More details on Blue Moon's project to build a pilot brewery in Denver's RiNo district emerged in recent Westword article. This will be Blue Moon's "first real foray into food service" with inclusion of restaurant space, noted paper (Sandlot brewery restaurant "at Coors Field is operated by Aramark, which operates all of the food service there"). The 27K sq-ft space "will probably be evenly split between the brewery and the restaurant." Then too, Blue Moon "is buying a twenty-barrel brewing system," as well as "several forty- and sixty- barrel fermenters," "a small, two barrel system for even more experimentation," and "may" include a barrel-aging program too. "I think people would be surprised by how much experimentation Blue Moon does," said John Legnard, who runs Sandlot location. Previously Sandlot brewery has done the bulk of its pilot brews including Blue Moon's White IPA and this yr's new spring seasonal, Belgian Table Pils. When complete, the brewery will be capable of brewing 10K bbls/yr (see Apr 13 issue), and there will be "twenty to thirty tap lines along with a stage for live music and an outdoor patio area."

Meanwhile, Colo's Oskar Blues just announced plans to open its first store for its Hotbox Roasters artisanal coffee line. Guess where? Denver's RiNo district, of course. Chalk it up to another Oskar Blues Fooderies operation among several others including Oskar Blues Grill & Brew, Home Made Liquids & Solids, CHUBurger and CyclHops Bike Cantina. The location will be a coffee and doughnut shop and is expected to open in May 2016.  

San Antonio-based Freetail Brewing set out on a more formal fundraising effort recently, looking for a new group of investors as it expands, according to San Antonio Biz Journal. CEO Scott Metzger founded the co in 2008 as a brewpub and expanded into a production facility late last year. That cost about $3 mil and has allowed Freetail to expand production to about 5000 bbls by the end of next year. Yet, "there is a lot of capacity left that's yet to be unlocked," Scott told the paper. He's remaining pretty mum on size of investment Freetail seeks, but it's "a seven-figure investment," he told Craft Brew News, so "significant, but certainly nothing like the transactions we've been seeing lately." It's the "first grown-up approach to fundraising," following its startup phase when Scott "was convincing family and a couple of friends to give this a go," he told SABJ. Scott's focusing efforts with local individuals, he explained to us, tho he is entertaining investment from non-local individuals too, as the fundraising will lead to formation of a new board of directors for Freetail. Scott will retain control. "We are in this for the long term," he noted. Hearkening to the famous (non-)exit strategy of another, well known brewery founder, Scott added: "My exit strategy is a pine box." Like Boston Beer chairman Jim Koch (who still, as far as we know, plans to "not die"), Scott is an experienced Brewers Assn board member. In the meantime, he expects it "to be increasingly difficult for any individual player to break through and grow the way brewers have in the past." So this round of fundraising "is very much about remaining competitive going forward while maintaining our independence."  

"It seems very strange to me that AB or MC can buy any brewers-no matter how small," said one interested source. "In Europe a 45 share player could not consider buying anything." He doesn't "think a number 2 player would be allowed to buy up little brewers either" in Europe, especially "given how concentrated the profit pool is" in mkt where 3 cos (AB, MC, STZ) have "around 90 share of the profits." This source can't "understand how this topic hasn't made it into any articles or hearings in the last 12 months," adding his guess that "many craft brewers are worried that if AB can't buy values will drop." But AB and MC buying craft "seems no different than the way brewers bought up thousands of pubs in the UK. Big brewers can afford to buy a very big number of craft brewers and monopolize shelf" space, he concluded.  

 Disruption might be relatively new in the craft beer world, but executives and researchers have studied its cycles in many contexts for a long time. So there's a lot to learn from industries and other systems more experienced in disruptive innovations. Tech, of course, provides a vast array of examples of fast-scaling innovations that users adopt quickly to replace incumbent offerings. Companies like Uber and Lyft, Airbnb or, a little further in the past, Amazon, harnessed technology to disrupt. Each case fits the classic example of "upstarts that offer cheap substitutes," as Harvard Business Review wrote in 2013, revisiting its initial 1995 article on the trend. Effective disruptions are typically lower-cost to consumers and easy to scale up, then. The beer industry's capital intensive structure largely hinders the ability of new companies to achieve significant levels of adoption quickly. So the emergence of craft followed a much slower trajectory. But AB's (re)activity in the space (and, in some ways, the quick expansion of hard sodas) seems to fit the bill, taking into account most if not all 5 of AB's actions listed above.

In analyzing the potential for disruption in craft, remember a now-common mantra many attribute to Steve Jobs but may just be a summary of his thinking when he returned to Apple: disrupt yourself before somebody else does. Whether AB seeks growth, disruption or both within craft, it seems to be disrupting itself to get there. It's investing heavily in craft acquisitions and expansion of those breweries within AB InBev's larger, widely cited culture of cost-cutting. The new series of Bud ads, starting with "Brewed the Hard Way," refocusing attention of product quality and processes, could be seen through this lens, as could its revamped incentive program. Those examples just underline the complexity of AB's path as it follows multiple tracks simultaneously, hoping to reverse declines in core brand volume while expanding its high-end biz.

Finally, look beyond business for a different view. Applied to educational theory, analysis of disruptive innovations by TeachThought founder Terry Heick identified four clear stages that form a cycle of learning. Stage 1, "emergence of disruption," is "characterized by relative stability," in Heick's view, as early adopters come on but overall change is minimal. If AB's purchase of Goose Island in 2011 represents this "emergence," then craft's steady, uninhibited growth since then fits this model. The next stage, "impact," is "characterized by increased emotion - excitement, hyperbole, fear, uncertainty, and binary thinking." In this stage, the "uncertainty can be polarizing, creating a sense of enthusiasm and new possibility in some, while others see cause for concern." While Heick applies this to the reactions of students or administrators to disruptive educational techniques, this sure sounds a whole lot like this recent period of emotional responses to heightened craft acquisitions. Following that stage in this model is a "recalibration" that's "characterized by chaos." Hmm. Is that what's next? The last stage? "Evolution," Heick believes, "characterized by growth" of the disruptive technology, which new innovations, in turn, disrupt. But crucial to this stage are "individuals who, after seeing what's now possible, can't see the world any other way and insist on something different." If craft follows this model (by no means a foregone conclusion), what does the segment evolve into and how will that impact the rest of the beer biz?

This is one key question about AB's craft strategy that is sometimes bandied about. At our Beer Insights Seminar in Nov, we asked AB prexy João Neves precisely this question and he only answered the part about growth. (AB is intent on growing its craft biz.) In a recent conversation with one craft brewer, the craft brewer said he didn't want to sound too "conspiratorial" but he wondered if AB intended to mess craft up. Many craft brewers wonder about this. Our take: it's both trying to grow its craft biz (and doing a pretty good job of it) and slow other craft brewers through a series of strategic maneuvers. Many raise questions about legality of AB's strategy, including at last week's Senate hearing. Some of these questions remain to be answered, including investigations by Calif AG and DoJ, etc. But much of what AB is doing is just in the nature of business and competition.

ABI is probably one of the few giant global corporations that actually has a "chief disruptive growth officer" on its executive board of management. His name is Pedro Earp. ABI has become obsessed with disruptive growth by companies in other industries like Uber. (See below for more general thoughts on disruption.) Clearly, AB's US biz has been disrupted by craft (tho less than Uber disrupted taxis). Would it be so far-fetched to think that AB might in turn attempt to disrupt the disruptor? What would an AB disruption strategy look like?

While we don't have insight into AB's internal thinking, here are 5 prongs of what AB is actually doing that have the potential to disrupt the movement (indeed, to some extent they already have). First, AB bought up several craft brewers. And they're not done yet. In addition to giving it more permission to play in this rapidly growing segment, all these acquisitions and most consumers' seeming indifference to AB ownership muddy the definition of craft and change the meaning of the movement, insofar as some limit "craft" to small players. Second, AB is aggressively promoting its craft brands, especially through its Promo-Opti plan where it offers steep discounts on kegs of Goose Island and Shock Top if a retailer buys Bud and Bud Light. In 2016, word is that Promo-Opti will be offered on basket of its craft brands, i.e. buy 10 Barrel and get Promo-Opti pricing on Elysian, or other variations. Do these low prices affect craft's overall pricing architecture? Maybe not so much so far, but that is clearly one of craft brewers' biggest fears going forward.

Third, AB is rapidly expanding craft brewers it acquired to new states. At presstime, unknown how many. But for example, 10 Barrel, Elysian and Blue Point will all go to Texas, which is AB's largest volume state, in 2016. These expansions could crowd out current brands on shelves, will give AB distribs' more craft brands to fight with and make total craft segment that much more competitive. Fourth, AB's new voluntary incentive program actually pays distribs money to have a higher % of their volume in AB brands. Exceptions are made for craft brewers under 15,000 bbls and those selling in only 1 state, if a distrib is at A+ level, i.e. 98% AB. And AB expects a much greater number of distribs to participate in this program going forward, which suggests those distribs might sell fewer craft brands. Fifth, AB is expanding its branches in craft-centric mkts and while it has proclaimed its interest in carrying at least local craft brewers, a number of craft brewers have bolted AB branches in past, and some raise objections to AB's branch expansion for reducing their access to scale distributors.

So AB is buying up craft brewers, selectively wreaking havoc with craft pricing, expanding its acquired craft brewers into new territories, incentivizing its wholesalers to carry a higher % of its volume in AB brands and buying branches in craft-centric markets. Sounds like a strategy to us. Yet each prong of this strategy has other purposes than disrupting craft. Each also aids AB in growing its own craft brands, incentivizes distrib focus and performance on its other brands and adds company-owned branches where its own biz is weakest. Some have questioned legality of a couple of these prongs, particularly the new incentive program and market access for craft where AB has branches. But AB's old, far more restrictive 100% share of mind program never faced any legal challenge. Times are different, but one could safely guess AB has done its legal homework before introducing this program too. And are craft brewers legally owed distribution by AB branches, or even large multi-brand MC distribs for that matter? We doubt it. They will have to continue to earn their right to be on the shelves, through sales growth and potential, branding, plans, resources and more, i.e., traditional business tools to grow their biz. One way or the other, AB's collective moves will likely add to the competitive challenges for the still rapidly growing craft segment going forward. But what did you expect? AB has lost over 12 mil bbls in the last 7 yrs. It has to compete more effectively whether thru growing its craft portfolio or disrupting others.  

Tight on space in hometown Kansas City, Boulevard announced addition of new distribution center this week. The co secured a long-term lease on a 182K sq-ft warehouse that'll hold all of its finished beer ready to go out to distribs. It also has room for a barrel aging center as well as a bottling line for Smokestack specialty beers. It paves the way for increased traffic to and from the brewery in 2016, as Boulevard starts shipping to additional markets in Arizona, Kentucky, Michigan, Connecticut, Rhode Island and Delaware.  

This is another example of a more craft-like project for North American Breweries (NAB) with its Genesee brand. NAB will invest $50-60 mil over next 5 yrs "to create a Genesee Eco-Brewery District" that'll ultimately become "a destination" spot for Rochester community, co announced. Project will add a 130K sq-ft building with "one of the most advanced brewing systems in the world," as well as expanding Genesee Brew House and pilot brewery, with an event space, "classroom" and "conference" space. "The concept is to build on the success of the Genesee Brew House, which attracts around 300,000 visitors annually," said ceo Kris Sirchio. "We want to become a premier destination for Rochester and all of New York State to capitalize on the growing beer and beer tourism industries." Recall, earlier this yr Genesee launched an Imperial Black IPA and Scotch Ale from its Brew House, and plans to keep adding more styles to the mix. Added expansions will include "a larger interactive museum and consumer experience that focuses on New York State's rich brewing history," as well as "larger" tasting bar and pilot brewery. Since 2009 NAB has invested $70 million into the Genesee brewery," Kris noted. NAB expects to add up to 100 more jobs to its current staff of 584, on top of hundreds of temporary construction jobs.  

OH Dept of Revenue wrote letter today saying that it believes Kroger's controversial new natl category mgt plan with Southern Wine and Spirits "would violate Ohio Tied House Law and Rules." Letter in response to inquiry from Wholesale Beer and Wine Assn of Ohio "seeking guidance." And it's perhap doubly significant because Ohio is Kroger's home mkt.

OH's Dept of Revenue looked into Kroger's plan and noted under Ohio law "suppliers, manufactures and wholesale distributors are prohibited from providing aid to a retail permit holder." Letter cites several sections of Ohio law, then adds: "Finally a manufacturer, supplier or wholesale distributor of alcoholic beverages is prohibited from hiring a third party company for the purposes of sets and resets unless the individuals performing the sets and resets are licensed solicitors for the particular manufacturer, supplier or wholesaler." Kroger's plan set up an independent third party that would be funded by suppliers and distributors. In short, Dept believes that Kroger's plan violates Ohio law in a number of ways.

While we've written extensively about Kroger's plan in our INSIGHTS Express publication, we haven't written about it in Craft Brew News before last issue's reporting on the letter from 6 natl assns to TTB looking for clarification regarding whether plan legal. NBWA also wrote TTB a letter saying it believes that plan illegal. What is the plan? Kroger is a $100 billion grocer that is 2d largest general retailer in US behind Wal-Mart, and one of top beer retailers too. It wants to work in conjunction with largest wine and spirits wholesaler Southern Wine and Spirits to devise sets for all alc bevs nationally thru introduction of an independent third party Planogram Center of Excellence. That 3d party would be funded by brewers and distributors. At the time it first leaked out, INSIGHTS asked: "Is that not a thing of value provided to Kroger? Can that be legal?" But Kroger has previously maintained in private meetings that 3d party billing and fund collection from suppliers and distribs is legal. The payments will be voluntary, says Kroger, with no repercussions for those who don't participate. Sure. Now at least one state govt entity is calling legality of program into question, including specifically plan to set up independent third party. Stay tuned.  

Many craft brewers are betting that squeezing more juicy flavors into both IPAs and new takes on classic sessionable styles will bear fruit next year. Most new brand or package intros that top craft cos plan for 2016 now announced, revealing a handful of familiar patterns. Look out for more fruit flavors, low-alc options, variety and can 12-packs and IPAs galore as brewers fill out their portfolios by following trends they haven't yet attacked.

New takes on fruit beers, with a major emphasis on tropical flavors, keep coming especially in IPAs. That's been developing right along and will be much more important in 2016 as Sam Adams, Sierra Nevada and New Belgium all release some form of fruit-forward IPA in 2016. Sam Adams will bring Rebel Grapefruit IPA and New Belgium's got Citradelic Tangerine IPA coming in January. Sierra's next Beer Camp spring seasonal is Tropical IPA, recall, hitting those fruity notes with hop additions alone. That's increasingly common too as more new and en vogue hop varieties lean into citrus and tropical fruit flavors like grapefruit or mango instead of resinous pine. "Juicy" emerged as a preferred positive beer descriptor, particularly for IPAs. So many of these new brands moving towards these flavors and away from "bracing" bitterness. Going full throttle here: Ballast Point, brewer of largest fruit IPA, Grapefruit Sculpin. It's debuting 3 new fruit-infused IPA offshoots in 2016: Pineapple Sculpin IPA, Mango Even Keel Session IPA and Watermelon Dorado Double IPA.

It ain't just IPAs being dosed with fruit these days. Boulevard's got a Fruit Pale Ale joining its year-round lineup in April. It'll also follow-up its Mar-Sep Ginger Lemon Radler with Cranberry Orange Radler in Oct. And plenty of other cos picking fruit for lower-alc styles. One of the larger ones will be Sierra's new Otra Vez, which recall gets prickly pear as well as grapefruit in the traditional easy-drinking German Gose style. Lotsa smaller cos still turning to Gose and Berliner Weisse, with or without fruit additions, to quench summer thirsts. And inevitably, plenty more big IPA brands hitting the market even without fruit. Shiner recently launched its new Wicked IPA year-round, the co's first major foray into craft's biggest style. And recall, 16oz cans of new Sam Adams Rebel Raw IPA, with limited distribution and 35-day shelf-life, started appearing recently too.

Small Batches, Bigger Packages: Collab Variety Packs and Lots More Cans, 12-Pks Two years after Sierra Nevada released its Beer Camp Across America variety pack, with ambitious 12 different collaboration beers in one package, it's coming back with round 2. The new version of BCAA mix-pack has 6 beers, each made by a team of Sierra and 5 other regionally-selected breweries. So, fewer beers, but way more brewery partners than first time around. And perhaps no surprise that some other breweries joining the party. New Belgium brings focus onto flagship with new Fat Tire and Friends pack and Devils Backbone has one coming too (see last issue). Considering current love for all things local, collaborations like these can sure boost relevance in more markets. Conversely, their broader distribution can satisfy internet-driven demand for beer created by small cos with tight footprints. Packs full of mostly one-off brands, unlikely to be seen again, only ramp up excitement. And speaking of building excitement with specialty brands and NBB's flagship focus, next year's Lips of Faith beers will all pay homage to the co's Belgian roots, spokesman Bryan Simpson hinted.

As always though, craft moves in opposite directions simultaneously. Look out for bigger packages of core brands, particularly in cans. Craft Brew Alliance will put Widmer Hefe and Hefe Shandy in cans for home Oreg market next spring. It's also throwing fast-growing Kona Big Wave Golden Ale into 12-pks nationally, and canning it for Hawaii. Firestone Walker is adding 12-pks of session IPA Easy Jack, in both bottles and cans, in March. Founders just added to its lineup of larger canned packages by debuting Dirtzy Dozen 12-pk of Dirty Bastard Scotch Ale cans. Bell's too will expand its canned offerings next year, putting popular limited release Hopslam in aluminum as well as sessionable Oarsman Ale. Meanwhile SweetWater keeps expanding its can lineup, 21st Amendment launched its first variety pack this fall (all in cans, natch), and Victory decided not to bottle but can its new Vital IPA, as it too puts more beers in the package.

Switching Seasonals, Going Nitro, Removing Gluten, Calling Out Flavors Top craft cos keep tweakin' seasonal lineups and spring is consistent tuffie. Sam Adams will stick to Cold Snap for 3d year running, but again, Sierra rotates in a new option again and New Belgium has another new brand for 2d straight year: Side Trip Belgian Pale Ale will replace short-lived NBB Portage Porter. Craft Brew Alliance switched up Redhook's entire seasonal program this yr to include Blackhook Porter, Summerhook Golden Rye and Winterhook Dark Ale. Brooklyn Brewery just released Insulated Dark Lager as its winter seasonal, available thru Mar 2016. Dogfish Head released its 2016 calendar to consumers today and it includes new Spring seasonal Romantic Chemistry and a new, TBD, winter option. It also looks like DFH will pull back on some brands, as 2016 plans don't include Sixty-One or gluten-free Tweason'Ale. It'll also bring back a couple wood-aged favorites like Immort Ale and Red & White as well as Squall IPA and a couple other limited releases.

Also prepare for more nitro beers, with addition of new Sam Adams nitro series, bringing a White Ale, IPA and Coffee Stout. Firestone Walker will also add nitro versions of its Merlin oatmeal stout year-round as well as DBA starting in May. Both of those will be draft only though. More top craft brewers continue to play with enzymes that remove gluten from beer. New Belgium's new Glutiny line joins this group, of which CBA's Omission beers and Stone's Delicious IPA, are some of biggest players. NBB kicks off with Glutiny Golden Ale and Pale Ale. Finally, regular rotation of brand refreshes keeps on rolling as breweries revamp how they look on the shelf. Harpoon just showed off a new look for its IPA. It includes the increasingly common feature of flavor callouts (in Harpoon's case: "Hoppy Floral Crisp") on bottles/cans and exterior packaging. A lot more brewers are using these callouts to help consumers understand whats inside the package, quickly. Deschutes launched new packaging this year and Troegs too just debuted a total brand refresh.  

Craft segment $$ grew 23% to $499.1 mil in IRI foodstores for 13 wks thru Nov 29 - up 2.4 share to 19.45 of beer $$ in supers. That's actually ahead of Imports for 13 wks. Imports still solid during period, and even outperforming YTD trends: up 10% to $478.6 mil for 13 wks (18.65 share). But in these last 3 mos, craft has turned on jets even more in its most developed channel. Each of the last 4 wk periods total Craft $$ have been ahead of Imports, and the gap is widening. In fact, Craft just hit 20 share of $$ in supers for these latest 4wks thru Nov 29. All in, YTD craft share in supers still 1.8 pts behind imports at 17.5 share of $$.

So what changed since beginning of September? Main reason is that IRI craft number includes hard root beers, and both Not Your Father's Root Beer (1.1) and Coney Island Hard Root Beer (0.3) collectively add a whopping 1.4 share of total beer $$ for 13 wks, compared to collective 0.65 share YTD in supers. Without including those top root beers Craft growth is more modest +14%, and still 0.6 share behind Imports for 13 wks. But Craft w/o those root beer brands did just pull ahead of Imports for 4 wks, even as trend slowed to +12%. Many of the fastest growin' top cos still managing to contribute lotsa growth, tho most have slowed down a bit in recent mos. Lagunitas (0.15), Ballast Point (0.14) and Sierra Nevada (0.12) each among top share gainers for 13 wks (only behind Constellation, +0.66). Alchemy & Science still gained 0.09 share for 13 wks, even teasing out root beer (tho most of the rest of A&S growth from shandies). And Deschutes, Stone, Bell's and SweetWater collectively gained another 0.12 share of $$.

Yet handful of the top cos/brands are struggling, so altogether growth ain't comin' from top cos nearly as much as previous yrs. Most notably, all Sam Adams top-brands again down for 13 wks, and trends even tuffer in supers vs multi-outlet + convenience. Sam Seasonal down 13% for 13 wks and sank 20% in latest 4 wks (perhaps the steepest drop we've seen for Sam Seasonal). For 13 wks, it lost 0.24 share of total beer in supers. And Boston Lager (-5%), Sam Variety Pk (-23%) and Rebel IPA (-13%) collectively down 0.23 share. Meanwhile, New Belgium trends stronger in supers than MULC, and total co notably improved to +8% in latest 4 wk period vs +2% YTD in this channel (new states this yr starting to kick in?). Yet NBB still slightly losin' share of total beer for both 13 wks and YTD. North American Breweries craft portfolio and Craft Brew Alliance (slightly) also losin' share of beer. All in, more craft's overall growth comin' from longer tail again this yr.