Saint Archer President and CEO Josh Landan on partnering with MillerCoors

They launched a craft beer brand 2 years ago, with a roster of high-profile investors that include Eric Koston, Paul Rodriguez, and Mikey Taylor. Last week, Saint Archer penned a deal that gives MillerCoors a majority of the shares. Transworld Business catches up with President and CEO Josh Landan to find out how it happened, and what comes next.

For starters, why beer? What brought you to this industry in the first place?

I think that first and foremost, we just liked drinking good beer together. It was the thing we liked doing together, and it sounded like something that we could do, that wouldn't have any conflict with anything that the boys represent currently – no roadblocks.

It was kind of ideal. It was something they could all do, and it was something that we all do together. It was something we were all excited about doing, and it was different.

How does a brand stand out, as a craft beer in the epicenter of the craft beer industry?

It's not easy, there's a lot of great brands out there, and a lot of great beer. When we came around, most companies were focused on just making great beer. And that was the thing that would set each one of them apart. For me, the brand and the brand aesthetic were very important. And in an industry where a lot of people are going towards over-designing the packaging, I went the other way. I didn't name the beers. It was really just the style that we were. The brand is very clean, very identifiable. It's very easy to notice Saint Archer. We had a great logo, and the color schemes that we were using weren't traditional in craft beer.

For me, it was really just taking everything that I've learned from the companies that I looked up to in our surf and skate industries – everything from Patagonia, to Girl, to Hurley, to Brixton. It was really pulling inspiration from those places, more than anywhere else.

And the story of our brand is what attracted a lot of people to it as well. It's just not a common story – We were a group of friends who came together because we loved craft beer, and we decided to make a craft beer business. People were drawn to that.

So now MillerCoors is what – a majority stakeholder?

Yup.

We're partnering with a business that, in my opinion, is the greatest brewery in America.

What advantages, or luxuries, are available to you, now that you have backing and infrastructure from MillerCoors?

There's a lot to gain – the amount they pay for aluminum, and glass, and hops, and everything like that. It's a massive help to our business. Obviously we're gonna be with a great distribution network. We're partnering with a business that, in my opinion, is the greatest brewery in America.

And the expertise that comes with being around as long as they have, and doing what they've done – not only what they've done with their core brand, but what they've done with Blue Moon. They've taken a craft brand, from a very small brewery in Colorado, to probably the second largest craft brewery in the nation.

So, it's because they have a track record for taking a craft brewery and doing well with it?

Yeah, a lot of people forget that. It's what attracted me to them. And obviously our goal is to be a national brand. And having somebody like MillerCoors to achieve that – makes it so that we'll do it the right way. And that was something that was really important to us.

How long were you discussing the deal, before it actually solidified?=

About five months.

Do you see this as an emerging trend? The big guys like Heineken and Anheuser Busch partnering with the Lagunitas and Golden Roads of the industry?

Yeah, absolutely. I mean, Saint Archer is obviously a lot different than Lagunitas, but I think there will be a lot of acquisitions from a lot of major craft beers. I think what people don't understand is it's a very expensive business – you're a production facility.

Our friends at Stance – who have done an unbelievable job – luckily for those boys, they aren't physically making the socks in San Clemente. They’re not hand stitching. But we're a production facility, and that gets very, very expensive.

And it's not just us – Ballast Point just built a new brewery that was $32 million.  I had done three capital raises in two years. It's millions and millions of dollars. And so you get to a point where you can only go a couple of ways with a business. You can go venture capital, or you can be financed by the banks. And at a certain point, when you get so big – especially in our case, we're two years old – banks don't like hyper-growth companies – they want slow and steady. And if our goal was to take this brand nationally, then why not partner with someone who's going to make that a reality for us now?

It would be naïve if people were thinking that this [trend] is only a couple [breweries] here and there. This is just the beginning.

They have the infrastructure; they know where the bodies are buried…

Right. And we don't have the luxury of being in business for 20 years, and being profitable for 15 years. So other breweries might not be the exact same situation as Saint Archer, but it's similar.

But yeah, I think it's gonna happen a lot. I know what Anheuser Busch's plans are, I know what MillerCoors' plans are. Now Heineken is getting into the game… I wouldn't be surprised if Constellation – who is absolutely crushing it with Modelo Especial, and Pacifico, and Corona – I wouldn't be surprised if they get into the craft game. It would be naïve if people were thinking that this is only a couple here and there – this is just the beginning.

Do you see any similarities with what's happened in action sports over the last ten or so years?

It's a little different. I guess with VF, that would be kind of the same thing. But then there're acquisitions like Chad and Andy, who sold Nixon to Billabong . That would be more like if we sold our brand to Sam Adams. And that kind of thing doesn't exist in craft – yet.

I think the only example would probably have been Bob [Hurley] selling to Nike. And that proved to be a fantastic decision on his part. I mean at the time, everyone had a lot to say, but look at what Hurley is now. Bob was way ahead of the curve on that.

I think one of the most unique things about Saint Archer is how you launched with a bunch of high-profile niche investors. I'm sure that was huge, as far as getting the word out.

Well sure, anytime you can create awareness around your brand, it's never a bad thing.

It worked. And pretty efficiently, too.

Well, I think it worked because it's authentic. It's authentic when you put everything on the line, and believe in something. I think that people are used to these guys being paid by sponsors, and representing them, but when they put in their own money to build a brewery from scratch in San Diego, it's attractive.

A lot of people have this misconception that a lot of these guys, these famous skaters and surfers, are loaded with money, and that's just not the case. That's not reality. Guys were giving me their life savings. I had a couple guys go to the bank, take out every dollar, and hand it to me.  A lot of these guys are living paycheck to paycheck. So whether you're investing $10,000 or $100,000, when someone gives you their savings, that's serious.

That's a heavy responsibility.

And with that commitment level, you're gonna get people who are passionate about that product. Whether they're famous or not, whether they have more money than others… money is money. And when you put it in to build something, you're gonna do everything in your power to make it successful. And that's exactly what happened.

So with the acquisition, where does that leave the investors?

We still own equity in the business.

How about you? How involved are you going to remain?

I'm still the president and CEO of the business. Nothing changes for Saint Archer; it's having a partner that we can use for multiple resources, and everything I had mentioned before. The staff stays the same, the brand stays the same, and most importantly, the beer stays the same.  MillerCoors doesn't want to come in and change anything – they're buying you for what you've become. They know we know what we're doing.

When you're a hyper-growth business, people want to compare you to a brand that's been around for 20 years, where it's easier for them to grow, and not give away their brand, but for us that's not a reality.

What's been the backlash from the craft beer industry?

There's always gonna be people that have their opinions… and to be perfectly honest, they're not educated opinions. And I don't pay much attention to it; I don't really care. If people think that we're sellouts… I have 70 employees, and their families, and investors, and their families, and they're all looking to make the right decisions for their futures. And this was the best decision to take care of people that are close to me, and people that have worked their asses off to make this business what it is. If people don't understand that this was the best decision for us, then that's ok.

When you're a hyper-growth business, people want to compare you to a brand that's been around for 20 years, where it's easier for them to grow, and not give away their brand, but for us that's not a reality. People don't understand that. The people who say what they want to say, they just aren't experienced in this field.

All I know is that when I broke this news to my friends, who believed in this from day one, a lot of people were crying. Their wives were hugging me. That kind of stuff makes every single decision we've done with this worth it, and what everyone else thinks, I don't' really care. If there's people out there who think we sold out, and they think we're awful, and they think our beer is awful, that's okay.

 

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