NH's most established craft brewer Smuttynose finished 2015 with shipments up 9.7% to approx 50,417 bbls, communications director JT Thompson shared with CBN. As is true for majority of the craft industry, co "definitely saw a slowdown toward the end of the year" after starting Q1 up 20% plus. But lots went right for Smuttynose at same time. Its Finestkind IPA up 25% off-premise with an extra boost from can pkg intro. Old Brown Dog "still plugging away," up 11% off-premise and flat on-premise. Robust Porter became #3 brand off-premise for Smuttynose thanks to some of its expansion mkts. And Vunderbar Pilsner saw fastest growth of all, up 116% overall, off small base (also with extra can boost). This year Smuttynose will give Vunderbar a packaging reboot and just added it to variety pks, expecting it to have "a pretty big impact on sales."

Seasonals were pinpointed as weaker area of the portfolio last yr and JT pointed to particularly tuff Pumpkin trends toward the end of the yr. So Smuttynose taking interesting approach to fall seasonals in 2016. It will push back its Pumpkin release to Aug and launch its Octoberfest on a larger scale (for first time) 30 days later, said JT. And it will create a unique seasonal 12pk that includes 6 Pumpkin ales and 6 Octoberfests. "People are coming back to beer flavored beer," JT quipped, as they're seeing "a pretty good lager movement" in the northeast. But plenty of folks still lookin' for new, different, unique flavors too, natch. So Smutty will launch a new rotational canned series of its Short Weiss brews. These kettle sour beers graduated from its Smuttlabs program and are aged with all different kinds of fruits. It will start with Blueberry in May followed by Peach and Cherry flavors, available on limited basis in 12oz 6pk cans. And Smuttynose will continue to innovate thru Smuttlabs program that's seen "great growth" and continues to produce "some winners…that will definitely see the light of day again in 2016."

All in, Smuttynose largest volume gains "were from some of our top wholesalers and in our home markets of New England down through NYC, Amoskeag and Bayside in New Hampshire, Central in Maine and the Sheehan family in Massachusetts." Smutty's newer mkts such as TN, AZ and TX are "doing alright" but it's "difficult as everyone focuses on what's local," JT acknowledged. In outside mkts, Smuttynose getting "squeezed on both ends" to an extent, since it's not as "nimble" as the small local players and "not on the same scale" as larger craft cos. So Smuttynose continues to innovate and think creatively about approach to mkt.

Smuttynose Creates "Beer Vault" Online Portal for Retailers to Help With Specialty Releases Speaking of creative approaches to mkt, Smuttynose is releasing "The Beer Vault" as an attempt to cut through "the din of the craft beer industry" and help accounts better track its specialty releases, co announced. The Beer Vault is an "online portal" that allows retailers that are signed up to "see a real-time inventory of everything in the special stash and 'call dibs' on whatever kegs they want," per release. Essentially, retailers that are signed up will receive email notifications for each specialty release and have the option to request kegs via the online portal; the request gets relayed to Smuttynose and then to its wholesale partners across 27 states & Puerto Rico who take care of the rest. Smuttynose has been workin' on the Beer Vault for 3-4 months now, and "as far as I know" it's the first of its kind, JT told CBN. "The whole idea was kind of grounded in two ideas": 1) "sometimes it's hard for all these beers to find homes"; 2) "wholesalers are busy" managing "mosh pit" of craft brewers so "how can we be better partners to our wholesalers." Indeed, "these are the beers that beer drinkers get most excited about" but are more of a "pain" for distribs to manage, JT continued. Another aspect of the Beer Vault is that more retailers could potentially have access to its products. Sometimes specialty releases "get cherry picked" by the most craft-centric accounts, JT said. So now, for example, a "craft-thinking sports bar" can sign up and ensure that it has access to Smuttynose's releases. Ultimately, the Beer Vault allows brewing team "to be a lot more nimble" and "a little more flexible," said JT, rather than "having to schedule six to nine months ahead" for these specialty brews. The Vault will be "the only way to get Smuttlabs beers… as well as brewery-aged, vintage beers and new, draft-only releases" of Smuttynose Big Beers, per release.  

These are not the best of times for Boston Beer. Yesterday, CITI initiated coverage of Boston Beer stock with a "sell" rating. Today, CLSA's Caroline Levy knocked Boston down 2 notches from "outperform" to "sell." And SAM stock getting pummeled so far today; down $25, 12% at presstime. The biggest reason why: reduced expectations on sales amidst increased competition. Stock down 12% to $175 and mkt cap at $2.2 bil, slightly more than half its peak value.

Boston Beer's flagship craft franchise, Sam Adams, is having a tuff time in scan data. Sam Adams franchise down 10% yr-to-date thru Feb 27 in Nielsen all-outlet. Sam Adams fell at even steeper pace, -13%, in last 4 weeks, even as total beer volume sales accelerated to 3.6% growth. Total Boston Beer down 3% for 4 weeks in Nielsen and 0.9% yr-to-date. But like IRI, Nielsen data set doesn't include subsidiary Alchemy & Science with Boston Beer. And if you recall, Boston Beer still seeing mid-single digit growth in $$ sales including Alchemy & Science.

Top Reasons CITI Rated Boston a "Sell" CITI gave 10 Points as "Principal Concerns about the SAM story today." Here are top 4: "SAM's growth has slowed and its forecasting accuracy has deteriorated"; SAM's "expansion into new brands/new categories had helped drive growth in recent years, but this seems to have ended"; "Competition in craft beer has intensified a lot"; "Innovation has been key to the story… but we suspect future new products may not be as incremental as past ones." Others included that "pricing is no longer driving growth," "recent management changes could imply a period of transition lies ahead" and SAM "still trading at a premium." Risk to rating is SAM being sold, "but we think odds are low in the near-term."

Boston's Cider Down 11% Last 4 Weeks; Truly Spiked and Sparkling; Martin's Stock Sales After 15% growth in IRI last yr (and 86% growth in 2014), Angry Orchard franchise down 11% latest 4 weeks thru Feb 21 in IRI, wrote CLSA's Caroline Levy as she too put a "Sell" rating on Boston Beer. Then too, Coney Island Root Beer was at levels less than 1/4 of Not Your Father's Root Beer in 2015 and "now must fight hard soda launches from ABI… and MillerCoors." Caroline now sees only 1.6% growth for Boston Beer in 2016. She too sees as risk to her rating "a possible takeout," i.e. Boston Beer getting sold, but "we do not view that as likely in next 12 months."

Another risk: "unexpected new product launches." Ding, ding, ding. Here comes Boston Beer's latest: Truly Spiked and Sparkling, a hard seltzer (another product called Spiked has had some regional success) that comes in 3 flavors and will launch regionally this spring. That goes along with at least 2 new cider brands, 2 new tea brands, 3 in nitro series, a shandy, Rebel Grapefruit, and undoubtedly more. Over a dozen new brands listed here. Tuff to even keep track. Even with Boston's recent stock and sales difficulties, top execs keep cashin' in options and netting out big bucks. For example, in Jan and Feb, Boston Beer ceo Martin Roper sold over 110,000 shares for over $19 mil (we don't know what Martin originally paid for those options) and bought options on even more shares at much, much lower prices (for total of about $13 mil). So not only did he net over $6 mil just on selling and buying those shares, but stock options he bought already worth about $10 mil more than he paid, even after today's drop.  

This is an interesting hire. After a several month search, following departure of marketing director Josh Holmstrom last fall, New Belgium hired a new marketing vice president. Ruairi Twomey will join NBB effective March 14th. Ruairi worked for leading distiller Diageo for almost 15 yrs, since 2001. Most recently, he served as Diageo Guinness USA's mktg veep from 2012 to 2015. There he "managed $94M annual marketing budget," according to his Linked In page. That's assuredly an exponentially bigger budget than NBB's (New Belgium total revs at $225 mil in 2015.) At DGUSA, Ruairi "drove transformational performance in the Guinness and Smirnoff Ice trademarks as well as bringing a highly innovative approach to communication, innovation, digital and sponsorships," said New Belgium in release. Ruairi served in leadership positions in Ireland, Canada, Nigeria and NY, said NBB. "In typical New Belgium fashion, we have taken our time to find the ideal candidate for this position and that deliberative process has really paid off," said ceo Christine Perich in a statement. "Ruairi's international experience, creativity and good humour will be a great fit here," she added. His creativity will be necessary to help NBB get going in right direction again. Recall, New Belgium had its first down yr ever in 2015.

New Belgium continues down slightly so far in available scan data in 2016. Volume down 1.7% thru Feb 21 in IRI multi-outlet + convenience and its 2 lead brands are lagging. On Linked In, Ruairi sez he "reversed multiyear category declines on both the Guinness and Smirnoff Ice trademarks in first 13 months." Both New Belgium's lead brands could use that kind of transformation. Fat Tire volume down 3.6% and Ranger IPA down 5.6% in IRI MULC for 52 weeks. Of course, NBB expanding to several big new mkts this yr, including Pennsy (Aug 2015), NJ (this mo) and NY (May). Those 3 states sell 23+ mil bbls of total beer, about 11% of US beer biz. Ruairi will likely have beacoup de incremental bucks to fund mktg initiatives because of upfront payments NBB secured from distribs in those states (tho part of that money may also be used to pay down debt). More details on NY in an upcoming edition of Craft Brew News.  

Oh to be a happy warrior in your home state! New Glarus's 195K bbls in Wisc last yr, +20%, gave it 4 share for entire state, and 1 of every 5 beers not sold by top-5 natl suppliers. That's about same volume that another local fave, Leinenkugel, shipped in Wisc last yr from its Chippewa Falls plant. Also: while New Glarus virtually tied Constellation-HUSA combo in 2014, it out-shipped those top 2 importers by 10K bbls last yr. New Glarus only 26K bbls, half-share behind Pabst for #3 spot in state, but well ahead in $$, natch.

New Glarus really dominates craft in Wisc. Nearest competitor, Boston Beer shipped 35,000 bbls, only156K bbls behind New Glarus last yr. Boston biz up 8% in Wisc. Number 3 Lakefront scored similar gain and shipped similar amount, 33K bbls. A handful of craft brewers between 20-25K bbls: Stevens Point even, Capital down 13%, Ale Asylum up 13% and New Belgium down 6%. Locals Wisconsin Brewing and Sprecher each gained, as did Bell's and Sierra. Top 11 craft brewers combined had over 8 share of Wisc biz last yr. More detail on Wisc craft, plus a handful of other states, in our Craft Brew Guide, due in early Apr. Click here for more info and to order.  

A bill making its way through Missouri legislature set off debate this week, due to provision that would allow distributors in the state to lease coolers to certain beer retailers. That measure backed by AB, which argues it "would help enhance the position of beer in a competitive retail landscape," AB's region veep Marcelo Abud said. But craft brewers and non-AB distribs in state ain't buyin' it. Craft brewers activated Brewers Assn-run Support Your Local Brewery network of supporters earlier this week to fight bill. It "contains some very troubling language" that the Missouri Small Brewers Guild believes "is an attempt to begin limiting craft brewer access to market," prexy/founder of Mother's Brewing Jeff Schrag wrote. Cooler leasing comes with "an expense that small brewers simply cannot afford or compete against," he continued, labelling the practice an incentive to stock big brewer brands, according to Missouri Lawyers Weekly. The bill passed through the state Senate 18-14 yesterday and now moves on to the House.

One source went off on a "rant" regarding the "refrigeration/ABInBev takes control of the legislature…issue," noting that "while the Federal Government and other states are taking a tighter, slimmer view of alcohol issues, Missouri decided to relax theirs!!" Same source continued: "This isn't really about refrigerators, this is a BIG change in liquor regulation." Since beer legalized in MO, "all players played under a given set of rules." Now AB wants to change 'em to its own advantage, sez source, while "legislators turn a deaf ear to the small brewers who now actually employ more people in Missouri than AB InBev." Stay tuned.  

Just as it looked like Sheehan Family Co's had put Boston Craft Brewers Guild situation behind it, at least temporarily, with fine to Mass ABC, Boston Globe hit 'em with story today on more "pay to play." This time, Globe focused on past practices that Sheehan's NYC distrib Union admitted to in unrelated lawsuit. Union is AB distrib in Brooklyn borough, and article tied NYC pay to play specifically to AB biz. But Union is also huge craft distributor in entire metro NYC and north and west of city. (Much of this article appeared in our INSIGHTS Express today.)

Lawsuit in question involves spat between Union and another NYC distrib over deposit redemption. But unsealed depositions of Union employees reveal that Union provided draft equipment, wrote checks for charity golf tournaments, swiped credit cards, extended credit beyond what law allowed and provided other freebies. Union's gen mgr said in 2011: "All...wholesalers that we compete with engaged in the same activity. What we did was in response to competition." Sheehan also insists any pay-to-play in NYC ended in 2011 after an Apr mtg where NY state liquor authority threatened crackdown.

As in Mass investigation, depositions give plenty of damaging detail about amounts paid, draft equipment worth $5-6K, Union supervisors clearing checks for over $1K to charities (on behalf of retailers) and more. During deposition, atty asked Union salesman: "What was the criteria that was used to give free goods?" His answer: "I had to hit a Bud Light number." And again as in Mass, Union's actions allegedly paid for by suppliers. According to Globe: "Union managers testified that money for the incentives came from a marketing budget set by Sheehan executives in Massachusetts and was substantially funded by its suppliers, including AB InBev." Records don't indicate if suppliers knew about the pay to play, Globe sez, and AB spokesman "emphatically denied the company was aware of Union's banned practices."

AB Stung on Shock Top Buy-Back Program; TTB Pockets $300K Offer in Compromise AB just made offer in compromise to TTB for $300,000 over alleged violations of consignment sales provisions of FAA Act. Violations involved 541,000 cases of Shock Top Wheat Ale and Lemon Shandy that TTB apparently believed were sold "with the privilege of return." AB offer resolves "all alleged violations" by AB distribs with respect to Shock Top "Buy-Back Co-op" programs, TTB wrote. Recall, TTB accepted $450K offer from MillerCoors last Sep over similar Fortune program involving 1.5 mil cases. AB's statement also similar to MC's at the time. AB's High End prexy Felipe Szpigel said: "Our belief and understanding was that this program was in full compliance. However, after many discussions with the TTB, we've decided to move forward in the spirit of partnership and settle the matter."

Pay to play mostly linked to big brewer brands, but recall that CBG's Boston payments involved craft taps too. Also, Lagunitas letter to its distribs on this issue acknowledged it was "indirectly involved" in a past incident. There's another resonance with craft here, on the Shock Top story. We've heard from NY retailer that he's having more and more trouble getting his distribs to pick up old beer, and especially seasonals that don't sell thru. Distribs are saying "it's against the law" to do so, perhaps fearing the kind of charges like AB just settled. In any case, no secret there's lotsa "dusty bottles" out there, as Craft Brew Alliance's Andy Thomas has noted in the past. So far, they haven't seemed to deter consumers from buying craft. But given stepped up competition and the sheer number of players and brands, both of these issues pose possibly huge market and legal problems for the category.  

Fla's Funky Buddha Brewing was largest new vendor tracked in IRI supers last yr, with $987K in sales. It pulled well ahead of next closest, Thirsty Planet out of Austin, TX, in 2d half of the year, which finished at $550K. Gotta note, MI-based Perrin (owned by Oskar Blues/Fireman's Capital) jumped onto the list to reach #4 new vendor at $246K after introducing cans later in the yr. Rest of top-10 new vendors were scattered across the country, per usual. Oreg-based Pfriem (#3) and WA-based Iron Goat (#8) out of PacNW; Big Bend Brewing (#7) joined Thirsty Planet outta TX; NC's White Street (#5) and VA's Old Ox Brewery (#10); and MO's Public House Brewing (#6) and OH's Land Grant Brewing (#9) added to list of new vendors from Midwest. 

Craft cans continued to outpace bottle sales and gain share of both segment and industry $$, Dan showed. Indeed, craft cans were collectively up 39.3% to $242.2 mil in IRI foodstores; enough to gain another 3.5 share of craft $$ to 11.4 total. Interestingly, that's about half the growth pace craft cans had thru mid-2015 under previous IRI definition of craft. With restated definition, MC is now largest "craft" can supplier at $24.4 mil, followed by Sierra's $16.9 mil, Oskar's $12.5 mil, Founders' $11.6 mil and Boston Beer's $9.5 mil. Those cos make up 31 share of total craft cans. Lookin' at package sizes, 6pk cans still largest format and growin' 91%, followed by 12pk cans up 35%, 4pk cans up 45% and 15pk cans (Founders All Day) up a whopping 385%.  

Another interesting BA Power Hour look that delved deeper into IPA style showed that IPA growth differs by pricing tier. Dan broke IPA style into 4 tiers: Tier 1 includes IPAs at $35.99/case or under; Tier 2 between $36 and $50.99; Tier 3 between $51 and 65.99; and Tier 4 at $66 bucks or over. The lowest priced IPAs in Tier 1 collectively made up largest portion of sales, with 205 brands collectively +26% to $248 mil in sales in IRI supers. That was led by each of the 3 largest IPAs in the biz thru 2015 - Lagunitas IPA, Sierra Torpedo IPA and Rebel IPA - and 30 brands in Tier 1 had sales over $1 mil last year. However that was the lowest trend of any tier. Tier 2 had more than double amount of brands (431 total), up 45% to $202 mil, with Bell's Two Hearted, Lagunitas Little Sumpin' and Stone IPA leading the way. Overall growth from Tier 2 was $63 mil compared to $51 mil gain from Tier 1 IPAs. Meanwhile, Tier 3 had fastest trend of all. Total of 176 brands grew 61% to $48 mil in sales, led by Ballast Sculpin IPA, Dogfish Head 90 Min IPA and Ballast Grapefruit. And interestingly, trend for highest priced IPAs in Tier 4 had slower +28% growth pace, to a little over $26 mil. What's more there were 328 IPAs in Tier 4 which was 2d most of the tiers, led by Stone Ruination, Stone Enjoy By IPA and Ninkasi Tricerahops.  

California and Great Lakes regions each grew $$ 14% and snagged largest total craft gains of any region in IRI supers, IRI's Dan Wandel showed during BA Power Hr. Yet while CA led all regions in $$ growth, it did so with lower volume gain than 4 other regions. Indeed, craft average price per case was highest of all in Calif at $36.32 per case and got the largest gain of any region too (+5.9%, $2/case). Great Lakes region led all regions in volume growth, up 1.1 mil cases, +12%, well ahead of CA's +759K cases, +8%. But since Great Lakes craft avg price was more than $2/case less than CA, its $$ growth a couple mil behind. All in, "all regions remained at double digit growth" with craft $$ up in the low-to-high teens.

Local Phenom Not Happening Everywhere in Scans (Yet?): NY Example While "numbers really seem to support" that "there's something there to this local trend…either outselling…or certainly outpacing" rest of craft in their respective markets, in NY scans "it's not the case," said Dan. Local NY-based brewers had "much smaller % of overall $$ sales" in NY multi-outlet (MULO) data and locals "not outpacing" rest of segment by much. Indeed, NY locals only make up 20% of craft $$ in NY compared to 63% in Chicago or 50% in San Diego. And locals outpace total craft by a bit: up 16.5% off much smaller base, compared to total craft up 8%. Only 2 of top-10 craft brand families in NY are locally-based, and one of 'em, Brooklyn Brewery, was down 2% last yr. But gotta note, Brooklyn had a tuff year in NY in midst of transition from Phoenix Beehive to Manhattan Beer, so Brooklyn lookin' to get back to growth in home-state now that its fully situated. And as "more and more craft brewers emerge in our data for NY" Dan will check back "in another couple of years" to see how this develops. Main point here is that "local" is "going to vary from market to market," said Dan.