Pa. deal reduces chances for brewery in Freetown

After spending $4 million on studies to decide whether to build a brewery at a cost of about $200 million in Freetown, Mass., The Boston Beer Co., brewer of Samuel Adams beer, instead has opted to enter a purchase-and-sale agreement for a brewery in Pennsylvania.
Buying the Breinigsville, Penn., brewery – which is about 60 miles outside Philadelphia – would allow the company to increase its brewing capacity to meet a steadily growing demand. In 2006, it sold 1.6 million barrels of Sam Adams beer, a 17-percent increase over 2005. The new brewery, along with the current Boston and Cincinnati breweries, might allow the company to double that amount, said spokesman Michelle Sullivan.
The Aug. 1 agreement with Diageo North America Inc., owner of the Pennsylvania brewery, involves buying the property for $55 million, most likely in late spring 2008, subject to the satisfactory completion of due diligence by Boston Beer.
The company would then discontinue its exploration of a possible Freetown brewery. But Sullivan said the deal is not yet definite, and the Freetown project could still happen.
“This is really for long-term growth,” she said. “Whether we build or buy, we won’t be brewing beer there until probably late 2008.”
In a statement, Boston Beer President and CEO Martin Roper said the company’s decision was made because of rising costs of brewing equipment, copper and steel.
“Comparing the projected construction costs of a new brewery against the price of buying and renovating the Pennsylvania brewery leads us to believe that this is the better long-term strategic decision for the company,” said Roper.
The agreement with Diageo stipulates that the brewery would continue brewing Diageo products while it is renovated for the Samuel Adams four-vessel brewing process. And when the renovations are completed, Boston Beer would keep 194 jobs at the brewery.
Before the agreement with Diageo, the 250,000-square-foot brewery planned in Freetown had garnered support from state and local government, as well as Freetown taxpayers, who approved giving the brewery a 33-percent tax break during its 20-year financing term.
Also, the Mass. Department of Housing and Economic Development had approved a $2.5 million grant for infrastructure – sewers, waterlines and road improvements – in Freetown. The town and the company had jointly applied for the reimbursement grant, which was awarded to the town on June 28.
But the town won’t be eligible if the 140 expected jobs aren’t created, even though the money was allocated to the municipality, not to Boston Beer proper. The $2.5 million was part of the $100 million Massachusetts Opportunity Relocation and Expansion Jobs Capital program, which aims to bring new jobs to the state.
The grant was part of $76.2 million in funding awarded on June 28 to create an estimated 8,200 jobs; a total of 22 projects received support. •