Craft segment continues to climb to new heights in Portland, OR. It grew 11% and gained another 2 share of $$ to 44.2 in Portland IRI foodstores in 2015. That's more than double the size of next closest segment, Domestic Premium, which shed 1.3 share to 19.7. And despite category slowdown for last 13 wks (+7.5% and +1.35 share) craft nearly 47 share in Q4. So craft and cider - up 0.6 share to 6.4 - combined are officially over half of total beer sales in Portland foodstores (and nearly 96% of the total $$ growth!). All in, beer $$ grew 5.7%, $10.77 mil in Portland foodstores. Gotta note, craft is a bit larger with new IRI definition of segment that includes Blue Moon, Leinenkugel and Shock Top. But craft mkt is so developed in Portland that Blue Moon brand family is only 11th largest co (by $$), Shock Top is #16 and Leinenkugel is outside of top-20. Those 3 brand families combined were 2.8 share of $$ in Portland last yr, collectively shedding 0.1 share. And in last 13 wks all 3 declined (both volume and $$) and collectively lost 0.3 share of $$. Still, any way you look at it craft as whole keeps on keepin' on in its most developed market.

Yet interestingly, 8 of the top-13 craft cos in Portland foodstores actually lost share of total beer here. Craft Brew Alliance (+3%), Deschutes (+1%), Boston (including cider & tea, excluding Alchemy & Science, -10%), Gambrinus/Bridgeport (-14%), New Belgium (-7%), NAB craft portfolio (top Pyramid/Portland brands collectively -1%), Blue Moon (+4%) and Lagunitas (+4%) collectively lost 1.6 share of $$. Tuff losses in particular for Boston Beer, down half a share (tho 2/3 of that loss is from Angry Orchard brands) and Gambrinus and Deschutes each off 0.3. Those 7 cos are nearly 1/4 of the entire beer category in Portland. Even so, more than half of their share losses were made up by one red hot local co. Hop Valley $$ up 86% and gained 0.8 share to just under 2 share total (we're talkin' total beer sales still) on its own. Its total $$ gain ($1.7 mil) was highest in the entire mkt, even ahead of Constellation's $1.2-mil gain. Then too, Ninkasi (+10%), Full Sail (+14%), 10 Barrel (+15%) and Sierra Nevada (+21%) collectively gained another 0.65 share to over 9 share total. Several smaller local cos gobbled up share collectively: Breakside (+126%), Worthy (+68%), Laurelwood (+39%), Fort George (+51%), Pelican Pub (+56%), Three Creeks (+176%), pFriem Family Brewers (new to scans) and Alameda Brewhouse (+116%) together gained 1.3 share. And many more small local cos helped add to another great yr for craft beer in Portland scans.  

Lotsa speculation, warnings and handwringing in media and among craft brewers these days about AB's "intentions" and ultimate "impact" on craft beer biz in US. But most important takeaway from AB's recent meeting with its distribs, dubbed SAMCOM, not at all speculative. AB intends to compete - seriously and vigorously - and devote a lot of resources to gain share of market and mind in craft beer, no matter how you define it. Specifically, AB aims to: 1) reverse Shock Top's decline in 2015 and make it the #1 national craft brand in US; 2) become the biggest craft brewer in the US; 3) make its "amazing partners" (Goose Island, Elysian, etc, 8 of 'em) the #1 craft players in their respective regions. These are not modest goals. First, Shock Top would have to more than double volume to catch Blue Moon, which is growing. But AB will spend more in Q1 on Shock Top than all of last year, including first-ever Super Bowl ad with hot comic TJ Miller. AB becoming biggest craft brewer no less ambitious. Even with good growth across board in 2016, we figure total craft volume could pass 1 mil bbls in 2016, tho closer to 2 mil if you include Shock Top. Note too, AB owns 32% of Craft Brew Alliance and has talked about working together more closely with CBA going forward. CBA's Andy Thomas appeared at SAMCOM for first time, via video. Pro-rated, that's another 250K bbls AB could claim in its accounting, based on 2015 volume. Lotsa ways to slice and dice these numbers. As for regional leadership, Goose Island leads in home mkt, as does Four Peaks, but it would take lotsa growth for others, depending on how you define region.

AB will continue to "invest in capacity" for partners and expand their brands "aggressively and consistently" to make them "regional, cross-regional and eventually national powerhouses," AB's High End prexy Felipe Szpigel told distribs. Those partners in "different stages of integration," with some already adding capacity, some still learning AB system, while AB "learns their culture," craft ceo Andy Goeler said. In terms of portfolio strategy, while earlier observers noticed that AB and MC limited early offerings to easy-drinkin' wheats, that's out the window. With its partners, AB intends to "build lead iconic brands in critical mass styles." One key example: Goose Island IPA up 260% last yr and became a top-5 IPA, Andy said. It already "has more taps than any other IPA" (14K+) and is "making America great again." (Andy's an enthusiastic presenter.) In addition to building capacities and brand support, AB added 200 High End reps in local mkts and calculates its High End biz can add $80 mil in gross profits to distribs system, Felipe pointed out. That's additional incentive to build AB's portfolio. (AB's High End includes imports as well, principally Stella Artois.)

AB Craft Grew at Double Segment Rate in 2015 AB's craft portfolio (excluding Shock Top, this gets confusing) up 36%, per IRI last yr, Andy told distribs, more than double overall craft trend. Goose Island up 30%+ (looks like our shipments estimate was low), 10 Barrel +35%, Elysian +34% and Blue Point +75%. So "we are gaining share and building momentum," Andy said, while #1 craft brewer Boston lost about 2 share of craft. In effort to make Goose IPA #1 IPA, Andy said key will be to "not lose distribution and drive velocity." AB aims to match Sam Adams spending in 2016, a "significant increase" over 2015, with combo of traditional media, digital, experiential and consumer promos to position Goose as "not the only beer you drink, just the best beer you drink." Also on tap: Goose Four Star Pils will go year round and AB aims to make Goose Island barrel warehouse in Chi a "global hub of barrel aging," including new cellar tasting room and culinary area.

Different Strokes for Different Brands Brief discussions and videos from partners highlighted breadth of styles/messages AB can now provide distribs, from lagers to vanilla porters and sessionable beers to more challenging sours. To close, Andy brought out founders of each partner to share stage, presenting them as "innovators, thought leaders and risk takers."  

Join us May 16-17 at the Ritz Carlton in Chicago for our annual spring conference. This year, we're doin' it a little differently, adding a half-day of presentations on Monday and expanding its focus to include ongoing shifts in beer M&A. We'll still focus lots of attention on high-end beer segments, including an extended panel with leaders of these segments: we just added Boston Beer chairman Jim Koch to panel with Constellation Brands Beer Division chairman Bill Hackett and Heineken USA prexy Ronald den Elzen. You'll also hear from Joe Whitney and Brian Grossman from Sierra Nevada, just before it kicks off its second Beer Camp Across America tour. With our additional half-day of programming, we'll dig into dynamic world of brewer and distributor deals. Bill Anderson of First Beverage Group will return to update us on craft brewer consolidation, IBG's Joe Thompson will talk about distrib consolidation and partners in new Paragon Bev Advisors Mark Hall and Randy Jozwiakowski will share their perspectives too. As always, CBN publisher Benj Steinman will provide his annual overview with key stats and developments. Seek out more info and register today.  

Plenty more proposals to amend current laws governing alc bevs popped up in last week, including some more states lookin' into raising volume caps on brewers and lifting restrictions on brewpubs. Kansas is latest state to reconsider current production cap on brewery licenses. A bill intro'd in both houses there would double current cap on microbreweries from 30K to 60K bbls; another would allow for cider production at breweries. A House committee passed both, according to Lawrence Journal-World, but Senators are eyeing the language more carefully. They want to make sure the cap applies to all connected bizzes, not to each facility operated by the same company. Recall, Tennessee is one of other states considering raising its volume cap on small brewers, but it's also considering lowering its population minimum that restricts counties where brewpubs can open. Legislators there intro'd a measure to allow brewpubs to open in counties with a population over 25K, down from 75K. New Jersey could also lift restrictions on state brewpubs: an assembly bill would allow brewpubs ("restricted breweries") to self distribute up to 1000 bbls. A separate bill there would allow breweries to get permits to sell their beer at farmers markets.

In Southeast, hotbed of legislative activity to expand options for brewers, plenty more talk but not so much action. Still waiting in Alabama for official bill to make changes that industry members and legislative committee already agreed upon (see Jan 20 issue). Next door in Mississippi, state brewers guild looks to have a bill intro'd that would allow for on-site sales for first time. Focus there is to move alc bevs laws toward being "congruent, competitive and consistent with the rest of the United States," guild's gen'l counsel Matthew McLaughlin told the Clarion Ledger. They're expecting bill to be intro'd in next couple weeks that will help create additional, much-needed revenue stream for small in-state brewers. That's been drum founders of largest/first Miss craft brewery, Lazy Magnolia, have been beating for years: no on-site sales at all mean average rev/bbl at Miss breweries is much lower than many out-of-state craft brewers, which can use addition revs (particularly from taprooms) to compete in Miss and elsewhere. Beer made in state only represents 0.3% of all beer sold in Miss, or 90K CEs of 30-mil-case state, state Dept of Revenue stats show. It remains one of 2 states that does not allow any form of direct sales, the other being Georgia. And there, Georgia Dept of Revenue is yet to act on agreement made between industry members and state politicians (see Jan 27 issue).

Allowing Growler Sales in More Spots, Negotiating Open Container Laws; "Control" Tweaks in Ariz Missouri could broaden the types of retailers that can sell growlers, opening it up from just breweries and only some restaurants. Both Idaho and Arizona are looking to clarify laws so that growlers are not considered open containers, but they're doing it differently. Idaho will require growler seller to put some form of tape so that police officers can tell whether the growler has been opened yet or not when stopping drivers. In Arizona, a Senate liquor omnibus bill clarifies simply that growlers purchased from permitted retailers are not open containers. It would also allow restaurants to pick up permits to sell growlers. Omnibus and a separate bill ease restrictions on tastings, or "sampling privileges" at retailers. Omnibus also tweaks the way Ariz regulates "control" over licensees, seemingly easing any transfer of control thru acquisition of a current licensee. In short, it removes a layer of oversight, eliminating a "pre-investigation" period so transfer can happen quicker.  

Russian River is in process of looking to open a 2d brewpub location "ideally in Sonoma County that would appease locals frustrated by the crowds," reported Press Democrat. The extra capacity will be a welcome addition too, natch, since Russian River already at full 16K-bbl capacity (see vol 6, no 85). But focus is on need to expand space due to crowds that have become "commonplace" at Russian River. Not just for its infamous Pliny release, but now "long lines are no longer unusual" during weekends and "certain weeknights" at its 150 person capacity pub. "We're pretty certain we want to do it," co-owner Vinnie Cilurzo told paper, but one key is "ability to own the land," paper notes. Indeed, "Vinnie and I want something to call our own," Natalie said, since both its brewpub and production facility are leased. Russian River would look to model their 2d brewpub after Sierra Nevada's Chico taproom, with addition of brewery tours and "a 'real gift shop,'" among other features, she added. "It's about growing the customer experience."  

New Mexico-based Marble Brewing just missed regional mark last yr, producing 14,700 bbls out of its 5K sq-ft facility in downtown Albuquerque, reported Albuquerque Journal; that's up about 15% according to Brewers Assn stats. "Fifteen thousand barrels in 5,000 square feet is somewhat remarkable," co-owner and brewmaster, Ted Rice told paper. And with $4 mil expansion project nearly complete that will boost capacity to 30K bbls/yr. "I'm pretty confident we'll easily hit 20,000 barrels this year," he said, "a conservative estimate." Marble already added 7K sq-ft, a new centrifuge, new 150-bbl tanks and a new cooler, with additional tanks and a new canning line coming soon. Separately, Marble is nearly done expanding its West Side taproom, adding a rooftop deck at its Downtown taproom and plans to open a "new Northeast Heights taproom near Montgomery and Eubank this spring," noted paper.  

More AB related news. Goose Island Green Line Pale Ale will get "national rollout" in 6pk bottles, 12pks of both bottles and cans, 4pks of 16-oz cans and kegs by Feb 29, Goose prexy and general manager, Ken Stout told Chi Tribune. Green Line was intro'd 6 yrs ago and has only been available in Chicago area on draft to this point. "We've had people begging us for Green Line outside of Chicago since we introduced it - just begging for it," Ken said, adding "there's a built-up demand and reputation. We're bullish about how it will do." "Vast majority" of Green Line Pale Ale will be made at AB's Baldwinsville, NY plant with "lone exception" of draft that's sold in Chicago, which "will continue to be made at Goose Island's Fulton Street brewery," paper noted.

Interestingly, decision to expand Green Line came along with decision to discontinue Goose 312 Urban Pale Ale. Recall, Urban Pale Ale launched in early 2014 tho saw sharp decline in its sophomore year: both volume and $$ down 23% in 2015 IRI multi-outlet + convenience data, and down 49% for last 13 wks thru Dec 27. "Multiple 312 beers confused customers," Ken said. So "once demand for 312 Urban Pale had turned tepid following a strong start, Goose Island decided to hand the 312 moniker exclusively to Urban Wheat Ale," noted paper.

312 Urban Wheat Revamps Packaging to Highlight "Goose" Goose also has redesigned its 312 Urban Wheat package "to mimic the presentation of its other major beers…with the word 'Goose' at the top of the label." Original 312 packaging was intentionally "distancing the brand from the brewery" when it was first released, trying to "appeal to younger drinkers," former brewmaster Greg Hall has said. Yet that has caused consumer confusion over the yrs. "I can't tell you how many times at the brewery or at an event, someone says, '312 is a Goose Island beer? I had no idea!'" Ken said. "It was time to bring 312 Urban Wheat Ale more clearly into the Goose Island fold."  

Craft Brew Alliance sales-to-retailers dipped in 4th qtr, down 1% and were flat for yr, it reported in preliminary results. That compared to 7% growth in 2014. (Note this article appeared earlier this afternoon in INSIGHTS Express.) Shipments flat in Q4, but down 1% for full yr (including contract brewing). Kona continued to rock as "cornerstone" of CBA's current portfolio, with depletions up 27% in 4th qtr. Kona shipments up 17% for yr. Net sales up 4% in qtr, even with flat shipments, "primarily due to favorable pricing and mix." So gross margin increased by 260 basis points to 31.4%. Net income at 7 cents per share compared to 0.4 last yr in Q4. Net income per share at 12 cents in 2015, still down 25% for full yr.

CBA expects shipments growth of 1-2% in 2016, including a "planned decrease in shipments during the first quarter due to a temporary closure" of Portland brewery "as we complete several key expansion initiatives." CBA also expects average prices up 1-2%. SG&A will will be roughly flat at $58-59 mil "as we leverage investments made in prior years, which will be offset by rising costs." Gross margin at 30.5% in 2015. CBA expects margin to improve to 31-32.5% in 2016. "Through steady progress to optimize our brewing locations and improve capacity utilization and efficiency," CBA "confident in our gross margin expansion target of 35% in 2017." Stock dipped very slightly this morn.  

After a very strong year of growth (+40%) for Founders Brewing, co expects only to accelerate from here. "We are expecting another high growth year and look to end 2016 somewhere around 415,000 bbls," co-founder Mike Stevens wrote in Year in Review letter. Recall, that's on top of 40% growth to 270K bbls last yr. So that would mean nearly double last yr's total bbl growth: another 145K bbls, +54%. And that's not all. In next 5 yrs "I fully believe we will be pushing 800k to 1MM bbls." Mike cites "tremendous amount of white space ahead," specifically in retail chains as major source of growth moving forward. Last yr Founders $$ grew 74% in chains, while its Category Weighted Distribution (CWD) was "much less than half of where our larger peers land (60-70%)." Further, co "just recently built a very deep chain department and we're poised for accelerated growth on a national level," sez Mike.

Largest factor behind Founders growth has been All Day IPA. It already became "the 4th largest selling IPA of any kind [nationwide], behind only Lagunitas, Sierra Nevada [Torpedo] and Sam Adams [Rebel]," sez Mike (Goose IPA gotta be a very close 5th if that's the case). And this yr Mike believes it "has a great shot at being the 3rd best-selling IPA in America…not bad for a brand that first saw full distribution in 2013." Historically, Founders never had a "lead brand" until emergence of All Day IPA. Rather, success was "rooted" in "innovation and experimentation" and before rise of All Day, Founders "never had a beer that represented more than 27% of our volume (Centennial IPA)." So "crazy to think," for Mike, "lead brand" emerged after 18 years.

Meanwhile, "growth [still] is remarkably well balanced and organic." Indeed, yr-round portfolio up 47%, Seasonals up 33% and Specialty brands up 52% in 2015. Latest facility cap expansion gives Founders "ability to produce several new beers in 2016" including "some really great new surprises," sez Mike. It's also in the process of expanding Grand Rapids facility to have "an additional 250,000 bbls of barrel-aged and specialty beer capacity," expected to be complete by Aug. Then too, "only 6%" of growth came from new mkts. Editor's note: Founders just entered SoCal last mo and entered NorCal, NV, NM, ND, SD and Western MN in 2d half of last yr, so it'll likely get larger boost from new mkts this yr. All in, "all components of sales contributed to the growth, with account distribution up 34%, item placements up 28% and rate of sale per item up 13%." And "looking at same store comparisons, depletions were very strong at +31% and same store rate-of-sale was also impressive at +31%."

Recently Created International Division Plans to 3X Overseas Biz This Yr Founders "just recently created a separate international division dedicated to growing on the existing 13 countries where our beer is already distributed," sez Mike. That means "feet on the street" will be added, takin' "all hands on deck approach." While Founders international biz still "relatively small" at 8,811 bbls last yr, co plans to nearly triple that to 24K bbls this yr. "We see American craft beer as a global phenomenon that is no longer constrained to the American borders."  

Craft kept up 13% growth throughout 2015 in Atlanta, Georgia foodstores. It gained over 1.7 share of beer $$ to over 24 last year thru Dec 27, our first look at IRI data for the market showed. And the segment had near identical $$ trend for 13 wks, gained 1.4 share to over 26. That's just 4.5 points behind domestic premium beers in the market. And volume ain't no slouch either: craft had 17.5 share of cases in Atlanta foodstores in 2015, almost 3 points more than imports. That's helped by biggest in-state players, SweetWater and Terrapin. SweetWater grew volume 19% in hometown supers, about a point faster than $$ trend. It's #5 player overall in the market, neared 5 share of $$. Terrapin cases zoomed +32%, $$ up 44%. Combo of SweetWater and Terrapin gained near 1 full share of $$ to 6.4, exact same as Constellation in the market, which gained 0.5 share. For 13 wks thru 12/27, SweetWater was less than 1 share-pt behind STZ by both $$ and volume, and the pair of in-state leaders had 6.8 share, bigger than #3 player in Atlanta mkt, Heineken USA.

SweetWater's flagship 420 Pale Ale #12 brand by $$ in Atlanta supers last year, +8%. But its IPA growing much faster, +26% and #14 brand. Also important to note here though that IRI craft data now includes Blue Moon, Leinenkugel's and Shock Top (but not Not Your Father's Root Beer), and Blue Moon is #13 between lead SweetWater brands. And it kept pace with 420, up near 8% by $$ for full yr and accelerated to +16% for 13 wks. Boston Beer had tuff year comparatively here, $$ up less than 1% for full year, down 6% for 13 wks. Its biggest brand Sam Adams Seasonal down 9% in 2015. SweetWater's Tacklebox variety pack is #5 craft brand in mkt, $$ +36%. Other top national (or close) brands come in at #6 and 7: Sierra Pale up 1% and New Belgium Fat Tire -1%. Overall, Sierra did well, jumped 23% last year, gained 0.3 share of $$ to over 2. But NBB sales -3% here, slipped back below 2 share. However, unlike general slowdown in trend we saw nationally in Q4, Sierra kept up its 20+% growth while NBB accelerated to +5% for 13 wks.

Terrapin's top brand Hopsecutioner IPA is #8 craft brand by $$ sales in Atlanta foodstores. It grew 15% last year, accelerated to +24% for last 13 wks to Dec 27. One MC brand and one AB brand fill out top 10 craft brands in new cut of IRI data: Leinie Seasonal Shandy and Shock Top, both up 10-11%. (Combo of Blue Moon, Leinie Shandy and Shock Top note quite 1.8 share of $$, +0.1.) Among the 5 next largest craft suppliers in Atlanta supers, pair of in-state players way outperfoming bigger out-of-state brewers. Dogfish Head grew $$ sales 10%, Abita +5% and Craft Brew Alliance +12%. But Red Hare Brewing right behind DFH and Monday Night Brewing right behind CBA and both of 'em up 70%.