Beer Marketer's Insights - BMI Archives Entry

BMI Archives Entry

02/15/2017

James Beard Semifinalists Include Familiar Craft Names: Sam, Vinnie, Rob & Jeppe

List of 20 semifinalists for James Beard Award for Outstanding Wine, Beer, or Spirits Professional includes 15 back again for at least 2d yr, 4 of 'em from small brewers. Dogfish Head founder Sam Calagione nominated again, now for 9th yr in a row. Allagash's Rob Tod also got nod, for 4th yr running. Vinnie Cilurzo of Russian River and Jeppe Jarnit-Bjergso of Evil Twin both semifinalists, like last yr. While not from a small brewer, Wayne Carpenter of Washington's Skagit Valley Malting also nominated for 2d yr in a row. No other beer-focused folks this time around. Other nominees include 6 folks from distilleries plus mixologist behind Crafthouse pre-packaged cocktails, 5 from wineries/vineyards, a cider maker, a sake maker and a glassware professional.

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02/15/2017

New Outposts: Hardywood Park Opening Charlottesville Location; Bars to Add Brewing to Legacies

Part of broader expansions plans, Virginia's Hardywood Park will open a Charlottesville brewery and taproom this weekend, about an hour from current home in Richmond. New 3,600 sq-ft space will be equipped with 3.5-bbl system, planned as a pilot system to test new recipes, according to The Daily Progress. Early on it'll do a slew of collab brews with local Charlottesville breweries. The co also has larger production facility in the works in Goochland, between the two VA cities.

Separately, (and seemingly coincidentally), two Legacy-laced retailers plan to add brewhouses to their projects. Atlanta-based STATS sports bar, owned by Legacy Ventures group, will convert existing Coke Zero event space into small brewery to serve 6 in-house beers, per Atlanta Journal Constitution. Large bar located downtown in middle of tons of attractions already has table-top taps serving beer, "and with the ever growing popularity in the craft beer scene, especially in Atlanta, it seems like a great opportunity and addition to our restaurant," group's COO for restaurants, said. Brewery expected to be up and running by July.

At same time, out in Plano, TX, planned Legacy Hall development will also be home to new Unlawful Assembly Brewing. The 55K sq-ft Legacy Hall, expected to open this fall as home to over 20 "artisanal food stalls," will also house brand new brewery on top floor, above open music venue and beer garden. Project is a first for The Food Hall Company, subsidiary of Front Burner Restaurants, a group that operates 90+ restaurants, including Twin Peaks chain (tagline: "Eats. Drinks. Scenic Views"). Recall, Twin Peaks added brewing capabilities to one of its Texas restaurants in 2014 and the next yr launched cans of four beers (Dirty Blonde, Knotty Brunette, Gold Digger and Dropdead Redhead, all featuring pin-up style images of women, each ironically more clothed than "playful Twin Peaks Girls" at restaurant locations). In fact, same brewmaster at helm of Unlawful Assembly, which "will brew, distribute and promote the highest quality, tastiest and most creative craft beers found anywhere," touted Tim Timbs, senior veep "of B.S. (Brewery Stuff)," according to release. That's same veep "thrilled" to intro those Twin Peaks "man cans" a couple years ago, noting that "for 10 years, Twin Peaks has upheld its promise to provide the coldest beer in town, always served at a freezing 29-degrees." The co has almost 80 Twin Peaks outlets in 25 states and sees room for "several" Food Hall concepts.

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02/15/2017

Saint Archer Founder Leaves to Pursue Coconut Water Venture; Whitley to Take Interim Management Role

Just under a year and a half since deal was announced, Saint Archer co-founder Josh Landan "has decided to move on" in order to "spend more time on his latest venture, Villager Goods, and their line of organic coconut water," MC's Tenth & Blake prexy Scott Whitley wrote in memo shared with CBN. Josh's last day was Feb 15. "We have already begun a search for Josh's successor," and "in the meantime, I am going to take a more active management role in Saint Archer and will provide whatever support the team needs," said Scott. "I'm confident the team won't miss a beat under the direction of Brad Nadal, VP of sales and marketing; Kyle Farson, director of finance; Kent Kreutzer, senior director of operations," and rest of the team.

In its first full year under MC and Tenth & Blake's wing, Saint Archer mainly kept to its Calif corners, tho entered parts of NV and announced plans to rollout AZ, WA and OR next as of late Sep 2016 (see CBN Vol 7, #80). Volume sales grew 73.5% to just under 100K cases tracked in IRI multi-outlet + convenience data last yr. And keep in mind, its IRI volume accounted for less than 12% of total volume in 2015 - that % certainly went up in 2016 and likely to continue that trajectory near term with MC at the helm.

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02/17/2017

BrewDog Goes with Superior for Majority of OH, Cavalier for Remainder; Hints at "Killer Deal" in UK

With BrewDog's Columbus brewery nearing completion, co officially announced it'll partner with Superior Bev Group "for the majority of Ohio's counties, with Cavalier covering the remainder." Recall, BrewDog plans to launch 7 states within first year, including OH, IL, NY, IN, KY, NJ and MI, co-founder James Watt told CBN in Dec (see Vol 7, #101). Its DogTap brewpub in Columbus officially opens on Feb 20 "with beers flown in from Ellon, but when our Columbus brewery starts releasing its first beers later this year, we'll be giving Ohio a huge focus for our initial few months," sez blog post. "We have some insane plans for growth in Ohio, and will be scaling rapidly in our home state to start with. We're focusing our efforts on the incredible response from local counties before spreading our wings beyond state lines." Initial plans called for aggressive 85K bbls in its first 12 mos once Columbus facility's up and running (see Vol 7, #21). But that projection was made in Mar 2016, before craft slowdown in US was fully apparent.

"New Deal Confirmed" to Bring "Loads of New Places to Buy" BrewDog Brews in UK Meanwhile, earlier today co-founder James Watt tweeted about a "killer deal for BrewDog" that was "confirmed" around 10am EST. James was intentionally vague, offering that deal will bring "loads of new places to buy Punk IPA, Elvis Juice and Dead Pony Club coming soon." It's unclear what this "deal" entails, but keep in mind UK mkt is set up very differently than US, since many major pubs and retail outlets are owned by large brewers and retailers alike (in fact, Heineken announced deal in Dec to buy another 1900 pubs across the UK from Punch Taverns, still under approval process). Yet BrewDog founders have consistently championed independence to this point, even finding fault with Brooklyn Brewery's 24.5% stake sold to Kirin, for example. Stay tuned.

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02/17/2017

Shock Top Digital Campaign Embraces "Transitions" Into Adulthood; Revamped Citrus-Focused Portfolio

Shock Top is the other "big bet" among craft brands, said Andy Goeler at SAMCOM. Embracing role as a "gateway" into craft segment, Shock Top plans to highlight "new [consumer] insight" with digital campaign focused on "transitions into adulthood." New creative focuses on "firsts" for those transitioning into adulthood, such as first job, apartment, "real thing" purchased, car, and more. Shock Top has also entirely revamped portfolio to focus on flagship Belgian White along with new extension brands featuring "citrus" flavors, including new Ruby Fresh Grapefruit Wheat this spring, followed by Lemon Shandy in summer and new Sunset Orange blood orange ale to close out year. It'll also add "citrus" variety pk that'll include 3 new brands only available in pack: Inner Beauty, Citrus Pearl, and Holy Citrus. AB hopes to keep Shock Top flat this year; perhaps a tall order considering Shock Top brand family started year down 20+% in Nielsen thru Feb 4. But keep in mind, that's before several new brands launch in Mar after gutting prior extensions in the portfolio, brand vp Jake Kirsch told CBN separately. Shock Top is still a "significantly sized brand" so "let's not let this thing drop off the shelf," said Andy.

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02/17/2017

Shock Top Digital Campaign Embraces "Transitions" Into Adulthood; Revamped Citrus-Focused Portfolio

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02/17/2017

After Huge Expansion of Hop Acreage, Time to "Tap the Brakes," BA Tells Growers, Brewers

Over last few years, growers responded to calls for more hops by expanding total acreage significantly, but the time for expansion may be over. "We asked the growers to push the gas pedal pretty hard," Chris Swersey, supply chain specialist for Brewers Assn, said during Power Hour presentation yesterday, reiterating comments he made during annual American Hop Convention in Bend, OR late last month. "The hop industry responded incredibly rapidly," he explained, as total US acreage expanded by almost 80% since 2012, largely to serve hop-loving craft brewers. But acreage maybe expanded too far and craft growth slowed. So now it's time to "take your foot off the gas a little bit. Maybe tap the brakes," Chris told growers last month and shared with BA members yesterday. Since speech for the growers, some "are re-thinking some of their plans" to expand acreage further, he's heard. However, "we're not done paying for" expanded acreage and "all that infrastructure" needed for it, he noted in Q&A yesterday. So there's still the potential for 5-6,000 surplus acres to be in production in 2017, he said. Based on even a slight decrease in average yield, we're talkin' 9-10 mil lbs of hops. That's the equivalent of 10-12% of last year's 87-mil-lb harvest.

Total US Acreage Up 78% Since 2012, Including Massive Shift to 80+% Aroma During the go-go years of fast-paced craft growth, Chris repeatedly urged growers to add more acreage, particularly for aroma varieties favored by small brewers and crucial to fast-growing hop-heavy styles like IPA. In 2016 alone, acreage harvested in just the 3 core PacNW growing states of Washington, Oregon and Idaho increased by 16.6% to almost 51K acres, according to the Hop Growers of America, based on USDA stats. Add over 2,000 more acres that HGA counted from small farms across the country and total US acreage increased by about 18%. Since a 2012 low, total acreage expanded by 78%.

During the same period, share of acreage devoted to aroma varieties skyrocketed. The historical average was in the 20-25% range up until about 2010. It jumped to over 40% in 2012, 63% in 2013 and climbed just over 83% in 2016, Chris showed. That "may tick down slightly" this yr, he said this week, but "the industry is really settling into a new normal," with a majority of US production in aroma hops. Those varieties yield fewer pounds per acre than alpha varieties (used generally for bittering), so average yield per acre of the American harvest dropped during that period. It was still near 1,900 lbs per acre in 2014. But due to variety shift and weather impacts, that fell to just over 1,700 last yr, according to USDA stats. That still led to a 10-11% jump in total US hop production in both 2015 and 2016. And considering higher average prices for aroma hops, USDA pegged the value of last year's crop at almost half a billion dollars, a 44% surge over the prior year's crop.

Hop Usage Headed Upward Too, But Slower Craft Growth "Caught Growers & Dealers Off Guard" Growth of IPAs and other hop-forward styles helped push up demand for those aroma varieties and more hops generally over last few years. "Hopping rates went up a lot," Chris told growers, sharing that hop usage ticked up another 8% to about 1.5 lbs per bbl for brewing year 2015, according to BA member survey. That's up over 25% since 2010. And Chris estimates it grew another 5% or so to 1.6 lbs per bbl last yr. Some small brewers tout new IPAs packing in 2-3X that, or even more.

But after years of double-digit growth, craft slowed to "a bit under 10%" last yr, Chris said yesterday. He and BA colleague Bart Watson put early estimates of BA craft growth in 7-8% range during hop growers conference (which tracks our 7% early estimate, see Jan 27 issue). And unlike last time craft volume growth dipped into that range, there's "something really different that's slowing the growth rate right now," he explained to growers. That slowdown was already clear to some brewers last fall, who had "difficult conversations with dealers when they went to Yakima for selection." But folks "need to have a lot more of those tough conversations," he insisted. Indeed. News of slower craft growth "really caught growers and dealers off guard," Chris noted this week.

Factoring in 5% Craft Growth in 2017, Still Thousands of Surplus Acres in the Ground The combo of craft growth and export growth (as hop-forward American styles become more popular abroad too) warranted 3,200 new acres in 2016, Chris shared with growers and brewers. But recall, hop acreage expanded by double-digits, over 7,200 acres last year. That implies over 4,000 acres above expected demand last year, Chris showed. Right now, BA forecasts just 5% craft volume growth in 2017. Combine that with another year of strong export growth and expected demand still falls just short of those 4,000+ surplus acres from last yr. So "what we need is really zero to slightly below zero total new acres," Chris said this week. "Stand pat," he told growers.

Instead, conversations suggest growers could add another 5,000+ acres in 2017, according to Chris. That would put surplus acreage in the neighborhood of 5,600 acres. At an average of 1,700 lbs per acre, that's over 9.5 mil lbs of hops. Of course, variety mix is crucial and there will likely still be a "mismatch in varieties," Chris said, with supply for some still likely falling short of demand, particularly for super-hot proprietary varieties. And yes, exports "are becoming increasingly important," Chris said in response to a question this week. But "I don't think we can export our way out of a multi-million pound hop surplus," he said. So these signs, as well as changing trends in hop stocks, represent "some storm clouds on the horizon," for Chris, that "start to look like a little rain on the parade."

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02/17/2017

BA Pairs High End Beer & Food with "Independence" Focus for NYC Media Dinner

"The theme for tonight's dinner is independence," Brewers Assn CEO/prexy Bob Pease said kicking off dinner for journalists and media folks in NYC last night. "There are people out there that will tell you that independence doesn't matter," he said. "It does." It was more than just theme, though. He and other speakers, including current BA board chairman and Allagash founder Rob Tod, repeatedly (and specifically) rebutted claims to the contrary from AB's SAMCOM meeting earlier this wk. Even tho craft surpassed 24 mil bbls, Rob noted that "you could brew all of that volume in 2 or 3 breweries." But instead, it comes from over 5,000, making craft "very, very inefficient" and therefore "extremely impactful" for a much larger number of communities, providing "tens of thousands of jobs." That's actually up to over 121K jobs directly at BA-defined craft breweries and brewpubs, BA's craft beer program director Julia Herz chimed in. So again, particularly for those communities, "independence matters a lot," Rob reiterated. Indeed, following busy period of craft acquisitions, "the independence pillar of [BA's craft] definition has been rising in importance," he said later.

Attraction of new craft consumers to small brewery taprooms - a point Bob's made in past in support of taprooms and made again last night - highlighted by comments of a couple brewers at event. When Lynne Weaver set out to open Three Weavers Brewing in LA area in 2012/2013, she was initially "scared to death to even consider Inglewood," a community that's 51% Latino and 41% African American, she said. But then she remembered that community-building and providing a "gathering place" was impetus to open the biz. So Three Weavers has been open since 2013, now occupies 29K sq-ft, employs 16 and sold 7,000 bbls last yr, targeting 12K in 2017, according to company fact-sheet. Lynne's been "excited to see the diversity" in both Three Weavers' customer base and employee applicant pool. "It's not just about the beer. It's about the community," she underscored.

Indeed, similar story up in the Bronx, NY, where Gun Hill Brewing opened up in 2014, co-founder Dave Lopez explained. When the company first opened in a largely Jamaican neighborhood, folks came in asking for "Guinness" or "Red Stripe." When those folks insisted that Gun Hill did make those beers, brewers eventually realized that it was really just code for 'dark beer' or 'light beer.' Now the "majority of our customers are people we never thought would come in," Dave said, calling for Gun Hill's own beers by name. Currently the co's doing its first-year sales goal in about 1.5 months, because founders "didn't expect the local community" to support it at this level. "There are literally 5,000 of these stories," Rob said. And surely more to come.

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02/17/2017

AB's Got Aggressive Craft Plans in 2017: Elysian Next Natl Brand; 20%+ Growth for Each Craft Partner

AB's High End craft unit has aggressive growth plans for 2017 like the segment has never seen before, highlighted at annual SAMCOM meeting with distribs earlier this week. Each of its craft partners expect 20+% growth, High End prexy Felipe Szpigel shared. Several brands will get big distribution pushes ("on average, all of you will get 3 new brands this year alone," High End vp of sales Dusan Vujovic told AB wholesalers). All craft brewer partners will get notable investments in marketing and media, including several new TV and digital spots, as well as in capacity and capability. And co continues to invest in highly trained and "best educated" feet on the street and regional sales managers. Lookin' at total craft segment, "we're going to see a lot of churn" and "only the best will scale up," said Felipe. "Simply put," co believes High End brands have "the best current and future portfolio," with "higher potential and resources than any other brewery out there." AB's "the only partner that can truly offer the best of both worlds," with "the magic of founders combined with the resources of a larger company." So "2017 will be a growth year," and "the most exciting we've had thus far." With this much emphasis on craft from world's largest brewer, this year's shaping up to be an even more competitive and challenging one for overall craft segment.

Elysian is Next Natl Brand, Expects 2X Growth; Goose a "Global Brand"; More Craft TV & Digital Marketing While several top craft brewers, such as Sam Adams and Sierra Nevada, continue to struggle, AB sees oppy for "another national player to emerge," said Andy Goeler. And AB's betting big on Elysian to be that brand. Behind high flyin' Space Dust IPA crankin' out of AB facilities and newfound capacity at current Seattle facility, Elysian will get national rollout this yr starting Mar and expects to at least double annual output in 2017. There's now more supply of Space Dust so distribs "won't have inventory out of stocks," Andy assured. Recall, Space Dust is growing 300+% in early IRI data thru Jan 22, already making it a top-30 craft brand and #11 best-selling IPA nationally in scans. Elysian will get extra help from TV spots, dubbed "Welcome to the World of Elysian," highlighting Space Dust, natch. And Elysian will bring its annual pumpkin beer festival to Boston, Los Angeles and New Orleans this yr to showcase the "specialty piece of what it does."

Meanwhile, Goose is now top-5 craft brand family and "must execute to our weight class," said Felipe. Goose is now a "global brand," Andy stated, following announcement of international brewpubs launching in 6 cities around the world. This year it'll boost advertising with 3 related TV spots thruout the year, highlighting footage from Elk Mountain hop farm, ingredients and tagline "There are no shortcuts to Goose IPA." It's stickin' with goal to eventually become the #1 IPA, currently behind Lagunitas IPA and Sierra Torpedo, which both took a step back in terms of measured velocity last yr, Andy pointed out. Gotta note, Lagunitas IPA still up 18% off larger base and Sierra Torpedo volume improved to down 1% in early IRI data thru Jan 22, while Goose IPA up 35% to start year. Goose IPA still less than half the size of Lagunitas IPA in these channels. It'll also expand barrel-aging warehouse to add a bit more capacity as well as an event space and aging cellar. And it'll launch Goose Cooper Project, a year round bbl-aged series.

Golden Road & 10 Barrel Hit ~30 New States; Wolf Pup 15pk; Others Expanding, Integrating & More Both Golden Road and 10 Barrel will get big distribution boost as well, including 30 new states for Golden Road and 28 new states for 10 Barrel in 2017. Interestingly, Golden Road brand highlighted ahead of 10 Barrel during presentation, in part due to launch of new Viceland TV series with Golden Road founder Meg Gill (see last issue). It's a "disruptive way of building awareness," said Andy, and 6-episode series expects to receive over 2 mil impressions from TV and internet viewers. There's "not a lot of technical" lingo, Meg told CBN separately. Rather, it's more about "the culture side and people side" of the US homebrewing community. Golden Road's lead brand Wolf Pup Session IPA will launch new 15pks as well as a new creative featuring Meg called Golden Dreams that'll get 12-wk media pulse. Yet 10 Barrel's shifting focus to newer Joe IPA as lead brand ahead of previous flagship, Apocalypse IPA (started out flat in Jan IRI). 10 Barrel will continue to post digital content daily and similar to Elysian, expects to limit out of stocks this yr with newfound capacity.

Remaining partners are all in process or finishing up various expansion projects and integration into AB system. Blue Point's building a brewery in downtown Patchogue, NY (reportedly for $24 mil according to Newsday article late last yr, see Vol 7, #106) and will be supported by "Patchogue's Got It All" creative campaign. Most of Blue Point Toasted Lager is brewed at AB facility, so the new Patchogue facility will give co more capabilities to scale up small batch brews like its new Prop Stopper IPA, Gose, Oyster-based series, Mexican craft lager and more coming in 2017, prexy Todd Ahsmann explained separately. All told, Blue Point's facility will start with 60K bbls of capacity and can reach up to 140K bbls. Breckenridge and Four Peaks have "recently expanded breweries," are "finishing up capabilities of cross brewing," and have "packaging updates and creative campaigns" comin'. Breck will focus more on its nitro series. Four Peaks will enter handful of west and southwest mkts. Newer Devils Backbone will expand to new mkts along the east coast (south of NY). And Karbach's so new that AB currently only has plans to "keep supporting" what Karbach's doin' in TX. Separately, Craft Brew Alliance briefly highlighted 2017 plans, including increased media focus for Kona, as well as new Widmer Hefe extensions and Redhook offerings.

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02/14/2017

Legislative Notes: NE Bill Amended Amidst Fight with Spectre of Granholm; Cap Change Intro'd in NC

Small brewers and supporters in Nebraska flooded committee hearing yesterday, pushing back against bill that would have added restrictions to off-site retail. They succeeded in forcing issue and getting sponsor to agree to amendments, according to local Lincoln 1011 News. Changes promised would once again allow brewers to operate 5 satellite taproom locations in the state without brewing at each one. However, thru "at rest" provision, bill would still require all beer to make it back to a distributor's warehouse before heading out to retailers. That's a concern for rural brewers with distribs based in big cities servicing retailers closer to home. But bill sponsor says intent for both that and soon-to-be-amended retail provisions is "constitutional issue" that "opens the state up to liability to be sued."

He's talkin' about US Supreme Ct decision in Granholm case, which has been brought up (often by wholesaler advocates) as potential problem with state laws that give small in-state brewers additional license privileges not afforded to out-of-state suppliers. Recall, Granholm ruling basically says that state laws can't treat similar in- and out-of-state bizzes differently. It focused on producer tier. Some argue it extends to retailers and distribs too. Many debate whether privileges given to small in-state brewers leave states open to legal challenge or are just fine. But we haven't seen any specific challenge on these grounds to statutes like this just yet.

Meanwhile, complaints about "at rest" provision strike sponsor as "hypocritical," since rural brewers "are choosing a distributor in Omaha rather than distributors that are closer," while touting economic success of their rural bizzes. Small brewer pushed back, noting that creation of "at rest" rule "changes the nature of how we're going to do business out in rural Nebraska." Before, "we didn't want to do business with a large scale, corporate entity that has, up until last year, created disincentive in their distribution market by putting a quota of certain percentages of beers that had to be brand central." Not stated, but that's basic complaint of many small brewers resistant to working with primarily AB distribs. Of course, sometimes the only local distrib with a warehouse in a rural community is an AB house (AB still over 60 share in NE in 2015). If passed, will "at rest" rule force distrib changes for craft brewers in the state? Then too, how will state's franchise law factor in?

Bill to Raise Self Distribution Cap to 100K Bbls Intro'd in NC Meanwhile, bill introduced late last week to raise production cap on breweries allowed to self-distribute in North Carolina from 25,000 bbls to 100,000 bbls. As has been the case with past attempts to make similar adjustments (though new cap proposed has varied), state wholesalers assn opposed, citing current strength of small state brewers and less restrictive laws compared to other Southern states, exec director of wholesaler org Tim Kent told Triangle Biz Journal. Notably, state brewers guild was "not aware of this bill prior to the filing," exec director Margo Knight Metzger told paper, but is clearly "appreciative" of bill sponsor's "enthusiasm and support for our industry," natch. Recall, handful of brewers in the state have been very vocal about this particular issue, while many other smaller brewers (as well as much larger transplants, like Sierra Nevada and New Belgium) have largely left the talking to the guild.

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