Devils Backbone discusses sale plans

The largest craft brewer in Virginia is about to get bigger.

Rockbridge County-based Devils Backbone Brewing Co. announced in April it has agreed to be bought by St. Louis-based Anheuser-Busch, the maker of Budweiser and Bud Light.

Anheuser-Busch is the largest brewer in the U.S. in terms of overall sales, according to the latest available data from the Brewers Association. Financial terms of the deal, expected to close in the second quarter, were not disclosed.

Devils Backbone will join Anheuser-Busch’s “high-end” line of breweries, which include brands such as Stella Artois, Shock Top and Goose Island.

The sale comes at a time when Devils Backbone already was growing at a fast clip. Since its founding eight years ago, the company has grown into the largest craft brewer in Virginia, according to the Brewers Association. In 2015, it produced 62,500 barrels of beer.

Last year, however, the company realized that it would be unable to continue growing at its current pace without outside investment. It started exploring a sale, and Anheuser-Busch was one of approximately eight interested buyers.

“It turned out they did not offer us as much money as one of the other guys did,” says Steve Crandall, Devils Backbone’s CEO. “What they did offer us was a commitment to build out our dream … build out our brewery and to keep our people.”

Devils Backbone now has 140 employees and expects to add up to 85 more in the next five years.

Production should increase, too. The company produced 62,500 barrels of beer last year and expects to ramp up production to 250,000 barrels in the next few years. Devils Backbone now is distributed in the U.S. in Virginia, Maryland, North Carolina, Tennessee and Washington D.C.

During the next two years, Anheuser-Busch is expected to invest more than $25 million in Devils Backbone’s facilities, which include a small brewpub in Nelson County and a 35,000-square-foot brewery in Lexington. The brewery would expand by 50,000 square feet under the Anheuser-Busch deal.

“We are really proud of the opportunity that this is going to give us to take Virginia beers all across the country and Europe,” Crandall says. 

Devils Backbone’s ambitious expansion plans show how quickly it has grown in the past eight years.

Crandall and his wife, Heidi, decided to open a brewery after a trip to Northern Italy in 1991, where they had their first taste of German-style beer.

The company expected to produce 10,000 barrels of beer in its first 10 years, but had churned out 45,000 barrels by its third year. Devils Backbone’s beers include Eight Point IPA, Schwartz Bier and Vienna Lager, which make up a majority of its sales.

While Devils Backbone and other craft brewers have seen a tremendous amount of growth lately, the overall U.S. beer sales have been virtually flat. According to the Brewers Association, total sales dipped 0.2 percent last year while craft beer sales increased 12.8 percent.

News of the acquisition hasn’t been met with applause by everyone.  Crandall acknowledges concerns from craft-beer aficionados. Some worry that Devils Backbone’s beers will be watered down or their ingredients will change under the new ownership.

His answer? A resounding, “Heck, no.”

Crandall says Devils Backbone is still 100 percent behind Virginia’s craft beer movement. That commitment includes hosting the Virginia Craft Brewers Fest in Nelson County on Aug. 20. 

“The alignment with Anheuser-Busch is basically like us changing our banks,” he says. “We were with a great bank, SunTrust, but they couldn’t fund our growth … Anheuser-Busch stepped in, and they’re going to be able to fund our growth and also give us a lot of expertise at the same time.”