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Turns out Dominic was born in Pasadena, CA and actually majored in German language in college. Both could have made Dominic a more appealing hire. "You can draw a lot of parallels through [POM Wonderful] experiences," he added. Dominic "views his role as bringing in new processes and organization that the company hasn't needed until its expansion into the East Coast and Europe," paper wrote. "How do you service more customers when some of your products are made in one location and some products are made in other locations?" Dominic asked. "Those are the muscles that have to be built in a more purposeful way." Then too, "restructuring was a necessary course correction we needed to do to match our growth trajectory and spending trajectory," he said of the recent lay-offs, calling it "the simple evolution of business." Again, he referenced "pressures from Big Beer" and their "impact" on industry growth as a primary source of those changes. Regarding Berlin project, he acknowledged it's "part of Stone's long-term plans to 'shape' the overseas market," paper noted. "It's something we need to start now so it can be of substance later.... There is no such thing as a homogeneous European approach that makes sense. It's going to have to be done market by market," said Dominic. No other big expansion plans "in the pipeline," both Dominic and Greg Koch confirmed. But True Craft project "underway," paper noted. Will Stone ever sell? There's a "zero point zero zero never percent" chance, sez Dominic.
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12/23/2016
CBA Appoints Two AB Folks to Board: VP of High End and VP of North America Biz Development
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Four Corners started in 2012 aiming to bring the "craft beer experience" to fast-growing Dallas metro area (now #4 in size nationally) and especially its Hispanic and bicultural population. Texas is 40% Hispanic, with most defining themselves as bicultural. That's Four Corners backyard and potential market right there. These consumers are "underrepresented and underindexed" in the craft segment, sez George. Four Corners is "trying to invite a whole consumer base to the craft beer journey that's never been there before. That's what we do," said George. He sees Four Corners as "bridging" craft to the bicultural consumer.
Most of Four Corner's tweets are in Spanglish or Spanish. "We live it. We are who we are." Four Corners's branding and packaging are as "friendly as possible" to help "demystify" craft for the bicultural consumer. "We can be familiar" and hit "deeper emotional triggers" with branding and packaging based on the iconography of popular game loteria (Mexican bingo). That way consumers can say they "remember the icon" and "hey they're talking to me." Four Corner's lead brand is Local Buzz, about 45% of volume, with the image of a bee. Its #2 brand is a big IPA, El Chingon (translated roughly as Bad Ass), another 30% of volume.
Headed to 9000 Bbls, New Brewery and Greater Distribution So far, Four Corners mainly sells in Dallas Metro via self-distribution and Andrews Distributing. It also sells down by the Mexican border with L&F (McAllen). Four Corners will sell about 9,000 bbls or 125,000 cases this year. Next yr, Four Corners plans to "really break out," George told CBN. It will move to a new brewery, which has 25,000 bbls capacity and begin expanding to other parts of Tex, including San Antonio, El Paso and Austin. Four Corners is going with Glazer's in San Antonio and El Paso, hasn't decided yet in Austin. With the addition of fermenters, Four Corners could get to 75,000 bbls capacity in its new location.
Four Corners recently hired Robbie Farquharson as sales veep. Robbie previously worked for MillerCoors, New Belgium and Phusion. Four Corners will be looking for more penetration on premise and "more engagement at store level." Interestingly, Four Corners breaks the usual craft paradigm, with 80% of its volume sold off premise, just 20% on. Surprisingly, it already has #1 or #2 SKU of any beer in key Central Market store in Dallas. It's also working closely with upscale Hispanic chain Rio Grande to develop their "Cerveza Artisanales" section, which will feature Four Corners as local craft. George also sang praises of "partnership" with Andrews Dist, which includes access to its "important" insights and data, and Andrews approach to "marketing at the point of sale." In conclusion, George said: "We are trying to do something different with the category," adding "we can travel well."
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12/23/2016
Big Tex Market Still Small Share for Craft, But Comin' On with New Breweries, Lots of M&A
Over 250 Small Brewers in Tex, Mostly in Big Cities; Shift to Brewpubs By the end of this year, the state had 257 licensed small brewers, according to post this week by Craft Beer Austin. The site dug into Texas ABC stats to find that most of them are brewpubs now. And more brewpubs opening in the state than production breweries. That's largely due to law change that allows brewpubs to distribute as well as sell beer for on-site consumption. So Tex now home to 150 brewpub licenses, with 40 more approved in 2016 alone. That's 25% more than the 32 approved the year prior, 4X the amount approved in 2014, over 10X approvals in 2012. Plus, an additional 10 companies switched from a brewer's license to a brewpub license this yr. Interestingly, while brewpub approvals at highest point ever, not as many brewery licenses approved in 2016 as in 2015: 24, vs 28, according to this count. But still, of 107 brewery licenses (not including contract brewers or those brewing in a second location), 93 opened in 2012 or later. And most of these breweries still opening in big Tex cities, with Dallas/Fort Worth and Austin/San Antonio corridor seeing majority of growth, as Craft Beer Austin's map of new breweries shows. Plenty of different biz models, like everywhere else, opening recently in Tex, including some with fresh creative takes like Dallas-based Four Corners (featured below).
Note too that biggest US brewers bought into Tex craft scene in big way this year alone. Recall, just last month, AB added Karbach (about 80K bbls this yr) to its High End portfolio. In Aug, MC bought majority of Revolver (was on pace for 25K bbls this yr, before deal and recent boost to distribution). And a couple months before that, Lagunitas took stake in Independence (lookin' at 18K bbls or so this yr). If craft 5-6 share in Tex this yr, these 3 brands could be over 10 share of the segment already. And all 3 companies have plans to expand capacity significantly: they're eyeing expansions to take them to 150K bbls, 75K bbls and 65-75K bbls, respectively. So both AB & MC now playing there, as well as one of top US craft brewers that has 50/50 JV with global Heineken, which has significant position in nearby Mexico. These large players could be much bigger part of expanding craft in Tex than they have been developing the segment in many other states. How will that affect competition within craft, its growth and its feel in country's 2d largest beer market?
Over 250 Small Brewers in Tex, Mostly in Big Cities; Shift to Brewpubs By the end of this year, the state had 257 licensed small brewers, according to post this week by Craft Beer Austin. The site dug into Texas ABC stats to find that most of them are brewpubs now. And more brewpubs opening in the state than production breweries. That's largely due to law change that allows brewpubs to distribute as well as sell beer for on-site consumption. So Tex now home to 150 brewpub licenses, with 40 more approved in 2016 alone. That's 25% more than the 32 approved the year prior, 4X the amount approved in 2014, over 10X approvals in 2012. Plus, an additional 10 companies switched from a brewer's license to a brewpub license this yr. Interestingly, while brewpub approvals at highest point ever, not as many brewery licenses approved in 2016 as in 2015: 24, vs 28, according to this count. But still, of 107 brewery licenses (not including contract brewers or those brewing in a second location), 93 opened in 2012 or later. And most of these breweries still opening in big Tex cities, with Dallas/Fort Worth and Austin/San Antonio corridor seeing majority of growth, as Craft Beer Austin's map of new breweries shows. Plenty of different biz models, like everywhere else, opening recently in Tex, including some with fresh creative takes like Dallas-based Four Corners (featured below).
Note too that biggest US brewers bought into Tex craft scene in big way this year alone. Recall, just last month, AB added Karbach (about 80K bbls this yr) to its High End portfolio. In Aug, MC bought majority of Revolver (was on pace for 25K bbls this yr, before deal and recent boost to distribution). And a couple months before that, Lagunitas took stake in Independence (lookin' at 18K bbls or so this yr). If craft 5-6 share in Tex this yr, these 3 brands could be over 10 share of the segment already. And all 3 companies have plans to expand capacity significantly: they're eyeing expansions to take them to 150K bbls, 75K bbls and 65-75K bbls, respectively. So both AB & MC now playing there, as well as one of top US craft brewers that has 50/50 JV with global Heineken, which has significant position in nearby Mexico. These large players could be much bigger part of expanding craft in Tex than they have been developing the segment in many other states. How will that affect competition within craft, its growth and its feel in country's 2d largest beer market?
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12/21/2016
More Tiny Turmoil in Chi-Town: Ale Syndicate's $$ Trouble Leads to Lease Loss, Couple Closings
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Currently co is "in negotiations for 10 potential locations in markets including Louisville, Lexington, Denver, Florida, Missouri, Phoenix/Scottsdale, Cincinnati and Columbus," noted Inside Indiana Business. It'll reportedly look to expand in Midwest first, sez IBJ, and within a year it'll look to open in AZ and other mkts in Southwestern part of US with help from another PE firm, ZGrowth Capital Fund, that's also "involved in the deal." Meanwhile, Scott also founded a brewery called Thr3e Wise Men Brewing, also based in Indianapolis (and Muncie), currently producing 9K bbls/yr with "a pizza driven menu out of its restaurant locations attached to the brewery," noted FSR. That's also included in the deal. And you can bet Thr3e Wise Men has several taps at all of its IN-based Scotty's Brewhouse locations. "There are significant plans to expand Thr3e Wise Men nationwide as well," FSR mag added.
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Jay Wiederhold, prexy of Pennsy Beer Alliance, voiced distrib response in rebuttal published last week. His key points: 1) PA brewers have option to self-distribute; 2) PA brewers can assign exclusive territories, or simply have distrib warehouse and deliver product; 3) standards to measure "good cause" for termination can and should be negotiated in contracts. Indeed, while Bill told paper "to go backwards and try to establish terms would be unworkable," several sources suggest brewers and distribs have in fact worked out these very issues via contract language, specifically citing Straub Brewing. Jay pointed out that the brewers' 20% "solution" is "woefully short of any sense of fairness or proportion." For many distribs, all of their brands are 20% or less of their biz and allowing them to be taken away "at the whim of a brewer" would make distribs' bizzes much more risky and threaten their ability to borrow money. Then too, brands with small shares of a distrib's biz often are higher share of margin. Brewers had also suggested that when distribs do deals, brewers should have right of first refusal to remove their brands from transactions and sell to another distrib. But buyers do deals based on a "complete portfolio," Jay responded. If brands can leave, that diminishes value. "Is this a fair and balanced system?" Jay asks, and answers: "The answer is resoundingly 'yes' (and remarkably similar to the systems in most other states)."
More Hits from Pennsy Brewers: AB Mega-Distribs "Killing" Craft; Planograms Too Not surprising that 20% figure popped in PA and MA (recall NY adopted 3% threshold), since Boston Beer a key player in both states. And PA has another big small brewer: Yuengling. Brewers of PA (BoP)/Yuengling atty Ted Zeller provided info for Lehigh Valley Biz article, including point about right of first refusal. No legislation currently pending in PA and 20% rule previously failed to get traction there. But BoP also recently tweeted copy of map created by consultant Joe Thompson that identified mega-AB distribs and AB branches across US (none in PA) along with message: "ABI Mega distributors are killing craft beer. These shops bury local beer. Support independent distributors. Brewers of Pennsylvania." Yet, some of the named distribs have extensive, successful craft portfolios. Elsewhere, Zeller penned a blogpost attacking planograms provided to retailers by large AB and MC distribs as "a tool to exclude smaller craft suppliers that might be represented by their competitors who are independent wholesalers." As Pennsy opens market to more outlets retailing beer, "the planogram is the large wholesaler's bait to control new outlets coming" to the state, and limit consumer choice, Ted charges. Gotta note, craft beer has thrived across US, along with planograms, in many retail outlets. Franchise law battles between small brewers and distribs ebbed in 2016. Will they pick up in 2017, via these questions concerning consumer choice?
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12/21/2016
AB Craft Expansions: Blue Point Slows But New Brewery Planned; Karbach Expansion; Global Goose
Blue Point Down Recently in IRI, Expects +20% in 2017: Going Natl, Building New HQ; NYC Distrib Swap Plenty of health across AB's acquired craft portfolio in IRI data, but Blue Point ain't the shining star. Blue Point $$ down 0.8% for last 12 weeks thru Nov 27 nationally in broad multi-outlet + convenience channel. Other than Toasted Lager (+7.5%), Hoptical Illusion (+11%) and Variety Pk (+16%), every Blue Point brand tracked in scans down double-digits for period. Co still up 10% yr-to-date, including territorial expansion. But that's one of slowest growth rates of any of AB's acquired craft brewers (only Breckenridge slower, up 7% YTD).
Since Blue Point was acquired in 2014 ("for a reported $24 million"), plenty changed: production up 75%, new logo debuted, first media campaign launched, ABI mktg exec Todd Ashmann brought on as prexy and distribution expanded from 15 states to "more than 46 states," Newsday recently reported in lengthy look at Blue Point post-acquisition. "By the end of the first quarter of next year, we will be in every state," Todd told paper. So co expects to grow 20% in 2017 with natl reach. But increased competition is creeping up on Blue Point both in its home mkt and nation-wide. Now "there are at least 36 breweries and brew pubs on Long Island, up from 19 in early 2015," noted paper, citing NY Brewers Assn numbers. Local distrib, Clare Rose sells "several hundred thousand" CEs of Blue Point, CEO Sean Rose told paper. He estimates that Blue Point accounts for "about 2 percent of the beer sold on the Island." Growth certainly isn't what it used to be on the Island (and beyond), but Sean still apparently very bullish on Blue Point's prospects: it still "could double or triple its distribution on Long Island," he told paper. Blue Point now "working on a $35 million relocation to downtown Patchogue, to the campus of Briarcliffe College when it closes in a year," paper added. The 53K sq-ft site will be Blue Point's new HQ and as you may have guessed, it'll add a restaurant and increase employment from 37 to 67 folks.
At same time, word bubbling up that after nearly 3 yrs, AB will finally get a deal done to bring most of Blue Point distribution in-house in NYC. (Note, this part of Blue Point story appeared in INSIGHTS Express yesterday.) Union Dist (a Sheehan Family Co) has sold Blue Point brands across five boroughs of NYC for yrs and yrs. That had to bug AB, following AB purchase of Blue Point Brewing in Feb 2014. But carve out in state franchise law wouldn't allow AB to move (efforts came after AB bought Blue Point) and they couldn't get a deal done. Until now. Brands still haven't changed hands, but reportedly will in early Jan. Some retailers already notified. AB will get Blue Point brands for its branches in Queens, Bronx, Staten Island and Manhattan, while Union will still sell Blue Point in Brooklyn. And Union will get AB brands in part of Queens.
Karbach's $4.5-Mil Build-Out: 150K Bbls by 2019 Karbach already started to expand its Houston brewery when AB announced acquisition of the brewer early last month (see Nov 3 issue). Recall, it'll pass 80K bbls this yr with goal to pass 100K bbls just in Texas next year, co-founder Eric Warner told us. To help get there, a $4.5-mil expansion will add over 50K sq-ft to Karbach's facility by next summer, Houston Biz Journal reported this week. Some of that space will make room for canning operations and increased barrel-aging.
Goose Island Pubs in 6 Countries (Plus US), Int'l Brewing Planned for Biggest AB Craft Brand Finally, Goose is going global, with plans in place to open brewpubs or branded bars in 5 more countries across the globe in addition to Philly and London projects already announced, the Chicago Tribune reported yesterday. (A different version of this story appeared in INSIGHTS Express yesterday.) AB also hopes to boost exports from the US and begin producing Goose brands abroad. This month alone, at same time that London concept opens, Brazil, Mexico, China and Korea will all get branded Goose retail locations. Full brewpubs will open in Sao Paolo, homebase for ABI's Brazil biz, and in Seoul and Shanghai in Asia. A branded pub will open in Monterrey, south of the border. Early next year, our neighbors to the north will see a Toronto brewpub open. Folks in Brussels, Belgium could be first to get a Goose bar if all works out in London.
Then too, AB's goosing up Goose exports to countries like Canada, Mexico, Brazil, England, Scandinavia, Belgium, the Netherlands, South Korea and China, with benefit of separate global sales team within the co's High End biz unit. But it's also got plans to begin producing some Goose beers in China and possibility to do the same in Brazil and Europe, the Trib reported. So Goose clearly has "one significant leg up" as craft goes global: "its ownership," according to paper. "It's plain and simple," Goose prexy Ken Stout told the Trib, "if we don't do it, somebody else is going to." Goose's "biggest advantage" is being "part of the largest brewing concern on planet earth," he continued, so "we have access to these markets." That's not very welcome for folks at Brewers Assn, which has been working to expand exports of its members for years. "We have nothing but respect for the quality of the beers coming out of Goose Island," CEO Bob Pease told the paper. But he clearly pushes back against "one company [having] that much control of the domestic and international market."
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In big Southern Calif market, above premium segments already close to 70 share of off-premise $$, according to snapshot of Nielsen all-outlet off-premise data for 13 wks thru Dec 3, and craft a key part of ongoing premiumization there, as elsewhere. Above premium segments gaining 2 share of $$ in SoCal; craft is half that, up 1 full share point to 19.5 (imports bigger, gaining more share, natch). Craft $$ up about 5.5% for 13 wks thru 12/3.
While craft in national scans this year largely a story about biggest brands dippin', not so in SoCal. In fact, three of largest craft brands there over 16 share of segment $$ for 13 wks, gaining over 3 points. That's led by newish top dog in the area, Firestone Walker 805. It's now #15 beer brand by $$ in SoCal, up over 40% this period. And that growth, about $1.2 mil, was almost 40% of total craft growth for 13 wks. That put 805 at 6.7 share of craft $$, +1.8. It passed Blue Moon flagship (-7%) in SoCal this period. Next largest craft brand in the market, Lagunitas IPA about to pass Blue Moon too: up by about 25% and less than $75K behind at #18 beer brand. Talkin' about IPAs passing other brands, Stone IPA moved ahead of Sierra Pale in SoCal during this period. Stone IPA $$ still up over 30%, now #24 beer brand there. So top 3 craft brands in SoCal not only all up double digits, all up by well over 20%. Sierra Pale, at #25 brand overall, -2% for 13 wks.
Note that SoCal market is driven by LA. Largest scan market in the US represented about 75% of SoCal beer $$ for 13 wks thru Dec 3 in Nielsen all-outlet data. So craft trend in LA pretty similar +5.3%. Both 805 and Lagunitas IPA, at same overall brand rankings in LA as total SoCal (#15 and 18) and both growing even faster. And again, 805 easily passed Blue Moon (and Corona Light, Natural Light, Miller High Life and Miller Genuine Draft, by the way) and Lagunitas IPA poised to pass it soon. Top Belgian Whites not faring so well in LA: Blue Moon -6.5%, Shock Top -25%. Overall, craft up 0.8 share of beer $$ in LA to 16.8. So in LA, the segment is about 3 share points behind where it is in total SoCal, even though LA is vast majority of sales in the region. Howzzat? Well, most of the rest of SoCal is San Diego, where craft is biggest segment by $$ at 31.3 share, up 2.2. Yes, in even more competitive, more developed SD market, craft growing faster, +7%. Go fig.
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