By the measure of fanatical hometown craft beer loyalty, Kansas City's Boulevard Brewing Company ranks about 175 on a scale of 100. Kansas Citians may argue heatedly about their barbecue joints or their college basketball teams (get real: Ka KAAAAA!), but when it comes to beer, it's Boulevard Pale Ale or Boulevard Unfiltered Wheat or, if you're under 30, one of those new, fancy Boulevard brews.
No wonder then, that the October 17 announcement of Boulevard's sale to Duvel Moortgat Brewery of Belgium was greeted with some raw emotion. I heard sadness, shock, indignation, anger and delusion, and I can relate to almost all of it, except the idiotic boycott Boulevard notion. I had a momentary feeling that can only be compared to learning that your sister was marrying the Prince of Europeburg and would henceforth not be allowed to co-populate with low-class Midwestern folk like you.
Those initial spasms have worn off. Now it all boils down to the age-old tension between wanting to hoard every fluid ounce of something that is so deeply, locally ours and wanting the world to know how truly special that something is. I got a little misty-eyed last year when I discovered Boulevard Wheat was being sold at my local Whole Foods and one of my favorite bars, Churchkey, in Washington, D.C. After just a year or so, the local rep for the beer here sounds like he has more demand than he can satisfy. That's the context to consider here. Kansas Citians aren't the only ones who love Boulevard beer. Everyone does.
I could easily ramble on, but I decided to go to the source to hear more about what the future holds. Below is an interview I conducted with Boulevard CEO John McDonald (JM) and Duvel CEO Michel Moortgart (MM). I hope you all will register your reactions in the comments section.
John, what do you say to the people in Kansas City who are feeling pretty emotional about this transaction?
JM: Yesterday morning, when I drove up to the brewery and saw the steam coming out of the stacks, I had this "OH MY GOD!" moment thinking about the fact that it wasn't going to be mine tomorrow. But after a few minutes, I had a smile on my face. I've worked really hard to do the right thing and I'm excited about this next step for the brewery. Part of my decision-making process was that, as the business got bigger and bigger, the whole idea of being in control weighed heavily on me. I came to the conclusion years ago that I wanted to pass on that control. It was a question of finding the right people and I've known the folks at Duvel for a long time. I am not going away. I still have some investment that I will ultimately pass on to my kids, which is very meaningful to me.
John, what specific upgrades will be made to the Kansas City brewing facility and what will be the jobs impact locally?
JM: No one will leave. The brewery will run like it is today and the whole management team will stay in place. A couple of people from Belgium will join us here as well. In terms of the facility, our Cellar 5 fermenting area is our next big step and we're looking at approximately $15-$17 million of investment to expand it. The more beer you make, the more employees you need. More broadly, our numbers are up 13 percent just in the last few months, particularly across the Smokestack Series portfolio. We want to accelerate growth across Smokestack and the Wheat and Pale Ale.
John, what is really going to change financially and operationally?
JM: Things will stay the same in terms of people and benefits. Over the next couple of years, we will look at how to do better by our people as well. We are also going to look to streamline Boulevard, Brewery Ommegang, and Duvel's US importing company. One of the big synergies here will be combining our sales force. They are strong on the East and West coasts and we are strong in the Midwest, so there's almost no overlap. All three entities are excited about having more to sell.
Michel, what is your favorite Boulevard beer and why was this specific company so interesting to you?
MM: Tank 7 and the Bourbon Barrel Quad limited release have been my favorites. Tank 7 is a Belgian-inspired beer that is familiar to me. We produce fermented, re-fermented and bottle conditioned beers, and Tank 7 is close to that in terms of aroma and taste. It also has more bitterness, which I like. The Bourbon Barrel Quad is more complex and creative, which are hallmarks of the U.S. craft beer movement. We became interested in Boulevard because we share the same values and focus on quality as the long-term key to success. We also see a lot of potential. In America, craft beer consumption equals 7 percent of the market, but in Belgium is equals 30 percent. We believe we can grow on the American side to 10 percent, 12 percent or 15 percent. We also believed that Boulevard was very complementary with Ommegang in terms of distribution.
Michel, which Boulevard beers are key to European expansion and what markets will be your focus?
MM: The Smokestack series have the most potential in Europe. Those are the most complex and creative. We also see a growing attraction to the bitter flavors of American IPAs. The Unfiltered Wheat will also be interesting, although we do have a tradition of that type of beer in Europe. We have a strong presence in Belgium, France, the Netherlands, and the United Kingdom. People in our network are already asking, "When can we start selling?"
John, Boulevard produced approximately 175,000 barrels last year. What is the U.S. growth vision for the brand, both in terms of geography and volume?
JM: Our planned growth for this year was 9-10 percent, and we've seen even higher numbers over the last six months. The brewery can ultimately produce between 500,000 and a million barrels, but adding capacity isn't the most important piece here. We're not going to do crazy things just to sell more beer. We're going to take methodical steps to expand and focus on our best growth areas on the coasts, at least until Cellar 5 comes online. We don't want to change our wholesaler networks. We want to keep doing the right business.
John, how important was Boulevard brewmaster Steven Pauwels, a native of Belgium, in this transaction?
JM: Steven is a hugely valuable person for us. He and Hedwig Neven, the brewmaster from Duvel, are good friends and collaborate a lot. Hedwig is a great technical brewer. Steven may be a bit more creative. There's a good balance. They are among the best brewers in the world.
Michel, what do you want Boulevard's loyal followers to know about your company and your commitment?
MM: We will do our utmost to keep all the things that are special about Boulevard the same. We are convinced that by combining with Boulevard, we are creating a stronger platform. There are a lot of new craft breweries coming up and future competition will be strong. By joining forces, we are better equipped to compete. We want to maintain the quality and all the strong relationships that Boulevard has.
John, how will you stay true to the roots of Boulevard and the craft beer movement generally?
JM: We shouldn't lose sight of the fact that Duvel was a craft brewer long before the term was even invented in the U.S. They are seven times bigger than we are worldwide. In the US, we are 2-3 times bigger than they are. We have a lot to offer each other. We are both family-owned businesses. This is a good thing.
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