Pubs continue to struggle in the UK, but pace of brewery openings really picking up. “A new brewery is opening in Britain every other day,” said the Dept for Communities and Local Government this week, citing stats from the British Beer and Pub Assn, announced during annual Great British Beer Festival. The group counted 1431 breweries now open, up almost 340, 31% since mid-2013. For a country with a population of about 64.5 mil, and a legal-drinking age population likely around 51 mil, UK’s home to about 2.7-2.8 breweries per capita (100K LDA adults). That’s about the same as New Hampshire, ranked 10th in breweries per capita by Brewers Assn for 2014. But just as 3 breweries open in UK per week, 29 pubs close, the Campaign for Real Ale (CAMRA) estimates. Pub count in Britain dipped below 54K the BBPA reports, down from 67K in early 1980s. About 750 pubs closed in just 6 months leading up to June 15. A third of those closing occurred in London and the South East, according to the Financial Times. Those regions represented just over a quarter of brewery openings during same time period. Many factors leading to pub closing in UK, but inside of broader trend, some pubs being saved by local drinkers banding together to keep what many consider cultural icons there.

Across the globe, Australian craft beer posted average annual revenue growth of about 10% over the last 5 years and currently represents about 3.5% “of overall beer manufacturing industry,” the Australian Associated Press reported. Interestingly, craft growth expected to slow to 6.3% per yr over next 5 yrs, “in part due to competition from big players,” just as “broader range” of products expected, “including private label.” Just as in US, per capita beer consumption has declined in Australia. There, it’s down over 15% in 10 yrs, hitting about 4 liters/yr in 2012/13. The industry’s grown about 0.1% per yr over last 5 yrs. Another familiarity: “shift towards higher value products to drive growth next five years” as “traditional brands forecast to lose market share to premium beers (including flavoured, dry, foreign-label and craft brands).” Oh, and “consumers switching to wine and cider.”

Deschutes is further expanding its distribution in Mich this Sep with Alliance Bev for “western shoreline,” Fabiano Bros in central Mich, and Daniel L Jacob & Co for Ann Arbor South, co announced.  Recall, Deschutes initially entered Mich with West Side Dist in Aug 2014 and in June expanded into Detroit area (Wayne County) with West Side Dist as well.  The new Mich mkts also “coincide with our new packaging” launch, noted business development director, Stacy Denbow in release.   

Then too, in case you lost track of all the new markets craft brewers launched in the last mo, we’ve put ’em all together for you inone handy pdf. Organized by state, this list includes craft brewer distribution expansions with sales expected to begin in Jul 2015, as well as a preview for Aug 2015 expansions.  While it may not be comprehensive, this list includes announcements made by the largest craft brewers and many expansions by smaller players. 

AlaBev Dist started distributing SweetWater in Birmingham, AL back in 2001, reports AL.com.  AlaBev built biz from 4K cases to 32K in 2010, outperforming other distribs, it claims.  SweetWater had apparently started using Supreme in 2010 in 2 counties, then told AlaBev it wanted to move Birmingham biz to Supreme too.  Tho distribs discussed swapping brands, never happened.  SweetWater subsequently reduced shipments to AlaBev.  AlaBev sued both the brewer and Supreme, claiming they did not follow state law and that SweetWater breached its contract.  But judge last mo granted summary judgment to SweetWater and Supreme.  “There is no written agreement of any kind between these parties upon which [AlaBev] could claim a breach of contract,” he ruled.  He also found “no evidence” that shipments reduction was due to any “agreement” between SweetWater and Supreme.  And without a contract, “no basis for asserting any illegality” or conspiracy.    

If local craft brands like Odell, Breckenridge, Great Divide and Grimm Brothers stick with AB branch in Colorado, it “will be a first,” Grimm Bros veep Russell Fruits told Fort Collins Coloradoan. Report yesterday included coupla other nuggets on recent deals expanding AB distribution presence in Colo, including note that “historically” branches are AB-only, from state distrib assn prexy Steve Findley. No decisions yet, including from largest Colo brand faced with this choice, Odell, which is “currently gathering as much information as we can, just as we do when we enter new markets,” sales/mktg director Eric Smith said. Paper explains 3-tier basics as well as “loophole” allowing self-distribution in Colo and elsewhere. “Many craft breweries distribute their own beer under this loophole,” the paper wrote, adding that “part of their success in Colorado is predicated on it.” But on scale of AB, “this is a breakdown of the three-tier system,” one Fort Collins liquor store owner told the paper. The Coloradoan also pointed to Oregon precedent, where AB added branch last year, noting choice made by Ninkasi and others to move brands to another distrib. After that transaction, there were “a small number [of local brewers] we chose to discontinue,” AB’s regional sales veep David Craig told Portland Biz Journal, Coloradoan reminds.

(Editor’s Note: the following article appeared earlier today in our INSIGHTSExpress letter.) While AB seeks fed court declaration that it followed NJ law in paying $563K to Hunterdon distrib for Elysian brands earlier this yr (see May 14 CBN), Hunterdon fired back that instead, AB violated state law and more.  Hunterdon, part of Sheehan family’s Craft Beer Guild and a statewide craft distrib in NJ (Hunterdon does not sell AB in NJ, tho Sheehan operations do elsewhere), just responded to AB’s lawsuit.  AB claimed NJ law allows “successor brewer” to move brands as long as distrib who loses them gets fair mkt value.  It calculated value of Elysian brands at 5.5X estimated $12/case GP on approx 8,528 cases sold in previous yr.  In 2014, AB transitioned Blue Point brands for 4.75X GP, so it claimed to be giving Hunterdon a “15% premium.”  Lawsuit cited discussions with Hunterdon over value of brands, but no deal reached.  Anticipating lawsuit from Hunterdon, AB sent termination letter and check on May 4 (yes, the letter actually sez: “Enclosed please find a check…”).  AB also filed suit for declaration that AB in compliance with NJ law. 

Hunterdon, of course, has a different take on this series of events.  It disputes most of AB’s claims about how early 2015 negotiations (and non-negotiations) went over Elysian.  Also made counterclaims against both AB and Elysian.  Those include charges that: 1) AB and Elysian failed to comply with NJ law; 2) Elysian violated distrib contract; 3) AB interfered with that contract; 4) AB did not act in a “commercially reasonable manner,” and more.  Hunterdon seeks judgment in its favor, plus damages, costs and atty fees. 

Hunterdon’s Side of the Story; It Proposed Brand Swap  Hunterdon “specifically denied” AB claim that it tried to reach “mutually satisfactory arrangement” to avoid termination and that AB’s efforts to do so were “rebuffed.”  Also denies that: 1) AB’s $563K figure constitutes fair mkt value for Elysian; 2) Blue Point was “reasonable or appropriate comparable” and; 3) AB’s multiple of 5.5X was “consistent with” or “higher than” other brand moves in NJ.  Since getting Elysian in 2008, it grew the biz 70-150% each yr, Hunterdon sez, “made substantial investments…beyond what it would otherwise expend on similarly situated brands” based on growth rate and expectation of keeping it.  Hunterdon heard from AB in Jan that it wanted to move brands to AB distribs, who would contact Hunterdon.  But “no AB New Jersey wholesaler contacted Hunterdon,” it claims.  In late-Feb, Hunterdon’s Michael Short told AB that “rather than accept payment” for Elysian brands, Hunterdon wanted to do swap (presumably with AB’s NJ distribs) and “Hunterdon would pay 12 times the gross profit for any difference in volume between the Elysian brands and” brands that went to Hunterdon.  Michael thought that multiple “fair” given “prominence, national recognition and potential of the Elysian brands and the craft brands in discussion.”  AB lawsuit didn’t say anything about swap, but only that Short “asserted” Elysian brands worth 12X GP.  After that discussion, AB exec told Michael that NJ “precedent” set after 2007 trial over transition of AB InBev brands was 3.3X GP and offered 4X for Elysian. 

During same time period (late Feb/early Mar) Hunterdon ordered new Elysian brand, but Elysian never shipped it.  In early Apr, Elysian told Hunterdon it would not ship any more beer due to legal issues and that Hunterdon was “on hold per AB-InBev.”  Elysian gave no other indication that it was terminating Hunterdon, latter claims.  But Hunterdon viewed this as a “de facto termination of Hunterdon’s distribution agreement with Elysian.”  Subsequently AB’s (about to depart) Randy Jozwiakowsi spoke with one of Hunterdon’s owners, Tim Sheehan.  (Turns out Craft Beer Guild held in trust by “eight individual member trusts, each owning a 12.5% share of its stock,” counterclaim reveals.)  Tim told Randy 4X GP wasn’t fair mkt value.  Then Hunterdon’s atty sent letter to Elysian’s atty stating that Elysian’s failure to ship beer violated the contract and NJ law.  But AB atty responded (not Elysian atty).  She pointed to lower multiples paid for other brands and claimed the 5.5X GP offer was a “premium.”  And while Hunterdon’s atty suggested AB, its distribs and Elysian were “seeking to undermine” value of Elysian, AB atty wrote that “makes little sense” since not in their interest to do so.  Three days later, AB sent termination letter, check and filed lawsuit.  Three mos later we’re in early stage of another AB/distrib battle with potentially broader implications for brand value and AB-distrib relations.  

Label approvals from TTB never a sure bet, particularly with bigger co’s that often take “just-in-case” mentality. But recent Certificate of Label Approval (COLA) applications from Boston Beer align pretty closely with expectations set on earnings calls and even if following don’t get follow-thru, they paint fascinating (and literal) picture of Boston’s considerations. Recall CEO Martin Roper hinted at both new packaging and innovations that could reinvigorate core Samuel Adams portfolio. Between January and June, Boston filed for and received COLAs for 16oz cans of Summer Ale and Octoberfest, as well as updated 16oz cans for Boston Lager and Rebel IPA, which it launched in larger package last year. Then in mid-July it added label for pint-sized can for new Rebel RAW Double IPA, a 10% ABV, “hazy from hoppiness” brand that package encourages drinkers to “keep cold” and “drink now.” TTB approved it last Friday and label appeared on sites that collect such approvals early this week. RAW label promises an “evolving” recipe. Its drinking cues and haziness warning on the silver 16oz can similar to those on other IPAs of this kind. Around same time, Boston filed for keg tags of 3 Longshot beers, its annual homebrewing competition. Recall that in recent years Boston announced Longshot winners and new brand innovations during GABF media brunch (in late Sept this year). Rebel, Cold Snap and Rebel Rouser all appeared at this event in past 2 years. In each case, Boston filed for an initial COLA between mid-July and mid-August.

Green-highlighted hops showering down on Rebel RAW brand name on new can (no COLAs for bottles yet, tho an 8.4% ABV keg-tag filed back in May), match those on current Rebel labels. Those also carried over onto new versions sent in for each of existing Rebel brands. Newer versions deemphasize spray-painted stylings of first labels and dial up cues from American Revolution, linking brands back to core lineup even while Rebel family grows. Proposed 12 and 16-oz can labels for base Rebel IPA incorporate same illustrated green hops into iconic image of George Washington crossing the Delaware. COLAs for bottle labels of other 2 Rebel brands suggest similar revolutionary-era tie-ins. Current spray-can-shaped Rebel tap handles match graffiti cues of current labels. But recall Martin also suggested on Q2 call that the co has new tap handles in the works too. If the co does seek to bring Rebel brands closer to rest of Sam family with new labels, then matching handles make sense. A couple other recent Boston COLA filings of note: a new 12oz can label for Spring seasonal Cold Snap; a keg tag for Rebel Smash, a grapefruit IPA; a new 750ml label for Kosmic Mother Funk Grand Cru, an aged and blended Belgian-style brand the co’s been releasing in limited quantities.

As natl rollout of Boston Beer’s Coney Island Hard Root Beer set to be complete by mid-August (any day now), its Coney Island beer brands are also in midst of expanding distribution.  Currently Coney Island beer portfolio is all sold thru NYC metro distrib “Manhattan Beer territory” plus “a little experiment going in Kohler’s territory” in northern NJ, yet “over the next month,” co plans “to launch it in essentially the Atlantic region” (NY down to VA), Alchemy & Science’s Alan Newman told CBN.  “Sales in New York continue to grow” and they’re “right where we expected to be for the year,” he added.  Worth noting that several of Manhattan Beer top execs came down to Coney Island for the opening of its new hometown brewery to show their support (see below).  Root Beer has added whole “new dimension to it” but Coney Island’s beer line has been “solid all year” too.   

Meanwhile, Coney Island officially opened its new 1,000 bbl/yr brewery to the public on Friday, Aug 7.  The brewery, attached to the Coney Island Cyclones ballpark and right by the iconic mini amusement park, will mainly be used as destination spot that allows for small-batch experimentation, Alan reminded (see Jan 23 issue for initial announcement of the brewery).  Recall, this marks the 3d facility under Boston’s brand incubation unit, Alchemy & Science, along with Los Angeles’ Angel City and Miami’s Concrete Beach.  Yet clearly Coney Island lookin’ far beyond NYC and its little brewery for growth.   

Root Beer Pricing Angle? Interestingly, Coney Island Hard Root Beer has been spotted at lower prices than competing root beers out in the trade.  For instance “Publix is doing a deal on it in Florida,” Alan acknowledged.  (It’s a BOGO deal, buy one, get one, for $9.99.) And elsewhere it’s been spotted at 1-2 dollars below Not Your Father’s Root Beer.  Alan explained that “FOB is $2 per case higher than [rest of] the Coney Island lineup,” which “seems to be where the price point is on it.”  Indeed, “our goal is to be competitively priced where we go with it,” however “what the retailer does with it, we don’t have much to say about that.”  They’ve seen some retailers “selling it for margin” while “others” have lowered price point to lure customers into hot new trend, and “everywhere in between.”

Don’t Forget About Curious Traveler Shandy; Other Incubators While most of the recent buzz for Boston Beer’s Alchemy & Science unit has been over Coney Island Root Beer, its other natl play, Curious Traveler, is still “trucking along,” said Alan.  It’s “not like root beer” which is “screaming” but it’s “exactly where we budgeted it to come in this year” while “building a solid base” and “building a fan base.” 

Then too, both Angel City and Concrete Beach continue to make progress.  In fact, Angel City is already poppin’ up in state scanner data; its Angeleno IPA is up 500%+ to 89th largest craft brand (by $$ sales) in statewide California IRI multi-outlet + convenience thru Jul 5.  That’s only just behind Magic Hat No 9 (-25%), Redhook ESB (-45%) and Anchor IPA (+55%).  And for latest 13 weeks Angeleno IPA was 75th largest craft brand, ahead of each of those brands, as well as red hot Calif-based Drakes IPA and Dogfish Head 90 Min IPA.  So while boost is not nearly enuf to curb Sam Adams struggles in Calif, Angel City is providing small and growing bright spot for Boston’s beer portfolio there.  

It’s not a surprise and indeed epitomizes an orderly transition.  But the announcement that Kim Jordan will end her long, successful tenure as ceo of New Belgium and make way for the expected ascent of prexy/chief operating officer Christine Perich is something of a moment not just for New Belgium but for craft segment as well.  Christine will become ceo on Oct 9 and Kim will become exec chair.  Christine will “focus on short term strategy, leading the executive team, industry leadership and running day-to-day operations,” while Kim “will focus on long term strategy and vision while working with the Board of Directors,” the company said. This was announced yesterday to NBB employees at an all company retreat.  That’s about 6 months earlier than originally anticipated in part because Kim and Christine decided that it was best to discuss it face-to-face with employees at a time when all were gathered in the same place.

Though there’s “still lots of good work for me to do,” Kim told Craft Brew News, her new role as executive chair of NBB board will no longer be full time.  And so with Kim’s new lesser role at New Belgium, she will transition to devoting more of her time to the New Belgium Family Foundation. Kim puts many of the progressive principles that inspired her as a ceo into action at the foundation, which she runs with Dick Cantwell and their respective children.

Kim is a singular figure in the history of the craft movement. She and her ex-husband Jeff Lebesch were pioneers in bringing Belgian beer styles to the American craft beer movement nearly 25 years ago. She’s the one who first publicly articulated the vision of craft getting to 10 share.  And she was reportedly the craft brewer most responsible for putting Brewers Assn and Assn of Brewers together way back when.  She has served on the BA board since 1996 and that tenure too is ending this year.  And oh by the way, she built the 3d largest craft brewer, sold off her and her children’s stake reportedly for over $175 mil, while converting it into a 100% ESOP, a form of ownership she has long espoused.  Those are just a few brief highlights among her many accomplishments.

Then too, she and Christine have long been very much on the same page. Indeed Christine, who Kim hired as New Belgium’s controller back in 2000, was “instrumental in transitioning the brewery into 100% employee owned ESOP in 2013.”  The year after proved to be perhaps New Belgium’s most successful year ever as it grew 153K bbls, 19.3%.  This year is proving to be more challenging and some questions remain about the way forward for NBB.  But CBN takes this moment to pause and congratulate Kim for her many accomplishments

You won’t want to miss the 22d annual Beer Insights Seminar on the evening of Nov 8 and all day November 9 at the Waldorf=Astoria in NYC. This year’s seminar promises to be another premier beer biz event with presentations addressing craft’s growing position in the industry. For example, a Growth Driver Brands Panel will include thoughts from some of hottest brewers and brands in the industry, such as Lagunitas Founder Tony Magee and Constellation CMO Jim Sabia.Going deeper with craft is just one of themes repeatedly noted by new Pabst ceo Eugene Kashper, who will update you on his action-packed 1st yr, including the runaway success of Not Your Father’s Root Beer. Consultant Mike Mazzoni is certain to be thought-provoking on brewer and distributor issues, comments from execs at large suppliers provide info on their craft plays and Beer Marketer's Insights President Benj Steinman will present an overview of the US Beer Industry, identifying trends and updating us on the competitive landscape. More speakers to be announced in coming weeks. Register and join us for this unique opportunity to learn more about the beer industry and network with some of the best minds in the biz.

Road to regional keeps getting shorter, it seems, as more new breweries take growth oppies. Modern Times in San Diego county is one of ’em. It opened in 2013, produced about 6500 bbls last yr, it reported to Brewers Assn, and just announced significant expansion of capacity and space. Modern Times “will again double the capacity of the brewery,” the co’s Chris Sarette wrote for company blog. And addition of new packaging equipment and QC lab, plus increase in barrel-aging capabilities and storage space means the co will move into multiple nearby buildings around its Point Luma facility. From original 12,540 sq ft, the co’s now leasing 30K, including building next door for packaging, “a spiffy new space just blocks” away for “massively bigger” barrel program and “a couple of properties snagged up around the brewery” for storage.