Craft fans and industry members alike would do well to grab a beer and enjoy a 6K-word profile of Scottish punk brewer BrewDog's singular story in The Guardian. BrewDog's imminent, ambitious entry into the US mkt via an Ohio brewery is but another fact cited by author Jon Henley who tells the story well, with plenty of interesting details and input from founders James Watt and Martin Dickie. BrewDog may best be known for its philosophy of "disrupting conventions and breaking taboos," outrageous publicity stunts, extreme beers and contretemps with the powers that be in the beer biz. But Henley reminds too that: 1) "for the past 4 years, [BrewDog] has been the fastest growing food and drinks producer in Britain, and the fastest-growing bar and restaurant operator"; 2) since launching in 2007, BrewDog employment increased from 2 to 580; 3) BrewDog operates 30 bars in the UK, 15 more internationally; 4) in 2015, revs rocketed 50%+ to £45 mil, over half of that from outside UK and 5) "solidly profitable every year since its inception, BrewDog's trading profit hit £5.5mil in 2015."

There's lots more, including a deep dive into the various and sundry controversies, sometimes self-manufactured, BrewDog faced over its short history, as well as the very mixed feelings that Watt and Dickie's punk attitude engender. One fascinating contradiction: Watt and Dickie blast big brewers for relying on mktg rather than what they view as quality beer, and regard traditional advertising as "dead." But Watt also believes that "in today's interconnected digital world, full of savvy Gen Y consumers, every single thing you do is marketing."  

Alabama breweries will be able to start selling beer directly to consumers for off-premise consumption on June 1st. Bill to open up this new privilege was signed into law by Ala Governor this week. That was final step in process kicked off by legislative study committee formed last year.  

MillerCoors' Tenth & Blake unit continues to have success with its leading brand, Blue Moon Belgian White. Indeed, after another strong year of growth, Belgian White continues to be "a top priority for MillerCoors" and "trends are accelerating as we speak," said Tenth & Blake prexy, Scott Whitley during MC distrib meeting earlier this week. His ask is "simple": "use its success story" and "new graphics" to get "Blue Moon front and center" among "family of brands," he said. "To be clear, on-premise is still the primary focus channel," but "we have a big opportunity to grow with consumers in social gatherings at home." Then too, Leinenkugel Summer Shandy is "still our hero," up 11% in 2015. Even with "copycats" entering the mkt, "this brand didn't give an inch," said Scott; still 9 of 10 shandies sold in US are Leinie brands.

However, both Blue Moon and Leinie are seein' "challenges" with their Seasonal lineups and Variety Pks (more so for Blue Moon). There were "two big challenges with seasonals last year" for Blue Moon: Harvest Pumpkin slowdown and seasonal "transitions." Harvest Pumpkin "slowed to a point where we considered taking a completely new direction." And the whole pumpkin beer industry saw a "slump" in 2015. But MC is stickin' with it because Harvest Pumpkin is still 63% share of Pumpkin segment. This year MC "re-tooled" recipe "with more real pumpkin" and Scott asked for Harvest to be "lead seasonal brand this fall." Also, "last fall our Blue Moon variety pack took a big hit" and "winter didn't fare much better," said Scott. Interestingly, Scott thought "almost all" variety pks are "affected by the increasing popularity of retail 'Pick 6' offerings." So MC took closer look and "starting this winter" will "downshift from four to three variety packs per year."

Similar story for Leinie seasonals. Tho Summer Shandy saw solid growth last year, "Shandy Seasonal" volume slightly declined last year in IRI after particularly tuff declines in Q4, suggesting that other seasonal shandies had tuffer times. Scott "strongly encouraged" distribs to "get behind" Harvest Patch Shandy, which is "still the #2 seasonal velocity brand in the industry," he said. "We all left money on the table last fall," after "transition" from Summer. So this year MC askin' for help to make the transition smoother and will support brand with 15 second TV spot (more on ad campaign below). "We heard you loud and clear that our transitions aren't seamless" and "management of seasonals has been "clunky' at times," said Scott. So MC is testing new best practices "to drive process improvements" and will "share findings and recommendations" in coming mos. Gotta note, Blue Moon Seasonal (-45%), Blue Moon Variety Pk (-22%), Leinenkugel Shandy Seasonal (-8%), and Leinie Seasonal (-14%) all down big to start the year in IRI MULC thru Feb 21. Yet Leinie Variety Pk continued to grow, up 14%.

Tenth & Blake to Keep Pushin' on Successful Innos Measured against rest of craft biz Leinenkugel Grapefruit Shandy was #1 "most successful" new craft launch "with just one sku" and Blue Moon White IPA "was the 4th most successful craft entry in 2015," said Scott. Indeed, Grapefruit Shandy put out most new volume of any new craft brand in IRI multi-outlet + convenience outlets last yr aside from Coney Island Hard Root Beer, tho Sierra Hop Hunter $$ were higher. And Blue Moon White IPA came in right behind those two with an incremental 303K cases. So this year MC will keep pushin' both brands. Leinie Grapefruit will now be sold year round with "more packs" this year, "serving as an anchor for the Shandy portfolio," and Blue Moon White IPA will be "front and center." Scott's main "ask" for White IPA "remains to put [it] on shelf and display with Belgian White" and "leverage the launch" of White IPA 12pks, said Scott. White IPA will be "supported with distinct digital media, focused grocery programming in August, and in the on-trade around National IPA day" (also in Aug), he added. And Leinie will get some new ads as well, including digital shorts with the family. Also, Blue Moon will be "expanding Horchata into all Beer Merchant markets this year." And Leinenkugel will intro new Watermelon shandy.  

This is the kind of event that Brewers Assn can pull off, even on a small scale, that adds to craft's luster. Two yrs in the making, last night Brewers Assn hosted "an evening of craft beer at the prestigious James Beard House in Manhattan (James Beard gives out some of most coveted awards for restaurants), with food by BA's executive chef Adam Dulye and special beers from Allagash, Brooklyn, Cigar City and Dogfish Head. Speakers included such craft luminaries as Dogfish Head's Sam Calagione, Brooklyn's Garrett Oliver and Steve Hindy, Allagash founder Rob Tod (also BA chair), Cigar City brewmaster Wayne Wamble, BA's Julia Herz and more. BA aspires to be James Beard Foundation of Beer, said Julia, with awards, events, books, education, etc. The audience consisted of a select group of journalists from publications like Wall St Jnl, Fortune as well as Food and Wine, etc. They were treated to notable brands such as Allagash's Curieux, Brooklyn's Black Ops, Cigar City's Hunahpu, Dogfish Head's Midas Touch and many more, all carefully paired with tasty and inventive cuisine. There was also a steady stream of patter from the speakers, including origin stories, humor, tasting notes and talk about issues of the day.

"We Need to Say Goodbye" to Crafts Acquired by Top 4, Sez BA Chair Rob Tod Craft brewer "means something," asserted Rob, adding that he's recently "uncomfortable" that the term is used "a little too loosely." The craft beer landscape has "become very complicated," according to Rob, by all the recent acquisitions, especially those by the big 4 over 6 mil bbls. But brewers acquired by the big guys are "completely different," he said in their "access" to raw materials, retail, economies of scale, even "access to market." So they no longer fit BA's definition of "craft brewer." While it's "emotionally tough to see them go, we need to say goodbye," said Rob. "But that's ok." Rob said he sometimes hears such brewers referred to as "orphans" when in reality they are "anything but" with power of big corporations behind 'em. "This movement is not going away. We need to hold onto the definition of a craft brewer," concluded Rob. "Nomenclature is power," agreed Garrett Oliver. Without "nomenclature," there's "no relevance, history or power." Garrett pointed to French ownership of the word "champagne" as evidence of the power and efficacy of naming.

"Line in the Sand," Sez Sam; IPAs at Half Price; "Abolish" 3 Tier? Exports Over 40% of Brooklyn Each of Rob and Garrett drew a distinction between their camaraderie with brewer next door, even as they compete, compared to their opposition to the big guys. Julia reminded that 96% of small brewers sell less than 15,000 bbls. "A line in the sand does exist," agreed Sam, even tho he has "friends on both sides of the line." But "the idea of them as orphans" is "not true at all. They have options we don't have." Consumer "has to understand the difference," added Sam, otherwise when a major brewer takes a tap line from a "local IPA" with an "IPA from Chicago" for "half the price" then "they will win." And Julia pointed to the danger that if one brewer dominates then "diversity will start to crumble." (Editor's note: that doesn't seem likely anytime soon.) Cigar City brewmaster Wayne Wambles talked about its recent sale of majority to Fireman Capital, noting that originally buyer was going to be AB but that "ended up falling through" and "this was a better option." Oddly Wayne also took a shot at unnamed distribs that get higher incentive to sell other brands and even wondered if Cigar City would be better off if there was move to "abolish the 3-tier system." Wha? That came outta the blue and shouldn't be taken too seriously. After all he is the brewmaster. But it is indicative of a mindset that's still out there.

Finally, Brooklyn Brewery co-founder Steve Hindy said craft beer is "spanning the world, changing the beer business all over the world" these days. He will speak to brewers' groups in UK, China and more this yr. Exports are now over 40% of Brooklyn's production. There are over 100 craft brewers that are part of BA's export development program. Export numbers not out yet, but up 30% in Western Europe last yr, said Brewers Assn Ambassador Sylvia Kopp.  

At the tail end of a playful panel discussion in Bethlehem, Pennsylvania last night, just before the event relaxed into a room of a few hundred beer lovers enjoying each other's company, Boston Beer founder and chairman Jim Koch acknowledged that the world's largest brewers buying a number of small brewers is "a little scary." Jim pointed out the good time he and fellow panelists Dick Yuengling and Sierra Nevada founder Ken Grossman had been having in response to moderator Bump Williams' question about this development in craft. Why scary though? "'Cause at the end of the day," Jim said, "they want what we have." The event itself and the light, often humorous conversation among the leaders of the 3 largest craft brewers (by the Brewers Assn's measure), underlined for Jim the difference between larger brewers and smaller ones. The camaraderie, the fun and particularly the attention (and $$, we'd add) of passionate beer drinkers: "they want what we have created," Jim said to a resounding round of applause.

The trio hit on all the hot topics between the wide-ranging conversation Bump moderated and a quick press conference just before. Private equity? Ken's "not sure" the firms investing in the space "will get their returns," since brewing is "very capital intensive." Jim reiterated point that it "will be an interesting dynamic" in 4-7 yrs, when time limits on some of these funds near an end. Privatization in Pennsy? "It's comin'," Dick said, as status quo is a "thing of the past" and an "antiquated system." Whatever happens likely to "be tough on beer distributors in this state," but "times are changed," so the system must too. (Dick's referring here to retail/home D distributors, not independent wholesalers, tho there could be impacts there as well.) Agreement between tiers? All three are "fundamentally aligned" behind "better beer," Jim argued. All 3 tiers want to sell more of it. Yet, Dick in particular sees serious tightening in the middle tier. New small brewers are "going to have an awful time getting their beer distributed," if they don't have that already, he said during the press conference. "Where does a new guy in this industry fit," he asked. "Where does a guy go?"

Bump asked about that "explosion of brewers" and whether they can all "peacefully coexist." Even though there's still "a lot of camaraderie," Ken said "I don't know that everybody will." Dick agreed, saying "not everybody's going to invest the way we have." The best path to long-term survival is to "stay small, stay as a brewpub, have fun with it," he said. Jim underlined importance of quality, noting that "you've got to give consumers a reason to drink your beer." But he too concurred that with that smaller brewpub/taproom "business model, there's definitely enough room for another five or six thousand breweries."

In Ken's opinion, the "diverse range of beer styles" now available isn't just the best innovation in beer over the past few years. He also said earlier that "the mix is where the future" is. Jim seemed to agree, claiming that "the greatest innovation is the whole idea of innovation." Looking back at the 80s and 90s, "craft beer was all about tradition," then. But a key development has been "the embracing of innovation in American brewing as a part of the brewer's art." After playfully impersonating tradition-loving German brewers, he noted that innovation goes beyond beer too. He recalled being "lectured at the Craft Brewers Conference" by Steve Hindy saying "we don't need no stinkin' cider." But "you can't stop innovation," Jim said before introducing new Sam Adams Nitro Project White Ale. That was third of 3 new beers from panelists' cos poured for the crowd. It followed Yuengling's new IPL and Sierra's Otra Vez, each clearly a bit out of traditional wheelhouse of each brewer.  

Issue released yesterday noted that 2.4 mil bbls of craft volume growth in 2015 reported by Brewers Assn excluded exports. However, totals estimated by BA (24.5 mil bbls in 2015; 22.1 mil bbls in 2014) do include exports. In 2014, craft exports hit over 380K bbls. 

Following massive growth of Mexican imports over past few years, handful of US craft brewers now releasing their own Mexican-style lagers. Oskar Blues announced debut of BEERITO yesterday, hitting shelves in 6- and 12-pks plus draft at the end of this month. Recall, fellow canning craft brewer 21st Amendment currently in the midst of rolling out its El Sully Mexican-style lager. That's as Ska Brewing's been releasing its seasonal Mexican Logger since way back in 1999. So national launch of BEERITO and early chain approvals for 21A's El Sully seem to add another wrinkle in ongoing growth of new craft lagers.

Recall, Sierra Nevada's Nooner pilsner was #7 new beer brand in IRI supers in 2015. AB's Goose Island is getting into action this year too with release of Four Star Pils nationally. Six different craft lager styles represented just over 10 share of craft volume in IRI multi-outlet + convenience data for 52 wks thru Feb 21. Pilsner was one of 2 gaining share of the segment as the style more than doubled to almost 1 share of craft volume. Ongoing growth of older Lagunitas Pils also contributing to the style's growth here. Note that half of total craft lager volume in IRI is just 2 big brands, Shiner Bock (+4%) and Boston Lager (-8%). It's not just pilsners and Mexican lagers entering the scene. Cigar City (also now part of Oskar Blues family) replaced its Hotter Than Helles brand with new "Tampa-style" Cigar City Lager at end of last year, which is "going really well, founder Joey Redner told CBN recently. The co "underestimated what it would be," somewhat, and it's performing "far beyond" expectations, which even caused "some supply chain issues," he said.

Also of note, both Cigar City and Goose Island entrants specifically pay homage to each brand's respective home towns. So does just-launched Rev Pils, a new yr-round "Chicago Pilsner" from that city's Revolution Brewing. That's all happening as same time as revival of regional (often lager) brands that previously fell out of favor or closed up entirely as American megabrands ascended. That revival not only coming from local beer lovers re-energizing their father's and grandfather's favorite brands. It's also being funded, in a much bigger way, by Pabst. So combo of new takes on classic lager styles and re-emergence of once-familiar beer brands all seem to more directly target mainstream beer brands than some of biggest craft brands. While not very likely that new Mexican-style US craft brands slow down actual Mexican imports, could combo of increased availability of the former and increased market power of the latter exacerbate the mainstream's decline?  

"The Governor, in his wisdom, has made craft beverages a top priority," stated Virginia secretary of agriculture and forestry, Todd Haymore, during Deschutes conference. Indeed, Deschutes marks 148th brewery in VA and the 3d west coast brewery to make VA its second home (Stone and Green Flash too). "We actually have a few more up our sleeves, but we'll wait for that," Governor hinted. Whether its "homegrown" or recruited breweries, "no other state has seen such exponential growth" in brewery openings, he added. (Editor's note: Brewers Assn's Bart Watson just pointed to exceptional growth of brewery openings in the South/Southeast last yr, see last issue). All in, VA striving to become a major "east coast destination" for craft beverages of all kinds, including breweries, wineries, distilleries and meaderies, noted Todd.  

After several reports earlier yesterday and years of speculation, Deschutes officially announced decision to build its future east coast brewery in Roanoke, VA yesterday. The project is still a long ways away: Deschutes expects to break ground in 2019 and complete the facility/tasting room in 2021, per co website. Yet when all's said and done, "Deschutes Brewery will invest 85 million dollars and create 108 new jobs here in the city of Roanoke, Virginia," said VA Governor Terry McAuliffe at press conference. The brewery will start off with 150K bbls/yr of capacity with room to expand cap as needed. Deschutes had been actively lookin' for an east coast location for a couple yrs, tho "this was an intense competition" between 3 states (VA, NC, SC) that "goes all the way back to 2012," Gov added. Deschutes literally "explored hundreds of potential locations" in the last two years, per release.

"We think that it's probably going to take a good two years to get the design and engineering completed," Deschutes founder and ceo Gary Fish told CBN, and "we want to make sure our balance sheet is in the right place." Lookin' at other cos' new facilities, "every one of these projects ends up costing more and taking longer" than originally expected, so Deschutes wants to make sure to "not have it be an excessive burden." However, this timeline puts Deschutes in an interesting position capacity-wise. Ultimate capacity becomes less and less "finite" as "lineup of beers becomes ever more complex" but Deschutes currently has anywhere "in the vicinity of" 420K-450K bbls of max capacity, said Gary. Doin' a little quick math, Deschutes would only have to grow 5.5% each year from 2015 volume (344K bbls) to reach max capacity in 2020 as it currently stands.

It's entirely possible that ends up being the case as "the [growth] pendulum swings back and forth." But Deschutes certainly considering its options between now and 2021. "We're looking at…if there's anything internally we can do without having to add tanks or anything else" to increase cap. Also, "we went through an exercise a few years ago where we tried to find a contract partner," but "weren't successful at that time," Gary acknowledged. "We're still looking," but "we don't know whether or not that will change." And if necessary "we can kind of ratchet down our growth curve if we want to." Ideally Gary would like to keep up "strong" momentum in 2016, but ultimately "we've never treated growth like a race," he said. "We want to do the right thing, and do it in the right way, and it will take the time that it takes."

Deschutes $$ Up 24% in IRI thru Feb; Fresh Squeezed Now #1 Brand; Black Butte Back to Growth & More Deschutes overall shipments growth slowed to just +3% in 2015 after particularly tuff yr in home-state Oreg (see last issue). However, co accelerated toward end of last yr in natl scan data and has kept up the pace to start 2016; $$ up 24%, vol up 18% thru Feb 28 in IRI multi-outlet + convenience data. That's again led by Fresh Squeezed IPA (+153%), which kept up about the same fast-paced growth it had all 2015 (+170%). Indeed, Fresh Squeezed is now officially Deschutes best-selling brand, Gary told CBN, ahead of Mirror Pond Ale (-1% in scans). Then too, Black Butte Porter is back to double-digit growth in scans, up 17% YTD. "Black Butte is showing the reason it's been the category leader," said Gary, and "Obsidian Stout is doing very well as well" (up 53% in scans). "We've always kind of considered ourselves something of dark beer brewery first," so "it makes us very proud" that "those brands continue to show strength." Lastly, Deschutes gettin' notable gains from Pinedrops IPA (still incremental) and Variety Pk (+455%). Variety Pk is "mostly in very small markets" and used in "new markets to introduce brands" but it remains "very expensive to produce," Gary noted. Sales team and retailers alike "would really like" more Variety pk availability but for now "we're using it where we can and where we need to."

Opening VA in "Near Future"; No Other Mkts Planned "Right Now"; CA Growth Deschutes "not planning on opening a bunch of new markets" but it's definitely lookin' to open Virginia "pretty quickly," said Gary. Co wants to bring its Street Pub to Roanoke "later this summer" which will "require us make a deal with a wholesaler." Then "we think we'll open up much of, if not the rest of the state of Virginia at some point in the near future, but beyond that" there are no plans to expand "right now." That's partly 'cause Deschutes is "seeing growth" out of California, which Gary referred to as its "largest [market] in terms of potential." It's been "solid" growth "but on a small base" and "as that base grows the numbers continue to stay relatively steady in terms of percentage." So "we're generally pretty pleased," but "the other edge of that sword is we have this capacity issue." Again, Gary stressed importance of "growing in the right way." Deschutes is currently in 28 states plus DC.  

If you're looking for more of the kind of analysis we've done in this issue on Oregon, San Diego and the overall US craft brew market, then our handy Craft Brew Guide is for you. The 2016 edition, available in April, provides perspective with data and analysis, plus profiles of top players and essays on important issues like M&A, legal and legislative changes. It digs into a handful of IRI's market-specific off-premise retail data sets, including important craft markets like Portland (OR), Seattle/Tacoma (WA) and San Diego (CA), as well as biggest Texas metro markets, big Florida and Ohio markets and for first time, fast-growing North Carolina. But that's just a small piece of this one-of-a-kind, info-packed publication. Order the PDF edition for $210 or get it as an easy-reference soft-cover book with the PDF for $260.