BMI Archives Entry
02/14/2017
Spotlight On Rare Beers Across US; GLBC Christmas Ale Case-Study: Big Sales in Small Window
Even after dip in sales last yr, Great Lakes Christmas Ale (see above) did over $6.6 mil in sales in scanned channels last yr, over 138K cases, per IRI multi-outlet + convenience thru Dec 25. That made it the #86 craft brand by $$ nationally for the full yr, even tho it's sold for just about 8 wks in parts of 13 states. Every larger brand in IRI craft is available year-round. A quick-scan of the next 200 brands turned up not a single other limited release brand (tho admittedly, we mighta missed one or two). To give a sense of its relative size during short availability window (again, even after decline), consider that if Great Lakes sold as much Christmas Ale year-round as it did during last couple months of the year, it would do somewhere in the neighborhood of $40 mil in sales, putting it just outside the top-10 craft brands, bigger than Goose Island IPA. Obviously, a significant part of the success of limited release brands like Christmas Ale depend on their relative scarcity, lost if taken year-round. But still, from Nov 1-Dec 25, Christmas Ale is #10 craft brand by $$, #12 by volume in IRI's total food store channel, GLBC's sales/mktg veep Bridget Barrett shared with us. Within IRI's "Great Lakes" region, it's #1 by over $1 mil during that time, she added. Managing this type of brand may not always be easy, but it sure can be worth it.
Newsletter
Craft Brew News
Tagged under
Yet % of can sales varies greatly by both brewery size and geography. Size-wise, brewers with less than 100K cases tracked in IRI collectively have 40% or more of their total volume in cans. Essentially double the % they had in 2013 and more than double the natl average. Indeed, "many of these brewers likely started out by installing a canning line versus a bottling line, whereas larger craft brewers started in an era when that would have been practically unheard of," Bart noted. Interestingly, mid-sized brewers (between 100K and 1 mil cases) had largest transformation since 2013; % of sales in cans jumped from 4.3% to nearly 25% in 2016. And brewers over 1 mil cases collectively doubled (or more) % of can biz to 11% of total sales collectively.
Meanwhile, certain geographies tend to have much larger % of craft pkg sales in cans. It ranges from CO leading the way with ~45% to OK with just 5% of sales in cans, again citing IRI data. But most craft-centric mkts aren't necessarily the ones where cans have highest share. For instance, UT is #2 with cans also over 40% of craft pkg sales. A bunch of southeast states - SC, GA, WV, TN, FL and KY - among next states with highest concentration of craft cans (between 30-35% of craft pkg sales) along with VT, OH and MA. A cluster of several states both craft-centric and underdeveloped had over 20% of craft pkg sales in cans. And CA, MD, IN, NV, WI, and OK all under-index with craft cans. Gotta note, tho PA in 25% range as percent of total state pkg sales, it had largest total craft can volume of any state (as defined by IRI, so that's even without including bulk of Yuengling sales). Similarly, CA among top total can volume contributors despite having just over 10% of total craft pkg sales in cans.
At this point, every state and nearly every brewer is increasing their can sales. As larger craft brewers continue to explore can formats (Lagunitas and Dogfish the latest to join), and with many younger breweries ignoring bottles altogether, gotta wonder how high is up. In toto, cans were 61% of total biz in US and 68% of total pkg volume, lookin' at 2015 total industry stats provided by NBWA based on TTB, Commerce dept data. That might suggest there's plenty more room for craft cans to run. Yet craft bottle sales continue to realize slower growth relative to cans and you gotta wonder if and when growth in cans stops providing an incremental lift to the segment. Either way, cans remain a big part of the growth story in craft these days. Stay tuned.
Newsletter
Craft Brew News
Tagged under
02/14/2017
A Little Legal Trouble Brews for Wal-Mart; Consumer Claims "Fraudulent, Unlawful" Craft Ploys
Suit sez Wal-Mart positions these brands next to craft on store shelves, prices them as craft and, according to Wal-Mart exec, "we were intentional about designing a package that conveyed a look and feel you'd expect of craft beer." But Plaintiff insists Wal-Mart's "Craft beer has never been a 'craft beer,' nor has it been produced by a craft brewery." Wal-Mart's actions violate OH's consumer protection laws and constitute unjust enrichment, fraud, etc, he claims. Seeks class action status, compensatory and punitive damages, atty fees and injunction to stop Wal-Mart's "misleading misconduct." Recall, similar action vs Blue Moon dismissed by US federal court last yr. That ct specifically said pricing of brand "cannot be a misrepresentation" (that brand is "craft" or not). Same ct tho refused to decide on defn of "craft," for such claims.
Newsletter
Craft Brew News
Tagged under
Newsletter
Craft Brew News
Tagged under
That launch should help Great Lakes continue to "grow that year-round base," Bridget said. The co has a reputation for its portfolio of classic styles and "Turntable extends that," Bill said. And even though seasonals struggled last yr, GLBC seems to be "benefiting" from a "swing back" to the kinds of beers GLBC makes. It's the moderation or maturation of the consumer that many brewers like GLBC point to these days. So GLBC is "bullish on 2017," Bridget shared, targeting mid/high-single-digit growth. Besides Turntable, it's got a new West Coast-style double IPA, Hop Madness to buttress pair of other early-year IPA releases. It'll also join growing number of US craft brewers taking on Mexican lager style, with seasonal Grandes Lagos entry. "We expect seasonals to continue to be challenged throughout the industry," Bridget said. But co believes it's got "some real bright spots" to get it back to growth overall.
Year-Round Brands Up 8% in IRI; Seasonals -5%; Christmas Ale -8%, But Rate of Sale Up Strength of GLBC's core brands vs seasonal struggles shows up in spades in off-premise retail data. Total Great Lakes biz basically flat to slightly down in IRI multi-outlet + convenience thru Dec 25 last yr. But just one of core 5 yr-round brands declined. Dortmunder Gold up 2.8% by $$ last yr. It even grew in hometown Cleveland, where that beer's been available for 28 yrs, Bridget noted. But Edmund Fitzgerald Porter up 6% in IRI, Commodore Perry +13% and Eliot Ness up over 20%. Just Burning River Pale down 2%. These 5 brands up almost 8% together, but still less than half of Great Lakes' biz in scans.
Instead, outsized portion of GLBC sales come from seasonal offerings. After the industry was generally "long" on seasonals in 2015, some (particularly in distribution tier) showed "over-conservatism" in 2016 orders, Bill said. So he saw some seasonals "blow off the shelves" and "not make it to the end" of availability timetable. GLBC Seasonals down 5% in IRI MULC. Its rotating seasonal SKU was still over a quarter of its biz in scans, but that dropped about 1.5 points last yr. So like Southern Tier (see last issue) and craft generally (see above) Great Lakes is becoming less reliant on seasonal offerings, bringing more of its business into core brands.
Also like Southern Tier, Great Lakes has big seasonally-tied limited release: Christmas Ale. It too declined in IRI last yr, -7.6% by $$. But GLBC cut a week of sales off that brand in 2016, releasing it Oct 31, a week later than usual. Almost all of that beer sold in 8 weeks before Christmas. It was still GLBC's #2 brand in IRI at near 22% of the co's total $$ sales. So during slightly shorter availability, Christmas Ale's rate of sale actually increased a bit, Bridget reported. Versus comparable period in 2015, Christmas Ale up 2%. (See below for more on power of Great Lakes Christmas Ale.)
Still "Tight" Geographically, Tho Need to Fill Out Footprint; Eyeing Distrib Relationships Closely; Capacity Between NBA Championships, World Series and Republican National Convention, "Cleveland had a great year," Bill said simply. And GLBC's hometown biz still solid, even as plenty of new local breweries coming up behind (check out fascinating look from Cleveland Scene). It also still has a "pretty tight market footprint." While GLBC beers available in 13 states, a number of them aren't fully "filled out," he said. So that work likely to come before expanding further. Like so many others, the co's still "figuring out how to be local" in markets further afield, as competition heats up from all directions. So GLBC is taking a close look at itself and its partners: "In this kind of market, the distributor relationship becomes really important," Bill said. The co's in the process of "evaluating" those relationships to a) identify if there's "something we can do" to make them work better, and b) "leverage those for even more success," he explained. Recall, GLBC still in the midst of lawsuit with its Columbus distrib, Southern Glazer's. Bill didn't comment specifically on that litigation, natch, but he did share that "we could do better in Columbus." Sales there not as strong as in Pittsburgh, he told us, though both cities are a "similar distance" from Cleveland homebase.
Finally, recall that GLBC has been capacity constrained for some time. Its brewery is "just slammed the second half of the year," Bill explained, in large part due to Christmas Ale. Addition of Turntable and growth of other year-round brands may even the score a little bit. But 2nd half could be "real tight" on capacity this yr. To alleviate that, GLBC will need to do a "significant expansion" at some point. But co is "very deliberate," Bill said, and founders Pat and Dan Conway are "not driven to see how big this company can get," but "how good a company we can be." And that outlook sheds a "different light on these decisions," Bill commented. So no big plans finalized just yet.
Newsletter
Craft Brew News
Tagged under
02/14/2017
Right-Sizing Seasonals: -2.7 Share of Craft $$ to 15.8 in 2016; Fixing the Balance in 2017?
Sales of craft seasonals, as a group, declined in every 4-wk period in 2016, IRI MULC data in graph above shows. Also note clear seasonality of volume sales, which peaked in May and June, then again in September. Across the year, trends varied fairly widely and tended to improve (if still negative) later in any given "season." (As we know, craft seasonal availability is largely divorced from calendar seasons, which shading of volume bars attempts to depict: green=spring; yellow=summer; orange=fall; blue=winter.) That bears out suggestion we've now heard repeatedly, that when fall seasonals sat on shelves well past their time in late 2015, an over-correction led to running short during some other peak periods in 2016. (Recall, folks at MillerCoors said as much when discussing Leinenkugel's Shandy trends last summer, ABV's John Coleman pointed to a similar story for Southern Tier last issue, folks from Great Lakes saw the same thing, see below, and we've heard comments along these lines from others as well.)
Many brewers, and the craft segment generally, are all becoming less reliant on seasonals. In fact, among the top 50 craft seasonal brands, just 10 grew to be a larger part of an individual brewer's mix last yr. Shift away from these rotating SKUs is very clear for 4 of 5 largest seasonal programs in IRI MULC data. Pair of Sam Adams seasonal brands went from almost 42% of that brand family's $$ sales in 2015 to 37.8% in 2016. Leinie's seasonals went from over 70% of that brand's biz in scans to just over 2/3. Seasonals just 10% of Blue Moon mix last yr, but that's also down 3.7 points. And over 1/3 of Bell's $$ sales in 2016 scans in its seasonal program, but that's -3.6 points from closer to 40% in 2015. Plenty of other sizeable shifts too. Seasonals went from about a quarter to under 20% of $$ sales for Highland, Revolution and Elysian last yr. Other AB High End brand families like Goose Island and 10 Barrel also saw moves away from seasonal brands as focus often more squarely on flagships. Southern Tier seasonals down about 10 points of that brand family's $$ mix from over 1/3 to about 1/4 in IRI. And even Rhinegeist seasonals went from well over a quarter of that co's scan biz to about 13% (tho separate "Rotation Ales" brand way up last yr and more than makes up for loss in Seasonals). Will this shift slow or stop in 2016? For first 4 wks of the yr, craft seasonals down over 15%, lowest trend in at least a year, likely much longer. So again: how much less reliant on seasonals will craft become?
Newsletter
Craft Brew News
Tagged under
Newsletter
Craft Brew News
Tagged under
02/09/2017
Specialty Projects: Sierra's Beer Camp Goes Global; Goose Cooper Project; Dogfish Rack AeriAle
Building on famed Bourbon County brand of stouts and using expansive barrel-aging warehouse, Goose Island announced new Cooper Project last week. Series of all barrel-aged beers will debut with Scotch Ale in March, in 4pks of 12oz bottles. Not too many details apart from Facebook post, but two more releases already scheduled for 2017, R&D manager Mike Siegel told Men's Journal. A blonde doppelbock and a porter will appear later in year. Speaking of barrels, Dogfish Head announced that it helped draft dispensing experts AC Beverage come up with a way to serve nitrogenated barrel-aged beers straight from the barrel. In his classic, off-centered style, Dogfish Head founder/CEO Sam Calagione had the brain-wave "to design a system that brings barrel-aged beers from the barrel directly to the tap system and incorporates a smooth cream nitro head into the process," he said in release. AC Beverage prexy Charles Kleinrichert took it from there, pairing the co's customized gas-blend CellarStream and Nitrogenator tech with new Rack AeriAle system to deliver just that. Plenty of technical sciencey stuff for hardcore fans to geek out over. But exposure so far pretty limited, natch. First Rack AeriAle system debuted at Boston Eataly location last week, just ahead of Beer Advocate's Extreme Beer Fest. Second system expected to end up at Dogfish Head's tasting room after a quick stint on the floor at the Craft Brewers Conference in April.
Newsletter
Craft Brew News
Tagged under
Switchback Up 25% to ~30K Bbls; Expects Another 25% Gain This Yr Switchback quietly became a major player in VT and New England region over the years since opening in 2002. Last yr it finished up "a little bit more than 25%" to about 30K bbls, with revs up "more than that," Bill shared. That's still "mostly" in VT and vast majority is from flagship unfiltered Switchback Ale - impressively "the number one selling draft beer in Vermont." Even after adding bottle sales within the last few yrs and 6pk sales more recently, draft is still about 2/3 of its biz and Switchback Ale is "pretty much all" of its draft sales. The "uniqueness" of Switchback Ale's flavor profile allows it to stand on its own, he thought, since it's "not fighting with the IPAs." And "we know what that fight is, it's brutal out there." So it's admittedly tuff to get more of its portfolio in the mkt, particularly on draft. "You try and get a second draft line out there these days," he quips to customers seeking more Switchback beers on tap. At lotsa accounts, "maybe if you're brand new," you can get "a few" handles. But often times it's "one brewery, one beer." Switchback Ale "is just so dominant" as many VT bars' "best-selling beer," he said. So they're "not taking this off." Keep in mind, Switchback also happens to be one of the fastest growing breweries in natl scan data thru 2016, with $$ sales up 77% and volume up 120% in IRI multi-outlet + convenience data last yr (see last issue).
Meanwhile, 2017 marks the first year it'll brew a full-time 2nd year-round brand - Citra-Pils Keller-Bier, an unfiltered lager - along with its growing portfolio, including Connector IPA (brewed year-round in VT-only), and several "Rotating Specials." Bill and co have gotten "hugely positive feedback" about Citra-Pils and that's "really generating our anticipation." Then too, this year "I think the expectation would be we're ready to probably fill out Massachusetts. We're definitely thinking about it," said Bill. Perhaps Connecticut too. Tho he's admittedly "a little scared" of the idea of entering a city as large as Boston or NYC. "I've always been tentative" and "very methodical about that stuff." Switchback also just recently opened RI and has distribution in NH, ME, Western MA and upstate NY. So "between our underdeveloped territories" and "solid growth" in home-state VT, Switchback's "likely" to grow "another 25%" this year.
Newsletter
Craft Brew News
Tagged under
02/09/2017
Artisanal Brewing Ventures Expects to Rebound in 2017; Southern Tier Launching Variety 15pk
Southern Tier Overreliance on Pumking and Other Seasonals; Shifting Focus to Core When John started with Southern Tier in Aug/Sep 2014, "one of the first things" he saw was "an overreliance on seasonals." They accounted for 45% of its biz at the time, he shared. So "we started on that path back then," to "start building up the core brands." Last yr, mix shifted to 68% core, 32% seasonal and ultimate goal for Southern Tier is to reach 80/20 split. Yet a big part of that change in mix was big drop of Fall seasonals, Pumking/Warlock. Those two brands collectively declined 45% to 13K bbls in 2016, accounting for over 90% of Southern Tier's total decline. So Pumking/Warlock alone went from 22% of Southern Tier biz in 2015 to just under 14% of total biz last yr. It was "incredible to see that kind of market shift that abruptly," John acknowledged. "A lot of folks got in the pumpkin game" and there are now "a lot of options in the marketplace." But John and co "still have a tremendous amount of confidence in the brand." Co's lookin' to "reinvigorate" it with "variants around the base brand," such as Cold Press Coffee Pumking and Pumking aged in rum barrels. "We definitely think the consumer will be back next fall," he said.
Core Brands Performed Well in Core States for Both SoTier and Victory; "Distant Markets" Slowdown Meanwhile, both Southern Tier and Victory saw "great results in core states and around our core year-round portfolio[s]," said John. Altogether, Southern Tier 2X IPA up "low-single-digits" and regular IPA up "double-digits;" Tangier IPA "exceeded our expectations by about 50% from a volume standpoint" and "Pack of Pales" variety pk, including IPA, 2X, Live and Tangier, was flyin'. For Victory, Golden Monkey, Prima Pils, Summer Love and Blackboard series "showed excellent results and drove positive revenue growth," as "mix shift to higher revenue brands accelerated in the 2nd half of 2016." Golden Monkey in particular grew 17-18% last year and "continues to just kill it." Plus, Vital IPA "has really started taking off," right in the "sweet spot" at 6% ABV with "citrusy" notes. Ultimately, "like many other regional brewers, we saw some slowdown in distant markets as 'local' continues to put additional pressure on our seasonal offerings." Neither brewer will enter new states in 2017; Victory's currently in 36 states and Southern Tier's in 31.
SoTier Launching "Overpack," New Canned Variety 15pk, in March at $19.99 Southern Tier is next brewer to explore 15pk format, with new canned variety pk called "Overpack" launching this March. It'll include 5 brands, 3 of each, that generally fall under the hoppy spectrum - Nu Skool IPA, Tangier IPA, Citra Hopped Live Pale Ale, Pilsner and 2XSmash IPA (going from seasonal to year-round). Suggested price will be $19.99 following "conversations we've had with quite a few retailers." And it views pack as "more of a marketing" and "sampling opportunity" that hopefully "carries over into people picking" up the brands they like most. There's "plenty of value in that package" and nearly all 15pks only offer "a single brand," he noted. Indeed, 21st Amendment is only other brewer that's announced variety 15pk (that we know of, see Jan 11 issue). But new players continue to trickle into the 15pk space. Founders All Day had space mostly to itself last year at this time, but now it's added each of its 3 seasonal brands into format. Shock Top and Bronx Brewery were quick to join last yr, followed by SweetWater, New Belgium, 21A and now Southern Tier among others, with more likely to follow.
Arbor Investments Has Small Stake in ABV Too Turns out another PE firm, Arbor Investments, also has a small stake in Artisanal Brewing Ventures. Arbor came into the picture during the Victory deal, John confirmed. And bringing in other firms is "very common" in PE world, John acknowledged. They're "very active investors in the CPG industry" and have done "a lot in food and beverage." So the main reason ABV and Ulysses "accepted their offer" was for the "level of expertise they bring to the party."
Treated as "Two Separate Entities"; Adding Personnel; QA "Point of Difference"; Pittsburgh Brewpub All in, ABV has "kept the sales team separate" while continuing to "test" combined sales force in FL. That's admittedly "been a bit of a challenge...from a support standpoint," since typically there are "four brands that you're going to get support on," but "now you've got eight." So ABV will "really treat them as two separate entities" and "is not combining the sales force anywhere else." Between two cos, it had 280 full time and 249 part time employees thru 2016 and both cos continue to invest in personnel, particularly in Southeastern/Mid-Atlantic mkts. ABV also heavily investing in QA, treating it as "a point of difference." In fact, it recently became 1 of 5 brewing cos that's HACCP (Hazard Analysis Critical Control Point) certified by FDA, "a major undertaking," John said, to implement rigorous "management system in which food safety is addressed," according to FDA website. And lastly, Southern Tier's new Pittsburgh brewpub "just opened," and already "going gangbusters," John said. Recall, Pittsburgh is SoTier's 2nd largest market, only behind Buffalo. So co's lookin' to capitalize on that brand recognition, utilize pub as R&D space and oppy to "introduce new brands."
Newsletter
Craft Brew News
Tagged under