It plays in whole beans, coffee shops, kegged cold-brew, even nitro-infused coffee in cans. How do all the parts fit together? Stumptown Coffee Roasters ceo Joth Ricci put his spin on it at BevNet Live conference in Santa Monica, Calif, earlier this week. Joth, recall, is longtime beer and NA vet, having held prominent roles at beer giant Columbia Distributing, Jones Soda, Talking Rain and private-equity shop First Beverage Group.

Joth started with thumbnail history of third-wave roaster. After starting with coffee carts in Seattle, founder Duane Sorenson launched Stumptown in 1999, opening first location in burned-down hair salon at 45th and Division in Portland - hence name of top product, Hair Bender. (That location is still going strong.) By now co operates roasteries in Portland, Seattle, Brooklyn and LA, following hub-and-spoke model to supply its own stores, outside coffee shops and grocers. It aims to have newly roasted coffee consumed in 14 days or less, tho it's good up to 30 days. It's operating 10 cafes and opens another in Mar at New Orleans branch of Ace Hotel chain, with whom Stumptown has partnered in other cities. Payroll totals 300. Tho Joth didn't touch directly on that history, recall that investment by private-equity shop TSG in 2011 was greeted as act of betrayal by locals, tho furor died down once it became clear Sorenson was maintaining core principles. Still, as Ricci noted in q&a, recent acquisition by Peet's Coffee & Tea puts co back into a "coffee family." Tho Chicago's Intelligentsia also is now in Peet's fold, co has been explicit that the 3 businesses will remain separate. (Joth reiterated to BBI that that means no sharing of roasting facilities, even at cost of potential logistical convenience. Also note that, while Sorenson has cashed out by now, he's still running the roasting operations at Stumptown.)

One key focus of Ricci since coming aboard has been whole bean biz, which starts at $14 per 12-oz bag, with labels color-coded for source: brown for blended, blue for Latin America, red for Africa, green for Indonesia, orange for decaf called Trapper Creek. As Starbucks has expanded grocery biz and headed down in price, third-wave roasters spotted opportunity from resulting price compression, just as happened on craft beer side, Joth said. So co hasn't hesitated to offer rarities at elevated prices.

Another priority has been cold-brew, as outlined earlier this year in BBI deep dive (BBI, Jan 29). Co entered segment via stubby brown bottle, then added pair of milk-based items in short gabletop cartons and most recently a nitro can that "pours like a Guinness." Seasonal Winter Cheer, with mulling spices as an eggnog cue, aims to keep cold-brew sales from dying off as cold weather hits. Up next in Jan, as reported on Mon: cold brew employing coconut base, without carrageenan or other stabilizers, to suit requests for dairy-free cold-brew.

Lately draft version of cold-brew has been coming on strong, accounting for 30% of volume, as Stumptown installs draft lines all over US, particularly in Sun Belt. "Great trial opportunity and will halo into off-premise as we grow," figures Ricci. He acknowledged being surprised at uptake, pointing to Stumptown cold-brew presence at 30-station growler bars in Northwest and multitap cold-brew systems in markets like Austin. "It's a very efficient way to sell a lot of product in the summer," he said.

At high end, co recently launched Honduran Grand Cru Gesha (coveted Arabica varietal) at $75 per bag online, and sold out pre-orders within a week. Cold-brew version in elegantly labeled 750-ml swingtop bottle that was available only in Stumptown's cafes sold out at $28 per bottle. So dynamics are "similar to the wine business," operating at multiple price points, Joth noted. Asked whether cold-brew is viewed as Starbucks Frappuccino killer, Ricci didn't take bait, drawing on beer background to suggest parallel to craft vs domestic premium: "great opportunity to improve people's perception of quality, to bring unique positioning to what people traditionally know as iced coffee, to bring unique flavors to the category." But in what could be seen as flick at rivals going out in shelf-stable versions, he urged focus on quality. "The closer you get to an iced coffee profile, the more you start to lose the premium aspect," he warned. Speaking like a craft brewer, Ricci also insisted that he welcomes new entrants: "The more the better." Local innovation, different styles and approaches are "really important to building the category."

Overarching view is to keep items simple, not overthink them. Plus, they have to be great - "best thing you've ever had in that category" or Stumptown won't put it on shelf, Ricci vowed.

The Stumptown stores are viewed mainly as brand-building vehicles to support the wholesale biz. Co "will curate those in the right neighborhoods," Joth said. Also key to marketing mix is social media, with Instagram surging from 15K followers 3 years ago to 147K followers now via dedicated effort, Ricci said. After unprompted Jimmy Fallon posted pic, Stumptown traffic went up 4-fold same day, he noted.) Events are also important - not thru title sponsorships but more immersive experiences that put coffee in people's hands. At Coachella, for instance, Stumptown set up shop in campground, serving coffee to 30K people who'd made that their weeklong base for music fest.

One opportunity with lotta upside: office coffee. "Great adoption at places like Nike, Intel, Google," Ricci reported. He related comment he'd gotten from HR exec about lift a coffee upgrade provided to morale: After initiating employee programs for 15 years, "if I knew all I needed to do was change the coffee . . ."  

Considerable amount of starpower at this week's BevNet Live conference seemed to be wielded by a tech interloper to bevs: Dave Asprey, who's made waves, starting among his tech peers, with coffee-and-butter concoction called Bulletproof Coffee that offers promise of taking pounds off via process called ketosis and offering sustainable energy lift. The line - recently buttressed by RTD flanker called Fat Water - and the way Asprey claims to have "bio-hacked" his innovation using $300K of his own money over period of nearly 2 decades, made for compelling story at conference, held in Santa Monica just a mile from Asprey's first Bulletproof Coffee Shop.

Asprey, 43, likens his diet history to that of many young programmers: swilling Jolt Cola, but at age 26 starting to get fat and realizing it's not good for you. Asprey was willing to treat himself like lab specimen, trying various nutrient combos and measuring results via decision support system, until he found himself in 2004 at humble guest house in Tibet, where he was served yak butter tea, a weak puerh tea with salt and butter from yaks. Effect was immediate: "My brain turned on in a new and different way. That made me come back and start hacking," trying to recreate that tea while carefully measuring effects to refine formula. Drink triggers weight loss via ketosis, metabolic state triggered by lack of carbs that kicks fat-burning into overdrive, as Fast Company has described process. "Power Mind and Body" is brand's on-pack slogan. The recipe, served at BevNet event, employs co's own coffee (other coffees, even at high end, contain mold toxins, Asprey claims) plus Bulletproof XCT Oil (medium-chain triglycerides sourced from coconut oil) plus grass-fed butter of sort sold under Ireland's Kerrygold trademark.

Also in brand mix are supplements and protein bars, gizmos like whole body vibration plate and first RTD entry, Fat Water, styled as an "XCT Oil + Water Infusion." That's out in half-liter PET bottle in flavors like Tangerine, at just 20 calories per bottle. "Upgraded hydration to power your day," label promises. Asprey said "little bit of revulsion" many feel for look of Fat Water is by design, "because I'm disrupting the belief that fat is bad for you - and saturated fat, the worst kind."

Things have revved up since July, when Asprey pulled in $9 mil in institutional capital from Trinity Ventures (which was early investor in Starbucks, Jamba Juice and FitBit) and opened Santa Monica cafe, since followed by others in LA and Bay Area. "My entire retail experience was scooping ice cream at Baskin Robbins, yet now I have 4 shops," he marveled. (Santa Monica store sports clean, uncluttered look of typical juice bar or high-end roaster; during 45 minutes spent there by BBI editor on Mon evening, nearly every customer walked in seeming to already know what they were going to order.) Bulletproof also deploys unpaid crew of 100 brand ambassadors to work crowds like cross fitters, bobsledders and memory experts, Lululemon-style. Dave didn't say much about expansion plan for Fat Water, tho BBI hears he's approached potential allies about launching at retail in markets like NY.

In past year or so, Asprey's reaped bounty of press for his notion of "bio-hacking" his way to slimmer figure (he came down from 300 pounds - "and I barely exercise"), including via best-selling The Bulletproof Diet and new cookbook. (For good take on what he's up to, see NY Times mag profile last month at http://www.nytimes.com/2015/11/15/magazine/you-only-better.html?_r=0.) Asprey noted that he'd scored 20 millionth download of his podcasts this week.

In presentation, Asprey spent considerable amount of time inveighing against FDA for shutting down promising innovations that use new ingredients, without any acknowledgement there might be safety issue involved. As result, he said, new studies are showing that coffee usage contributes to longer life and battles ailments like depression, diabetes and cancer, but you can only post that info on Web sites overseas, outside FDA's jurisdiction. Thanks to funding approaches like Kickstarter, entrepreneurs are going ahead anyway, but "you will see a bunch of weird upstarts grow quickly and get slapped down," he lamented. "The regulatory side drives me crazy," he acknowledged. He readily acknowledged that key advantage of using unpaid ambassadors is that they have more leeway in what they can say about brand's benefits.  

Last issue we wrote that Boston Beer subsidiary Alchemy & Science's Concrete Beach will "run" the on-board Carnival Cruises brewery, but the "unique partnership" that Carnival touted was essentially advisory on the part of Concrete Beach, which has no operational or financial stake in the brewery.  

Lagunitas founder Tony Magee was featured on "Snoop Dogg's 420 lifestyle blog," Merry Jane, in first episode of an original web series called "Highly Productive" that's "debunking the stoner stereotype," reported The Press Democrat. Unfortunately Snoop isn't in it, but the 5 min video is entertaining nonetheless.  

Boston Beer founder and ceo Jim Koch was interviewed by Marketplace radio in preparation for his new book release comin' in the next couple weeks. Jim discusses a variety of familiar topics such as competition, ingredients, innovation, company size, succession, and more. Some highlights:

• Jim sez Boston Lager is "actually better" now than it was when he first started since he has better access to ingredients and more influence among "growing practices."
• Jim believes his main competition is "ignorance and apathy" of consumers who don't know or care about good beer, rather than any specific brewer. "If I can win the battle against ignorance and apathy then I can expand the market for Sam Adams and for craft beer, and I will succeed." Sam Adams is "much bigger today with 4000 craft brewers than I was 30 years ago when there were only 10." On a similar note, Jim thinks notion that the beer biz is "cut throat" is "a misperception." He gives example of "huge hop shortage in 2008" that could've been detrimental to many breweries, but "we shared our hops with hundreds of craft brewers."
• Asked about decision making process for Boston Beer portfolio, Jim called himself "the decider in chief" but "we've got some really great creative brewers now" that "can come up with ideas and execute them." So in one sense Jim is "the gatekeeper" and "conductor of the symphony" in another.
• While giving his usual rap about succession plan ("don't die") he also mentions that he does have 4 kids.

The piece also includes an excerpt from his book, where Jim talks in detail about the moment he told his father his decision to start a brewery. Take a look and a listen here.  

Latest version of inter-tier squabbles set off in Rhode Island this week over issue of direct, on-site sales at breweries. Small brewers in state currently allowed to offer samples and sell up to 72 oz for off-premise consumption, a change made just a few years ago. Now, some small brewers seek expansion of those retail privileges, but some in-state retailers none too pleased about it. Indeed, a number of RI brewers received an anonymous, unsigned letter this week expressing some familiar arguments against expanding brewers' retail abilities. Letter leads off that "brewers got into this business knowing what the rules of the industry were and now they want to change the rules for their benefit." Seemingly written from perspective of package store owner, letter highlights underlying issue in parallel debates in many states: brewers "either want RI liquor retailers to be your customers to help you sell and distribute your products or, you want to be their competitors," author simplifies, adding "you can't have it both ways." Letter also asserts that if brewers do get expanded retail rights, "there will be hard feelings," leading to both "intended and unintended consequences."

At least a few in-state brewers saw the letter as a threat, taking to social media and company blogs to rally support. Some individual brewers, like Proclamation Ale, have been vocal in both reaction to letter and support for changes to system. Co-founder Joshua Karten spoke to the Providence Journal for an article last week, which outlined provisions in a handful of bills currently state legislature. Two of those would allow for more on-site sales at breweries. RI legislature website indicates those bills, as well as one to allow direct shipping of wine (likely another sore spot for liquor retailers), are still in committee. Officially, RI Brewers Guild generally supportive of bills aimed at helping brewers, but has not "written, submitted or testified in favor of any legislation" to date, guild prexy Brent Ryan, also of Newport Storm Brewery, explained to CBN. While he has worked to educate members about legislative issues in his role with guild, the relatively young org still leaves them to speak up legislatively as individual business owners. Instead, RIBG still focuses its energies on marketing support for the state's 14 breweries and brewpubs.

In Colorado, on-site sales at breweries not nearly as restricted. And for the most part, small brewers and independent liquor stores united against allowing grocery and convenience stores to sell full-strength beer (and wine, spirits). But not all of 'em. Owner of St Patrick's Brewing supports the change and actually appeared in commercials for Your Choice Colorado campaign (funded largely by retail chains looking to get into alc biz in Colo). As a result, he's "getting a lot of push back," he told local NBC affiliate 9News, which reported that his brands have since been dropped from local liquor store shelves. Meanwhile, the debate continues in Colo with lots of money spent on both sides and possibility of multiple ballot initiatives this fall.

Kentucky Cap Close; Breaking Down Brewery Walls in Maine; Georgia Waiting Game Large alc-bev bill in Kentucky, which raises microbrewery license production cap from 25K to 50K bbls among many other provisions, now waits on Gov Bevin's desk for signature. Most expect him to sign it and a couple of in-state brewers already looking into taking advantage of it, Business Lexington reported. Up in Maine, pending legislation would eliminate current requirement for brewers that also have restaurant licenses to have a wall separating space where beer and food purchased for on-site consumption and beer bought to-go. And in Georgia, brewers have now been waiting for almost 2 months for action by the Dept of Revenue to clear up allowable pricing structure for facility tours and "souvenir" beer, Atlanta Journal-Constitution wrote.  

Last year around this time growth of AB craft acquisitions hardly able to make up for Shock Top declines in scans, while MC's Blue Moon and Leinenkugel brand families each grew high-singles to low-double-digits. Lots changed and Q1 2016 paints a much different picture. Indeed, AB craft acquisitions (excluding Four Peaks and Breckenridge) are collectively flyin' up 42%, $6.7 mil YTD, more than makin' up for Shock Top brand family's 5%, $1.6-mil decline in IRI multi-outlet + convenience data thru Mar 20. So AB craft up 11% altogether. That's in large part thanks to Goose IPA's continued success. Goose IPA still more than tripling sales YTD. It's more than all of Goose brand family growth and nearly 70% of total acquisition growth. Several other top Goose Island brands are declining, but Goose brand family up strong 47%. 10 Barrel is also pickin' up steam, up 47% thru Q1. Apocalypse IPA (+42%) and Joe IPA (+303%) providing bulk of growth, along with an extra boost from new Colo and NorCal mkts. And while Elysian (+29%), Blue Point (+34%) and Golden Road (+20%) each slowed a bit, all still up comfortable double-digits.

Meanwhile, MC craft $$ eked out a 1% gain and volume actually down 2% thru Mar 20. That's largely due to Leinenkugel struggles. Leinie craft brands collectively down 5% and volume down 7%. Nearly all of its brands are down this yr including both Shandy Seasonal (-7%) and Seasonal (-16%). Grapefruit Shandy $$ still up 82% following launch yr, but slowed to +34% in last 4 wks. And Blue Moon brand family notably slowed, takin' tuff hit from Seasonal (-41%) and Variety Pk (-22%) declines. Blue Moon Belgian White still seein' solid growth and both White IPA's mostly incremental gains and Cinnamon Horchata Ale (+97%) keep Blue Moon brand family in the black, $$ up 2% YTD. Yet volume off 0.5%. Lastly, MC's lone acquisition brand, Saint Archer up strong +86%. But it's still too small to impact MC craft number much.  

Karbach Brewing remains one of the fastest growin' brewers in the country, still only sellin' in Lone Star state. Shipments grew 69%, about 22,400 bbls to "a shade over" 55K bbls in 2015, with "roughly 2/3" of sales just in greater Houston area, founding brewmaster Eric Warner told CBN. That's largest bbl growth of any mid-sized craft brewer (under 100K bbls) last year and actually the 14th largest bbl growth among all craft brewers.

"First and foremost," growth comin' from greater Houston area, sez Eric. He particularly highlighted local distrib partner, Silver Eagle's ability to get into "a lot of venues," whether sports, music, or other special events. And now they're "starting to get that next level of distribution in c-stores" too. Meanwhile, Karbach got mostly incremental gains in Austin mkt last yr since it first entered late 2014. And it rolled out in Dallas/Fort Worth last summer (package in Sep), so this year DFW will provide an extra pop too. "We do feel [local competition] a little more on the on-premise draft front," he acknowledged. "That's where some of the newer up and comers are really making their inroads." There's "no doubt" that "others" in TX will "rise to the top," he thought. But Karbach has "strong on-premise draft program." And since TX is a chain state and the Karbach team has "experience as distributors," that still represents "a huge route for driving our growth."

Hopadillo IPA "Juggernaut"; Love Street Kolsch Jumps to #2 Brand; 19.2oz Cans & More Hopadillo IPA is still "the juggernaut" of the portfolio at about 1/3 of its total volume and now "the number one selling IPA in the Houston market," Eric noted. But its newest year round beer, Love Street Kolsch is already "a strong number 2" brand after making the switch from summer seasonal last March. Co decided to make the change after speaking with Silver Eagle and various retailers about where trends were going and "styles that would fit in well." Indeed, "Texas is really a unique market" and "lighter beers do really well here." Interestingly, Karbach is releasing larger 19.2oz single serve cans for Hopadillo, Love Street and Rodeo Clown double IPA, aimed at c-stores and venues: "places like that, we see big opportunities."

Then too, while core seasonals "not growing quite as fast as it was" ("same thing that's kind of going on nationally") its new summer seasonal, Staycation "surpassed expectations" and "kind of sold out" in its first year. One potential reason for seasonal slowdown is that "everybody's doing so many one-and-done releases," so seasonals are constantly going up against new releases, Eric thought. Similarly, while Karbach variety pk saw strong growth in 2015, this year it's seeing slowdown too (total craft variety pks are flat to up slightly in natl IRI data thru Mar 20). But "we think we can be stronger" with variety pk, sez Eric, and will "come out with a fresh look" for its packaging this yr. Lastly "specialty seasonal" brands saw a boost after switching to 4pk can format. And "capacity constraints" kept Karbach from doing barrel-aged brews "as much as we would've liked to" last yr. So this year Karbach will have more in the mkt.

80-90K Bbl Goal in 2016; Record Production Mo in Mar; Rounding Out Rest of State Karbach plans to have another strong year of growth in 2016; "pretty confident we're going to hit 80,000 barrels" and "more aggressive goal is closer to 90[,000]," said Eric. That'd be anywhere between 45% and 64% growth and its largest total bbl gain yet, even at lowest end of that growth spectrum. And potentially puts 'em ahead of longstanding local Houston brewery, Saint Arnold, in terms of total production (recall, Saint Arnold is in a handful of other states too). Karbach is off to a good start after just "putting the wraps on a record month" for shipments; "over 8,000 barrels" in Mar. Admittedly, Mar is "a favorable month for that" since it's "essentially a 5 week month" but it's all "still good organic growth," he said. In Feb Karbach boosted capacity further to 110-120K bbls/yr and it will add more "filtration equipment" later in the yr to get "a little bit better yield" (120K-140K bbls/yr). So there's still room for growth in near term. Within the next 12 mos Karbach expects to have "rounded out the state of Texas" for distribution. "Beyond that we're not sure." It has to first "digest that and see where that puts us relative to capacity." Regardless, if it keeps up growth pace, Karbach will certainly need to expand capacity again within next couple years. Just about 5 years old and countin', Karbach is a clear cut example of power the craft movement has gained at the local level.  

Interesting analysis from consultant Bump Williams in his current letter to clients suggests how much trade-up there's been even within craft segment itself, not just beer in general. Looking at 52-wk period thru Mar 20 in IRI multi-outlet + convenience scans, craft brands priced in $30-$39.99/case price-range accounted for fully 70% of all craft $$ sales. But they were "only responsible for 53% of total Craft growth," during this period, Bump noted. Lookin' up at higher-priced tiers, turns out that brands in $40-49.99/case range were just 11% of craft $$, but nearly 1/3 of craft growth. Even more expensive brands also making outsized contribution to craft growth. All in, "sales of brands priced $40 or higher account for only 20% of sales yet are responsible for just under 50% of total Craft growth" over last year. What's more, of top 25 Craft brands in the $40+/case tier, only 3 are down; only 4 of top-50 in that range are down. Looks too like consumer trade up within craft takin' a toll on "popular, widely distributed, mature Craft brands" and possibly on "overall Craft segment," Bump notes. Could be a bit of "brand fatigue" among mature brands, tho Bump believes these brands "absolutely remain an important building block of Craft" since they're still majority of sales and "can also act as a bridge for consumers looking to 'trade up' into the world of Craft without having to cross a major price threshold."

One other interesting point from Bump's analysis. Longer-term trends show just how little price resistance craft faced over the last 5 yrs. From 2010 to 2015, avg craft price increased fully $4 per case, 13%. Craft $$ sales increased by 145% during those yrs. During same period, avg premium price up just $1.15/case, 6%. And total $$ sales in premium rose just 5%. Avg import price up only $2/case, 7.5%, but total import $$ +48%. In 2015 alone, gap between craft and premium widened by more than $1/case. Is that gap starting to contribute to craft slowdown?  

The tide may still be rising, but more ships are being left behind rather than lifted. Sixteen of the 30 largest craft brands sold less yr-to-date thru March 20 in IRI's multi-outlet + convenience channel than the comparable period last yr. Yet craft still gained over 0.6 share of beer $$ to 10.8; $$ sales climbed 11.4% overall. Craft cases grew 8% YTD, got 6.8 share. And pricing still healthy, up over a buck per case, +$1.11 to $36.39. Shorter-term, 4-wk trends a bit slower, as craft $$ up just 9%.

But it ain't easy out there for some of craft's biggest brands. Top 30 brands represent 44.2 share of craft $$. They collectively grew $$ sales 4.7% YTD thru 3/20. So all other brands gained 2.8 share, +17%. Now 16 top brands dragging down overall craft and top 30's collective trends. These 16 brands collectively -9%, losing 5.2 share of segment $$ to 23.4. So still about a quarter of craft sales in IRI from a dozen+ down brands. Ten of them sold by 3 top indie craft brewers. All 4 Sam Adams brands in top 30 down. Seasonal ($$ sales -19%) actually sold less than Boston Lager (-11%) and Rebel (-9.5%) less than Variety Pk (-3%). Top Sierra Nevada brands down too, though Seasonal (+15%) making up for 2% dips for Pale, Torpedo and Variety. Total Sierra biz +3.6%. But New Belgium $$ -0.6% thru 3/20, as Fat Tire -3%, Ranger off 14% and Variety basically flat.

Yet some of more recent craft growth stories still being told. Lagunitas IPA $$ still up 20% YTD and its Little Sumpin' jumpin' 51%. In toto, Lagunitas nearing 0.5 share of all beer $$, +27%. Firestone Walker 805 still more than doubling, hit 0.8 share of craft $$, and Founders All Day up near 120% to 0.65 share. Firestone and Founders both up around 60% thru mid-March. Bell's Two Hearted Ale still super strong, up almost 40%, all New Glarus brands +18% and Stone IPA still solid, +11%. Top 30 also includes all-incremental Coney Island Hard Root Beer, now #16 on list at 0.86 share of craft $$. (For anyone counting: inclusion of CIHRB strengthens overall craft trend by about a point.) Tho it's got no brands in top 30 by $$, Deschutes up strong 24% YTD too. On slower growth side, Shiner Bock (#4 craft brand) and SweetWater 420 (#27) up 3-4%. Gambrinus flat overall, while SweetWater +7% and Dogfish Head +3%; each slower for 4 wks. Pair of CBA brands, Redhook Longhammer and Widmer Hefe, both down mid-singles as co refocuses on their home mkts.

Note that IRI craft data includes Blue Moon, Shock Top and Leinenkugel brands. Of those 16 big decliners, two more are Blue Moon brands (tho flagship Belgian White still up 8%), plus lead Leinekugel's brand, Seasonal Shandy. Original Shock Top also in top 30 craft brands, flattish so far in 2016. Together, all Blue Moon, Shock Top and Leinie brands shed about 2 share of craft $$ to 15.8 (see below for more). Factoring out those brand families, craft $$ up about 14% YTD.