BMI Archives Entry
01/11/2017
Has Brewery Count Boom Peaked in MN?
Yet, in MN, there were still 15 new breweries that opened last yr compared to nearly 20 in both 2014 and 2015. That brings total count up to 94 active breweries in MN thru 2016, along with 23 brewpubs and 7 contract brewing cos, according to MNBeer. And there's only been four closures "in recent years" that paper could find: Dubrue Brewing, Staples Mill Brewing, Leech Lake Brewing and more recent Harriet Brewing (see CBN Vol 7, #92). "I would say closings are higher this year than in past years," said Bart, but openings still well-ahead of closings nationally too. "Most of the Minnesota brewers have been pretty cautious in their expansions," since "they're not super widely distributed and most of their sales are coming from Minnesota," he added. 2017 may be the year that starts to change, both founder and editor of MNBeer, Ryan Anderson, and Laura Mullen of Bent Paddle Brewing and VP of MN Brewers Guild suggested, whether it's due to increased competition or general pressures of running a small biz (roughly 50% of small businesses fail within first 5 yrs). But MN still has space for new brewers in less concentrated areas, Laura said. And Ryan "expects to see continued growth - though maybe at a slower clip than at the height of the boom - in Minnesota's craft beer scene in 2017 and going forward."
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01/11/2017
New Glarus Shifts to Local Glass Supply
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01/11/2017
21A to Debut 15-Pks of El Sully, Brew Free! or Die IPA, Hell or High Watermelon; Add Ariz, Colo
Joining growing list of US craft brewers, 21st Amendment will launch 3 core brands in 15pks of 12oz cans this March. It'll replace 12-pks with the larger pack size for El Sully Mexican-style lager as well as Brew Free! or Die IPA and biggest seasonal brand Hell or High Watermelon. "Following close behind will be year-round variety pack options offering combinations of five different 21A beers," prexy Dave Wilson said in statement. Ahead of their launch, 21A will release 6-pks of new Blah Blah Blah IPA, shortly followed by a blood orange variant of BF!oD IPA. Then, in spring and summer, it'll start shipping to both Ariz and Colo.
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Obviously, licensing and other regulatory issues could hinder fast expansion of the appliance into retail locations. On the other hand, states like Calif have already dealt with issues related to bars/restaurants picking up cheaper brewpub licenses to more cheaply and quickly sell all alc bev types in markets like San Francisco and Napa. Indeed, many states offer low license costs for small-scale brewers, clearing hurdles for budding brewers while offering them the ability to sell their own products (and others) on site. So will opportunistic retailers, some of which have already felt pressure of growing taproom biz, seek to use PicoBrew's Indy appliances to both take advantage of such license structures and appeal to increasing consumer demand for "local"? Then too, these appliances represent dramatic changes to the equipment, costs and processes needed to brew. If successful, could they add pressure to further change existing regulatory structures? That is, will a restaurant using an Indy machine need a manufacturing license, even if it's making beer in an appliance not unlike those it uses to make food items?
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First Time Blue Moon Family's Down For MC, big change in 2016 was that Blue Moon brand family declined for the first time ever. Total brand family $$ down 3%, volume down 5% in IRI multi-outlet + convenience channels YTD thru Dec 25. Flagship Blue Moon Belgian White has typically provided bulk of the growth, but this yr only eked out 0.3% volume gain and 2.7% $$ gain after an improved Q4. Blue Moon Seasonal (-31%) and Variety Pk (-10%) declined all year. And both main innovation brands from 2015 were unable to cycle launches in follow-up yr. White IPA volume down 13% YTD after dipping 46% in final 12 wks and Cinnamon Horchata Ale able to grow 12% for yr, but declined 7% for last 12 wks.
Total Leinie Struggles While Grapefruit Flies Leinenkugel family recovered a bit from brutal Q3, but its $$ down 6%, volume down 8% for the full year in IRI. Any recovery was no thanks to lead brand, Leinie Shandy Seasonal. It stumbled thruout 2d half of 2016, down 20+% in each of last 2 qtrs, bringing volume down 11% YTD. Recall, that's partially due to altered Summer Shandy production forecast (see CBN vol 7, #92), but fall and winter seasonals clearly not farin' any better. So what helped Leinie improve trend in Q4? Grapefruit Shandy. It grew a whopping 600+% in Q4 scans, bringing it up to 120+% growth YTD. In fact, Grapefruit Shandy's perhaps the only sizable brand from either MC or AB in last few yrs that's been able to cycle launch numbers, and accelerate at that (AB's Goose IPA could be considered another example). However, virtually every other Leinie brand besides Grapefruit Shandy, Leinie IPL and incremental Wisconsin Red Pale Ale declined. Seems like MC's putting big bet on Leinie Grapefruit going forward.
MC Acquisitions Not Enuf (Yet?) All in, Blue Moon and Leinie brand families collectively declined over 1 mil cases and $20 mil in IRI for full year. Acquisition brands not nearly enough to make up the difference. Hop Valley is largest scan brand of the bunch, up 41% to 358K cases. But Saint Archer (+73% to 97K cases) and Revolver (+31% to 56K cases) still tiny in IRI (Editor's note: Terrapin number's currently not available, but it falls somewhere in between Hop Valley and Saint Archer in size in this data set; a bit closer to Hop Valley). It'll be interesting to see how Blue Moon and Leinie fare in 2017 now that sales & mktg shifted over to MC team, while Tenth & Blake focuses on acquisitions and imports. And how quickly MC expands distribution for its acquired brands will certainly be a major growth factor.
Shock Top Big Drop, No Roll For AB, Shock Top decline steepened as the year progressed. Despite starting off year with bigtime Super Bowl ad investment, Shock Top brand family volume declined 5% in Q1 followed by 13% drop in Q2, -18.5% in Q3 and -21% in Q4. So Shock Top ended year down 15%, 799K cases in IRI MULC; $$ down 12%, -$19.4 mil. Every brand in the portfolio down for the year and most down steep double-digits. Only Shock Top flagship Belgian White able to keep decline to low-to-mid single digits, while Seasonal (-25%), Varity Pk (-30%), Honeycrisp Apple Wheat (-40%), Raspberry Wheat (-24%) make up bulk of the brand family drop.
AB Acquisitions Up 32-33% But Some Signs of Slowing & Goose Prices Lower Yet AB acquisitions (not including Karbach) collectively grew 32-33%, selling 4.3 mil cases and $160.3 mil YTD in IRI MULC. Goose Island (volume up 28%), a top craft brewer in its own right, makes up about half of total AB acquisition volume; Elysian (+62%), 10 Barrel (+34%) and Devils Backbone (+39%) make up another 1/3 of volume; and Blue Point (+9%), Four Peaks (+30%), Breckenridge (+5%) and Golden Road (+97%) make up the rest. Collectively they're nearly as big as Lagunitas in this data set (see last issue) and more than make up for Shock Top struggles (Editor's note: it's likely that total AB acquired craft volume surpassed Lagunitas last year, especially including Karbach). So AB IRI craft $$ up 7.6%, volume up 3.5% in 2016 (also including Ziegenbock, Wild Blue Lager and Redbridge) likely putting it ahead of Sam Adams as the 2d largest craft co in scans, as defined by IRI. But interestingly, these AB craft brands collectively lost a bit of share of IRI craft segment in 2016 thanks to Shock Top.
Overall, AB acquisition strategy has clearly provided co with a craft boost while certainly disrupting the craft scene. But it's not necessarily gonna be an easy road ahead in 2017. While Goose continues to perform well, its growth slowed thruout the year as Goose IPA (+82%) not flying as much as before and several top brands declined, including 312 Urban Wheat (-13%), Seasonal (-35%), Bourbon County Stout (-22%) and Honkers Ale (-42%). Also gotta note, Goose noticeably realized lower average prices of its lead brands in Q4, particularly in December: Goose IPA prices down $2.90/case to $30.87, 312 Urban Wheat down $2.58/case to $30.14, Seasonal down $1.90/case to $32.07, and Honkers Ale down a whopping $10.97/case to just $21.67 for 4 wks thru Dec 25. Elysian (+70%) and Golden Road (+94%) accelerated thruout the year with new distribution territory boosts and strong IPA sales. And Four Peaks trend steady. But 10 Barrel, Devils Backbone, Blue Point and Breckenridge trends all notably slowed in Q4. So while some brands have caught on and others still have plenty of distribution (and possibly price) levers to pull, certainly some challenges ahead for AB craft too.
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01/06/2017
Anchorage TGI Friday's "Wiggled" Out of Corporate Mandates to Help Biz by Focusing on Local
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01/06/2017
"At Least Six" Oreg/SE Wash Brewers Closed in 2016, Another Six "For Sale," sez New School Beer
Meanwhile, seven (including SOB, listed above) different brewers listed as "for sale," tho almost all of them seemingly just lookin' to sell off their facilities and/or equipment opposed to their brands. That includes South Oregon Brewing, BTU Brasserie & Brewery, Amnesia Brewing, Columbia River Brewing, Deception Brewing, Bunsen Brewer and Oregon Trail Brewing. Of those listed, only Oregon Trail lookin' for investors, reportedly. All in, this is certainly an uptick in closings right in the thick of PacNW craft land. But importantly, there were still several more openings than closings in OR this yr.
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01/02/2017
SAN DIEGO SPOTLIGHT III: White Labs Expands from SD Homebase While Playing in Taproom Biz
White Labs, founded by Chris White in 1995, supplies yeast to brewers across the world. The size of those breweries runs the gamut, operations veep Neva Parker explained to CBN on a recent visit, but are mostly relatively small and in North America. Just as the number of those breweries expanded, so too has White Labs. When the co moved to its current HQ in 2011, it had about 35 employees and "five years later, we've tripled that number, basically," Neva said. White Labs employs over 100 these days, excluding its expansion with a new facility in Asheville, NC. That new space allows the company to shift about a third of current San Diego production immediately, when it starts up operations later this month, she explained. That location is White Lab's 3d primary production facility, as it also produces yeast for European customers in Copenhagen. But it's the co's 7th location overall. Internationally, it operates a distribution center in Hong Kong for Asia and Australia. Here in the US, it has an innovation-focused production facility near the UC Davis campus (one of top fermentation science programs in US), as well as a tasting room and customer service center in Boulder, CO. So when the Asheville tasting room opens later this yr, White Labs will operate retail sites in 3 of the most important taproom markets in the country.
What are visitors tasting? Beer from White Labs' small brewery, natch. It fully-commissioned its 24-hectoliter (20.5 bbls) brewhouse early last year, as founder Chris White wrote in recent 2016 recap. The brewhouse is mostly used to make wort that's not fermented for human consumption, but is instead used to feed and propagate yeast. But it also makes beers to serve in the tasting room, where servers educate visitors about the impacts of yeast on beer flavor. So ordering an IPA at the White Labs in SD doesn't necessarily result in a pint of a single beer, but a flight of 4, each made using the same wort fermented with 4 different yeast strains. That allows tasters to notice the sometimes subtle, sometimes staggeringly clear changes to flavor, aroma, clarity and more, created by yeast. To provide this experience, the White Labs brewery is outfitted with many fermenters smaller than the brewhouse to split up the batches. The setup provides unique experiences to beer geeks in a location full with attentive fans and excited visitors, just like the Front Range of Colo and Asheville, NC.
But while White Labs saw the clear opportunity to cater to that crowd and sell some beer on-site, like West Coast breweries that opened up new facilities in the East, the Asheville location is all about alleviating production and reducing shipping costs. "When we ship yeast across the country, it's priority next-day delivery, freeze-dried in a temperature-controlled shipping container. It's very expensive," co-owner of Asheville-based Hi-Wire Brewing, Adam Charnack told the Citizen-Times recently. Also like those breweries, White Labs got $40K from Buncombe County to open up in Asheville, tho the co plans to invest $8 mil in the location, hiring 65 employees or more in coming years, according to the paper. Over the next few years, it will need to work to fill capacity in NC, but with small breweries still opening all over and oppys to expand serve makers of other fermented bevs, the co still has room to expand yeast knowledge and its biz.
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In a one-time only appearance, AB bringing back 1980s spokesdog Spuds Mackenzie, “the original party Animal.” But this time Spuds is a Ghost in a full 90-second Super Bowl spot. Super Bowl ads sell for $5 mil per 30 seconds, or $15 mil if AB paid full price. So this ad is a Big Bet. It will be next installment of Bud Light’s new “Famous Among Friends,” intended as multi-yr “platform” and “not a campaign,” said Bud Light veep Alex Lambrecht. Spuds will “make a statement” that is “relevant to the cultural moment,” Alex continued; it will be “all about friendship.” But after the Super Bowl, Spuds “will return to the after life” tho not before a “final message” on Monday after the game. Bud Light down 2.3% last 4 weeks thru 1/21 in Nielsen all-outlet, a bit better than 3% drop in calendar 2016. It lost 0.4 share of volume in latest period, compared to 0.7 in full yr 2016.
Talk Value; Bud in “Crosshairs of the Next Trump Tweet?”; “Beer Should Be Bipartisan,” Sez AB’s Marcel Like Bud’s immigrant spot, this Bud Light ad should have lotsa talk value. But will it sell beer? About 70% of people are still familiar with Spuds, according to AB research, noted Alex. One question is how much those under 40 will care. Then too, talk value sometimes has consequences. AB and at least some distribs have gotta be concerned that Bud ad wades too far into hot immigration topic at wrong moment. “Budweiser may have put itself in the crosshairs of the next Trump tweet,” headlined Wash Post in extensive article this morn. “We believe beer should be bipartisan, and did not set out to create a piece of political commentary,” said mktg veep Marcel Marcondes. “However, we recognize that you can’t reference the American dream today without being part of the conversation.”
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The founders are simply "not driven by the pursuit of wealth," said Doug, who believes that growth "doesn't really mean anything unless your beer is good or getting better." So Societe purposely produces "less than what we can sell" to "ensure freshness," while keeping only its own hands on the beer "as much as possible in our local market." That includes mostly self-distribution, plus cleaning tap-lines and checking up on cold-storage at retail accounts. Societe's biz is still almost entirely local and draft-only.
The co is "still growing quite a bit, but it's slowing down" from heady days of doubling or close during first year or two, Doug said. He hopes to keep growth to around 1000 bbls per yr til production hits capacity of current space, between 8000-9000 bbls. He knows there's probably the demand to sell a lot more, and not meeting it may upset some consumers. "Compromising the product," tho, would be "more upsetting," he said. Getting to 8000+ bbls will require some additional cooperage, perhaps a silo for storage. But investing in bigger growth would mean more debt, which doesn't interest the co. Once hitting that 8000-bbl-mark, Doug would "love to even out a little bit," then "pay back all of our investors" and operate a "stronger, self-financed business, rather than [be] highly leveraged," he explained. That set of goals "goes against anything" he learned about the manufacturing biz while getting his finance degree, which he knows is typically about "locking in those economies of scale." But in his view, "craft" is all about "making the conscious decision to stay small," and taking on the additional costs to maintain quality.
Increasingly, attentive drinkers seek out the freshest beers they can in SD. When "you start drinking fresh on-site," Doug said, "you notice the difference." That's true "especially now, because of how hoppy the beers are getting." Societe's process for brewing and selling its two lead brands, Pupil and Apprentice, both IPAs, plays into that attention. The two brands make up about 40% of volume, but their releases are "staggered," Doug explained. They brew each beer every 22-24 days, putting a fresh batch of one or the other into the market every 11-12 days. Salespeople work with retailers to ensure the beers go on tap shortly after delivery. As such, Societe has "no permanent IPA handles" but plenty of rotating IPA handles (it makes another handful of IPAs and other hop-centric beers too). It's trained local drinkers to know that when they see a Societe IPA on tap, it probably "hasn't been on for more than a couple days," left the brewery less than a week or two ago and that they "might not see [the same beer again] for another week or two." The rest of Societe's broad portfolio, including some Belgian styles and a few dark beers and stouts typically do better at restaurants around town, which are more likely to keep permanent handles, Doug said. Currently, about 80% of the co's growth is still driven by "selling more beer to the same places," he estimated, and that's exactly the way he's trying to keep it.
The founders are simply "not driven by the pursuit of wealth," said Doug, who believes that growth "doesn't really mean anything unless your beer is good or getting better." So Societe purposely produces "less than what we can sell" to "ensure freshness," while keeping only its own hands on the beer "as much as possible in our local market." That includes mostly self-distribution, plus cleaning tap-lines and checking up on cold-storage at retail accounts. Societe's biz is still almost entirely local and draft-only.
The co is "still growing quite a bit, but it's slowing down" from heady days of doubling or close during first year or two, Doug said. He hopes to keep growth to around 1000 bbls per yr til production hits capacity of current space, between 8000-9000 bbls. He knows there's probably the demand to sell a lot more, and not meeting it may upset some consumers. "Compromising the product," tho, would be "more upsetting," he said. Getting to 8000+ bbls will require some additional cooperage, perhaps a silo for storage. But investing in bigger growth would mean more debt, which doesn't interest the co. Once hitting that 8000-bbl-mark, Doug would "love to even out a little bit," then "pay back all of our investors" and operate a "stronger, self-financed business, rather than [be] highly leveraged," he explained. That set of goals "goes against anything" he learned about the manufacturing biz while getting his finance degree, which he knows is typically about "locking in those economies of scale." But in his view, "craft" is all about "making the conscious decision to stay small," and taking on the additional costs to maintain quality.
Increasingly, attentive drinkers seek out the freshest beers they can in SD. When "you start drinking fresh on-site," Doug said, "you notice the difference." That's true "especially now, because of how hoppy the beers are getting." Societe's process for brewing and selling its two lead brands, Pupil and Apprentice, both IPAs, plays into that attention. The two brands make up about 40% of volume, but their releases are "staggered," Doug explained. They brew each beer every 22-24 days, putting a fresh batch of one or the other into the market every 11-12 days. Salespeople work with retailers to ensure the beers go on tap shortly after delivery. As such, Societe has "no permanent IPA handles" but plenty of rotating IPA handles (it makes another handful of IPAs and other hop-centric beers too). It's trained local drinkers to know that when they see a Societe IPA on tap, it probably "hasn't been on for more than a couple days," left the brewery less than a week or two ago and that they "might not see [the same beer again] for another week or two." The rest of Societe's broad portfolio, including some Belgian styles and a few dark beers and stouts typically do better at restaurants around town, which are more likely to keep permanent handles, Doug said. Currently, about 80% of the co's growth is still driven by "selling more beer to the same places," he estimated, and that's exactly the way he's trying to keep it.
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