Deep Ellum Brewing Co., one of the fastest growing breweries in Dallas, has been purchased.
Canarchy Craft Beer Collective, a beer conglomerate that owns brands such as Oskar Blues Brewery, bought the company for an undisclosed amount. Brewbound, which covers the beer industry, first reported the news.
The deal, which closed June 8, "allows us go to forward with what we've been needing," says John Reardon, founder of Deep Ellum Brewing, namely capital to complete its brewery expansion and extra production capacity.
"It's the next big step for a brewer like us," Reardon tells GuideLive. "It allows us to join an already growing, already built out platform."
Opened in 2011, Deep Ellum Brewing quickly became a staple of the local beer scene with releases like Dallas Blonde and Deep Ellum IPA. It also gained notoriety for its marketing strategies, some good (like the billboard that played to the city's rivalry with Houston) and some bad (like the "goes down easy" slogan that some said promoted rape culture).
In 2016, we reported that Deep Ellum Brewing sold a majority stake to Chicago investment firm Storied Craft Breweries. But Reardon says that partnership "fell short of its initial goal." Talks with Canarchy began in September, but ramped up this spring.
"What Canarchy has proven through their five partners -- we're six -- is they value the independence of each individual brewery and work to grow that culture as opposed to coming in and trying to change it," Reardon says. "It sounds cliche, but it's business as usual."
The staff will remain in place, including Reardon who serves as president and chief executive officer of Deep Ellum Brewing.
According to Canarchy spokesman Chad Melis, Deep Ellum Brewing was an attractive partner because of its local following and ability to be "disruptive and innovative."
"It's a brand that has a fanatical local following," Melis says. "Their growth is restricted by capacity, and our resources and expertise, we can help with that immediately and make sure that Deep Ellum beer can be on shelves where it's in demand, so Texas drinkers can get their hands on it."
Mergers and acquisitions have become increasingly commonplace in the beer business, as large producers have looked to expand their footprint in the craft market. Few deals have affected Dallas-Fort Worth, however.
Deep Ellum Brewing is the second local operation to be purchased by a larger company behind Revolver Brewing, which joined MillerCoors' portfolio in 2016.
In 2016, Canarchy-owned Oskar Blues opened a production facility in Austin where it now brews its signature recipes plus others from Cigar City Brewing, which is also under the conglomerate's umbrella. That facility could be tapped to make more of Deep Ellum Brewing's recipes, Melis said.
According to the Brewers Association, Deep Ellum Brewing Co. produced 45,264 barrels of beer in 2017. The company is currently building a new taproom and brewery in Fort Worth, which is expected to open this year. Reardon also recently launched Deep Ellum Distillery, which makes vodka. That business was not included in the deal, according to Brewbound.
It's unclear if joining Canarchy means Deep Ellum Brewing will be subject to what's colloquially known as the taproom bill. Passed in 2017, the law states breweries must contract with a distributor to sell beer in its taproom if it or its parent company makes more than the 225,000 barrel each year. Canarchy produced 359,000 last year, according to its website.
Oskar Blues is currently the only brewery in Texas affected by the bill, and Melis confirmed it does have an agreement with its distributor in Austin, Ben E. Keith.
"I believe Oskar Blues is currently complying with a poor interpretation of the bill," says Reardon, "and it's one I hope I'll get the opportunity to fight on my own."