Redhook Ale Brewery

Abstract

In 1995, Paul Shipman, CEO of Redhook Ale Brewery, and his management team prepared to enter uncharted territory by taking their craft-brewing operation public in the United States. Although there already were massive large-batch breweries that were profitable, publicly traded firms, Redhook was different: it embodied the ethos and grassroots beginnings of the microbrew movement. Still, Shipman wondered about the potential of the craft-brewing industry segment. Excerpt UVA-S-0230 Rev. May 26, 2016 Redhook Ale Brewery Craft Brewing Goes Public In August 1995, Paul Shipman, CEO of Redhook Ale Brewery, and his management team prepared to enter uncharted territory. A craft brewing operation had never before been taken public in the United States. Sure, there were massive large-batch breweries such as Anheuser-Busch Inbev and Miller Brewing Company that were profitable, publicly traded firms. But Redhook was different: it embodied the ethos and grassroots beginnings of the microbrew movement, and Shipman was confident that widespread market demand for craft beer was set to explode. Shipman and the team had steadily developed their premium-quality handmade ales for nearly 15 years in Seattle, Washington, and their loyal customer base was strong. In the past year alone, Redhook had forged an alliance with Starbucks, to co-brand a coffee-flavored brew, and another with Anheuser-Busch, which had purchased a capped 25% interest in Redhook in exchange for access to its national distribution networks and accounting systems. Shipman had overseen significant capacity increases and plans for another brewery in Portsmouth, New Hampshire. He had worked hard to position Redhook favorably for expansion, and the public offering would provide the necessary capital. Still, he wondered if the microbrew feel of Redhook would translate to the commercialization and growth pressures of the mainstream open market. Producing and distributing microbrews on a large scale was a new concept, and like any new concept, it would have to be sold. Shipman hoped to sell craft beer—and lots of it—in the heartland of America. . . .