Michigan craft brewer Short’s sells 20% stake

Kaylee McGhee
The Detroit News

Short’s Brewing Co., Michigan’s largest craft brewery, will sell a 20 percent equity stake to Lagunitas Brewing Co., a subsidiary of Heineken International.

The deal with Lagunitas will give Short’s the security needed to experiment in a constantly changing market, said Scott Newman-Bale, a partner at Short’s. He said this is a “minority deal” that won’t change the day-to-day operations of the Bellaire-based brewery.

“The deal has been designed so as not to lose control of the brewery,” Newman-Bale said in a phone interview Wednesday with The Detroit News. “Things will continue as they have as far as the day-to-day workings. Nothing will change.”

The deal, pending state approval, comes after years of weathering the fierce competition that regional breweries like Short’s face.

Newman-Bale said Short’s has been approached for years with similar offers, many of which offered a higher price than Lagunitas. Short’s did not want a deal that offered financial security at the expense of control and creative license, however.

“We waited until we were sure we wouldn’t lose total control of our company,” he said.

Newman-Bale said negotiations with the Heineken subsidiary didn’t speed up until last summer. The deal will allow Short’s to remain in control of which suppliers and distributors it uses.

Lagunitas will have one member on Short’s five-person executive board, and will not have veto power. Newman-Bale declined to disclose further details, including the price Lagunitas paid for the equity stake.

Short’s realized that in order to move forward in the brewing industry, it would need to partner with someone. Lagunitas was the only one to embrace Short’s experimentation, and the only one that offered to collaborate in new, creative ventures, Newman-Bale said.

Even though Short’s has lost money investing in some of its brand landmarks, like its eccentric displays and commitment to bottling and shipping beer to customers the same day, the company has said it will continue doing what has set the company apart from other breweries.

“They embraced our creative side, whereas everyone else was just like, ‘That’s stupid, you need to stop doing that because it costs money,’ ” Newman-Bale said in an interview with MiBiz.

Short’s identity as a unique craft brewer has allowed the company to overcome economic obstacles many other regional breweries have not been able to hurdle.

“I never imagined Short’s would become such a successful regional brewery,” founder Joe Short said in a statement. “The secret to that success has always been to surround myself with good people, the best people, who in many ways are smarter and more talented than myself. ... This partnership with Lagunitas is just another part of evolution in the cycle of our dynamic and growing business.”

As regional craft breweries continue to pop up, driving up the competition, the partnership with Lagunitas will allow Short’s to remain stable while continuing to expand, company officials said.

“The market is changing,” Newman-Bale told The News. “It’s being saturated with other breweries. As the economy continues to change, we wanted to make sure that regardless of what happens, we’ll be able to cope and adapt.”