Kansas City’s Boulevard Brewing is sold to Belgian firm

10/17/2013 1:55 PM

10/18/2013 10:30 AM

Boulevard Brewing, a popular Kansas City company that’s grown to be one of America’s largest craft brewers since its founding in 1989, is being sold to a Belgian brewer, Duvel Moortgat.

John McDonald, who started the iconic brewery in a warehouse at 25th Street and Southwest Boulevard with used equipment, said that at age 60 it was time to find a buyer.

“My kids are too young to take over, and I don’t want to be 70 coming down here arguing with people,” he said.

So he sold it to Duvel — which means devil in Flemish. It’s pronounced doo-vel.

The terms of the deal were not disclosed. Boulevard said the sale gives it an opportunity to expand more rapidly to keep up with demand for its products. Duvel, a family-owned Belgian company founded in 1871, said the purchase will allow it to expand in the United States.

“I’ve done the right thing for the brewery, for me, for our employees and Kansas City,” McDonald said. “We’ll make more beer and keep employing people.”

From the days Boulevard hauled its first products around town in an Isuzu panel truck, the company has grown to become the 12th ranked craft brewer in the nation with 125 employees.

It produces 185,000 barrels of beer and sells it in 25 states coast-to-coast, mainly in the Midwest, along with the District of Columbia, and has a small presence in Scandinavia.

“We’re the best-selling American craft beer in Norway,” said Jeff Krum, chief financial officer. “There’s a strong interest in American craft beer in Europe.”

But Kansas City remains its heart, with almost half of its product sold within a 50-mile radius, and its transfer from local ownership comes with pangs of loss.

Not long ago the scrappy brewery bragged it was Missouri’s largest, after beer giant Anheuser-Busch of St. Louis was sold to InBev, another Belgian company. Now, that title will return to St. Louis and craft brewer Schlafly Beer.

Boulevard, with its familiar red and green diamond-shaped logo, quirky retro-style marketing materials and beer labels, and its sponsorship of events from church carnivals to major league baseball, has woven its flavor deep into the fabric of the community.

Krum acknowledged that the sale of Boulevard would be a disappointment to many people who’ve taken hometown pride in it.

But, he said, “We’re still Kansas City’s hometown brewery. We’re not going anywhere, and we’ll do what we’ve always done.

“Kansas City is the foundation of our business. We’ll continue to give back to the community.”

Soon after the news of the Boulevard sale hit social media, the reaction was mostly negative.

“Ugh,” wrote one poster on Twitter. “Literally a deal with the ‘devil.’”

Other pithy tweets included “a little upsetting,” “not cool” and “nooooooooooo!!!!!!!!”

Jack Bondon, the owner of the Berbiglia liquor-store chain, was surprised by the sale and wondered whether if that meant changes ahead. He knew McDonald when he worked as a carpenter before starting Boulevard.

“It’s a shame that Boulevard is being sold, but hopefully they’ll keep everything the same,” Bondon said. “Duvel Moortgart makes wonderful but expensive beers.”

Boulevard also is the latest household name in Kansas City to be acquired by foreigners. Sprint Corp. is now controlled by a Japanese company and AMC Entertainment by a Chinese venture.

McDonald said he reached out to Duvel three months ago and struck a deal that’s expected to close by the end of the year. Duvel brewed 700,000 barrels of beer last year and employs 900 people.

“We went to them and they were very interested,” McDonald said. “They’re seven times bigger than us and they have a global vision, but working through local breweries.

“This is not what happened in St. Louis (with Anheuser-Busch and InBev); it’s totally different. We will add jobs and investment and not cut two-thirds of our work force. They are very collaborative.

“We’re going to be partners going forward, but they will have control.”

Boulevard’s most popular beers remain its mainstay Boulevard Pale Ale and Unfiltered Wheat, but its brews have expanded to a wide selection of year-round and seasonal offerings as well as its artisanal Smokestack Series sold in 750 ml bottles and four packs.

It also has teamed with chocolatier Christopher Elbow to brew up a chocolate-flavored ale.

McDonald said the sale to Duvel should allow it to accelerate a $20 million expansion of its fermentation operation at the plant campus on Southwest Boulevard.

“I think this is a good thing for the brewery,” he said. “We could do it on our own, but we can do it faster with them.”

Peter DeSilva, president of UMB Bank, which financed the growth of Boulevard, said he hopes that relationship will continue with the new ownership.

“We helped put Boulevard in business many years ago, and it’s been so fun to watch them grow and their great brand,” he said.

“I think Boulevard has been part of the fabric of Kansas City, and it’s not going anywhere. It’s headquartered here and I plan to still enjoy a brew from time to time.”

Duvel has a toe-hold in the U.S., selling about 60,000 barrels of its “strong golden ale” in this country. But it wants to expand and recently also bought a small brewery, Brewery Ommegang, based in Cooperstown, N.Y.

“Our path for growth became abundantly clear as I got to know John and Boulevard,” Michel Moortgat, CEO of Duvel, said in a statement.

“Our companies share the same values. We have great mutual respect for each other’s achievements and maintain a deeply held belief in exceptional quality as the platform for long-term success.”

Though Duvel sees its purchase of Boulevard as an opportunity to grow in the U.S., there are no plans to brew its products here or Boulevard products in Belgium.

McDonald said the current management team at Boulevard would remain intact. A year ago, the firm hired Mike Magoulas, a former regional vice president of MillerCoors, to take over the CEO position from McDonald.

Duvel is expected to assign some management staff to Kansas City. McDonald also will have a seat on the Duvel board of directors.

Duvel Moortgat was represented by McDermott Will & Emery. First Beverage Group was adviser to Boulevard.

McDonald said Boulevard’s marketing arrangements with Sporting Kansas City at its stadium Sporting Park and the Kansas City Royals at Kauffman Stadium also would remain unchanged. The firm will continue to be involved with its Ripple Glass recycling program and other local commitments.

In an interview with The New York Times, Moortgat echoed Krum’s observation that American craft beers were catching on in Europe.

“In the future, with this partnership,” he said, “we will be able to develop the taste for those beers more substantially here and in other countries like Japan and China.”

Duvel Moortgat

Founded: 1871

Annual production: 700,000 barrels

Employees: 900

Boulevard Brewing

Founded: 1989

Annual production: 185,000 barrels

Employees: 125

A look at Duvel Moortgat, the new owner of Boulevard Brewing

1871: Jan-Leonard Moortgat and his wife Maria De Block found the Duvel (pronounced doo-vel) Moortgat farm brewery.

1923: A new ale commemorating the end of World War I is launched. A shoemaker describes it as “nen echten Duvel” or “a true devil” and the name sticks.

1930: Bel Pils, Duvel Moortgat’s luxury pilsner, is launched.

1963: The company contracts with the Maredsous abbey to brew its beers. One variety has 10 percent alcohol content.

Late 1960s: Company develops a unique tulip-shaped glass that holds a full 33-centilitre bottle.

1970s: The company begins to make major inroads in the European beer market.

2003: Expands to the United States, purchasing Ommegang Brewery in Cooperstown, N.Y.

2013: Purchases Boulevard Brewing.

A look at Boulevard Brewing’s brief history

1989: John McDonald, a native of Osborne, Kan., and a carpenter by trade, starts brewery in a warehouse with three employees and used equipment from a closed brewery in Bavaria, Germany. First product is Pale Ale and first barrel goes to Ponak’s Mexican Kitchen a couple of blocks away.

1990: Boulevard Wheat joins the lineup. While many others have joined the lineup, Wheat and Pale Ale remain the company’s strongest sellers.

Circa 1992: Boulevard expands sales as far north as Omaha, Neb., and east to Columbia and Springfield, and south to Wichita.

2003: Boulevard moves into Minnesota, expanding its range to 11 Midwestern states.

2005: Boulevard Brewing breaks the 100,000-barrel mark.

2006: $25 million expansion opens that includes a new banquet hall and increases brewing capacity to 700,000 barrels annually.

2007: Boulevard introduces its Smokestack series, artisanal beers sold in .750 ml bottles.

2011: McDonald receives annual Brewers Association Recognition Award. Boulevard expands to Pacific Northwest, bringing total to 20 states.

2012: Boulevard moves into Washington D.C., and also quietly begins selling its Smokestack beers in Norway, Finland and Sweden. Brewer also ranked 10th-largest craft brewer in U.S.

2013: McDonald announces sale to Duvel Moortgat.

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