The Alberta beer industry was rocked for the second time in a week the other day when Alley Kat Brewing announced it was being purchased by a pair of St. Albert-based entrepreneurs. Alley Kat is a mainstay of the Alberta craft beer scene and so its sale understandably sends reverberations across the industry. In this post I hope to unpack some of the consequences of this recent deal.

The timing of the deal is not unexpected. The Herbsts have been talking for a couple of years about their desire to retire and wanting to find a pathway toward that. I would love to say that they turned down offers from the big boys, but I don’t think they ever came knocking. But that doesn’t diminish the Herbsts’ expressed desire to keep the brewery independent and local.

In the days immediately after the sale most seem to be pleased that the Herbsts passed on their company to another local operation, keeping it both independent and locally owned. That is, undoubtedly, a good thing. But if we stopped there I think we would be missing the real significance of this deal.

So what does it really mean?

First, and likely most importantly, it means the loss of one of the industry’s biggest and most respected voices. Neil Herbst* has been a huge advocate for the industry for more than two decades. He was a key part of creating the Alberta Small Brewers Association, of getting the provincial government to pay attention to small brewers and to, generally, raising the profile of the industry.

Also, he was a mentor for most of the breweries who have opened in the past decade or so – not to mention the many former Alley Kat employees who have gone on to anchor other quality craft brewery operations. He was universally respected in the community.

This is not his eulogy, so I won’t go on. The point is that Neil Herbst was and is a huge piece of what makes the Alberta craft beer scene what it is today. His long history and his pragmatic perspective added incalculably to the industry. And replacing that will not be easy.

That is the most obvious impact of the sale. But there are others.

For the brewery itself, this is a potentially dangerous time. The short term is likely not an issue, as Herbst will be around for the transition and the staff, for now, remain in place. However, I see two risks for Alley Kat 2.0. The first is that even with a commitment to maintaining the product line and quality, the new owners will have to convince longtime Alley Kat customers that they can still trust the brand. There will be an inevitable period of uncertainty they will need to navigate.

Second, the new owners will want to chart a different course at some point. I have not idea what that will be, but it is inevitable. What decisions they make in years 2 through 5 will be crucial for the future sustainability of the brewery. Not the least of their decisions is whether to stick with the Herbsts’ slow, steady, sustainable growth model or try to expand more quickly, as many try to do.

I have not yet met the new owners, but hope to arrange a meeting in the near future. So for now I won’t try to make any predictions about what their plans are.

For the industry at large, I think the sale means two things. First, it signals we are in a period of transition. The industry is both maturing, and becoming more competitive. The era of brew-it-and-they-will-come is coming to an end. Breweries and wannabe breweries need to up their business game. This is no longer an industry of former homebrewers doing what they love (I mean, there is still room for that, but the industry is more than that now). You need business chops. This deal exemplifies that (on both ends of the deal).

Second, as much as Alley Kat has long been an example of how to start up and operate a small brewery in a hostile environment, they are now an example of how to transition. They, somehow, have found a third (fourth?) way between buy-out by one of the big boys, absorption by another larger craft brewery, or slow slide into irrelevance. It is possible they are uniquely placed to make this transition, but personally I don’t think so. I think this sale shows that a shift to new, independent ownership is viable for a number of breweries.

There are more chapters to be written in the book of Alley Kat, they will just have new authors. We will all be watching with interest at what unfolds in those chapters.

Myself, I will happily keep ordering pints of Full Moon when the opportunity and mood arises. But, like many of you, I will be sipping with a bit more attention, watching for any shifts, both in flavour and metaphorically.

*Note: I have known Neil Herbst for many years, predating my work writing about beer, and I consider him a good friend. I have not communicated with Neil about this article and the opinions expressed here are mine alone based upon my years of following the craft beer industry on the prairies.