Beer Marketer's Insights - BMI Archives Entry

BMI Archives Entry

01/23/2017

Walmart's Trouble Brewing "One of the Biggest Beer Developments" in Last Yr, sez Wash Post; Positive Spin?

A coupla private label craft style brands emerged in 2016, adding notable growth in tracked scan data last yr, and Walmart's Trouble Brewing was at the forefront. In fact, Washington Post went as far as to call it "one of the biggest beer developments of the past 12 months," in recent piece dubbed "There's something brewing in the Walmart beer aisle, but you can't call it 'craft.'" When Trouble launch was announced in Jun 2016, co expected to have 4 brands - Amber Ale, IPA, Pale Ale and Belgian White - in about half of Walmart's 4600 stores at $13 per 12pk. But paper pins brand at 3K stores across 45 states, potentially looking to add seasonal styles to the mix. "More than half of all American shoppers" visit a Walmart store "in a given month," paper notes, citing market research firm Placed Insights. So that's "a lot of eyes falling on those products."

Stores that put out private label brands have tendency to make brewing origins "deliberately obscure," paper also highlighted. Walmart doesn't put its name on Trouble labels and brews are produced at NAB's Genesee facility in Rochester. "We were intentional about designing a package that conveyed a look and feel you'd expect of craft beer," Walmart senior buyer of adult beverages, Teresa Budd, told paper. Similarly, Costco's Kirkland Signature Handcrafted Beer "claimed that the IPAs and brown ales came from either New Yorker Brewer in Utica, NY or Hopfen und Malz in San Jose, depending on where the beer was purchased." Those are alternative names for FX Matt and Gordon Biersch. And Trader Joes lists JosephsBrau Brewing, Salt Lake City's Four + Brewing and River Trent Brewing instead of Gordon Biersch, Uinta and Mendocino.

Price is always a private label factor and each of the aforementioned brands plays that card in spades. And blind tasting of Walmart and Trader Joes brands among Wash Post staffers was "not that positive." But interestingly, Washington Post views these private label brews as "a positive for brewers of all sizes," potentially serving as a "gateway" that could lead "domestic beer drinkers" down path toward trading up.

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01/23/2017

Wormtown "Just Shy" of 15K Bbls in 2016; Expects to Double Again with New Capacity; MA Craft

Wormtown doubled production in 2016 to "just shy" of 15K bbls, David Fields told CBN. Recall, that's all in Mass with still 75-80% of its biz on draft. And there's "a long way to go," he sez. Lookin' at recent rolling 3 mos of sales, Wormtown's selling at 21K bbls/yr pace while "still running out of beer." So "bottom side" of this yr's volume projection would be 22-23K bbls and "top side after we do some expansion" will be "closer to" 27-28K bbls. That'd be 3d straight year co doubled production. Originally, Wormtown expected to be able to boost annual capacity at its current facility to 50K bbls, but revised cap upwards to 65-70K bbls/yr after hiring a brewery engineer and design firm to "determine how to best develop that space," David added.

MA Craft has "A Long Way to Go" Too In general, David's "gut instinct" is that MA craft "still has a long way to go" too, in terms of growth. There are now several "decent-sized breweries," many of which are "seeing trends that are just strong as can be." And MA breweries per capita still relatively low, he added. Editor's note: MA has 2.14 permitted breweries per capita, according to TTB data recently posted by NBWA chief economist Lester Jones (see Jan 13 issue). That's right in the middle, 24th highest among states, but well below (moderately populated) states with highest counts such as OR (7.43), CO (6.97), WA (5.82). Twenty-two brewery permits were issued in MA last yr, bringing total to 146, 17th overall among states. Yet gotta note, largest in-state players, Boston Beer and Harpoon, notably struggled last year both at home and thruout their footprints. And as competition becomes more pronounced, handful of long-established mid-sized brewers' trends could start to dip as well (if they haven't already).

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01/23/2017

Stein Dist to Buy Click Dist in Wash; JV with Odom Will Be Called Northwest Bevs

Another well-known craft distrib selling its biz. Seattle-based Click selling to MC distrib Stein, out of Vancouver, Wash and Boise Ida, pending supplier approval. (Note, this article appeared in sister-pub INSIGHTS Express on Friday.) Recall, Click won NBWA's Craft Distrib of Yr award back in 2008. Stein will simultaneously form JV with another of Northwest's larger distribs, Odom Corp. The JV will reportedly sell about 3 mil cases of beer, wine, spirits, NAs. Ownership teams believe the "combined organization will enhance the resources and expertise to better serve the growing needs and competitive challenges" in northwest mkt. Deal expected to close at end of Q1. Meanwhile, "existing Click organizations will continue to operate independently for the foreseeable future," said press release. Click mgt "and substantially all of the Click staff will continue with the new organization."

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01/19/2017

Brooklyn Brewery Sees Path to Staying in Williamsburg, Abandons Navy Yard Plans

Looks like Brooklyn Brewery won't have to move its headquarters to elsewhere in namesake NYC borough after all. The co is now in talks with some of its Williamsburg-based brewery's landlords to extend current leases well beyond 2025, co-founder Steve Hindy wrote for the company's blog late last week. Recall, due to explosion of the neighborhood around the brewery, at least partially a result of zoning allowances put in place years ago, Brooklyn didn't think it would be able to stay put. It planned to open new HQ, small brewing facility and rooftop restaurant in Brooklyn Navy Yard, a property specifically marketed to small food/bev manufacturing cos (see vol 7, #39 from last May). But Brooklyn has now "backed out of" that plan, NY Times reported on Friday, following news that current mayor's office could limit further commercial development in industrial zones, like area where Brooklyn's operated for over 20 yrs. "We have been looking for a long term site for the brewery for several years, fearing that our leases would not be renewed," CEO Eric Ottaway said, according to blog post. "The City's proposed industrial protections have strengthened our hand," he said, revealing "real path to keep our footprint in Williamsburg."

That change and resulting discussions with landlords may have been "a big surprise," as Steve told the Times, but it also aligns most interests. The co certainly doesn't want to move if it doesn't have to. Plus, "people know we're here," Steve said. Its taproom/beer hall now gets 3-4,000 visitors per week. Current city officials also apparently in favor of new plan: "I want to see manufacturers thriving not only in our assets like the Navy Yard, but across the city," deputy mayor for housing and economic development Alicia Glen said before calling plan to stay put "a coup." It also opens up Navy Yard space "to grow the next multimillion-dollar Brooklyn brand," she added. Prexy of that location's development firm already "very confident" it'll find replacement he told Times, noting that "it's an opportunity for the Navy Yard to support other emerging businesses," per post.

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01/19/2017

Mass Distribs Propose Brewers Under 30K Bbls Can Move At Will for FMV; Separate Bill Would Wipe Out Franchise Law

As state of Mass task force about to launch review of all alc bev laws, two bills proposed at deadline last Friday. One creates carve out from franchise law for brewers under 30K bbls; the other wipes out franchise law. Only the first got any media attention. Beer Distribs of Mass proposed what it calls "equitable solution" for "Emerging Breweries" to resolve ongoing battle with small brewers over franchise law there. Currently, small brewers can self-distribute, but once they work with distrib for 6 mos, can't move without good cause, i.e. meeting one of five conditions stated in law. Proposed bill will allow brewers under 30K bbls to move brands for any reason, as long as they give 90-day notice, name successor-distrib in territory, pay for inventory and pay fair mkt value for distrib rights. Recall, brewers sought ability to move brands if they were less than 20% of distrib's biz, a limit that would "devastate" indie distribs, the assn claims, and a non-starter for them. Any disputes about whether brewery qualifies as Emerging Brewery would be resolved by Mass Alc Bev Control Comm. Fair mkt value defined as amount rights would "sell for in an arms-length transaction between a willing buyer and a willing seller." If distrib and brewer can't decide on that amount, it would go to "final binding arbitration." (A version of this article appeared in INSIGHTS Express earlier today).

Beer Distribs of Mass announced proposal late Friday afternoon, touting it as "giving breweries even more choice and flexibility with beer distributors." Citing BA data, distribs note that "96% of the breweries" operating in US "stand to benefit" from bill. But bill wouldn't apply to a couple of most important players in Mass, so unlikely to get unified support from brewers. Lookin' at in-state brewers, Boston, Harpoon and Wachusett already over the 30K limit in 2015. Cisco right at 30K. Ipswich was close (26K). Hot Jack's Abby was 20K and Berkshire at 19K in 2015. And several young up 'n' comers in the 10-15K bbls range last yr, such as Wormtown, Tree House, Trillium and Night Shift all could reach 30K bbls cap in short order as all of 'em in process of significantly expanding capacity. In fact, Wormtown expects to finish 2017 right "on the threshold" of that 30K bbls number, Wormtown managing partner David Fields told CBN (see below).

Proposal is "a terrific opening effort" and it'll be "very interesting to see how the Brewers Guild [of MA] reacts and where this leads," David thought. Recall, David has a wholesaler background, so he's got unique perspective from both sides of the aisle. "I do think franchise reform is overdue," and "I'm excited to see where this step takes us," but "I do worry about total unlimited freedom" for small brewers, he cautioned, referring to previous Guild proposals that included brewers up to 6 mil bbls in carve out (made to include Boston Beer). Indeed, this was heavy topic of discussion at MA Brewers Guild meeting that took place this afternoon, CBN understands.

Separate Proposal Wipes Out Franchise Law Meanwhile, media missed 2d bill proposed late Friday. That bill, aimed at "restoring contract rights to craft brewers" basically wipes out franchise law in Mass for all manufacturers of malt beverages, including definition of good cause needed to terminate. That definition currently includes disparagement of product, "unfair preferment" in sales for competing brands, failure to exercise "best efforts," "engaging in improper or proscribed trade practices" and failure to comply with terms of sale. Instead, going forward, relationships between manufacturers and wholesalers "shall be governed by the parties' agreement, the law of contracts and/or other generally applicable provisions and principles of commercial law." What's more, "any dispute" between suppliers and distribs on termination "shall not be determined by" the Mass Alc Bev Control Comm unless a court rules relationship for some reason not governed by this new law. While Beer Distribs of Mass touting Emerging Breweries bill, forces behind second bill so far unnamed. But since Act restores "contract rights to craft brewers," gotta figure some support from that corner.

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01/19/2017

Sizeable Recall Interrupts Beginning of 2017 for Sierra Nevada, Following First-Ever Decline

Second-largest U.S. craft brewery Sierra Nevada finished 2016 with shipments down about 7%. Recall, co saw 1st-ever volume decline coming and had new news and new brands to kick off 2017. But over the weekend, it issued 36-state recall of bottles of 8 different core brands, including Pale Ale, Torpedo and more shipped from its Mills River, NC brewery between Dec 5 and Jan 13. That can't be the start to 2017 Sierra hoped for. The co shipped about 1,137,000 bbls from its two facilities last yr, it shared with us. That's down about 84K bbls, 6.9% from over 1.2 mil bbls shipped in 2015.

As with a number of other beer recalls over the yrs, the culprit here is glass: "a flaw that may result in loss of carbonation and a small piece of glass to break off and possibly fall into the bottle." Tho glass defects may only affect 0.1% of bottles packaged over that 5 wks, the co is still locating and destroying a lot of beer. It includes the co's largest brands as well as new Sidecar Orange Pale Ale and Tropical Torpedo, seasonal Beer Camp Golden IPA, Hop Hunter IPA, Nooner Pilsner and Otra Vez Gose. Since affected beer came out of Sierra's NC facility, beer was shipped to 36 East Coast, Midwest and Southern states. Affected bottles often show "a few telltale indicators," including signs of leakage from under the cap before opening and a rough edge from breakage around the top after opening, according to detailed post on company website. The brewery has not heard from any consumers who experienced any injuries, so far, and recall still classified as "voluntary."

Most of 8 affected brands produced between Dec 5 and Jan 13; but affected Pale Ale bottles came out of NC plant during slightly shorter Dec 5-Jan 8 window. Consumers "eligible for full compensation of the purchase price" and able to submit info for reimbursement right from co's website. Sierra aims to have count of exactly how much of each affected brand its distribs have on hand by end of day today, it said in communication with wholesalers. Those distribs also already got detailed info on what affected beer they received from Sierra, CBN understands. Note too that this is just latest (and perhaps largest) in recent string of craft recalls. Most have fallen into one of two categories: a glass defect, like this, or an unspecified quality issue often resulting in over-carbonation (pointing to issues with fermentation/yeast and/or packaging). While we can't really point to these recalls as a major factor in slower growth seen in craft recently, they certainly don't help.

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01/19/2017

More Tech Opening Up Brewpub-Light Oppys: Ferment Pre-made Wort with SmartBrew System

The "Indy" systems coming from PicoBrew aren't the only tech innovations hoping to reduce the financial and space requirements needed for retailers to brew their own beer. Recall, that was new product-line announcement from PicoBrew shortly after ABI confirmed investment thru Zx Ventures (see Jan 6 & 11 issues). But SmartBrew system already in use by handful of brewpubs in Australia and Canada and recently employed by Greasy Luck Brewery in Mass, according to Boston Herald. SmartBrew saves money and space by fully taking the brewing out of the hands of the user, which ferments pre-made wort in group of four 5-bbl fermentation vessels and control center. Customizations to beer recipes can be made and all-in system takes up 150-200 sq-ft to get about 40 bbls per month. The system's already in use at Cherokee Brewing & Pizza in GA, Collector's Choice Brewing in WA, INC 82 in San Francisco, Paddle Hard Brewing in MI, Tilt Wurks Brewhouse & Casino in MT, Edwington Brewing in ND and Philly Bar & Grill in NY in the US, according to SmartBrew's website. Right now, all the wort comes from breweries in New Zealand or Germany, per SmartBrew FAQ. That creates odd juxtaposition of beer that's started very far away but finished as local as you get. Meanwhile, handful of other homebrewing devices launched in last year or so aim to make that process simpler and take up less space, much like PicoBrew, and could also be used by retailers to ease pathway into small-scale brewing. For example, the Grainfather makes the brewing process easier to manage in small amount of space. That device also has a pot-still attachment to make spirits.

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01/19/2017

Cinci-Based Ei8ht Ball Brewing Closes in Yr-3; Assets Being Purchased by Another Brewer

Just 3 yrs in, Cinci-based Ei8ht Ball Brewing is closing up shop for good this Feb, reported Cincinnati Business Courier. Ei8ht Ball "is a subsidiary of New Riff Distilling," and reportedly, the decision to close "came down to investing another $8 million to $10 million to make the brewery profitable or focusing solely on the distilling business," owner Ken Lewis told paper. It was maxed out at 1200 bbls/yr, "but at that level, we're breaking even," he said. "So even though we've doubled our sales each of the three years we've been open and we're making fantastic beer over there, the fact is we've never been more than a break-even situation."

But as the ol' adage goes, once a brewery opens, it doesn't go away - it just changes hands. "Ei8ht Ball's assets are being purchased by a new brewery, which will brew and operate out of the same space but not use the Ei8ht Ball brand." Turns out that includes "most of Ei8ht Ball's employees" staying on with the new owner/brand (not disclosed), except for sales manager and head brewer, sez paper. The head brewer's "leaving to pursue his own brewery." Meanwhile, New Riff will focus on its distilling biz, including a new "whiskey campus" that'll hold 18-19K bbls of aging whiskey with bottling and distribution capabilities, as well as an event center. That's scheduled to be complete by end of 2017. Both New Riff and Ei8ht Ball started in 2014, tho clearly New Riff has prevailed as the more successful venture.

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01/19/2017

Sam Adams Rebel IPA Reformulated: More "Juicy, Tropical & Citrus" Following Double-Digit Decline

After historic launch in 2014 and following several additions to the Rebel IPA family of brands, Sam Adams Rebel IPA notably struggled in its 3d year. It was down 16% in natl IRI multi-outlet + convenience data YTD thru Dec 25 and down 20% plus for last 12 weeks. So Boston Beer/Sam Adams lookin' to shake things up. Using new experimental hops that co's been workin' on for several years under "Project Lupulus," it reformulated Rebel IPA to have "more intense juicy, tropical, and citrus flavor supported by a leaner body and a crisp, clean finish to optimize the hop character," co announced. Boston Beer worked in collaboration with Yakima Valley hop breeder to develop new varieties dubbed HBC 566 and "after months of experimenting with dozens of trial batches at the Boston Brewery, the brewers are now ready" to debut new recipe with HBC 566 and another new variety, HBC 682. It'll also add Mosaic hops while keeping a few of the original hop varieties, such as Cascade, Centennial, Simcoe and Chinook.

Interestingly, "this is the first time we've significantly changed the recipe of a flagship beer," Jim Koch stated in release. "As hop varieties evolve, we want to use the new varieties to keep brewing the best beer possible." All in, Sam Adams becoming further invested in juicy IPA trend, following Rebel Grapefruit launch last year and Rebel Juiced variant this year. Despite Rebel IPA's decline, the Rebel family was able to grow in 2016 with a big boost from new Grapefruit IPA launch. So it'll be interesting to see how the total brand family performs in 2017 going up against Grapefruit launch with reformulated flagship and new Juiced. Rebel IPA and Rebel Juiced IPA will be available on draft, in 6pks and both will be in the Pack of Rebels variety pack (bottles and cans) along with Grapefruit and new Rebel White Citra IPA (only available for a limited time in Pack of Rebels variety pack), per release. Suggested retail prices are $7.99-$9.99 on 6pks and $14.99-$17.99 on variety pks.

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01/18/2017

Oskar Blues Passed 200K-Bbl Mark in 2016, +5% After Filling in US Footprint; Holdings Near 350K Bbls

Colo-based Oskar Blues shipped about 201K bbls last yr from its breweries in Colo, NC and Tex, spokesperson Chad Melis shared with Craft Brew News today. That's only up about 9,000 bbls from 192K bbls reported last yr, about 5%. So like Bell's (above) and many other brewers we've heard from, Oskar too didn't grow as quickly as initially planned. But total Oskar Blues Holdings neared about 350K bbls, according to Oskar release. That implies combo of Cigar City, Perrin and pair of Utah brewers, Wasatch and Squatters, totaled another 150K bbls or so. Recall Cigar City is about half that, as we reported last issue. So in toto, Oskar Blues Holdings up about 9%, from estimated 320K bbls in 2015.

At same time, Oskar Blues reported having #1 craft canned sixpack in US foodstores, flagship Dale's Pale, in year it expanded distribution to complete its national reach. After expanding its Brevard, NC brewery, the co has capacity to brew about half a mil bbls at 3 primary facilities (not including Cigar City, Perrin or Utah plants). Recall, the co also launched two year-round brands last yr, BEERITO Mexican Amber Lager and Priscilla White Wit Wheat, plus intro'd 16-pks of Pinner, the co's session IPA. It just opened a new retail location in Denver's RiNo district, dedicated to its CHUBurger and Hotbox Coffee Roasters concepts. This yr, it'll start exports to Brazil and Japan and open a previously-announced 9th retail location in Colorado Springs. Oskar's also launching limited release Hotbox Coffee IPA in cans in March as well as a new CANspiracy beer club for folks visiting Colo and NC tasting rooms, the co announced today.

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