Lagunitas Brewing Co. takes stake in Moonlight Brewing Co., two other brewers

The popular Petaluma brewer will enter into a joint venture with the beloved Santa Rosa brewery; also buys into Texas and South Carolina breweries.|

Less than year after embarking on an unprecedented partnership with Heineken International, Lagunitas Brewing Co. is acquiring stakes in three small U.S. breweries, including local craft pioneer Moonlight Brewing Co.

The Petaluma-based brewery announced Wednesday it is taking stakes in three beer businesses: Southend Brewery and Smokehouse in Charleston, S.C., Independence Brewing Co. in Austin, Texas, and Moonlight Brewing, the Santa Rosa brewery operated by one of the founders of the modern craft beer movement, Brian Hunt.

In addition, Lagunitas will open two buildings in Portland, Ore., and San Diego where it will house fundraisers for nonprofits, similar to what it does at its taprooms in Petaluma and Chicago on Monday and Tuesday nights. The Portland room will open Aug. 1 and San Diego next January.

The moves by Lagunitas founder Tony Magee go in the opposite direction of the recent activity in the more than $22 billion craft beer market as AB InBev, MillerCoors and Constellation Brands are in a race to capture market share in the sector by buying up the hottest and fastest growing craft beer brands.

Instead, Magee said in an interview he is looking to grow from a more hyper-local perspective. He wants tap into local communities where Lagunitas may not have as great of a presence and learn from local beer lovers what they want, making it akin to a research and development project.

“These aren’t conquests ... it’s not for scale,” said Magee, who has built a reputation in the beer business for his iconoclastic views. “This a thread to make more local connections.”

Lagunitas is in a position where it doesn’t have the same pressures as other brewers to build market share domestically. It is one of the largest craft brewers in the country, the 10th largest brewer overall in the United States last year, according to the Brewers Association, a trade group for independent brewers. It will open its third plant in Azusa next year to better serve areas such as the Southwest. It is expected to produce 960,000 barrels this year, Magee said.

Financial terms of the investments were not disclosed. The purchases were all funded by Lagunitas and did not require any capital outlay from Heineken, he said.

The most notable Lagunitas investment announced Wednesday is its 50-percent stake in Moonlight, which Hunt has operated since 1992 and is considered one of the pioneers of the craft beer movement and is a favorite of local beer lovers.

Moonlight’s flagship beer, the black lager Death and Taxes, has an “outstanding” rating of 92 on the Beeradvocate website with one review calling it “incredibly fresh the deep malt flavors, yet still light and extremely quaffable.”

In an interview, Hunt, 59, said the opportunity “to secure Moonlight’s future into the next generation” was the driving factor along with his friendship of Magee, who he has known since 1993.

“I’m almost 60 now and I don’t know how long I’m going to keep doing this,” said Hunt, who like Magee has never shied away from giving an unvarnished opinion of the industry. “I got other things going on my life. I don’t want to run a brewery until the day I fall under.”

Hunt has two children who he said weren’t interested in taking over the business. His brewery has four full-time employees and three part-timers. Moonlight finally opened a taproom recently on Coffey Lane, which has attracted a considerable following with local beer consumers.

Moonlight produces 3,000 barrels annually, but Hunt noted that he has long list of people who would like to serve his beer - which is only available on draft - mostly in Northern California. He also has had retailers ask him to sell Moonlight in bottles.

“It tugs at my heart strings,” Hunt said of the taprooms that he has to turn down because he doesn’t have enough capacity. “People keep demanding more beer than I can make by myself.”

Hunt stressed that Moonlight will not seek to be in every state under the deal, but rather grow organically by placing a premium on its quality. “I don’t care about Moonlight getting big,” Hunt said. “I care about Moonlight being a delicious beer.”

When asked what Lagunitas could do for Moonlight, Magee said: “I want to find out what Brian wants to do.”

Hunt said the partnership will free him up to concentrate more on brewing beer. He built up Moonlight over more than a decade of 80-hour workweeks, with almost no task too menial. He is known to personally deliver kegs to bars around Sonoma County on Friday nights.

“Between Tony’s creativity and mine ... there’s no end to the things we can do,” Hunt said.

In Charleston, Lagunitas has a majority stake to turn Southend into its new taproom, its first one outside of its breweries in Petaluma and Chicago. It will offer small batches of beer that will be exclusive to the taproom from a 10-barrel brewhouse in the historic quarter of the city, which is a major tourist destination.

But Magee cautioned that Lagunitas will not have much expansion of standalone taprooms across the country. By doing such a strategy, Magee said, “eventually they all become like an Applebee’s.” He has said in the past he would like to build more domestic breweries.

Other major craft breweries are starting to branch out with taprooms that are not attached to a major brewery. For example, Stone Brewing Co. of Escondido announced last month it would open up a taproom and a small-scale brewery in downtown Napa by refurbishing the historic Borreo building. Sierra Nevada Brewing Co. of Chico operates a small taproom in Berkeley.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.

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