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Blue Point balances expansion, local roots after acquisition

Todd Ahsmann, left, president of Blue Point Brewing

Todd Ahsmann, left, president of Blue Point Brewing Co., and Mark Burford, co-founder and former head brewer, among stacks of barrel-aged beers at the brewery in Patchogue on Dec. 12, 2016. Credit: Barry Sloan

When Long Islanders Mark Burford and Peter Cotter began brewing the kind of beer they wanted to drink 18 years ago, they never imagined that their craft brewery, Blue Point Brewing Co., would one day be purchased by the world’s largest beer maker.

Since Patchogue-based Blue Point was acquired in 2014 by Anheuser-Busch InBev of Leuven, Belgium, the local craft brewer has: boosted its beer production by 75 percent; changed its logo to an all blue, minimalist design; launched its first media campaign using print, billboard, radio and LIRR transit advertising; brought in AB InBev marketing executive Todd Ahsmann as president; and grown its distribution to more than 46 states, up from 15 before it was purchased.

“By the end of the first quarter of next year, we will be in every state,” said Ahsmann, former head of marketing at Goose Island Beer Co., another AB InBev-owned craft beer. The company projects a 20 percent increase in production in 2017.

Blue Point, the Island’s largest craft brewer at the time of its purchase, is still true to its roots. It hasn’t changed the recipe for its flagship Toasted Lager; and it hosts community events such as its annual Cask Ales Festival. While co-founders Burford and Cotter are now advisers to the company, much of the staff has remained. Employment, 25 when the deal was announced, has grown to 37.

“We’re still dealing with the same people we dealt with beforehand,” said Andrew Luberto, president of Long Island Beer & Malt Enthusiasts club. “The brewery has a deep connection to our club and community.”

Blue Point’s purchase — for a reported $24 million, a sum Ahsmann said he couldn’t confirm — stems from efforts by AB InBev, a $43.6 billion-in-revenue giant, to catch the rising tide of craft beer popularity in the past five years.

There are at least 36 breweries and brew pubs on Long Island, up from 19 in early 2015, according to data from the New York State Brewers Association.

Nationally there are more than 5,000 breweries, up from about 2,000 five years ago, according to the Brewers Association, a Boulder, Colorado-based craft brewers trade group.

“When we started in ’98 the industry wasn’t what it is today,” Burford said in an interview. “It went from not being able to find craft beer to craft beers in almost every location now.”

Behind the craft craze: consumers, particularly millennials, are seeking more artisanal food and drink with a stronger connection to locally sourced ingredients. Blue Point, for instance, uses Island oyster shells and bay salt in its seasonal New York Oyster Stout.

Americans spent about $111 billion on beer in 2015, up $2 billion from 2014, according to the Beer Institute, a Washington D.C.-based industry group.

The growth largely comes from craft beer, which will account for almost 13 percent by volume of the U.S. beer market this year, and from Mexican imports, according to Brewers Association figures. Sales of staple brands from big companies, such as Coors Light, Miller Lite and AB InBev’s Budweiser, have declined in recent years, said Bart Watson, chief economist for the Brewers Association.

Hence the interest of big brewing companies in buying craft brewers.

AB InBev has acquired eight other craft beer companies, starting with its 2011 purchase of Goose Island of Chicago.

MillerCoors, maker of Miller Genuine Draft and Milwaukee’s Best, has bought four craft beer brewers in the past five years; and Amsterdam-based Heineken International last year bought a 50 percent stake in Calif.-based Lagunitas, the sixth-largest craft brewer in the United States at the time.

“Big established brands are either left with the choice of developing those sort of niche brands in-house or getting into that space through acquisitions,” said David Portalatin, food and beverage analyst for Port Washington-based market researcher the NPD Group.

Burford and Cotter, two home-brewing enthusiasts, began their business venture in 1996. The partners maxed out credit cards, took out loans using their homes as collateral, and used the money to buy fermentation tanks, a brew kettle and other equipment secondhand.

They filled their first keg with Blue Point Toasted Lager in December 1998. Today, the brewery makes more than 40 beers, including Hoptical Illusion, Mosaic Session IPA and RastafaRye Ale.

After rolling that first barrel into the parking lot behind their small brewery, a former ice factory on 161 River Ave., where the company still operates, they began calling on neighboring businesses, looking for taste testers. The turnout — and subsequent empty keg — let them know they were on to something.

At first, the founders made deliveries themselves, recalled Patchogue Mayor Paul Pontieri.

“One of the first times I met them they were making a delivery to the Oar restaurant in Patchogue,” Pontieri said. Cotter would often make keg deliveries in a “beat-up station wagon,” accompanied by a Golden Retriever named Sally, he said.

Blue Point soon turned to 80-year-old, East Yaphank-based Clare Rose, which distributes 10 million cases of beer a year to 5,000 bars, restaurants and convenience stores throughout Nassau and Suffolk counties.

“They needed a more mainstream distributor,” said Sean Rose, chief executive of the third-generation family business. The distributor, which predominantly sells AB InBev products, began selling Blue Point the brewer’s first year in business.

Blue Point’s beer and local ties were strong enough for Clare Rose to take them on.

“It was all about the quality of product for them,” Rose said. “That, I think, is what really got them where they needed to go, because there’s been a lot of losers along the way.”

Blue Point shipped a little more than a 200 kegs that first year, he said. After the company moved to bottling, opportunities for sales in retail outlets opened, and the brewery’s reach grew dramatically.

Rose declined to provide specific figures, but said his company distributes the equivalent of several hundred thousand 24-bottle cases of Blue Point beers across the Island annually. He estimated that Blue Point accounts for about 2 percent of the beer sold on the Island.

At the time of the sale, Burford said the company felt constrained in its operations, and that AB InBev provided an opportunity to grow.

“They had success with buying Goose Island and making it a larger company,” Burford said. “It just made sense that that’s what they were going to try and do.”

After the takeover was announced, many Islanders worried that Blue Point would lose its local connections.

“There was a lot of concern,” said Long Island Beer & Malt Enthusiasts president Luberto. “To have this massive, multinational corporation come and buy one of our local breweries, we didn’t realize that was on the map,” he said.

Many in the local craft brewing community worried that Blue Point would lose its connection to the community, that the brewer would undercut local competitors’ prices, and that it would become a “bland watered-down brewery,” he said.

Despite those worries, Luberto, a certified grand master beer judge, said the acquisition has benefited the company’s beers.

“The beer at the brewery has become more experimental,” said Luberto, who’s partial to Blue Point’s new Armchair Nitro Stout. “When you go there now you find more stuff there that you wouldn’t have found before they were bought by InBev.”

In June, Blue Point launched its first “Patchogue’s Got It All” commercial on the Hulu streaming service in 23 media markets on the East Coast, Southeast and Midwest. The comedic 30-second spot highlights a Patchogue phone booth, water tower and T-shirt printer. Despite showing prominent reminders of Blue Point, such as signs and logos, its narrator never mentions the brewer by name.

“What’s funding the marketing department and the sales department is beer sales,” said Ahsmann, who joined Blue Point last year.

An executive at Blue Point’s parent said he often hears concerns when the company buys local craft brewers.

“The only thing we can do is to keep doing what we do, which is brewing great beers,” said Felipe Szpigel, president of The High End portfolio, AB InBev’s business unit in charge of craft brewers. “If the next day, or month, or a year from then you go to the tasting room, you go to the brewery and there are folks there still drinking amazing beer . . . That’s the best answer you could get.”

Cotter, former president of Blue Point, said AB InBev had “been honorable from day one.” He declined to talk about the business since the acquisition.

Now, Blue Point is working on a $35 million relocation to downtown Patchogue, to the campus of Briarcliffe College when it closes in a year. The 53,361-square-foot site would be the new headquarters for the brewer, which plans to add a restaurant, host brewery tours, and increase employment from 37 employees to 67.

“It really reflects well on the community,” Pontieri said about the company’s growth.

Rose said that, despite the crowded market for craft beers, his company is bullish on Blue Point, which he thinks could double or triple its distribution on Long Island.

“The product attributes are relevant to today’s consumer and it’s backed by the largest consumer product goods company in the world. I’m not a betting man, but I like the odds,” Rose said.

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