Combining two of the hottest trending styles in beer for its largest brand family, Craft Brew Alliance is launching Kona’s new low-calorie blonde ale, Kahana Blonde, nationally yr-round, co announced. New brand has just 99 calories and 4.2% ABV, brewed with mango fruit for an added tropical twist. Recall, CBA made similar combo last yr with Omission Ultimate Light golden ale on much smaller scale. And on much larger scale, AB’s new Mich Ultra Pure Gold with 85 calories launches in late Feb at a 115 price index to Mich Ultra; and Constellation gearing up for national launch of Corona Premiere (90 calories) sold near craft level pricing. List of craft brewers lookin’ to capitalize on both blonde/golden ale and low-cal trends keeps growing too, but Kona is among the first to bring that combo to a national stage. Firestone 805 Blonde still nearly entirely sold in CA (clocks in at 141 calories). Shiner Blonde Light (99 calories) is a smaller brand and still mostly sold in TX, tho co’s lookin’ to feature it more going forward. Founders new Solid Gold Lager will be available nationwide. Separately, small FL brewer, 3 Daughters launched a Light India Pale Ale with 118 cals, only available in FL. And you get the picture. 

But gotta note, Kona’s lead brand Big Wave Golden Ale is similar style and has been principle growth driver for Kona in recent yrs. CBA will need to keep these brands differentiated for them to co-exist without much cannibalization. All in, Kona shipments grew 8% thru 3 qtrs, and if it kept up similar pace in Q4, it’ll shoot past 400K bbls mark in 2017.

Brown Dist will sell off another chunk of its formerly statewide FL craft distribution arm for big multiple, while retaining bulk of its craft biz.  Brown also AB distrib in West Palm Beach and Richmond, Va.  With this deal, onetime statewide distrib Brown will again dramatically reduce its footprint, selling off its entire portfolio on West Coast.  Recall, in 2016, Brown sold 600K cases or so, its entire Specialty North division, for near $50 mil.  This deal far smaller, but still $15-20 mil, CBN estimates.  And Brown will retain 1 mil cases of craft on East Coast. Deal set to close in late Feb.  (A version of this article appeared in sister pub INSIGHTS Express.)

This time, consolidation among craft brewers biggest driver. Funky Buddha sale to Constellation last summer spurred this deal (in large part).  Constellation very public about its desire to align Funky Buddha with its Gold Network of distribs.  And Brown does not sell Constellation.  Constellation reportedly pushed its Gold Network to cut deal with Brown, which insisted on including other brands on West Coast.  Buyers are a buncha AB distribs that also sell Constellation.  In East, Brown has much more robust portfolio, including Cigar City, Funky Buddha, Dogfish Head, Wynwood (big in Miami, minority owned by CBA), Ballast Point, Victory/ Southern Tier, Oskar Blues, Terrapin, Florida Keys.  Florida Dist (Reyes Bev Group) is Gold Network distrib there. Presumably, Brown and Reyes have talked, but under state law, Brown does not have to sell.  Tho over 20 suppliers involved in deal, well over half of volume Funky Buddha and Founders, sources say.

Windy City and Lakeshore Bev Exchange Surly for Brooklyn and More; Brooklyn Platform Aligned in Chi
Another craft swap took place in Chicagoland to start the year – Reyes Bev’s Windy City agreed to move rights for Surly to Hand Family’s Lakeshore Bev in exchange for Brooklyn, Weihenstephaner and some additional $$, sources told CBN.  A third distrib, Schamberger Bros, also involved.  Surly sold about 60K cases last yr in Chicago area, while Brooklyn sold 30K cases and Weihenstephaner sold 9K cases.  Gotta note, Surly has been one of the fastest growing craft brewers in the country in recent yrs, while Brooklyn brands declining in US mkts outside of NY. Part of the motivation for the move was for Brooklyn to align distrib network with its new partner, 21st Amendment. However both suppliers sought change, CBN understands.

As on-site sales at brewery taprooms become increasingly prevalent across the country, everyone’s attempting to quantify just how much on-premise biz has shifted to brewery taprooms, including largest suppliers. Direct sales grew about 500K bbls, 22% to 2.8 mil bbls, according to early Brewers Assn estimate, shared in MillerCoors’ latest Behind the Beer blog post.  Indeed, taproom biz still hummin’ while total beer industry shipments dipped nearly 1% in 2017, according to our early estimates (reported in latest issue of parent pub, Beer Marketer’s Insights).

Looking at total on-premise traffic (as a measure of visits to on-premise establishments), MillerCoors found that 9% of total on-premise traffic in US now goes thru brewery taprooms, and percentages are much higher in several major cities across the country, according to data thru Nov 2017 presented in MC’s blog. Remarkably, taprooms in Denver (35%) and San Diego (30%) draw over 30% of total on-prem traffic. Portland, OR taprooms (29%) just under that mark. Midwest cities like Indianapolis (25%) and Minneapolis (24%), as well as Seattle (22%), each over 20%. And Phoenix (19%), Boston (17%), Detroit (17%), Philly (14%), San Fran (13%), Chicago (12%), DC (12%), and Los Angeles (11%) all over-index vs natl average. Gotta note, a couple major cities noticeably under-index vs natl avg. Namely, NYC and Austin taprooms only draw 3% of total on-prem traffic. And Atlanta (8%), Dallas (8%), and Houston (6%) under-index as well.

Yet total on-premise traffic fell 3.6% in 2017, according to MC analysis. And in 5 major cities (Denver, San Diego, Seattle, Phoenix, Detroit) about 4 of 5 consumers “did not visit a bar following a trip to a tasting room,” sez MC. BA acknowledges these shifts but also poses that “some of that taproom volume is new demand and new occasions that wouldn’t have gone to a traditional bar,” BA’s chief economist Bart Watson told MC blog, citing previous consumer survey with Nielsen. But there’s no question, it’s increasingly difficult for traditional bars and restaurants to stabilize, let alone grow, with these kinds of traffic shifts.

In just a few short years, craft cans grew from just 15% to almost a third of Brewers Assn-defined craft volume in IRI off-premise scans, BA economist Bart Watson shows in latest post. His look at craft packages in broadest IRI channels shows continued shift to cans within craft. Cans were 30.9% of BA-defined craft cases yr-to-date thru Dec 24, Bart shared. So he estimates cans now about 18% of overall craft production, up about a pt over 2016.

That’s still much less than over 56 share of total beer shipments in cans in 2016, estimated by Beer Institute. But even total volume shifting more to cans, which have grown low single digits overall in 6 of last 8 yrs, while bottles declined. Looks like that dynamic being realized in craft too. By stacking up bottle and can volume by 4-wk periods from 2012-2017, Bart shows shift to cans within BA-defined craft set. A close look at his chart reveals that while craft volume up modestly last yr, bottle volumes down and cans got all the growth.

Bottles remain the more popular craft package type by far. And obviously some bottled craft packages grew last yr. But not enough to lift bottles collectively. In general, “smaller brewers tended to be more heavily in cans in 2016, grew faster in 2017, and shifted more heavily toward cans in 2017,” Bart summarizes stats based on brewery size. He groups brewers by volume in IRI-tracked scans in 2016. Once again, smallest brewers put up fastest growth last yr. BA-defined craft brewers selling over 1 mil cases in 2016 collectively down 1.7% in 2017 (for ease, call ’em “large craft”). Brewers between 100K and 1 mil CEs (“mid-size”) up 6%, while those selling 10K-100K (“small”) still up double digits, +17% last yr.

Look at those stats this way: in 2016, small craft brewers were half the size of mid-size craft (12.1 share of craft volume vs 24.5). But small craft brewers grew almost 3X as fast as mid-size craft brewers in 2017. Both groups saw over 8 share of their volume shift to cans, probably about 2 mil CEs of growth each, up around 40%. So cans now almost a third of cases sold by mid-size craft, but already over half of volume sold by small and very small craft brewers. On the other hand, cans still less than a quarter of scanned volume for large craft brewers by end of last yr. Cans up about 16% for those brewers, we estimate based on Bart’s stats. Bottles down mid-single digits for both large and mid-sized BA-defined craft brewers. Flattish for small craft brewers.

Very small craft brewers, those that sold less than 10K CEs in scans in 2016 plus brewers new to scans, up close to 60% last yr. Cans were already over 40 share of their volume in 2016. That jumped over 12 pts to close to 55 share last yr. So looks like volume sold in cans by these smallest brewers basically doubled last yr. Plenty more insights into shifting craft biz in Bart’s post, too.

Chaos theorists might get a kick out of craft in scans lately. That’s not to say that what goes on in the craft biz is random. But with so many players ratcheting up competition, so much geographic variation, such fickle consumers and other peculiarities, this wild and woolly world seems to only get wilder. Recently, change in the segment seems to be moving beyond dynamism and into volatility. Sometimes for the better, sometimes for the worse.

For a picture of this volatility, look no further than the recent performance of the top 30 craft brands in foodstores, as tracked by IRI. These 30 brands, over a third of IRI-defined craft $$ in the channel, near 40% of volume, were all over the map for 4-wks thru Dec 31. Short-term volume trends range from -36% to +135%, some the complete reverse of long-term trends. For instance, Leinenkugel Shandy Seasonal is down double digits, off 26% for 4 wks after a big summer and 9% volume gain YTD. Opposite story for Sam Adams Seasonal, which never recovered from a dismal start to 2017 and was still down 20+% YTD. It’s up 12% for 4 wks. On the other hand, Boston Lager got worse, down double-digits for 4 wks. Sierra Nevada Pale Ale pretty steady, off mid-single digits still. But Sierra’s Variety Pk got back to flat for 4 wks, even as it’s down double-digits YTD. Shock Top Belgian White got better too: volume up low single-digits in Dec. But its dollar sales are still down for the period, as average prices off $1.76/case to below $28.50.

Indeed, price has clearly become a lever that some companies are willing to pull in craft. Recall big drop in Goose Island IPA prices below $27/case we noted last month (see vol 8, #105). Well, for last 4 wks of the yr, Goose IPA prices up $7.55 to $33.30/case, implying some short-lived promotional prices in Nov 2017 and Dec 2016. That brand down 17% by $$ for 4 wks and -36% by volume, steepest drop of any top-30 brand. Still up mid-singles YTD. Biggest %-gain still belongs to Elysian Space Dust, cases up 135% for 4 wks, +165% YTD. Big short-term price change also shows up for Kona Big Wave Golden Ale, which remained very strong thru most of 2017, up mid-teens YTD in IRI foodstores. But its avg prices up over 5 bucks, back into $33-34/case range for 4 wks, while $$ sales dropped 18%, volume off 32%.

Still plenty of stability to be found in the segment, of course. Some strong or fast-growing brands barely slowed at all. But navigating thru these choppy waters seems to require both fast action and careful consideration.

Book now closed on 2017 in off-premise retail data. Craft kept up modest gain pace, volume +3.6% yr-to-date thru Dec 31 in IRI’s broadest multi-outlet + convenience data. That’s about a point slower than segment closed out 2016. Dollars up a little faster last yr, +5.6%. That’s still better than total beer biz, +1%. So craft gained another half-share of beer $$ to near 11.8, +0.3 share of volume to 7.5. December wasn’t best month for beer or craft segment. Craft $$ +4.3% for 4 wks to 12/31, volume up just 2%. Chart below shows craft volume in IRI MULC throughout 2017, including 4-wk case gains and trends. Note that craft grew faster than its 52-wk trends during just two 4-wk periods in 2017: thru Jul 16 and Sep 10. Volume grew less than 3% every other period. (Note a couple-point difference between IRI’s craft trends and Nielsen trends we reported last week.)

In far more developed foodstore channel, craft gains even slower, volume barely up for 4 wks. For full 2017, segment tacked on additional $100.4 mil in sales, +4.4% in this channel. Gained 0.8 share of $$ to 22.7. Still 2nd largest beer segment in foodstores by $$, largest by share-gain and absolute $$ growth. Also still way under-developed in convenience stores, where craft volume +7.8% for the yr, still less than 4 share. Dollars +9.6% to 6.5 share, smaller than FMBs. Even tho craft sales in c-stores a little over half the size of sales in foodstores, convenience channel a bigger piece of segment growth: $$ up $108.7 mil there.

Segment Slightly Stronger Without Big Brewer Superpremium Brands  As always, note that IRI includes Blue Moon, Leinenkugel and Shock Top in its craft segment stats above. MillerCoors’ Blue Moon and Leinie brand families had a pretty good year, +1.7% and +6.7% by $$, respectively. But AB’s Shock Top struggled, $$ -18% YTD. Volume trends 1-2 pts lower for each. Together, these 3 brand families 15-16 share of craft $$ in IRI, over 18 share of volume, and collectively down for the yr. In our volume data, we include these brands with the superpremium segment, not with craft. Pull them out and craft segment trends a little better: $$ +7% YTD to Dec 31, volume +5.2%. In fact, those brands finished the yr particularly slow. So picture of craft in Dec brightens without ’em: $$ +6%, cases +4% for 4 wks.

AB continues to broaden its reach in exploratory adjacent mkts surrounding beer thru its Zx Ventures arm. PicoBrew’s latest launch is a “first-of-its-kind” distilling device dubbed “PicoStill,” co announced. Interestingly, co seemingly focused most on potential commercial use by small craft distillers. “The PicoStill provides commercial distillers a versatile, safe and easy to use small batch distilling system,” said PicoBrew CEO Dr. Bill Mitchell. “Licensed and properly permitted craft distillers or individuals can also use the PicoStill to produce a wide range of alcohols.” PicoStill can also extract oils from hops, and “distill water, herbs, spices, grains and more.” Suggested retail price is $349. Then too, PicoBrew also launched Pico Model C with upgraded technology and new accessories, with access to over 100 “PicoPack” recipes from breweries around the world.

Arbor Brewing will jointly open new brewpub in Plymouth, MI with parent co Farm + Ferment’s pizza chain, Bigalora Wood Fired Cucina, reported MLive. Recall, Farm + Ferment, a small Michigan-based PE firm, acquired Arbor Brewing in May 2017. It also owns Bigalora as well as largest local hop supplier, Michigan Hop Alliance, and local wine biz. Indeed, combo of Arbor and Bigalora always seemed like natural progression under Farm + Ferment umbrella. This new location is first of “at least two” new locations Arbor plans to open in the next few yrs (see Vol 8, #43).

For its tenth year in biz, Lift Bridge Brewing has big plans. The co finished 2017 shipping about 20K bbls, founding co-owner Brad Glynn told Craft Brew News. About 12K bbls came from its hometown brewery in Stillwater, MN, just outside the Twin Cities on the border of Wisconsin. It brewed the rest under an alt-prop agreement at Cold Spring’s Third Street Brewhouse. Lift Bridge shipped a total of 12K bbls in 2016, according to Brewers Assn stats. It did start selling beer in parts of Wisc and North Dakota, but up to 85-90% of the co’s beer is still sold within 50 miles of Stillwater. Seeing plenty of run-room there and throughout rest of upper Midwest, Brad shared plans to spend $10 mil to build a new, larger brewery in Stillwater, providing enough capacity to reach 70K bbls across 12-15 states in another 10 yrs.

Obviously, Brad and co have plenty to do before then. They’re currently working thru final site selection, with hope to break ground this summer and opening the new brewery by summer or fall of 2019. Beyond additional production capacity and more efficient equipment, a new facility will allow Lift Bridge additional space for a bigger lab, of particular importance for Brad, as well as a bit larger taproom. Existing taproom space fairly “cozy,” Brad shared, since current brewery built before MN breweries allowed to sell beer directly to visitors. New space will give Lift Bridge more visibility in historic town of Stillwater, which gets fair amount of tourism from day- and weekend-visitors out of the Minneapolis/St Paul, Brad noted. It’ll also allow the co to grow from current 17 full-time employees (plus another 25 part time) to 35-40 employees.

Co will also boost distribution in upper Midwest over next year or so. Lift Bridge’s 2017 growth “split between local growth and the new piece” in western Wisc and eastern ND, which launched last yr, Brad told us. He expects co’s Wisc footprint to be filled out by end of Q1, adding distribution to the rest of ND, SD and IA by end of the yr.  He’s already eyeing about 27K bbls for 2018, he told the Duluth News Tribune, but is being “pretty conservative” about new market plans, he told us, and expecting existing markets to keep growing a bit too. He has seen some additional chain activity come to MN, traditionally an indie market. His ability to serve those accounts with flagship brands Farm Girl Saison and Hop Dish IPA has “certainly helped us in the off-premise.” Those brands performing well in terms of velocity, Brad reported, as they’re built for having more than one. That’s also led to some success with larger venues and sports facilities. Craft has a lot more room to grow in the MN and the upper Midwest in general, Brad thinks. He’s “encouraged by the smaller cities” and rural communities starting to come around, particularly college towns. Look at “what the new bars look like and what the taps look like,” and the focus is on craft. By providing “very quality beer” and remaining “good stewards of our community,” Brad sees oppys for Lift Bridge for yrs to come.

After searching across the globe for last 12 mos, Dogfish Head hired George Pastrana as new President/COO of the company “effective immediately,” co announced. George will report directly to CEO and co-founder Sam Calagione; Mariah Calagione maintains position as “Executive VP and co-founder.” Previously, George spent 6 yrs as CMO/VP of mktg and innovation for ACH Food Companies, which manufactures and sells “many of the top-selling cooking and baking ingredients in North America,” according to co’s website. This marks another step in Dogfish Head’s evolution among leadership team. Recall, Dogfish’s previous CEO, Nick Benz, left at the end of 2016, and Sam stepped into CEO role. Dogfish also hired former Constellation exec, Todd Bollig as sales vp in 2015 and tripled its salesforce in 2016. By end of 2017, co grew more than 20% to over 280K bbls with 300+ employees companywide. Dogfish continues to expand distribution into new states, most recently adding its 38th state (plus D.C.), Louisiana.