Lagunitas is at it again and founder Tony Magee's back to breakin' news via Twitter feed. This time Lagunitas has "leased the building" and "purchased the small brewing gear that was home of the late great Hilliard's Beer Co," in Ballard district of Seattle, WA, said Tony. "Got some work to do to get us licensed & the space cooled out, a few months prolly," he added.

Hilliard's had recently sold 100% of its biz to another small local brewer, Odin, and at the time co stated intention to sell off Hilliard facility mostly "as-is" (see Jun 24 issue). So Lagunitas jumped at the oppy, furthering its local strategy; this time no minority stake or partnership. Recall, after announcing partnerships with Independence, Moonlight and Southend Brewing, Tony remarked that "if we can get this first step right then it is just the beginning for all of us." He wants to make "a bunch of these relationships," he told Chi Tribune separately at the time.  

Big win for TX brewers yesterday, after Travis County Dist Ct judge officially ruled that law passed in 2013 prohibiting brewers from selling territorial distribs rights in-state is unconstitutional. Recall, that provision, passed as part of package that gave new rights to craft brewers, was supported by Wholesale Beer Distribs of Tex, one of two big Tex beer distrib assns, reminds Houston Chronicle beer scribe Ronnie Crocker. Atty who represented brewers (Live Oak, Peticolas and MC's Revolver) who originally filed suit in late 2014 said at recent hearing: "This law, it was written by beer distributors to enrich big beer distributors and that is not a legitimate state interest." Decision came 10 days after hearing.

"The Judge, Karin Crump, made a courageous decision in which she had to go against the will of the legislature, the TABC and the AG's office to decide in our favor," said Live Oak co-founder and President, Chip McElroy in Facebook post. "It just goes to show the huge meritorious advantage our case had against theirs. Besides relief, the biggest emotion I have right now is a feeling of vindication." TABC has 30 days to appeal the decision.  

Lots more details on extended and new AB-CBA agreements shared on conference call earlier this week including major piece of news (as we reported in INSIGHTS Express). AB and CBA agreed on a minimum "qualifying offer" that AB can make to acquire the rest of CBA at $22 per share over next 12 mos, $23.25 per share the next 12 mos after that and $24.50 per share thereafter (recall, AB owns 31.6%). AB not bound to make, nor is CBA bound to accept, offer. And who knows if DoJ would approve the acquisition anyway? (Still reviewing Devils Backbone deal many mos after deal announced). But just the possibility of a much higher stock price enuf to capture financial community's interest. Big time. Stock price skyrocketed up 20% plus in day one after announcement and BREW continues to climb as time goes: over $20/share earlier today before settling back to $19.90 at press time. It closed at $14.46 just before announcement.

Analysts and other observers have previously speculated that some form of further deal between AB and CBA likely. And after announcement Bloomberg called "this level of detail" a signal "that AB InBev has every intention of wanting options for craft brew acquisitions in the future." It and others (see Seeking Alpha takes in Aug 2 and Jul 7 issues) speculated that ABI "really just interested in buying the Kona brand," since that's major growth piece and part of new agreement requires CBA to invest half of savings from extended distribution agreement (0.50/case lower than previously contemplated) back into Kona brand. Yet CBA ceo Andy Thomas refuted that notion in Market Watch interview, plainly stating: "I don't see Kona ever being a standalone right now. It's not the path we're headed on and it's not how we work together."

Other significant details on call regarding amount of $$ CBA can save/gain thru new agreement. Altogether, CBA expects to benefit over $10 mil a year, Andy Thomas said. ABI will pay CBA a series of incremental "fixed payments for rights to sell its brands in intl mkts; $3 mil in 2016, $5 mil in 2017, $6 mil in 2018 and $20 mil incentive payment in 2019. Those payments will be made unless AB makes qualifying offer and CBA rejects, or if CBA were to "undergo a change in control" with someone else. Interestingly, if there's no offer by 2019, CBA would be entitled to $20 mil fee for intl distribution rights and AB no longer can force termination: CBA could choose to operate independently or undergo change in control and ABI would have to respect all agreements. Does that incentivize AB to make an offer prior to 2019? Either way, internationally "there's a lot of excitement" and "not only for Kona, but Kona for sure," High End ceo Felipe Szpigel told Market Watch. "We're also getting ready to grow High End" internationally, he added. Previously it's been surmised that Lagunitas IPA, Goose IPA or some other ABI related brands have best chances at attaining global craft tag. It seems that Kona in the running as well.

CBA will also save at least $10 per bbl on up to 300,000 bbls per yr (or $3 mil per yr) it will make at AB breweries, tho that won't be fully ramped up until end of next yr. And CBA will be "transitioning" about 100,000 bbls away from Memphis. And lastly, these agreements also "open up opportunities" for CBA to pursue more partnerships (like with Cisco and Appalachian) or perhaps M&A. It "allows us to be bolder," said ceo Andy Thomas. "A lot more options are available to us," he added.  

Expanding its portfolio helped Boston Beer keep its off-premise biz +1.5% by $$ thru the first 2/3 of the year. But Boston volume on the other side of flat, -0.6% in IRI multi-outlet + convenience data thru Aug 14. That includes healthy bump from Alchemy & Science, more than doubling on its own YTD from lots of incremental Coney Island hard soda sales (tho note those brands down more recently, cycling last yr's launch). The A&S division represented a bit less than 5% of Boston's total off-premise volume, a bit more than 5% of $$. Exclude it, and Boston down 2-3%. And trends across its portfolio of 3 core brands far from even.

Samuel Adams brand family still easily largest set of craft brands out there at about $196 mil in sales, or 5.8 mil case equivalents thru mid-August. (Recall, IRI includes Blue Moon brands with craft, about $15 mil and over 600K CEs larger than Sam Adams.) But Boston's lost over $14 mil in Sam Adams sales, nearly 600K CEs, in IRI-tracked channels already this year. That puts Sam Adams family down 6.7% by $$, -9.3% by volume. So first and still largest Boston brand family now a little less that 39% of the co's total off-premise biz, down from 42% at this time last yr.

Sam Growth Coming from New; Few Existing Brands Growing Boston has 51 different Sam Adams brands in IRI MULC data thru 8/14. Just 11 grew in that time, including new brands. The whole group certainly includes one-offs, specialties, variety packs and seasonal offerings, some of which are hold overs from last yr or brands replaced by newer options. But competitive environment clearly hitting biggest craft brand family hard. Boston's got 8 new or almost entirely incremental brands (nitros, Rebel Grapefruit and Raw, Downtime Pilsner and more, see above). They're adding a collective $15.7 mil in sales and over 400K CEs in IRI. So just 3 pre-existing Sam brands contributing off-premise growth so far this yr: Rebel Rouser Double IPA, up over 40%, plus Pack of Rebels mix-pk and ultra-premium Utopias.

Biggest Sam brands having toughest go of it. Sam's two seasonal brands (Seasonal and Seasonal Overlay) total about 1/3 of Sam $$ sales, and each down about 20%. Boston Lager is a little over a quarter of Sam Adams biz and down 11%. Base Rebel IPA is near 12% of Sam Adams $$, -13%. So combo of just 4 brands, which were 78% of Sam Adams sales and 33% of Boston's off-premise biz for comparable period in 2015 collectively lost over $25.4 mil in sales, -15.6%. They're now 70% of Sam Adams and 27% of total Boston Beer.

A&S Beer Brands Healthy But Small Boston now sells a handful of much smaller beer brands through Alchemy & Science, but they only totaled about 0.2% of the co's $$ sales off-premises. The Angel City, Concrete Beach and Coney Island brand families (excluding hard sodas) totaled about $1.2 mil thru 8/14. That's about the same size as Three Floyds, Hopworks Urban Brewery or Knee Deep for same period. Each of these A&S brands are growing, Angel City and Concrete Beach by about 120%. And like those other smallish craft brands, their on-premise biz likely to be significantly healthier in home markets than Boston's other brands.

Cider Slipping But FMBs Flying Boston's best growth is clearly coming from outside of beer these days. But earlier growth engine, Angry Orchard cider, not turning over like it used to. Boston's cider brands down 12.6% by volume in IRI MULC thru 8/14. They were just over 4 mil CEs, a little over 27% of Boston's off-premise volume. Though Twisted Tea FMBs still a little smaller by $$, at 4.4 mil CEs the teas passed cider in terms of volume. Total Twisted Tea family up about 20% YTD and get this: it's led by flagship Original, +23%, buttressed by Half and Half, +30%. Add in about $20 mil and almost half a million CEs of hard sodas, and Boston sold almost 4.9 mil CEs of FMBs so far this yr. That's 32.6% of total Boston cases in off-premise. (Note this doesn't include Traveler shandies, which represent another 1% of Boston's biz in IRI, down 20+%. And new Truly Spiked not included in these Boston numbers at all, categorized in separate bev alc category by IRI).  

Sitting within New Belgium's shiny new brewhouse in Asheville, North Carolina last night, founder Kim Jordan reflected on a "winning" year for the company, the "rough waters ahead" for craft and her belief that "it will right itself," during Brew Talks event hosted by Brewbound. This year, NBB depletions up almost 7% yr-to-date, and up in mid-20s in Aug. New markets are part of that, natch. So is success of Citradelic. But "same-state growth is really healthy," she reported, and the co has a "new and energized management team" that's "bringing new, fresh ideas." With Fat Tire now "#2 'true' craft' brand in the United States" and Citradelic "#1 craft launch," Kim noted that folks at NBB "don't live and die by those numbers," however, "we do like to win." And right now, "we're killin' it."

Kim countered the notion that somehow the "bloom is off the rose" for craft, citing that the segment's still up mid-singles. But she also acknowledged that "there are rough waters ahead." And "you never want to see those hiccup phases." Noting her and NBB's focus on and love for making "delicious beer," and that not all companies are similarly focused on quality or beer at all but on making a quick buck, "I want to see the good guys win," she said. Rough as it may get, "it will right itself," she believes.

Conversation dipped into the deal landscape, of course, including Kim's characterization of her company's exploration of possible changes in NBB's ownership as a "multi-country death march." Through that, she learned that "there are people in this business who love beer and there are people in this business who couldn't care less" about it. And those folks are "not so much our type," she found. As the number of businesses operating in craft expands, NBB is "going to need to figure out how to use what we're already doing in communities all over the country as a launch point" to attract drinkers in places where the company isn't necessarily local. "I think business models matter," she said, and can help in that attraction. That includes NBB's employee ownership, a biz model that provides a different kind of "opportunity for Americans to own things." As Kim sees "a bigger and bigger gap between the kind of people who can own things and the people who can not," it's a story she's clearly passionate about telling.  

There are currently over 900 craft brands in scans so far this yr still getting all incremental growth that collectively reached $106.3 mil in sales and 2.7 mil cases YTD thru Aug 14, lookin' at IRI multi-outlet + convenience data. That's still a little over half of total craft growth (see May 26 issue), up about $210 mil YTD in toto. Many of these brands are tiny, but list also includes 18 brands already over $1 mil in sales (ranging as high as $11.5 mil) that collectively make up nearly half of total new brand sales. Editor's note: keep in mind that a portion of these brands won't finish the yr all incremental since sales began later last yr, including some of largest new brands like NBB Citradelic, Sierra Otra Vez, etc. IRI currently counts 617 of those brands as fully NEW brands that're collectively $58.5 mil and 1.55 mil cases YTD. Either way, there are clearly still plenty of new brands being intro'd into the system, even tho total brand and SKU counts in IRI this yr point to potential rationalization in chains (see Aug 16 issue). That suggests lotsa pre-existing brands are getting cut out of the mix at same time.

NBB Intros Keeping Co in Black; Sam, Sierra Intros Not Enuf Largest new craft brand this yr, New Belgium Citradelic IPA sales continue to climb as yr goes on. It's now the 35th largest craft brand by both $$ and volume in IRI MULC thru Aug 14 with $11.5 mil and over 313,700 cases tracked, putting it just below Ballast Point Sculpin IPA (+43.5%) in $$ and just below Stone IPA in cases. What's more, Citradelic's total growth (still all incremental) is second only to Coney Island Hard Root Beer among all (IRI-defined) craft brands. And since Coney Root Beer sales just began to cycle and took a nosedive in latest periods, it's possible Citradelic will be largest craft brand gainer overall in 2016 scans. While NBB's Ranger IPA (-16%) strugglin' and Slow Ride Session IPA (-49%) fallin' off a cliff, Citradelic gains more than make up for total of those declines. Also gotta note, adding to strong innovation yr for co, New Belgium's new gluten-reduced brands, Glutiny Pale Ale and Golden Ale, collectively tracked over $1 mil in sales YTD.

Sam Adams Rebel Grapefruit IPA is 2d largest new brand at $8.25 mil in sales. Similarly, that more than makes up for any declines among Sam's Rebel family of brands. New Nitro series collectively hit $5.5 mil YTD with White Ale, Coffee Stout and IPA at 7th, 8th and 15th largest new scan brands respectively. And Sam Downtime Pilsner (still mostly incremental) $1.3 mil growth and new Adventures in Lager variety pk added tiny $60K. But rest of portfolio strugglin' big time (see below). Then too, Sierra Nevada Otra Vez is still 3d largest new craft brand this yr, tho less than half the size of Rebel Grapefruit at $3.9 mil YTD. Other than Sierra Seasonal and a handful of other tiny new brand intros this yr, every other Sierra brand in the portfolio is declining YTD. So NBB innovations ultimately keepin' biz ahead in 2016 while Sam and Sierra innovations not enuf. Questions remain, will Citradelic and Rebel Grapefruit (among others) be able to sustain launch growth next year? Will Sierra Otra Vez catch on more in yr 2? What else will these cos and others bring to the table next yr and how will future new brands affect rest of their respective portfolios?

Ballast Intros Over $6.4 Mil YTD; Low-Priced Private Label Brands Climb; Other Highlights Lookin' further down the list of new brands in scans, while Coney Island Root Beer already began cycling last yrs launch, Orange Cream ($3.6 mil) and Hard Ginger ($1.6 mil) still among the top new brands YTD. Ballast Point Pineapple Sculpin IPA and Switchback Brown Ale each reached $3.1 mil in sales. Keep in mind, VT's Switchback is among fastest growin' cos in scans altogether, tho Brown Ale represents virtually all of its growth. Ballast also has Watermelon Dorado Double IPA, Mango Session IPA and Sculpin Variety Pk collectively adding another $3.3 mil YTD. A coupla low-priced private label brands still climbing the ranks (see Aug 2 issue). Rockdale Light lager $$ already a bit ahead of AB's new Goose Island Four Star Pilsner, selling at $12.50/case. So its incremental 142K cases actually 3d largest among new brands, behind Rebel Grapefruit and Citradelic. And Walmart's Trouble Variety Pk already shot up to $1.6 mil in sales at $25.61/case. Kona Seasonal, Firestone Walker Luponic Distortion IPA and Rhinegeist Rotational Ales each above $1 mil in sales, and Founders Rubaeus Raspberry Ale just below at $892K YTD. All in, 18 brands already sold over $1 mil in sales, 140+ brands reached between $100K and $900K in sales, while hundreds upon hundreds of new brands in scans were smaller yet YTD. All from a mix of larger, more established craft and from smaller local cos that're newer to scans altogether.  

Beer production in Ireland rose 6% to approx 6.4 mil bbls in 2015, "largely due to a big jump in craft beer production," according to "a new report," cited by Irish Times. Indeed, Irish craft up 66% to approx 205K bbls last year, gaining 0.8 share to 2 total; up a whopping 550% since 2012. Revs from Irish exports also grew solid 16% to nearly $300 mil, paper noted citing data from Irish Brewers' Association. That's 43% "of all beer produced in Ireland." Keep in mind, Irish shipments into US are up 16% again this yr to 68K bbls thru Jun - the only other major import source that's growing beer biz in US other than Mexico so far this yr (see Aug 5 issue of INSIGHTS Express).

Meanwhile, the Independent Craft Brewers of Ireland (ICBU) also introduced its own symbol "to make it easier to identify Irish brewer craft beer," reported Sunday Business Post separately, following recent decision by UK Society of Independent Brewers (SIBA) to do the same (see Aug 16 issue). "Understanding that a beer is genuinely from a microbrewery rather than from a multinational with a snazzy label is important…. Our beer is going to command a premium price and people are going to want to know why that is," said co-founder of Metalman Brewing and ICBU board member, Grainne Walsh.  

Forget asking whether or not your city can handle a (or another) brewery, how about your neighborhood? Taprooms make small-scale breweries catering to individual neighborhoods in beer-loving cities like Denver economically viable and therefore increasingly popular, according to extensive Denver Post article last week. The key: know your model and know your limits. For example, Bruz Beers originally planned on broader production and distribution with a homebase "in the craft beer hotbed of River North" nabe. But after it couldn't find the right spot, the co got an opportunity to open in a location developers set aside for a brewery when planning a new community in Midtown. "We changed our business model," co-founder Ryan Evans told the paper. "We saw the market changing, we saw the competition changing on the shelf," he said, and focused on taproom sales. Bruz isn't alone. It and other taproom-focused breweries also do limited packaging runs or keg distribution, made easier by flexible packaging options like crowlers or mobile canning and self-distribution laws or boutique distribs. And note that bigger cos are pulling back too: both Twisted Pine and Wynkoop (following separation from Breckenridge) recently decided to stop distribution to focus on selling beer at their restaurants.  

  Three year old contract brewer, Brew Detroit LLC, has changed biz model, now only offering alternating proprietorships, ceo Jerry Kocak told MiBiz in recent article. Recall, alt props allow brewers to rent equipment from a separate host brewery while using its own staff, ingredients, packaging, labels, etc. Importantly, a contract brewery is still responsible for paying higher federal tax rate if total production of contract brands exceeds small brewer cap (60K bbls/yr) while an alt prop leaves the tax burden on the brewer, Jerry explained. "A lot (of breweries are in a wait-and-see mode to see where the industry is going because it's getting pretty jammed up…The easier option is to come to us and then see where the industry goes."

This model attracted 10K bbls/yr local brewer, Greenbush, to recently sign on with Brew Detroit, MiBiz reported. Greenbush currently needs to expand capacity in order to keep growing. But rather than investing lotsa $$$ for a new/expanded facility right away, "now we're able to put a bunch more beer on the street and the margin is still good on it. It allows us to bank money and sit back and decide how big a system we might want to eventually put in for ourselves and build capital," said co-owner Scott Sullivan. Co plans to invest in its own production facility within next two and a half yrs, he added.

All in, Brew Detroit currently has 70K bbls/yr of capacity that's all spoken for. So it seems tax rate was big factor in co's decision to alter biz model. Other than Greenbush and recent partnership with Stroh/Pabst, it's also partnered with Badass Beer Co and Lake Brothers Beer. Brew Detroit plans to expand capacity to 100K bbls/yr this year and 140K bbls/yr in "late 2017."  

Folks from new home state of BrewDog's US biz have anted up to take part in the co's next chapter. About 38% of the investors that have already pledged a combined $1 mil towards BrewDog's US Equity for Punks campaign are from Ohio, co-founder James Watt told the Canal Winchester Times. But that's just 2% of total $50 mil in equity shares that BrewDog hopes to sell by next February. And not all investors so far consider it either a good investment or one they're looking to make money on. "If you do the math, it is outrageously overvalued," one investor who picked up 23 shares (but wishes he hadn't) told the paper. Another "bought a couple of shares to feel like I own it and I am a part of it" but is okay with not seeing a return.