An Alaska Native village corporation from the Kodiak Island region has acquired the state’s largest retailer of liquor, wine and beer.
Afognak Native Corp. purchased the Brown Jug chain from the Canadian company Alcanna, based in Edmonton, Alberta, the village corporation said late Monday.
The purchase, completed Monday, includes the chain’s 21 stores in the Anchorage area, Wasilla and Fairbanks, plus a warehouse, Afognak said in a statement. Brown Jug employs 218 Alaskans and generates more than $80 million in yearly revenues.
Afognak said the acquisition will improve profits and provide job opportunities for shareholders, among other benefits. It will allow the company to sharply increase its operational revenue, and reduce its reliance on government contracting.
Brown Jug was founded in Alaska more than 80 years ago. An Alaskan family that owned and operated it for decades sold it in 2008 to a predecessor of Alcanna.
“Brown Jug was born and raised in Alaska and remains one of the state’s most well-known brands,” said Greg Hambright, president of Afognak. “The company has built and maintained a solid reputation by providing quality customer service, great selection and competitive prices while also leading the industry in responsible retail and ensuring social responsibility and community involvement and engagement.”
Alaska experiences higher rates of alcohol-related deaths than most other states, with Alaska Natives in particular experiencing outsized rates. Alaska Natives suffered almost half the state’s 962 such deaths between 2010 and 2016, though they comprised 15% of the population, according to a report from the Alaska Department of Health and Social Services in 2018.
Brown Jug financially backed an unsuccessful alcohol tax proposal in Anchorage in 2019 and a successful one in 2020. That 5% tax will fund substance misuse treatment in Anchorage, as well as sexual assault, domestic violence and child abuse prevention efforts. Money will also go to fund more first responders and homeless shelter beds.
Afognak will use the acquisition to be a responsible leader in the community for retail sales, the statement said.
The village corporation plans to prioritize employee training to comply with strict regulations in the liquor sales industry, said Alisha Drabek, executive vice president of Afognak.
“Our focus is on promoting safe use and compliance,” Drabek said in a phone call. “This is an opportunity for us to take a leadership role in the state on that.”
She added in an email: “We feel this purchase provides Afognak with a unique opportunity to promote the importance of self-control, moderation and safe drinking practices for everyone, which include no motorized vehicle operation while drinking, and no drinking by minors or pregnant women. All Brown Jug retail stores follow strict alcohol board compliance, which seek to eliminate indulging intoxicated patrons.”
The Native village corporation was created in 1977 with the merger of two village corporations from the Kodiak region. Afognak and its subsidiaries employ more than 4,000 employees.
Alcanna said in an earnings statement on Monday that the sale will generate about $21 million in total cash proceeds.
The Brown Jug stores will require large investments to remain strong, and Alcanna would prefer to focus its interests in Canada, said James Burns, Alcanna chief executive.
“Brown Jug has been a steady business for Alcanna for many years but we believe it requires significant capital expenditures to maintain its market position,” Burns said. “These capital investments could exceed the cash the Alaska operations generates over the next several years.”
Burns said Afognak can improve the chain.
“It was important to Alcanna that if we sold our Alaska business, it was to a responsible buyer with the financial resources and corporate aspirations to take the business to the next level," he said. “Afognak met those criteria extremely well.”
Anchorage Daily News reporter Aubrey Wieber contributed.
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