of Fireman, Oskar Blues, Perrin and now Cigar City.  "Nobody wants a boss," Melis says. "We are building a group of people who are collaborating and building resources and we don't have to have a boss. Joey will able to run Cigar City the best way that he wants to." Terms of the Cigar City deal weren't disclosed.

Founded in 2009, Cigar City rocked to popularity based on envelope-pushing beers like Jai Alai IPA Marshall Zhukov Imperial Stout, Florida Cracker and Hunahpu's Imperial Stout, which is only released on a single day each March. The brewery won a number of awards and quickly developed a cult following despite the fact that it didn’t distribute outside of Florida, which led to a lot of growth pressure.

For the past year and half, several published reports have said that the sale of Cigar City to AB InBev was imminent. The brewery typically downplayed those reports.

Cigar City isn’t regularly distributed in Colorado, although it has delivered beer here for a few years in a row now around the time of the Great American Beer Festival. That could change as a result of the sale to Oskar Blues/Fireman Capital Partners, since the combined entities have access to more resources. Oskar Blues built a second brewery in North Carolina in 2014 and plans to open a third brewery in Austin, Texas, this year. In the meantime, Perrin recently announced that it would begin distribution in Colorado.

But that might not be a for a while. "We will probably sit down and have a beer and think about our biggest challenges and how to make each other better," Melis says. And it might not make sense for them to immediately go to Colorado."

Here's more from the Oskar Blues statement: "The combination stems from the want to take risks, sniff out bullshit and grow against-the-grain in an era of increasing competition within craft beer. The collaboration will match years of large-scale growth, expansion expertise and resources of Oskar Blues with the strength of Cigar City’s local following to help both breweries strengthen their future position.”

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Jonathan Shikes is a Denver native who writes about business and beer for Westword.
Contact: Jonathan Shikes