Well-known brewmaster at Stone Brewing for last 10 yrs, Mitch Steele will depart the co at the end of the month, the co announced via video of Mitch talking about his time on Team Stone. He's leaving to take a "bucket list" opportunity as a partner in a new brewery. Not much info yet, but he was asked by a couple of beer biz vets, in industry for 20-30 years, Mitch says in clip. The announcement comes in the thick of a very busy year for Stone. It's opening 2 new large-scale breweries, in Berlin, Germany and Richmond, VA. It's also still searching for a new CEO. Some of these items recently explored more by founder Greg Koch (see below).  

Working to make up for the "lack of comprehensive on-premise data," Brewers Assn economist Bart Watson examined relationships between measures of draught shipments, total shipments, breweries per capita and craft share off-premise by state. And he found some interesting patterns, laid out in new post this week. First, the amount of draught beer sales in a state happens to predict the amount of craft breweries in a state much better than the amount of total beer sales, Bart found. He lined up the BA's breweries per capita state stats with the Beer Institute's measures of draught shipments by state, which Bart measures in pints per 21+ adult. Naturally, draught consumption varies widely by state, "ranging from almost 44 pints per 21+ adult in Colorado to 5.5 pints per 21+ adult in Mississippi," he writes. But compared to total shipments in a state, "the size of the draught market is a much better predictor of the number of small and independent breweries," he found.

Not only that, but eyeing draught as a percent of total shipments by state, Bart noticed a pretty strong relationship between that measure and craft's share of off-premise sales, as tracked by IRI. In that, he sees "evidence that the old maxim, 'brands are built in the on-premise,' has been true in the aggregate for craft." That is, first see a brand in a bar, buy it later in a store. Yet he cautions that "the on-premise market has shifted," becoming "increasingly fractured and competitive." That's made it a tougher channel for larger, regional craft players, which "are typically doing the heavy lifting in off-premise channels," Bart writes. At same time, chain presence off-premise likely to keep that channel from same level of dynamism as in bars, restaurants. So he questions how these dynamics will impact different craft cos differently, raising possibility that some of larger regional players may focus more on "building their brands through off-premise." Recall, that's similar to points made by both Joe Whitney and Brian Grossman of Sierra Nevada at our recent Spring Conference.  

Here's a little peek into Minnesota state data, one that we typically don't get to see much of since it's not a scan state. MN beer category grew solid 2% to 3.7 mil bbls in 2015 and craft's continued rise in MN helped drive majority of the growth, according to state reports. All Others (brewers outside of top-5: AB, MC, Constellation, HUSA, Pabst) up another full share to 23.25 of total MN beer last yr. (Editor's note: these figures slightly differ from Beer Inst data we've published elsewhere.) In fact, All Others up 2.7 share since 2013 and accounted for virtually all the growth and more in-state in that time. Indeed, while AB and MC were able to stay flat and Pabst and HUSA were able to grow in 2015, all four were unable to make up for total declines from previous year. So AB down 2.5%, MC down 1.5%, Pabst down 1%, HUSA down 5.6% since 2013. Only Constellation grew over a two-yr period, up 22% to 102K bbls in MN.

Two different BA defined craft brewers, August Schell (118K bbls) and Summit (105K bbls), are each around 3 share of total state sales (Schell a little above, Summit a bit below). Not many other states that can say they have 2 local brewers with that large a portion of state sales. Both are larger than CBBD and HUSA in-state and August Schell was actually larger than Pabst here last yr. But interestingly, neither really contributed to All Others share growth these last couple yrs; up just 1.6% and 1.1% respectively since 2013, these two leading MN brewers actually lost a bit of share of state in that time.

The real growth story in MN is Surly, yet another Midwest brewer that's surged in very short order. It grew 46.5% and gained 0.4 share of MN beer to 47,757 bbls in 2015; up 81% since 2013. And recall, Surly also added IA in Mar and WI in Jun last year and already had distribution in Chicago area too (adding more distribution in 2016 as well). So total Surly biz up strong 60% to 62,432 bbls last yr, according to Brewers Assn stats. But Surly's not the only local brewer growin' at rapid clip, natch. Fulton now over 20K bbls in-state, Bent Paddle grew more than 7X to 13K+ bbls in just 2 yrs, and Indeed Brewing nearly tripled to 11.5K bbls (tho "slowed" to +37% in 2015). These four fast growin' MN brewers, Surly (+0.6) Fulton (+0.2), Bent Paddle (+0.3) and Indeed (+0.2), collectively gained 1.3 share of state shipments in the last 2 yrs to 2.5 share. Not to mention, many more microbreweries are spurting up, including Lift Bridge, Excelsior, Bauhaus Brew Labs and Castle Danger to name a handful.

Larger craft brewers from out of state generally fared well in MN too. Boston Beer grew solid 6.4% to 39K bbls last yr and New Belgium up 4% to 25K bbls here even as Boston's total biz slowed and NBB total biz declined last yr. Sierra Nevada grew strong 25% to 22K bbls. Bell's (+16%), Alaskan (+17%) and Deschutes (+22%) reached about 17K bbls, 14K and 12K bbls respectively in MN last yr. And a bit further down the list, Lagunitas (+26%), Founders (+56%) and Odell (+13%) growin' solidly. Gotta note, MN separates out Leinenkugel from MC total - Leinie up 21% in 2015 to nearly 28K bbls, but that's still off 11% vs 2013. A couple other regional brewers, Minhas and Stevens Point, had tuffer times in MN as well these last two yrs: down 27% and 83% respectively since 2013. And home-state brewery Cold Spring down 23% since 2013, tho recall it contract brews for several brands sold all over the country.

All in, MN craft scene is a vibrant one with growth comin' from lots of different directions. Should be interesting to see, among other things, how Surly follows up its big growth year, if Summit and August Schell can sustain share, if larger out-of-state craft cos continue to perform well, if the top-5 brewers are able to continue upward trend after a solid 2015, and how these fast-growin' smaller craft brewers perform going forward. Stay tuned.  

With a hit on its hands in form of new Citradelic Tangerine IPA and a handful of new markets, New Belgium expects to get back to growth in 2016, CEO Christine Perich told Craft Brew News during recent visit (tho she didn't quantify that). As year goes on, impact of Citradelic and new markets, plus easier comps (recall, NBB had slow back-half to 2015), all likely to boost the co's overall trend. Yet some of that won't be very visible in scanned data: it launched New Jersey in April, New York in May, and Connecticut in June, none of which show up in retail data as significantly as big chain states. But after 2% gain for 4 wks thru May 15, NBB cut in half its prior YTD trend, $$ -1% thru Apr 17 in IRI multi-outlet + convenience. And that was before NY launch.

And Citradelic is shaping up to be biggest craft launch of 2016. "It's on the move," Christine told us: already 12-15% of NBB shipments so far this yr, "as much as we thought we'd ship" for full yr. That makes it #2 brand in NBB portfolio right now, ahead of Ranger. If that holds, it'll come in north of 100K bbls for the year, possibly one of top 10-15 IPAs in US. Citradelic a top-10 growth brand overall in Nielsen-tracked grocery stores thru June 4, grabbing 0.1 share of beer $$. And it was already #37 craft brand by $$ in IRI MULC thru May 1, just behind Deschutes Fresh Squeezed and Dogfish Head 60 Minute, just ahead of SweetWater IPA. The co "had high hopes" for the brand, but it is surpassing them, Christine said, pleased that after a lot of trial runs, the co "hit it right on." That doesn't mean it's all gravy. The co "knew we'd have some cannibalization" on Ranger from this launch, but "didn't anticipate quite as much" as it's seeing. Ranger down 16% by $$ thru 5/15 in IRI MULC. Right now, NBB working on "what we can do to follow" big Citradelic launch.

Fighting Against Flagship Fatigue with Fat Tire Focus, Friends But in a market where consumers love new, righting its flagship is a tougher challenge. So far, "Fat Tire is actually faring better than a lot" of other flagships, Christine said. So NBB's "bringing it back around" while working thru "overarching flagship issues." This yr, that includes special Fat Tire & Friends variety 12-pk, shipping now. It comes with Fat Tire and 5 collab brews with different brewers "riffing" on the classic amber ale (see Mar 1 CBN for more). NBB produced about 26-28K bbls of the beers and "pre-sold all of it," Christine said. It's organized "a lot of side-by-side tastings" to support the launch and keep drinkers trying original Fat Tire too. Looking further ahead, the co believes it has plenty of options to "freshen the narrative a little more" behind Fat Tire, PR director Bryan Simpson told us. And new marketing veep Ruairi Twomey has plenty of ideas for new efforts, likely to be intro'd to distribs this fall and start appearing next yr. Recall Ruairi recently joined NBB after work with Diageo Guinness USA.

Slow Ride Slow, Other Innovations "Ahead of Their Time" While Citradelic's working, other recent innovations have not fared so well. As we keep hearing, retailers gotta be ruthless making choices about which brands to make space for and which to cut, which clearly ain't helping trends of lower-focus brands from top craft cos. SlowRide sold solidly last year, but so far isn't sticking in year-two. It's down sharp 38% thru May 1 in IRI scans. Similarly, tart Snapshot and pale lager entry Shift were "both slightly ahead of their time," Christine acknowledged. They're "great liquids," she said, but the co "could have done something differently" to help sell them and keep selling them long-term. They're each off 60%+ for first 4 months in IRI MULC.

"You think some things are going to play, and they don't," Christine said. That's "part of being innovative," which has been "our lifeblood." But even if some intros don't hit the mark, "we can't all get afraid to innovate." So NBB will continue to "go slow to go fast" on innovation front, Christine insisted. The co has a handful of new, small projects that could grow overtime, including gluten-reduced Glütiny brands. They're "going well," but currently considered a "slow growth proposition." Similarly, NBB's "testing" its Side Trip ciders in CO, NYC, Chicago and NC starting next month. Yet the co plans to "focus more on the core" and "reminding ourselves and reminding them," drinkers, about its core beers. "We've always focused a lot on branding," Christine said, a focus directly from guidance of founder Kim Jordan.

"Whole New Era" After 25 Years: Finally Closing in On National; Construction Between orderly transition of day-to-day leadership (and CEO role) from Kim to Christine, other top leadership changes in mktg and sales, opening of Asheville facility and the co's 25th anniversary, it feels like "a whole new era," Bryan told us. "Things evolve," Christine said, "and they should evolve." Asheville already brewing Fat Tire and Ranger, likely to begin working with Rampant next, then probably Citradelic. As brewing ramps up there, the co will keep opening remaining 6 states. Connecticut comes on this month. It's interviewing in Massachusetts for launch early next yr. NBB also planningng to hit VT, NH, RI, ME and OK by mid-2017, said Christine. Separately, the co recently expanded Fort Collins brewery to make room for twice as many visitors. It can now hold about 180 in its taproom, up from about 90, Bryan said, plus a couple hundred in bigger outdoor space. Recall, it's got another small location coming to Denver too, though timeline on that dictated by larger project, of which NBB space just a small piece.

Eyeing Deal-O-Sphere, NBB Engaged, Taking Time So far, leadership transition "going really well," Christine said, though she's got a "tough act to follow." Kim "still involved" and the 2 "talk at least once a week." Though Kim sold her stake to ESOP, both of her sons work at the brewery. Note that ESOP has existed since 2000 "in some form or another," Christine said. The co now has about 750 employees, including 100 in Asheville. On possibility that NBB could change its capital structure (ie, sell a piece of itself), "I don't really have anything new to say" Christine told us, asserting that "we want to make sure we're well capitalized to compete" and process "not a lot different than what we've done in the past." Yet she was frank that NBB looking at possible options and weighing them carefully. She also spoke candidly about craft deal environment generally. Obviously big brewer acquisitions get attention, but "private equity plays could be interesting to watch," she said, as those co's have "gotta flip 'em." And a "bigger concern" could be "how those go-to-market strategies may shift" after PE takes a stake. Would NBB acquire? It's looked. But it's "so expensive to buy" right now, Christine said, that getting back the "return's almost impossible." Plus, NBB still working off debt accumulated by Asheville construction and sale to ESOP.

At these crossroads, with change "coming from all directions," the environment forces leaders to "look at your business differently every day," Christine said. From "unknowns around MegaBrew," local-love "morphing," "consumer confusion" and "only so much tolerance" for variety and churn, brewers "have to be really clear in messaging," she believes. So even though the times are "more challenging," she thinks her co is "continuing to be a strong brand" and has reason to see more growth ahead.  

Sierra Nevada "was awarded Leadership in Energy and Environmental Design (LEED) Platinum status - the highest level awarded - for its Mills River, North Carolina, brewing facility," co announced yesterday. (LEED is "globally recognized rating system for the design and construction of environmentally responsible buildings.") Indeed, "from the start… Mills River brewery was designed to meet minimum Silver LEED status," and co ended up "[taking] the certification farther than any other brewery has and not only included several buildings on the campus but also the brewing process equipment in their energy calculations," per release. LEED review board looked at four main capabilities of Mills River facility where it excelled: "Energy Creation and Performance," "Water Use, Recover and Treatment," "Resource Recovery" and "Building Efficiency and Indoor Environmental Quality." So among other things, Sierra's "nearly 2200 photovoltaic solar panels spread over the warehouse roof," reduction of water consumption "to only 3.5 barrels of water" per bbl of beer and ability "to divert 81% of total waste away from landfills" stood out as "unique" to Mills River. All in, "building a second brewery gave us the chance to start with sustainability in mind," said founder Ken Grossman," and "the real reward is a more sustainable brewery for generations to come," added sustainability manager Cheri Chastain.  

Sleeping Giant Brewing, a contract brewer in Denver, CO that opened just last yr, expects to double production to 30K bbls this yr and reach "at least" 50K bbls in 2017, reported BusinessDen. And to do so, co will already need to go thru an additional $2 mil expansion. First it'll add 3 new 150-bbl fermentation tanks (about $250K total), followed by $400K centrifuge and new $1.5 mil canning line able to fill 220 cpm (up from 130 cpm with previous canning line, which it's already sold and "will soon leave the warehouse"). "We're in a fortunate spot where we have a wait list of customers wanting to get in…and our current customers are all growing and doing well, so we want to make sure we can keep up with their demand too," owner Matthew Osterman told paper. Currently Sleeping Giant has "about a dozen clients," and paper lists CA's House Beer, VA's Honor Brewing, New Planet Beer in Boulder, CO (Matt previously worked for them) and The Post Brewing in Lafayette, CO, as "some of his biggest customers." Sleeping Giant production facility is 67K sq-ft and co has 15 employees.  

 As craft develops, plenty more top companies hiring outside talent to face increasingly complex marketplace. Among 'em, Cleveland's Great Lakes Brewing hired Bill Boor to fill first-ever CEO spot for the co way back in Oct. But interview about how things gone just hit Crain's Cleveland Business this week. Recall, it's been run by founders Pat and Dan Conway since its establishment 30 years ago. Bill spent many years with Cliffs Natural Resources, a public iron ore mining co also based in Cleveland, mostly recently as Chief Strategy/Risk Officer.

CBA Brings on Portfolio-Wide Innovation Brewmaster from Hopworks Urban Brewery Tom Bleigh assumes role of Innovations Brewmaster for Craft Brew Alliance, working on new experiments for each of CBA's beer brands at the co's Portland home base and beyond. He'll not only lead innovation teams at Kona, Widmer Bros, Redhook and more, but also "support the integration of new strategic partner breweries," the co announced. He comes most recently from time at Hopworks Urban Brewery, in Portland, as Director of Brewing Ops.

So-called "compromise" bill that easily passed thru Colo legislature last month signed by Governor John Hickenlooper on Friday. Recall, it phases in full-strength beer, wine and liquor sales to chain grocery stores in the state over 20 years. Tho "not perfect," the governor wrote in statement, bill does add "guardrails" to keep small bizzes operating. And that's better, in his view, than alternative: still possible ballot measures launched by largest grocery chains to immediately allow them to sell full-strength beer and wine. Groups promoting ballot measure currently weighing options, including filing lawsuit against just-signed bill.  

Craft Beer Colorado is new state org formed by at least 14 Colo brewers after each recently left the older Colorado Brewers Guild, which formed in 1996. Founding members include most of the largest in-state brewers, representing a clear majority of the craft volume produced in the state: New Belgium, Oskar Blues, Odell, Left Hand, Great Divide and more, according to open letter reported by Westword and Porch Drinking over the weekend. The state is home to well over 350 brewers, over 200 of which are members of CBG, according to Westword. But loss of biggest members, including resignation of 2 board members, president Wynne Odell and treasurer Brad Lincoln of Funkwerks, along with the group's lobbying firm Weist Capitol is certainly a blow.

Letter signed by 14 brewers/brewery founders laid out "three core issues" that led to departure: 1) observation that CBG typically reactive, while this group seeks "a proactive agenda"; 2) a longtime "culture of information control and director behavior that is the opposite of transparent," in this group's view; 3) by-laws "don't reflect what we believe to be membership's wishes." That last piece explored a little more in letter, noting that "the world's largest brewer is a voting member" of CBG. That is, bylaws allow Breckenridge to remain a voting member after its acquisition by AB. So new group now open to all "independent" Colo brewers, though of course it won't start nailing down more specific parameters 'til organizational meeting planned for next month.

Though these brewers saw fast-changing landscape for craft as time to strike out and start from scratch, CBG exec director John Carlson believes "now is not the time to diminish our efforts but to strengthen them." He acknowledges potential confusion of having multiple brewer trade assns talking to legislators. Importantly, CBG still in the middle of its own election. "Please vote," John encouraged members in his own letter, noting that due to diverse membership, "compromise may be required." He maintains the org is a "positive, open and participatory organization." But obviously, these key members disagree with John's view enough to believe the situation within CBG irreconcilable. Establishment of Craft Beer Colorado, its own bylaws, board, staff and legislative agenda will take time. And how the pair of orgs may impact alc bev policy in the state could take even longer to see.  

Craft continues to spread globally at a rapid rate, however contrasting views portrayed about extent of oppys during Global Craft panel at Brewbound Brooklyn session last week, with ABI vp of global craft and specialties, Jerome Pellaud, founder of Camden Town (acquired by ABI late last yr), Jasper Cuppaidge, and owner of Toronto-based Amsterdam Brewing, Jeff Carefoote (previously a marketing director at Miller in the 90s).

ABI and Camden Town seemingly very optimistic about global oppys going forward. Specifically in "big cities" with vibrant food cultures that "don't have the stiffness of tradition like [parts of] Europe," like in Italy, Mexico, China, and Korea, said Jerome. For example, craft already has 10% of the mkt in Rome, Italy, compared to nearly 100% wine 15 yrs ago; China and Korea both "love IPA"; and in Mexico, craft is "vibrant" and "about to explode," with already 250 brewers in the country. Recall, among several craft acquisitions of late, ABI also recently acquired leading Italian brewer, Birra del Borgo and "we want to play a role" in Mexico, Jerome acknowledged. Indeed, it acquired a Mexican craft brand and "launched Goose Island as well last year." Overall craft still a mere 0.5% of the Mexican beer mkt but there's "definitely room for more than 1 player" and "education" is key. Ultimately, unlike US, craft "doesn't need to be manufactured" over long period of time to reach higher levels of success in other parts of the world, thought Jerome, 'cause "it's already happening," thanks to US. "We're trying to recreate the American craft market," Jasper added, and "craft will grow faster 'cause you guys did the hard work."

Then too, UK craft is "exploding," up 50% YTD, Jasper shared, now with 102 breweries in London alone. In his eyes, Camden Town has "done everything right" from "hiring great people" to purchasing "best equipment we could possibly afford." About 90% of Camden Town's total production is lagers, and "never came out to be a niche product." It's "absolutely" "possible to be a global craft brand," he responded to question later, pointing to Brooklyn brewery and Lagunitas as primary examples. Aspirations for Camden Town are to become "the most loved craft lager in the whole world," regardless of whether it's fully available around the globe.

Yet Jeff from Amsterdam Brewing is "skeptical" and "sort of pessimistic" about possibility of global craft brands for a few reasons. "Most of the markets are controlled very tightly" by largest brewers, so ABI "could do it" and "maybe Heineken," but "after that I don't know." He used Canada as an example, stating that "they own the retail system" and "basically control the government" so it "shut a lot of people out." So "you need the right partners." Then too, "tastes are so varied" from mkt to mkt. "Not saying it can't be done," but "I don't think the world's ready for it." Tho "definitely think there's a big aspiration for local product" and "lots of opportunity" for local players across the globe, he acknowledged. In home mkt, Toronto, craft is "coming along," but "not anywhere near" US, said Jeff. Craft is "maybe a 5 share" yet it's "growing" and has "more presence." Amsterdam just turned 13 yrs old and keeps "chipping away at it," expecting about 44-45K bbls this yr, while large brewers "really not paying much attention to the consumer at all" in Canada, he thought.

All in, ABI is honing in on global oppys thru acquisitions all over and with recently developed ZX Ventures, essentially acting as a global High End unit. Its "building the team in different places…to have a limited number of people thinking about the small things…in context of AB InBev," said Jerome. This is "definitely a long-term commitment" with "long-term objectives," he assured.