BMI Archives Entry
Newsletter
Craft Brew News
Tagged under
01/18/2017
New & Tiny Denver Craft Distrib Makes Debut
R>
This might be the smallest distrib concept we've heard of yet. Colorado Craft Distributors opened in Denver last December, currently comprised of 6 tiny local brewers - Caution, Horse & Dragon, Lost Highway, Oasis, De Steeg and Jessup Farm Barrel House - that combined "make fewer than 4,000 barrels" a year, reported Westword. Founders Tom Jasko and Christopher McGraw expect to add a few more suppliers this summer and plan to cap it at roughly 12 suppliers total. "The big guys do a great job, but they have a lot of companies in their portfolios," Tom told paper. "We are small, a mom-and-pop operation, and we can provide a lot of attention. As our breweries grow, we grow with them."
Ultimately, they're "trying to create a portfolio that makes sense stylistically," said Tom. Tom previously spent "nearly two decades in the distribution business," working for Merchant Du Vin and Sheehan Family Cos' Union Dist among others (according to his Linkedin page), while Christopher "was working as a beer buyer for a large liquor store." Interestingly, "after getting advice from a similar small distributor in New York that Jasko had worked with previously, they finally got things up and running in December," sez paper. "There's lots that goes into a distributorship," and "months and months of government red tape," Tom said. But the two were able to put everything together, got SBA loan and Tom and his wife put their house up for collateral in order to get off the ground. "I really see something developing here," he added.
Interesting to note Brewers Assn's focus in written comments to DOJ - just recently made public - on ABI-SAB deal and what it left out. Turns out BA filed comments, making many of same points/criticisms it had made for over a yr on deal. Oreg's Ninkasi Brewing filed short letter too. BA-defined craft brewer Yuengling also filed extensive comments. So did several distrib assns, retailer assn American Bev Licensees and a few others. DOJ got 12 comments in all, but made no substantive changes to proposed final judgment announced last July. We'll focus here on small brewer comments.
Interestingly, BA's major concerns echoed many of distrib comments: allowing ABI to condition incentives or requirements based on its share in distrib's mkt still creates disincentive to sell 3d party brands and "allows AB to tilt the playing field in its favor," BA's prexy/ceo Bob Pease wrote. BA wanted that "carve-out language" removed. BA also asked DOJ to bar ABI from buying any additional distribs. Like several distrib groups, BA also sought exception to language about mktg spend levels to make it easier for distribs to take on new brands. Separately, BA wanted DOJ to keep keen eye on any further ABI craft acquisitions and mktplace actions, including deals it makes in stadium venues that increase its "dominance." "BA believes that ABI's past acquisitions of craft breweries have harmed competition," Bob noted, since they have "enabled ABI to thwart the most likely (and perhaps only) disruptor to its entrenched market position: independent craft brewers on a pathway to scale." (Once again, Bob omits Constellation as powerful disruptor to ABI's "entrenched" mkt position, which has actually eroded to tune of 14 mil bbls, 6 share of US biz since 2008.) ABI's "serial" craft buys allow it to reduce competition, in his view, since "by forcing" AB distribs to carry its craft brands, there's less room for indie crafts in AB house, Bob wrote.
BA also echoed Yuengling's comments, raising questions about ABI's right to "match and redirect" distrib deals, and the "shell games" as BA called 'em, that ABI played in Miss, Ky and Colo last yr to move brands to distribs "loyal to and dominated by ABI." Yuengling asked DOJ to bar or amend ABI's "match and redirect" rights, as well as prohibit ABI from: 1) "insisting" on any level of distrib promo expenses or curbing investments in other brewers' brands; 2) any ABI financing of distribs; 3) "manipulating 'delivered price' amounts to similarly situated" distribs as an incentive to align with ABI or to reward distribs for winning or losing a "match and redirect" deal. Questions raised by "match and redirect" deal in Miss last yr, BA's Bob urged, show why "ongoing diligence" by DOJ and its monitor will be necessary.
Ninkasi CEO Nikos Ridge pointed to his loss of biz and challenge to get new distribs after ABI bought indie distribs in Oreg and Calif that had his brands. (He moved in each situation.) He also asked DOJ to bar ABI from buying more distribs, as well as: 1) bar branches from "making recommendations or manage the schematics of any shelf sets in their territory"; and 2) require all breweries to disclose their ownership of other brewers to avoid misleading consumers. DOJ did not bite on any of this. Rather, as expected, it concluded all concerns and requested changes either outside scope of it proposed final judgment, not justified and/or already covered by it. Then too, DOJ reminded, there's a Monitor if anticompetitive activity occurs in the wake of ABI-SAB.
While BA ignored ABI's retail interests and Nikos only mentioned them in passing, American Bev Licensees, which represents on- and off-premise outlets across US, expressed concerns about ABI's "increased presence in the retail market." ABL calculates ABI has 30+ "tied-house" on-premise establishments that "limit consumer choice." Its specific ask: DOJ should "consider the implications of the proposed merger on current retail beer operations" and determine if any "safeguards" necessary to preserve competition. But retail issues, including taprooms and shelf schematics, "outside the scope" of DOJ's investigation here, it concluded.
Talk about a sign o' the times. After 25 years of recurring growth, CO's Great Divide saw production drop 16% to 35,300 bbls in 2016, reported Westword. "We were having 25 to 30 percent growth on an annual basis; we were used to that. So it was definitely a tough year, and it stings," said founder Brian Dunn. Gotta note, growth already started to slow in 2015, up just 5% over previous yr. However, a big part of this year's drop was self-inflicted. Great Divide discontinued three year-round brands - Nomad Pilsner, Lasso Session IPA and Hoss Rye Lager (now a seasonal) - because "we felt like those brands didn't fit us anymore," said Brian. Co projects that it would've actually been up if it hadn't dropped said brands. "But at some point you need to change the lineup, you need to make decisions based on what's best for the brewery in the long term," and Brian and co "still think those were the right decisions, even if it creates short-term pain."
Even so, that's got Great Divide back to the drawing board, launching "at least four new beers": Hop Disciples, "the first in a seasonal hop series that will change each year," is already out; Strawberry Rhubarb Sour was a taproom-only brew going year-round in 22oz bombers this Jun; Chai Yeti "will replace Oak-Aged Imperial Yeti as a seasonal"; and Roadie Grapefruit Radler is a new summer seasonal. "We need to have fun new beers," sez Brian. "We need to be creative and innovate. Breweries need to change. Brands need to change. People are looking for different beers, and our job is to help brew those," he added.
It'll also put RiNo (Denver's River North Arts District) production facility plans further on hold since "we can't justify the expenditure right now." Recall, that project was announced in late 2013, originally expected to be completed sometime in 2015, cost $38 mil and be capable of producing 100K bbls/yr initially with room to reach 250K bbls/yr, as Denver Post then reported. Once its current Arapahoe Street location fills out capacity, "the company will reignite its plans to build," sez Westword. But for now, Great Divide's focused on getting back to growth. And it expects to do just that this year with boost from new product launches, increased focus on cans and quality, adding employees and more.
One of the hotter craft brewers in Southeast, Athens' Creature Comforts, announced it will expand to a 2d Athens location, a 36,000 sq ft historic building downtown, where it will put a brewery with 50,000 bbls of annual fermentation capacity with "ample space to add additional fermentation in the future as needed." Creature Comforts only started in 2014, but is already producing at annual pace of 28,000 bbls in current facility, co said. New brewery will cost it $8 mil plus, is expected to open by end of this yr and add as many as 25 full-time jobs in next 5 yrs. New brewery will be able to brew as much as 25,000 bbls of its IPA, Tropicalia, "nearly double its current output." Creature Comforts will also keep current downtown location and "plans to reinvest in the tap room and outdoor space once the new brewery is operational."
Cigar City Brewing depleted "an excess of 65,000 barrels" in 2016, COO Justin Clark confirmed to CBN. As has been the case with most year-end numbers we've seen thus far, 65K bbls is a fair amount behind Cigar City's initial 75K bbls projection. But unlike many other examples thruout the industry, Cigar slowdown's due to capacity constraints, out-of-stocks and separately counted taproom sales, rather than increased competition and general mkt slowdown.
Cigar City actually got closer to 75K bbls including strong taproom biz, Justin explained. Co was already capacity-constrained at its own facility (around 50K bbls/yr) in 2015, but was able to get extra growth thru contract brewing partnership with Brew Hub. Then, following deal with Oskar Blues/Fireman Capital announced in March, it didn't begin testing Jai Alai IPA production at Oskar's Brevard, NC facility until this Nov (see Vol 7, #80). That's only just starting to be produced "with some consistency." There's up to 80K bbls/yr of capacity Cigar City can use there. It's also started to brew and/or plans to brew in smaller quantities at Oskar's other facilities in CO and TX as well as sister cos, Utah Brewers Co-Op and Perrin, in UT and MI (see below). So this yr, co's "excited to see" what it can do now that brands will actually be "produced to order," said Justin. Core portfolio, led by Jai Alai and getting an extra boost from new Tampa Lager (nearly tripled Hotter than Helles total, which it replaced, in 1st full year), geared toward chain biz growth, while co expects to have more specialty brews readily available for its whole footprint this time around. One goal founder/CEO Joey Redner's tasked co with is to keep up its specialty beers program. It's "in our DNA to keep that going" and that needs "to be 10% of our business," said Justin.
Added TN with Lipman; SC, NC, NJ, CO and UT Coming Soon; Oskar Network Gets "Strong Look" Meanwhile, Cigar City just entered middle TN this week with Lipman Bros, largely a wine and spirits distrib, which also extensive craft book, including Oskar Blues. It will add SC, NC, NJ, CO and UT this year, said Justin. Turns out, ABV cap lift was a big reason to enter TN, now that Jai Alai is eligible for grocery sales there. And as has been the case, Cigar City wants "to fill out the Southeast" Publix footprint, since that's its largest chain partner in FL. So SC and NC in particular are "definitely a priority" with a lotta growth potential. It'll also be able to expand into Harris Teeter's footprint (since there's only one in FL) as well as more of Kroger's footprint, etc. In CO, Cigar City's "always done a little bit" of distribution during big events like GABF and CBC, but now has oppy thru Oskar Blues to keep that steady. And similarly, "we want to be able to serve a little bit out there," in UT (with help from Utah Brewers Co-Op). Recall, Jai Alai is also served at Oskar's CO/TX taprooms and just announced plans to brew Jai Alai at Perrin's facility in MI for brewpub-only sales too. "Certainly, Oskar Blues' [distrib] network will get a strong look," he added. Cigar City's "tasked with picking the best partner in the market," and "luckily" Oskar's already partnered with many of those.
"Ultimate Goal" to Have All Production In-House; 2d Cigar Facility "Down the Road" With all this additional capacity in mind, "ultimate goal" would be to have production "all in-house under our power," Justin acknowledged. So that suggests it'll eventually look to end its relationship with Brew Hub. But for time being, "we are still making beer at Brew Hub." Extra capacity also helps "move" project to build a 2d Cigar City production facility further "down the road," said Justin. "Someday we will probably need" it.
2017 Will Test "The Real Runway" for Cigar City Lookin' at 2017, "it's a little tricky" to project growth, Justin admitted. "We have the capacity," but "we don't know what the real runway is, even for some of our cores," since "our data is really just what's happening in Florida." Indeed, Cigar City still did well over 90% of its total biz in FL last yr. That number "will come down a bit" as it adds new states. But co's still expecting strong growth outta FL as well, including 25% gain with hometown distrib JJ Taylor, on top of 20% growth in 2016 even with "multiple out-of-stocks." That being said, "it's definitely getting tougher out there," Justin acknowledged. You "either have to remain really, really small," or "keep getting big quicker." That "middle area" for regional brewers is "tougher." But Cigar City's "really fortunate" to still have distribs "knocking on our door." There's still "plenty of growth in front of us."
Here's a friendly reminder to please honor our copyright. Your subscription to this newsletter allows you one copy of each issue at any one time. Copying it without our express permission, including email forwarding, violates copyright law. If you have questions about your subscription or if you are interested in learning more about multiple-copy subscription discounts, site-licenses or other ways to ensure colleagues and team-members also benefit from our publications, please feel free to reach out at any time. You can reply to this newsletter, email us at This email address is being protected from spambots. You need JavaScript enabled to view it. or call us at (845)507-0040. Thank you for understanding, respecting the law and for your continued readership.
A ways back in the heady days of 2013-2014, NYC-based Ruckus Marketing worked to get contract to rebuild big, vacant ex-Neuweiler Brewery property in Allentown, PA, recall. It eventually secured that deal with plans to spend $30 mil on a contract brewing facility. But looks like that'll never be. The co never started work on the site and now plans to start with a much smaller project with no brewing involved, according to The Morning Call. Of course, those plans not finalized either as the city extended more deadlines for Ruckus to meet before it moves forward with putting office space into small section of the old brewery, aiming for completion in 2019. Of course, a brewery on site could still follow that, since Ruckus does still contract production of a couple of its brands, including Hoptimus Prime IPA, which it bought from Legacy Brewing in 2010. But no promises.
A ways back in the heady days of 2013-2014, NYC-based Ruckus Marketing worked to get contract to rebuild big, vacant ex-Neuweiler Brewery property in Allentown, PA, recall. It eventually secured that deal with plans to spend $30 mil on a contract brewing facility. But looks like that'll never be. The co never started work on the site and now plans to start with a much smaller project with no brewing involved, according to The Morning Call. Of course, those plans not finalized either as the city extended more deadlines for Ruckus to meet before it moves forward with putting office space into small section of the old brewery, aiming for completion in 2019. Of course, a brewery on site could still follow that, since Ruckus does still contract production of a couple of its brands, including Hoptimus Prime IPA, which it bought from Legacy Brewing in 2010. But no promises.
Just a couple weeks into the new year, deals for turnkey operations - where a brewery purchases another fully equipped facility - are starting to show up more frequently. New School Beer recently reported 6 closings in Oreg/SE Wash and 6 more brewers lookin' to sell their facilities as turnkey operations to a willing buyer. And yesterday, Chicago-based Finch Beer and Like Minds Brewing "struck a deal for Finch to take over the Near West Side brewery where Like Minds launched a mere 18 months ago," reported Chi Tribune. Like Minds originally planned to move from contract brewing in Wisc to this 10,500 sq-ft facility on 1800 Walnut St. But that's clearly not how it's panned out, now that Finch acquired all brewing equipment and assumed the lease. Instead, Like Minds will focus on the Milwaukee brewpub it opened last fall for its sour and wild ales, and partnered with Chi-based contract concept, Great Central Brewing (located right across the street from sold facility) for rest of its portfolio, paper noted.
Meanwhile, Finch will look to settle in and settle down after tumultuous couple yrs of ownership changes, forcing the founder out of the company, a couple facility closures and scaling back distribution, among other things (see Vol 7, #104). Indeed, "for Finch, the deal was a matter of survival," sez paper. Co hopes to be up-and-running by late Feb in new space, and "the goal is stability," co-owner, and one of original investors, Jamie Lisac said. Amid all the turmoil, Finch declined nearly 22% to 8K bbls in 2016, "partly by design and partly due to things out of our control," Lisac added. "Now we just want to put our head down and make great beer."
Ultimately, they're "trying to create a portfolio that makes sense stylistically," said Tom. Tom previously spent "nearly two decades in the distribution business," working for Merchant Du Vin and Sheehan Family Cos' Union Dist among others (according to his Linkedin page), while Christopher "was working as a beer buyer for a large liquor store." Interestingly, "after getting advice from a similar small distributor in New York that Jasko had worked with previously, they finally got things up and running in December," sez paper. "There's lots that goes into a distributorship," and "months and months of government red tape," Tom said. But the two were able to put everything together, got SBA loan and Tom and his wife put their house up for collateral in order to get off the ground. "I really see something developing here," he added.
Newsletter
Craft Brew News
Tagged under
01/18/2017
BA, Ninkasi Focus on Distrib/Brewer Issues in Comments to DOJ; Mum on Retail; ABL Rings that Bell
Interestingly, BA's major concerns echoed many of distrib comments: allowing ABI to condition incentives or requirements based on its share in distrib's mkt still creates disincentive to sell 3d party brands and "allows AB to tilt the playing field in its favor," BA's prexy/ceo Bob Pease wrote. BA wanted that "carve-out language" removed. BA also asked DOJ to bar ABI from buying any additional distribs. Like several distrib groups, BA also sought exception to language about mktg spend levels to make it easier for distribs to take on new brands. Separately, BA wanted DOJ to keep keen eye on any further ABI craft acquisitions and mktplace actions, including deals it makes in stadium venues that increase its "dominance." "BA believes that ABI's past acquisitions of craft breweries have harmed competition," Bob noted, since they have "enabled ABI to thwart the most likely (and perhaps only) disruptor to its entrenched market position: independent craft brewers on a pathway to scale." (Once again, Bob omits Constellation as powerful disruptor to ABI's "entrenched" mkt position, which has actually eroded to tune of 14 mil bbls, 6 share of US biz since 2008.) ABI's "serial" craft buys allow it to reduce competition, in his view, since "by forcing" AB distribs to carry its craft brands, there's less room for indie crafts in AB house, Bob wrote.
BA also echoed Yuengling's comments, raising questions about ABI's right to "match and redirect" distrib deals, and the "shell games" as BA called 'em, that ABI played in Miss, Ky and Colo last yr to move brands to distribs "loyal to and dominated by ABI." Yuengling asked DOJ to bar or amend ABI's "match and redirect" rights, as well as prohibit ABI from: 1) "insisting" on any level of distrib promo expenses or curbing investments in other brewers' brands; 2) any ABI financing of distribs; 3) "manipulating 'delivered price' amounts to similarly situated" distribs as an incentive to align with ABI or to reward distribs for winning or losing a "match and redirect" deal. Questions raised by "match and redirect" deal in Miss last yr, BA's Bob urged, show why "ongoing diligence" by DOJ and its monitor will be necessary.
Ninkasi CEO Nikos Ridge pointed to his loss of biz and challenge to get new distribs after ABI bought indie distribs in Oreg and Calif that had his brands. (He moved in each situation.) He also asked DOJ to bar ABI from buying more distribs, as well as: 1) bar branches from "making recommendations or manage the schematics of any shelf sets in their territory"; and 2) require all breweries to disclose their ownership of other brewers to avoid misleading consumers. DOJ did not bite on any of this. Rather, as expected, it concluded all concerns and requested changes either outside scope of it proposed final judgment, not justified and/or already covered by it. Then too, DOJ reminded, there's a Monitor if anticompetitive activity occurs in the wake of ABI-SAB.
While BA ignored ABI's retail interests and Nikos only mentioned them in passing, American Bev Licensees, which represents on- and off-premise outlets across US, expressed concerns about ABI's "increased presence in the retail market." ABL calculates ABI has 30+ "tied-house" on-premise establishments that "limit consumer choice." Its specific ask: DOJ should "consider the implications of the proposed merger on current retail beer operations" and determine if any "safeguards" necessary to preserve competition. But retail issues, including taprooms and shelf schematics, "outside the scope" of DOJ's investigation here, it concluded.
Newsletter
Craft Brew News
Tagged under
Even so, that's got Great Divide back to the drawing board, launching "at least four new beers": Hop Disciples, "the first in a seasonal hop series that will change each year," is already out; Strawberry Rhubarb Sour was a taproom-only brew going year-round in 22oz bombers this Jun; Chai Yeti "will replace Oak-Aged Imperial Yeti as a seasonal"; and Roadie Grapefruit Radler is a new summer seasonal. "We need to have fun new beers," sez Brian. "We need to be creative and innovate. Breweries need to change. Brands need to change. People are looking for different beers, and our job is to help brew those," he added.
It'll also put RiNo (Denver's River North Arts District) production facility plans further on hold since "we can't justify the expenditure right now." Recall, that project was announced in late 2013, originally expected to be completed sometime in 2015, cost $38 mil and be capable of producing 100K bbls/yr initially with room to reach 250K bbls/yr, as Denver Post then reported. Once its current Arapahoe Street location fills out capacity, "the company will reignite its plans to build," sez Westword. But for now, Great Divide's focused on getting back to growth. And it expects to do just that this year with boost from new product launches, increased focus on cans and quality, adding employees and more.
Newsletter
Craft Brew News
Tagged under
Newsletter
Craft Brew News
Tagged under
Cigar City actually got closer to 75K bbls including strong taproom biz, Justin explained. Co was already capacity-constrained at its own facility (around 50K bbls/yr) in 2015, but was able to get extra growth thru contract brewing partnership with Brew Hub. Then, following deal with Oskar Blues/Fireman Capital announced in March, it didn't begin testing Jai Alai IPA production at Oskar's Brevard, NC facility until this Nov (see Vol 7, #80). That's only just starting to be produced "with some consistency." There's up to 80K bbls/yr of capacity Cigar City can use there. It's also started to brew and/or plans to brew in smaller quantities at Oskar's other facilities in CO and TX as well as sister cos, Utah Brewers Co-Op and Perrin, in UT and MI (see below). So this yr, co's "excited to see" what it can do now that brands will actually be "produced to order," said Justin. Core portfolio, led by Jai Alai and getting an extra boost from new Tampa Lager (nearly tripled Hotter than Helles total, which it replaced, in 1st full year), geared toward chain biz growth, while co expects to have more specialty brews readily available for its whole footprint this time around. One goal founder/CEO Joey Redner's tasked co with is to keep up its specialty beers program. It's "in our DNA to keep that going" and that needs "to be 10% of our business," said Justin.
Added TN with Lipman; SC, NC, NJ, CO and UT Coming Soon; Oskar Network Gets "Strong Look" Meanwhile, Cigar City just entered middle TN this week with Lipman Bros, largely a wine and spirits distrib, which also extensive craft book, including Oskar Blues. It will add SC, NC, NJ, CO and UT this year, said Justin. Turns out, ABV cap lift was a big reason to enter TN, now that Jai Alai is eligible for grocery sales there. And as has been the case, Cigar City wants "to fill out the Southeast" Publix footprint, since that's its largest chain partner in FL. So SC and NC in particular are "definitely a priority" with a lotta growth potential. It'll also be able to expand into Harris Teeter's footprint (since there's only one in FL) as well as more of Kroger's footprint, etc. In CO, Cigar City's "always done a little bit" of distribution during big events like GABF and CBC, but now has oppy thru Oskar Blues to keep that steady. And similarly, "we want to be able to serve a little bit out there," in UT (with help from Utah Brewers Co-Op). Recall, Jai Alai is also served at Oskar's CO/TX taprooms and just announced plans to brew Jai Alai at Perrin's facility in MI for brewpub-only sales too. "Certainly, Oskar Blues' [distrib] network will get a strong look," he added. Cigar City's "tasked with picking the best partner in the market," and "luckily" Oskar's already partnered with many of those.
"Ultimate Goal" to Have All Production In-House; 2d Cigar Facility "Down the Road" With all this additional capacity in mind, "ultimate goal" would be to have production "all in-house under our power," Justin acknowledged. So that suggests it'll eventually look to end its relationship with Brew Hub. But for time being, "we are still making beer at Brew Hub." Extra capacity also helps "move" project to build a 2d Cigar City production facility further "down the road," said Justin. "Someday we will probably need" it.
2017 Will Test "The Real Runway" for Cigar City Lookin' at 2017, "it's a little tricky" to project growth, Justin admitted. "We have the capacity," but "we don't know what the real runway is, even for some of our cores," since "our data is really just what's happening in Florida." Indeed, Cigar City still did well over 90% of its total biz in FL last yr. That number "will come down a bit" as it adds new states. But co's still expecting strong growth outta FL as well, including 25% gain with hometown distrib JJ Taylor, on top of 20% growth in 2016 even with "multiple out-of-stocks." That being said, "it's definitely getting tougher out there," Justin acknowledged. You "either have to remain really, really small," or "keep getting big quicker." That "middle area" for regional brewers is "tougher." But Cigar City's "really fortunate" to still have distribs "knocking on our door." There's still "plenty of growth in front of us."
Newsletter
Craft Brew News
Tagged under
01/13/2017
Please Don't Forward This Newsletter!
Newsletter
Craft Brew News
Tagged under
Newsletter
Craft Brew News
Tagged under
Newsletter
Craft Brew News
Tagged under
Meanwhile, Finch will look to settle in and settle down after tumultuous couple yrs of ownership changes, forcing the founder out of the company, a couple facility closures and scaling back distribution, among other things (see Vol 7, #104). Indeed, "for Finch, the deal was a matter of survival," sez paper. Co hopes to be up-and-running by late Feb in new space, and "the goal is stability," co-owner, and one of original investors, Jamie Lisac said. Amid all the turmoil, Finch declined nearly 22% to 8K bbls in 2016, "partly by design and partly due to things out of our control," Lisac added. "Now we just want to put our head down and make great beer."
Newsletter
Craft Brew News
Tagged under