​Craft Brew Alliance (BREW): Stock Hits 52-Week High After New Anheuser-Busch (BUD) Deal

Bolton Flautt  |

Everybody loves a home run. It means instant runs on the board. No more bunting over, stealing bases, or sacrifice flies… One swing, one crack of the bat, one run on the board is the result. I thought of this analogy when looking at a big agreement Craft Brew Alliance (BREW) announced with Anheuser-Busch InBev (BUD) on August 23, 2016. Today, the stock is one of the most actively bought gainers trading up to a new 52-week high of $18.66 per share before settling back at its current price of $17.52 per share on volume of 1,042,122 shares. Even at $17.52, the stock is up more than 20 percent on today’s session. Craft Brew has a market capitalization of $341 million and an average daily volume of 90,628 shares. The company has a 52-week range between $6.80 and $18.66 per share.

In a press release, Craft Brew and Anheuser-Busch announced a series of new commercial agreements that expand and strengthen the companies’ long-term relationship and create new growth opportunities for both companies. The agreements include an amended and extended master distribution agreement, a new contract brewing arrangement, and a new international distribution agreement.

Through the agreements, AB will provide additional support and committed resources to accelerate CBA’s growth strategy, which includes: strengthening its distinctive 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 U.S. and around the world.

Craft Brew and Anheuser-Busch have extended the current fee structure of their existing Master Distributor Agreement for 10 additional years, through 2028. The amended agreement secures Craft Brew’s brands in the industry’s strongest wholesaler network, enabling continued investment in brand growth and strategic partnerships, such as Appalachian Mountain Brewery and Cisco Brewers.

Under the terms of a new contract brewing arrangement, Craft Brew and Anheuser-Busch will work together to transition up to 300,000 barrels of volume into Anheuser Busch’s state-of-the-art breweries. This agreement will directly support Craft Brew’s ongoing brewery footprint optimization and enable both companies to realize additional operational efficiencies.

Anheuser-Busch will support the expansion of Craft Brew’s portfolio of brands globally through a new international distribution agreement. This agreement builds on Craft Brew’s recent distribution arrangements with Anheuser-Busch, which launched Kona in Brazil and Mexico, and creates opportunities to accelerate the growth of Craft Brew’s craft portfolio in additional international markets.

Commenting on the new agreements, Andy Thomas, CEO of Craft Brew said: “We are proud of our long-standing relationship with Anheuser-Busch and have always been candid about the competitive advantage of our distribution arrangement, which allows Craft Brew to independently manage our brands and still enjoy the benefits of being a valued part of Anheuser Busch’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.”

We will reach out to Mr. Thomas for more details on the new agreement with Anheuser-Busch and get back to you with updates in due time.

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