Founder John McDonald explains why selling his company creates new opportunities for growth.

Last month’s announced sale of Kansas City’s Boulevard Brewing Company to the 142-year-old family-owned Belgian brewer Duvel Moortgat earned a lot of media attention locally and beyond, including a story in The New York Times.

It also left many folks in the Kansas City area wondering why such a prized hometown brand would relinquish its majority interest to a foreign interest.

Yet when the deal’s two key players – Boulevard Brewing Company founder John McDonald, 60, who will retain a minority stake; and Duvel Moortgat’s Michel Moortgat, 46 – sat down to talk about the deal with Thinking Bigger Business, both men were clear about why they came together: The local, national and international expansion of their now-combined craft beer business, including Duvel Moortgat’s Brewery Ommegang in Cooperstown, N.Y.

The only thing brighter than the message they had to share was the mutual smile on their faces.

 

Mr. McDonald, you’ve spent nearly a quarter century building one of the most popular specialty brewers in the Midwest. Why did you sell Boulevard Brewing Company, and how difficult a decision was it?

McDonald: It was difficult. I know I did the right thing. I was at a time in my life where I had other things I wanted to do, and I really felt the company needed a good partner to bring things that we didn’t have within our own walls.

I sold because I found a partner that I believe will help our brewery continue to grow right here in Kansas City. There are just a lot of synergies between the two companies, and a lot of respect. I think we are better off with the Duvel Moortgat/Ommegang family than we are just going on our own.

 

Although terms of the sale will not be disclosed, is it safe to say that you were rich before this deal, and you are now very rich?

McDonald: You know, I’m fortunately not a very money-motivated person. I’ve never allowed myself to think of myself as that. I live very well, and I live very frugally. And I don’t think that’s going to change much after this.

 

How do you think the deal will affect your legacy in Kansas City?

McDonald: Well, I am the founder of Boulevard Brewing Company. I always will be. And I see myself as being a contributor to this new, bigger company. And I’m looking forward to it.

Almost for a legacy reason, I’ve worked out a really great deal with Michel that is true ownership, which was very important to me. I have stock in the new American entity, so I’ll be involved, and I’ll have a seat on the board.

And so I’m very excited, and it is a meaningful reinvestment for me. I have two kids – they’re in their early twenties – and a lot of this is for them. If they, in the next five or 10 years, decide that they really want to work for Boulevard Brewing Company or Ommegang or even move to Belgium, possibly, and they’re very interested in the beer business, they’ll have a chance to do that.

 

Q: Mr. Moortgat, why did you decide to buy Boulevard Brewing Company?

Moortgat: Let me first answer your question to John – we will make sure to preserve John’s legacy. Because we are very much impressed by what he has done over the last 24 years with this brewery, specifically, and in the craft beer industry in general. He has built a company with very, very well-respected beers focused on quality. And he has developed a very large talent base within his brewery. And we want to build further on this talent base and with these quality beers.

John has always been very concerned about the future of his company and of its people. That’s one of the main issues we have been discussing over the last months. He has talked about, “How can I secure the future of my company?” And he has chosen us, and we are very thankful and also, um, how do you say?

McDonald: Honored?

Moortgat: Honored, absolutely. We are very honored he chose us. The “click” was very good between the persons, and both companies share the same values.

 

Are there numbers to support your optimism?

Moortgat: The American craft beer industry represents approximately 7 percent of total beer consumption in the U.S. It grows by 12 to 13 percent a year, and we think that there is still a lot of potential. If you look at Belgium, for instance, craft beer represents 30 percent of total beer consumption. So if the 7 percent in the U.S. goes to 10 and 12 and maybe 15 percent in the future, there is some strong potential in the U.S.

Secondly, we see that, in Europe, consumers start to look more and more to American craft beer, and to realize that you have some very, very high-end, good, specific, complex beers that are produced over here. And they are interested in those beers. They want to taste them. And so we will work on distributing and developing Boulevard Beers in Europe in the future also.

We also saw, when talking with John and with his people, that you have a good geographical fit between Boulevard in the Midwest and Ommegang on the East Coast, which also has sales people and good distribution on the West Coast. So by combining those entities, we can cover almost the whole United States with John’s beers and our beers.

McDonald: You know, in 1989, Boulevard was a very local brewery. And then we were a little bit of a regional brewery. And then, seven or eight years ago, we started looking more nationally, and even started looking a little internationally.

What I like about Michel’s vision is the idea that it is global, but we can do it in a local and regional way, and then start to figure out synergies between these companies to make it better for all of them.

What I really like about Michel is he is a brewer and an owner, and I am a brewer and an owner. We very much relate.

 

Did Mr. Moortgat being a younger man play any role in the decision to sell the company?

McDonald: It did, absolutely. I see a really great leader in Michel. I think he’s tough. We’ve had some tough negotiations to get this deal done, and I admire that in him. I think that’s something that is a good thing. Because running a company of this size, or the size that they are and the size that it will be going forward, requires someone with a vision, somebody that has great leadership skills and somebody that can be tough when the time arises to be tough.

 

You can’t please everyone, but what do you say to Kansas City area folks who may feel disappointed by Boulevard Brewing being sold to a majority owner that’s not only outside of Kansas City and the Midwest, but from another country?

McDonald: I’ll sit down with anybody on any barstool in Kansas City and tell them why this is a good deal. And, ironically, even though we are considered a very large craft brewer and we sell one-third of our volume here in Kansas City, we only have about seven percent of the total market here in Kansas City. And we hope to get 8, 9, 10, 11, 12, 15 percent over the years.

I mean, I’d like to have half the beer sales in Kansas City someday. And we’ll keep working on that. It goes back a little bit to the whole Show Me State thing – you know, people here, you’ve got to show them.

 

Mr. Moortgat, a lot of folks here may say, “I’ll have a Boulevard, bartender,” at least partly out of civic pride. Can they feel that Boulevard Beer is still Kansas City’s hometown beer?

Moortgat: We know and we understand those concerns. But we know from all the people we’ve spoken to within Boulevard and all the numerous conversations with John, that this relationship with the city is key to the success of the brewery. So we have agreed – and, frankly, we would be stupid not to do so – to continue this very strong relationship. So the charity that Boulevard does with the city, the involvement with the local sports clubs, that will obviously continue on.

It’s also part of our philosophy. We, as Brewery Ommegang, are linked to our community in upper state New York. With Duvel Moortgat, we are linked to our community in Belgium. So it’s part of our DNA, and we will certainly keep this focus on the local.

McDonald: And because of what happened to Anheuser-Busch in St. Louis a couple of years ago, this is a conversation that people are going to have. There’s going to be some guy sitting in a bar in Kansas City drinking a Bud Light, and he’s going to say, “Do you know what – did you hear Boulevard sold out to the Belgians?” But he’s drinking a Bud Light, anyway, and that company is actually owned by a bunch of Brazilians.

So we are not bankers and these huge companies. And, you know, the Anheuser-Busches or MillerCoors of the world, those people are all really good people. There’s nobody who works at those companies who isn’t a fine, hardworking, good person. But to say that those companies are run by brewers, that’s a stretch.

And I think that’s what’s so great about our deal is that we are both brewers. We are not these financial entities who are all about that.

 

Will we get Boulevard beer in cans for the first time?

McDonald: We have discussed cans here at the brewery. We actually just don’t have room to put in a can line, or we probably would. I think we will want to have long strategy conversations about that in the future, because in the U.S., canned beer historically has been considered not high-quality beer. But, really in the last decade, canned beer has become considered high-quality beer by a lot of craft brewers in the U.S. So there probably are some good conversations we need to have going forward.  And canned beer, from a quality point of view, we don’t think is a bad thing. It protects the beer from light. And it’s lighter (weight). It makes sense for outdoor sports.

 

Is Boulevard Brewing looking to expand by building another brewery or by contract brewing with a larger company?

Moortgat: (Neither) of those. We are looking to expand by adding capacity here in Kansas City, and so that will happen on this site.

McDonald: Both our breweries, I can tell you, are very much about the source of where these beers come from. Now, having said that, I do believe that because of the similarities of brewing practices that we have between Boulevard, Ommegang and Duvel, we will look to collaborate, do partnership things that make sense, moving forward.

If Sierra Nevada can have a brewery in Chico, California, and build a new one in Ashville, North Carolina, and make the same beer in both places, we can talk about that. But it’s not something that we are going to do from day one. It’ll be something that we take a lot of thought about. And neither of us, I believe, would say we’re going to brew beer for other people or we’re going to have our beer made by a third party.

 

How would each of you describe the taste of Boulevard beers? Do you experience the beers the same or differently?

Moortgat: Hmm.

McDonald: I would say that Michel has not had all of our beers. I took a bunch of beers back to Belgium, and we put them in their taste panels. And so I think he’s probably had a half-dozen or a dozen of our beers.

 

On a personal note, have the two of you become friends – maybe over a beer?

McDonald: We’re gettin’ there.

Moortgat: Yeah.

McDonald: He’s coming over to my house for dinner tonight.

Moortgat: We also had this wonderful dinner yesterday at the Bluestem.

 

So you’re being shown the town, Mr. Moortgat. What do you think of Kansas City?

Moortgat: It’s a great city. I’m almost thinking about moving to Kansas City.

Almost?

Moortgat: I have some duties back over in Belgium. But it’s a very nice city. It has a human size. I’ve seen some very nice buildings. There are a lot of positive developments going on. A lot of young people. A very lively scene.

 

Finally, what makes a great beer? Feel free to give away any trade secrets.

Moortgat: It’s going to (sound) a little bit banal, but it’s quality ingredients, quality equipment. We both believe in the use of the best available technology, and that’s something that struck me from day one when I entered this brewery. This is a very well-equipped contemporary brewery. John has always put a lot of money into this company. It’s the people that make the beer that really, really matters to quality. And time. You can’t rush good beer.

McDonald: It’s what an old brewery guy told me a long time ago. He said, “You know how you know it was a great beer? If you want another one.”

This interview has been edited for length.