Related Party Transactions

As of September 30, 2019 and December 31, 2018, Anheuser-Busch, LLC ("A-B") owned approximately 31.2% and 31.3%, respectively, of our outstanding common stock.

Transactions with A-B, Ambev and Anheuser-Busch Worldwide Investments, LLC (“ABWI”)

In December 2015, we partnered with Ambev, the Brazilian subsidiary of Anheuser-Busch InBev SA, to distribute Kona beers into Brazil. In August 2016, we also entered into an International Distribution Agreement with ABWI, an affiliate of A-B, pursuant to which ABWI distributes our malt beverage products in jurisdictions outside the United States, subject to the terms and conditions of our prior agreement with our other international distributor, CraftCan Travel LLC, and certain other limitations.

Contract Brewing Arrangement with Anheuser-Busch Companies, LLC ("ABC")

On January 30, 2018, we entered into a Contract Brewing Agreement (the “Brewing Agreement”) with ABC, an affiliate of A-B, pursuant to which we brew, package, and palletize certain malt beverage products of A-B's craft breweries at our Portland, Oregon, and Portsmouth, New Hampshire, breweries as selected by ABC. Under the terms of the Brewing Agreement, ABC pays us a per barrel fee that varies based on the annual volume of the specified product brewed by us, plus (a) our actual incremental costs of brewing the product and (b) certain capital costs and costs of graphics and labeling that we incur in connection with the brewed products.

The Brewing Agreement, as extended, will expire on December 31, 2019, unless the arrangement is extended at the mutual agreement of the parties. The Brewing Agreement contains specified termination rights, including, among other things, the right of either party to terminate the Brewing Agreement if (i) the other party fails to perform any material obligation under the Brewing Agreement or any other agreement between the parties, subject to certain cure rights, or (ii) the Master Distributor Agreement is terminated.

Transactions with A-B, Ambev, ABWI and ABC consisted of the following (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Gross sales to A-B and Ambev	$	38,740	$	41,737	$	129,779	$	129,588
International distribution fee earned from ABWI	812		850		2,436		2,550
International distribution fee from ABWI, recorded in Deferred revenue, net	19,188		650		17,564		1,950
Contract brewing fee earned from ABC	139		821		781		1,679
Margin fee paid to A-B, classified as a reduction of Sales	574		601		1,839		1,806
Inventory management and other fees paid to A-B, classified in Cost of sales	98		97		295		287
Media and other reimbursement from A-B, classified as a reduction of Selling, general and administrative expenses	—		192		—		192

Amounts due to or from A-B and ABWI were as follows (in thousands):



	September 30, 2019			December 31, 2018
Amounts due from A-B related to beer sales pursuant to the A-B distributor agreement	$	12,631		$	17,946
Amounts due from ABWI and A-B related to international distribution fee and media reimbursement	—			6,000
Refundable deposits due to A-B	(3,712		)	(2,840		)
Amounts due to A-B for services rendered	(6,725		)	(5,140		)
Net amount due from A-B and ABWI	$	2,194		$	15,966

Transactions with Wynwood Brewing Co. ("Wynwood")

As of September 30, 2019 and December 31, 2018, Wynwood was a wholly owned subsidiary. During the nine-month period ended September 30, 2018, we owned a 24.5% interest in Wynwood. The carrying value of our investment was $2.0 million as of September 30, 2018.

Transactions with Wynwood prior to its becoming a wholly owned subsidiary consisted of the following (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Master distributor fee earned	$	—	$	3	$	—	$	22
Share of loss, classified as a component of Other income (expense), net	—		22		—		44
Refund of investment, classified as a reduction in the carrying value of the equity method investment	—		—		—		23

Related Party Operating Leases

We lease our headquarters office space, banquet space and storage facilities located in Portland, land and certain equipment from two limited liability companies, both of whose members include our former Board Chair, who is also a significant shareholder, and his brother, who continues to be employed by us. This lease is included in the ROU asset and lease liabilities recorded on our Consolidated Balance Sheets. Lease payments to these lessors were as follows (in thousands):



Three Months Ended September 30,				Nine Months Ended September 30,
2019		2018		2019		2018
$	41	$	41	$	123	$	123

We hold lease and sublease obligations for certain office space and the land underlying the brewery and pub location in Kona, Hawaii, with a company whose owners have a charitable foundation that owns more than 5% of our common stock. The sublease contracts expire on various dates through 2020, with an extension at our option for two five-year periods. We exercised our option to extend these leases commencing in September 2020. These leases are included in the ROU asset and lease liabilities recorded on our Consolidated Balance Sheets. Lease payments to this lessor were as follows (in thousands):



Three Months Ended September 30,				Nine Months Ended September 30,
2019		2018		2019		2018
$	172	$	145	$	511	$	435