Following Sep 9 completion of MC deal for majority stake in Revolver Brewing, Revolver officially entered first ever distrib partnership with Dallas-based MC house, Andrews Dist for North TX territory excluding Denton county, reported D Magazine. And Andrews wasted no time in setting strong expectations. "Revolver sold 300,000 cases last year," and "I think we'll be able to help them double that at the end of nine months," said Andrews owner and CEO Barry Andrews. Recall, Revolver was on pace for just 25K bbls this yr (almost all thru self-distribution) when deal with MC was announced last mo, but it already had equipment in place for 37K bbls/yr and more tanks on site to double that to 75K bbls/yr (see Aug 12 issue). Co-founder Rhett Keisler then expected to expand thru rest of TX via MC network "fairly quickly." So Revolver likely to finish 2016 on a strong note, well on its way to 600K CEs in next 9 mos.  

Three-year old Tempe, AZ-based co Huss Brewing, run by wife and husband Leah and Jeff Huss, became an acquirer last mo, agreeing to purchase Scottsdale, AZ's Papago Brewing in deal brokered by First Beverage, co announced. The bar and restaurant "was not part of the deal and will continue to operate and use the Papago Brewing name under license." Papago has established local following since starting in 2001, particularly with "best-selling" Orange Blossom mandarin wheat beer. But it "always outsourced the production" to "other local beer makers" since its "location in the Papago Plaza Shopping Center has made brewing on-site all but impossible," Phoenix New Times noted. Huss was among those that've helped contract brew for Papago, having "crafted each of Papago's beers." And Leah Huss actually "co-owned and operated" Papago for 14 yrs prior to starting Huss Brewing. So it seems acquisition was natural step to allow brand more breathing room to grow.

Indeed, as AZ mkt evolved and Papago biz grew "dramatically, we realized Huss Brewing can support the Papago brand in the Arizona market better than we could, and this deal is just the next logical step for us to go in order to continue our business evolution," said Papago prexy Ron Kloth in release. "Unlike many other of the big brewery mega mergers . . . where global conglomerates come in and buy local breweries and say nothing will change, in this deal it is being kept local and is in the best interest of consumers, and yes, things will change." Huss Brewing Family of Beers "can now effectively manage the growth of all of our brands under one umbrella," said Huss sales chief, Chip Mulala (previously at SanTan). And "acquiring the Papago beer brands ensures that the brand will stay in Arizona and not be bought by an out of state or international conglomerate," added Leah Huss (likely a touchy subject in AZ after AB acquired Four Peaks late last yr).

Huss family already thinkin' well into the future too, lookin' to build "a legacy for their daughter, while insuring . . . it can compete in the ever increasingly saturated craft beer market." And building a second Huss taproom in Phoenix is "another piece of that plan." Last year Papago brewed 4500 bbls according to Brewers Assn stats which was more than 100% increase vs 2014. So deal likely makes Huss Brewing the 3d largest AZ brewer behind Four Peaks and San Tan. This year Papago $$ up 322% in scans to $401K in IRI MULC thru Aug 14. And Huss Brewing new to IRI this year, tracking an incremental 1500 cases and $57K in sales YTD.  

Rather than just picking one way, Connecticut's Two Roads Brewing frequently balances multiple complexities, between its own and contract beers, larger brands and niche experiments, supporting its private biz and its community. And so far, so good. Two Roads' own brands are "on plan" to end 2016 at 45-47K bbls, CEO Brad Hittle told Craft Brew News. That's 40+% over the 32K bbls or so it shipped last yr and is "more organic growth than geographic expansion," he said. In fact, core New England markets continue to be very healthy: Eastern Conn is up about 60% thru August and RI +40% in the brand's 4th yr in the market. Road 2 Ruin Double IPA also growing in 40% range and remains its biggest brand. But maybe not for long. Session IPA Lil' Heaven's comin' on and "may surpass Road 2 Ruin in the next six to eight months," Brad said. It's up "somewhere around 90%."

Two Roads has maintained "really good on-premise distribution" at home while adding "secondary packaging placement" off premise, Brad explained. The brand's "coming on strong with the chains," with some "new distribution" helping "to drive the volume in Connecticut." But he was quick to point out the benefit of "marketing activities at the brewery," the amount of which has increased significantly, to expanding awareness and maintaining interest in the brewery and its brands.

Contract Biz for 13 Partners Still Majority of Volume; Complexity and Investment Two Roads' contract biz continues to roll along too, also "going according to plan." Combined, the brewery will likely top 100K bbls this yr, about 45% Two Roads brands, Brad estimated. That suggests slightly less contract volume than last yr, tho it's kept 13 contract partners including "some real outstanding craft brands." Two Roads produces beer for Lawson's Finest Liquids, Peak Organic, Notch Brewing and more. It "may be adding one or two" new contract partners next yr, Brad told us, tho it's still "way ahead of where we thought we'd be," in original biz plan.

Balancing these brands multiplies "the amount of complexity involved in our business model," which stretches across all operations, from permitting and legal to recipe development and inventory to accounting. "You've got a lot of methodical processes you have to adhere to," Brad said, which require significant investment. Its "lab is doubling down on equipment," for example, and the co already has over 90 full-time employees, plus an additional 20 part-timers to work the tasting room or events. The co tried "to hire people in advance of sales and to grow into that overhead," he explained. So it's "always more or less been ready for the volume wave."

"Beacon of Newness for Stratford"; Experimental Brands; Charity Events So Two Roads is also bringing a bunch of jobs and economic activity to a "part of Connecticut [that] has had some rough times," Brad said. Beyond its own biz, it's the "rebirth of a town that we're pushing." Brad felt "a sense of hopelessness and negativity" that was "palpable around town," but now "that's changing." Already, Two Roads has become a "beacon of newness for Stratford," Brad explained during a press event at the brewery last month. Tours displayed the space's old brick industrial bones surrounded by brewing equipment big and small. Indeed, just as its main brands grow, Two Roads continues to find space in its busy schedule to release a slew of barrel-aged and experimental beers. Brewer Phil Markowski recently created Northeast-style hazy IPA the co's calling 2 Juicy. It's still only available at the taproom as it's a beer that's just "not the same" after 4 wks, which makes it harder to send into broader distribution, obviously. Newer additions at the brewery include a set of outdoor fermenters, which boost overall capacity, sitting near a horizontal dairy tanker parked outside, which adds capability of large-scale kettle souring without tying up the brewhouse.

Working to revitalize Stratford doesn't just mean bringing economic activity back, either. "We've always wanted to be good citizens," Brad said of charitable work Two Roads has done from the outset. Like other previous "boom towns," Stratford "suffered from the environmental impact of the industrial growth of the 50s and 60s." So Two Roads has been working to bring attention and raise funds for Stratford Point, land once owned by DuPont and used as an army engine plant. It's now operated by the Connecticut Audubon Society as bird sanctuary, which the brewery supported with its 2d annual Shore 2 the Pour 3-mile beach running race at the end of August. This yr, the mayor matched funds with his charity, a "nice 1-2 combination." As ties between Two Roads and Stratford strengthen, Brad continues to see "many, many benefits to focusing on a local charity" for the brewery. "The human connection in the beer business is so vital," he reminded.  

"I don't have to tell you that the industry is changing dramatically," Calif Craft Brewers Assn exec director Tom McCormick said during opening remarks at members meeting last week, prior to start of Calif Craft Beer Summit in Sacramento. This changed industry will also change the politics of the industry, he insisted. "I envision a new political landscape, a new political frontier, of sorts," moving forward, he said. It's "because we've been so successful." Craft share of $$ reaches into the high-30s or low-40s in parts of Calif, Tom said. So "big beer and big alcohol want to play in our sandbox." In fact, "they are in our sandbox with both feet now." It's exactly what one of pioneering US craft brewers, Fritz Maytag thought would happen when he first took control of Anchor Brewing. Later at that meeting Fritz relayed his reactions when monthly reports came in with various brewers' market share in Calif. "Every month, Anchor showed up as 0.0," he said, and "I loved it." He knew, "if that ever goes from zero, we're in big trouble." Then, "sure enough, one day," it "got to 0.1" and he thought, "now we'll really have to go to work."

"A healthy industry is just crazy with changes," Fritz reminded, insisting that "all kinds of crazy things are going to happen." The entrance of big brewers is part of that. In fact, "I think that it's a sign of maturity for the industry," Natalie Cilurzo, co-owner of Russian River and prexy of CCBA said simply during closing panel discussion. Large acquiring small is just one way "to stay relevant," she said, and there will be more. "It's okay to have an exit strategy and to have a succession plan and to retire," she reminded. Indie brewers "just have to stay true to ourselves and find our niche."

Vinnie Cilurzo, Natalie's husband and co-owner, relayed a recent story about a late-night flight on United Airlines from Denver to demonstrate changes in the marketplace due to big brewers owning craft. The man next to him asked about beer selection, to which the stewardess responded "we replaced Bud Light with Goose Island Pilsner," according to Vinnie. "Yeah," he said, "it's still owned by AB. But that's saying something." ("I drank a gin and tonic, though," he added.) Responding to the same question about what the moves of big brewers portends for craft, Port Brewing/Lost Abbey's Tomme Arthur said "I long for the day when we don't refer to ourselves as 'craft,'" and instead noted that small brewers are "on our way back to taking the name 'beer' back."

This Is Not That: Getting Attention from Distributors, Bankers Early On "We changed the world of beer," as Firestone Walker's David Walker said during his talk, recalling what brewmaster Matt Brynildson repeats to him. He too shared stories of times before the change. Within the first few years of Firestone being in biz, the co had trouble finding a distrib in a certain part of the state, David recounted. So he mailed a $25K check to the gen'l mgr of one distrib as a "down payment on our conversation" and a sign of "good faith" that the brewer would take on its share of marketing expenses. He got "radio silence." The whole distribution system was "built around giant tenants," in David's view. And now there are less wholesalers in biz generally, but also "less of those guys out there" who refuse to adapt and "get with it." Importantly, brewers in Calif can self-distribute now, a key license privilege that they must protect, he and other speakers repeated throughout the Summit.

Another change: banks that wouldn't talk to brewers 10 or 15 years ago now chase them down, Peter Zien of AleSmith said. "In San Diego, there's kind of a fight to gobble up the good brewers," he said of banks. They may not be supposed to talk to each other, but they do, and shortly after a meeting with one, he'll get a call from a second who knows the offer he just got and presents another.

Protecting Small Brewers Thru Storytelling, Maintaining Tied House Change isn't likely to stop either. There will be "more and more" acquisitions "going forward," Tom said, but he keeps a "very rosy view" of the future. Thinking in broader terms, he believes "flavorful" beer "will have a market share of 70 to 80%." But "who is going to own that?" he asked. "Obviously they're [big brewers] going to have a share," but small brewers must "be sure that they don't take that market share from us" and "co-op" the segment completely. To do that, Tom recommended two things. First, "tell your story," he said. "They don't have that story." Let consumers know "who brews the beer that they buy," he insisted, acknowledging that brewers "have to convince them that it's important." He's been told that "80% of consumers don't care, they just want a good craft beer." Fritz picked up on that claim later: "at least 80% don't care," he agreed, reminded of the old adage that "what the world wants is a good story that's true." But "really," it's probably just that 20% who want that. "But that's our 20%, isn't it?"

The "second thing we need to do," Tom said, is "preserve equal access to market laws," specifically "tied house laws. We are able to survive because of tied house laws," he insisted (something Calif ABC gen'l counsel Matt Botting spoke of the next day, see above). Tied house "prevents payola" and "allows an equal playing field," Tom said. He understands brewers that tell him "it goes on anyway," but "can you imagine if it was legal?" Therefore they're "essential" for the survival of small companies. And again, Fritz recalled these protections and offered sincere support of staying small. "It's okay to be small," he reminded entrepreneurs in the room. "You can have a single restaurant and be world famous," he noted. "It's possible" to be small and be "profitable, exciting, world famous," rather than become what he called one of the "bizarre sort of mushroom corporations" that have taken over so many industries. He remembers "great and famous and remarkable companies who were small," and encouraged brewers hoping to do the same.  

Not one to mince words, gen'l counsel for Calif ABC, Matt Botting, said that legislation introduced (and defeated) in Calif this year would "drive a stake through the heart of tied house" law, during presentation at Calif Craft Beer Summit last week. He was referring to bill that would have cleared payments by alc bev manufacturers to individuals with interest in retail licenses. That bill described as attempt to allow sponsorship of celebrity chefs, by Matt. But language of bill went far beyond that. Calif Craft Brewers Assn and others opposed and bill eventually died, exec director Tom McCormick said in opening remarks. "Big Alcohol doesn't like equal access to market laws," he said, so org "played defense this year." He also referenced the "very important court case," which Matt also discussed, that brings a 1st Amendment challenge by a 3d party service provider that sells ads to manufacturers/distribs to place on digital video devices it puts in retail accounts. Between the two, Matt sees a possible "complete evisceration of tied house, essentially." And "you wouldn't be here without the tied house laws," he told the audience of small brewers. They "allow you to compete with Anheuser Busch, at a certain level," and "work to your advantage."

Of course, small brewers also seriously benefitted from various exceptions to those tied house rules. Now that "there are more and more exceptions," and "bigger exceptions," Matt said, the state is having to be very careful to find ones like the bill this year that "really bring the whole system into question." So new exceptions, previously seen thru the lens of providing economic benefit by helping certain businesses succeed, no longer receive "just a legislative rubber stamp," he noted. "There's still going to be exceptions. There just needs to be more robust reasons" for why to allow them beyond simply expanding business.

The way the state has thought about its economic interest in alc bev sales shifted over time, even if the language exists in the original ABC statutes, Matt explained. Originally, after the repeal of Prohibition, promoting "economic, social, moral well-being" had everything to do with promoting temperance or minimal sales of alcohol, since widespread use was seen as a damper on economic activity. But now, that same language is often interpreted as promoting the industry itself. In fact, that's become the driving force between certain changes to alc bev regulations, particularly those concerning tied house or 3-tier. And those are often much harder to explain a public policy reasoning for than, for example, keeping alcohol away from "kids and drunks," as Matt said. So, a key challenge for his agency going forward will be finding ways to make these tied house laws and the public policy reasoning behind them "relevant."  

You won't want to miss the 23d annual Beer Insights Seminar, at the Waldorf=Astoria in New York City this November. The fun begins with a reception Sunday eve, November 13th, followed by a jampacked day of programming, Monday, November 14th. This year's seminar features one of our widest-ranging and most power-packed programs ever: hear from the top exec at the world's largest brewer, ABI CEO Carlos Brito; MillerCoors CEO Gavin Hattersley; Constellation Brands Beer Division president Paul Hetterich; and global thought-leader FIFCO CEO Ramón Mendiola Sánchez (FIFCO owns North American Breweries). And don't miss thoughts from two generations of leaders at independent craft brewer Bell's Brewery, founder Larry Bell and his daughter and VP Laura Bell. Beer Marketer's INSIGHTS president Benj Steinman will provide his annual industry overview. More speakers will be announced in coming weeks. Get more info and reserve your seat today; space is limited.  

New red ale debuting this month from Gordon Biersch could be first partnership with NHL team, according to Mercury News report. It's yet another example of craft brewers buddying up with local sports teams, even if they can't win major sponsorships at same scale as largest US brewers. Chum, the beer packaged at Gordon Biersch production facility last week, expected to hit shelves in San Jose, CA later this month. It will also be available at local arena where NHL's Sharks play. 

Just two years into operation, Minneapolis, MN-based microbrewery (and state's first/nation's 3d ever cooperative brewery) Fair State Brewing announced plans to build a second location in St. Paul, reported City Pages and Star Tribune among others, making it the only brewery with operations in both of the Twin Cities. "We got to a breaking point where we couldn't live saying no to everyone all the time anymore" head brewer and co-founder Niko Tonks told City Pages. "We were completely overmatched. Running out of beer constantly." So after searching for new space since last winter, Fair State landed on nearly 42K sq-ft space at Midway Distribution Center, split into 28K sq-ft brewery and remaining space it can sublease. The new brewery will instantly help boost production from "approximately 1,500 barrels to over 7,000," papers noted, with "lots of room here for us to grow" co-founder Evan Salle told Star Tribune. Majority of production will move to new site. And co already signed on with Bernick's Distributors to bring brands to Duluth, St. Cloud, Rochester and North County wrote Eater Minneapolis separately. Construction expected to start "immediately" and "we'll be doing really well if you see beer outta here in first quarter 2017," said Niko.

Meanwhile, current 2K sq-ft, 2K bbls/yr Central Avenue brewery will live on as Fair State's only taproom (only allowed to have one in MN) and "pilot plant," Niko explained. "We'll be able to actually test batch things so that this new facility can focus on doing larger quantities of smaller amounts of beer" including Roselle, Pils, Du Pounde, new hopped lager and seasonals. The taproom will then "feature more one-offs and rotating batches." All in, "we're thinking in the long term instead of just putting Band-Aids all over everything," said Niko. "The best thing about it is that we're pretty confident we'll never have to move again."

Fair State currently has "nearly 1,000 member owners" and "currently on pace to add a member a day," noted Star Tribune. "Lifetime memberships are $200 for individuals and $300 for households" which allow for taproom discounts and other "refund[s] on patronage."  

After investing "nearly $5 million" to build 32K sq-ft brewery with 50-bbl brewhouse and initial 24K bbl/yr capacity, Chicago's first contract brewer, Great Central Brewing is ready to open next mo, reported Crain's Chicago Business. Recall, Great Central opening at 1745 Walnut St, just a block away from Goose Island's taproom at property purchased in Feb 2015 (see Aug 14, 2015 issue). Co will start with 15 clients that're mostly from IL and Midwest, such as Tangled Roots and Maplewood Brewing. "Great Central also hopes to capitalize on its central location by partnering with breweries on either coast seeking to expand their geographic reach." Currently it's "working out the details of a partnership" with Utah's Moab Brewing since co "wants to test the waters in Chicago's robust beer market." Then too, Tangled Roots expressed familiar notion, using contract brewing as "something of a bridge" to "prove ourselves as a brand" before it eventually moves into own commercial brewery, said founder Keith Pearse who previously "worked for more than a decade at SABMiller." Great Central brewery also has additional 3800 sq-ft taproom that'll pour up to 24 beers. Ultimate capacity expandable to 125K bbls/yr.  

Wicked Weed continues to branch out further, expanding into Washington DC and northern Virginia starting today with Reyes Holdings' Premium Distributors, reported NC Beer Guys blog. Recall, co added CO, NC triangle, Boston area, and GA all within last year. "When analyzing markets across the country, the DC and greater DC area were an instant attraction to Wicked Weed," said owner and head of sales Ryan Guthy. "We felt an instant connection to Premium Distributors upon meeting their craft division and ownership team," he added. Wicked Weed's full portfolio of 30+ brands will be "regularly" available.