Rhinegeist Brewing is planning to open a nanobrewery in Columbus, OH at its 17K sq-ft distribution center, reported OH's The Beer Blog. Recall, Rhinegeist recently expanded distribution to Columbus area after leasing warehouse to use as a distribution center (see Mar 16 issue). For starters, the nanobrewery will be used as "research and development brewery" and "won't be open to the public and there won't be any retail sales or a taproom at the site," according to blog. "There are no plans for a big brewery," said co-founder Bryant Goulding, but "who knows what the future brings."  

Planned Virginia-based farm brewery from Flying Dog, to be called Farmworks, no longer in the works, the co shared this week. Not much detail, but looks like original plan to open on Shadow Farm in nearby Lucketts, VA just didn't work out as "we remain excited about a farm brewery concept," CMO Ben Savage said in statement. Flying Dog is "still very much interested in developing the Farmworks concept if the right opportunity presents itself," he said.  

Just days after last week's look at difficulties small brewers sometimes have with local regulatory control, intriguing story of Lagunitas' less-than fabulous relationship with city of Petaluma, Calif, and recent issues between the city and small brewers based there appeared in the Press Democrat. Topics at issue could barely be more mundane, including construction permitting, traffic and parking. But explosive growth Lagunitas continued to experience stressed relationships with city officials tasked with managing such issues. Indeed, the co's relationship to those folks "became rocky," the paper wrote, "a charitable description." In the Spring, early arrival of 4 new tanks led to a stop work order from the city until the issue could be resolved 10 days later, according to the article. But Lagunitas founder Tony Magee "stresses that 'there are no good guys and bad guys' in the incident," per the Press Democrat, and a city official "also downplayed any spat." While that issue was resolved, most everyone interviewed for the story still cited bumps to be smoothed over. A pair of councilmen diplomatically noted the growth and strength of small brewers as well as "growing pains" or frustrations with folks that "do whatever they want to do and think we have to accommodate them." One also added that he'd "love ideally to come up with some targeted plan on how we can grow this area and how we can grow these businesses," the article concludes.

Lagunitas Construction to Hit 750K Bbl-Capacity in Calif Plenty of interesting tidbits about Lagunitas' plans in Petaluma also revealed by Press Democrat. The company's spending $30 mil to expand production from 450K bbls to about 750K bbls, including those new tanks. Construction also includes significantly expanding parking lot and installation of a wastewater treatment plant that will save 85K gals/day. That'll reduce water demand by 18%, according to the paper, balancing truck traffic to/from the facility. "We do $200 million in sales," Tony told the paper, but just $2 mil comes from its Petaluma taproom, "totally incidental." The site has room for 325, the paper wrote.  

While total craft volume jumped 137,000 bbls, 30%+ in Mich last yr, reaching 9.6 share (see Apr 21 issue), Mich craft brewers "accounted for 6.56 percent of the market in 2014, up from 4.74 in 2013," noted Herald Palladium, citing Mich Beer Guide in extensive article on Mich craft beer scene. "People are always surprised that the (craft beer) share is so small because the share of awareness is well beyond that," exec director of the Mich Brewers Guild, Scott Graham told paper, but "I'm confident it's going to go well past 10 percent and even past 20 percent and I don't know where the end point is." Ultimately, "retail shelves can only hold so much beer…but I think there's room for a lot more growth in distributing breweries as well as pub type breweries. Lots of room." Greenbush Brewing owner, Scott Sullivan "agrees" since his brewery only "meeting somewhere around 10 percent of demand right now based on requests versus what we can actually fill," he sez. "So we're in the process of trying to get an expansion done by the end of the year just so we can handle meeting 30 percent of our demand before we look at doing even more." With expansion Greenbush lookin' to grow roughly 3000 bbls, 30%+ to 12,000 bbls in 2015. "I think we will be able to ride that to 30,000 barrels before we have to grow again." (So BA estimate that Greenbush hit regional status last yr a bit high, it seems.)

Yet, despite Scott Sullivan's optimism for his own brewery, "for a brewery opening today some of the distribution challenges are going to be more pronounced" and "if I was doing it again today, I'm not even sure I would try distribution," he said. "The shelf space and choices out there is already overwhelming" added head brewer and general manager at The Livery Wire, Simon Rusk. One long-time worker from local craft-centric off premise account, St Joseph Liquor Cabinet, also had contrasting views on amount of "room" for growth. Just in last two years "there's been at least a 25 percent growth in terms of shelf space," yet "we still run into shelving issues," Bryan Ammeson told paper. "When we first opened there was so many feet of Founders and so many feet of Bell's," but "those are getting smaller," he said. He went on to reference newer local competitors such as Round Barn, Tapistry and Greenbush, "and that's just locally." Gotta note, both Bell's and Founders grew Mich shipments healthy 26% and 53% respectively last yr, so they're still doin' well at home. Liquor Cabinet carries 500 different beers from more than 150 breweries (mostly Mich breweries). But rather than "take away a spot" from Greenbush or Short's "I want to take a spot away from Corona and Budweiser," Haymarket Beer Co owner and brewmaster Pete Crowley told paper.

205 Brewing Licenses Approved in MI While Brewers Assn pinned Mich at 159 breweries in 2014, "205 brewing licenses have been approved in the state," noted paper, again citing June edition of the Mich Beer Guide. Paper lists handful of new breweries comin' in Southwest Mich: Cultivate Brewing Co "on track to open in July" in Berrien Springs, Chicago's Haymarket "expanding into Bridgman" at "former state police post" by spring 2016, "two different brewery proposals" in New Buffalo "and another in South Haven."  

Ill legislature proved prediction made by Revolution's Josh Deth at recent Beer Insights Spring Conference correct this week. Recall, he said that product of year-long negotiations between Illinois brewer and distrib assns was "at the finishing line." Now, a bill, expected to pass quickly this week by House sponsor, would raise production cap for brewers operating retail outlets to 120K bbls, from 30K bbls, according to Chicago Tribune report. Retail outlets include brewpubs and taprooms not connected to breweries. The bill also clarifies rules covering use of social media in alc bev promotion. But it doesn't change self-distribution law, which allows for 7500 bbls to be self-distributed by brewers that produce less than 30K bbls. Indeed, brewers guild shifted focus from self-distribution, prexy John Barley of Solemn Oath Brewing told the Trib. Focus turned to "allowing this industry to grow in a way that we see the market pushing for," John said. For their part, distribs "were obviously concerned about preserving the three-tier system," ABDI prexy Bob Myers told the paper. "On the other hand, we also want to sell more beer," he added. Recall, Revolution was working outside state law by operating brewpub as well as a separate facility that produced more than 50K bbls last yr. "We've been taking a lot of risk and investing a lot of money with an unclear future," Josh told the paper. "But we didn't slow down because we felt good about our chances for a change in the law." That change now coming and without opposition, could soar thru state Assembly by the end of the week.

But What of Goose? Still a "Limit to Consider," Kopman Sez Not just folks in Ill paying close attention to this bill: a pair of St. Louis-based companies interested here as well. Anheuser Busch operates Goose Island brewery with newly-opened taproom in Chicago (tho not original brewpub, recall). And Schlafly sought to open a brewpub in town last year, which helped spur the debate in the first place. AB's Goose taproom won't be affected by new bill, we understand, since state law allows one taproom per production facility to sell only beer made by that facility. But it doesn't clear up question for Schlafly co-founder Dan Kopman. While "great progress," the bill still imposes "a 120,000-barrel limit to consider," Dan told the Trib. "So does the law answer the ultimate question?" Should Schlafly, or any other out-of-state brewer build a brewpub, "what happens if we get over 120,000 barrels?"  

Coupla quick tidbits on New Belgium, including note that construction of its NC brewery is "on time and on budget," according to co-founder/CEO Kim Jordan, hit Asheville Citizen-Times over holiday weekend. Like other craft leaders, Kim does "think the industry will change as things get tighter and competitive. It does worry me somewhat." But that's far cry from recent spate of bubble-bursting talk elsewhere. And turns out folks at NBB discuss buying small breweries "a fair amount," she said. "I have this sort of notion of a set of breweries across the US that are affiliated or merged together in a corporate sense but they have their own brewing identity (and) the opportunity for employee ownership," Kim shared. At same time, "I am learning to let go," she said, since handing over more day-to-day operations to recently-promoted prexy Christine Perich. "It's not just a switch that you flip off," Kim said, adding that she's "still very busy with the company," and expressing confidence in Christine and "very talented" team at NBB.  

Craft brewers’ total average score improved slightly, +0.07 pts to 3.65, in 2d annual Tamarron Consulting Craft Brewer Performance Survey, which included 7 craft brewers – Deschutes, Dogfish Head, Great Lakes, Green Flash, Odell, Stone and Summit Brewing.  Tamarron surveyed 278 distribs – 53% from central parts of country, 24% from West, 23% from East – that “rated the performance of the craft brewers on a scale of 1 (Poor) to 5 (Excellent) on 45 questions within a variety of sales and operations related competencies.”  Odell Brewing (4.19) received highest marks by far again, improving score slightly vs last yr while next highest rated, Deschutes, slightly down to 3.81.  “Four of the six craft brewers (that were on the 2014 survey) reported higher scores in 2015 than 2014,” including “very impressive improvements” from Great Lakes and Stone, Tamarron noted.  Indeed, Great Lakes markedly improved its grade, from 3.44 last yr to 3.65 this yr to become 3d highest rated brewer in the survey. 

These craft brewers improved scores in nearly all of the 13 function-level performance categories vs last yr.  Only “field sales – execution” and “field sales - communication and training” scores slightly declined, tho each still rated well above a “3.”  Most-improved categories were “field sales – quarterly/monthly programming & measurement” (+0.14), “customer service” (+0.13) and “marketing/brand management” (+0.13).  Again and “not surprisingly” the “biggest areas of opportunity for the craft brewers are in National Accounts,” noted Tamarron.  Those remain lowest category scores by far for craft brewers tho scores slightly improved vs last yr to 2.82 in natl on-premise accounts and 2.62 in natl off-premise accounts.

Relationships Improved Too, But Fewer Distribs Think They’ll Improve in 5 Yrs  Meanwhile, “the vast majority” of distribs (90%) thought relationships with these brewers were “good,” “very good” or “excellent” this yr; a higher % of distribs thought relationships were “very good” or “excellent” while fewer thought relationships were “good,” “fair” or “poor.”  Yet fewer distribs thought relationships would improve in the next 5 yrs; dropped to 53% of distribs vs 64% last yr.  And higher number of distribs thought relationships would actually decline, tho still a minority (15%).     

Besides “the own-premise,” BA’s Bart Watson turned another coupla catchy phrases in recent post (see above), including “the IPA show,” for which pretty much every new batch of data provides a new “episode.” No change in latest IRI. The style’s still more than half of craft’s volume growth yr-to-date thru May 19 in IRI’s multi-outlet + convenience data. IPAs kept taking share (up over 4.5 pts in $$ and vol) from other well-developed styles like Seasonal ($$ share -1.4), Pale and Amber Ale (each -0.9) and Amber Lager (-1).

But what else is gaining? Variety pks still: $$ +24% YTD and just slightly slower for 4 wks. But as Bart notes: “we can basically call this the Sierra Nevada effect.” Using IRI data thru mid-April, Bart shows that Sierra’s variety pk represented just over half of the “style’s” vol growth in 2015. That decreased during most recent period, but Sierra’s entry still got 43% of total variety pk vol growth thru May 17. For 4 wks, as it started cycling more, Sierra Variety cases +21% and just over 10% of total variety pk growth. That’s a little more than New Belgium’s variety pk, up 9% for 4 wks. Biggest variety pk, Sam Adams, returned to growth for 4 wks, vol +6%, but still down 9% YTD. So lotsa other variety pks putting up strong growth.

Pilsner style actually gained more share of craft $$ and vol than variety pks so far this yr. It’s #2 share-gaining style behind IPAs in most recent data. The style’s more than doubling YTD in MULC data. Bart’s also called this out, but unsaid: Sierra’s a big part of that too. Its new yr-round Nooner Pilsner hasn’t hit top 30, but recall that thru Mar 29 it sold only slightly less than Sierra’s other new entrant Hop Hunter IPA. Looks to us like Nooner was almost half of total craft pilsner vol growth during first 3 mos of the year too. And those numbers won’t cycle til next year.

Slightly bigger than pilsners, “craft blonde, kolsch and other golden ales” was #3 share-gaining style by vol thru May 17, +50-60% YTD by vol and $$, up 115K cases and $4 mil. Lookin’ like Firestone Walker 805 (see above, up 86K cases, $3 mil) is significant part of that style’s growth too. And lookout for Fruit, Veggie and Spiced beers, gaining slightly more vol share than variety pks YTD. The catchall style’s up 40-50% thru May 17, but started flying for 4 wks as weather heated up: vol +71%, $$ +81%. Could be a lot of brands coming into play here, none big enough alone to hit top 30 brands list. But national launch of Boston Beer’s Traveler brands and plenty of other fruit-flavored shandies and radlers hitting shelves certainly taking part.

Craft’s  growing fast, but on-site sales directly to consumers at small brewer taprooms and brewpubs are growing faster. All told, taproom and brewpub sales likely totaled 1.5 mil bbls in 2014, up about 25%, Brewers Assn chief economist Bart Watson estimates. “More and more breweries are turning to the own-premise channel, aka their own taps,” he wrote in wide-ranging blog post on craft thru Q1 for BA members. That additional 300K bbls of on-site, on-premise volume growth (from 1.2 to 1.5 mil bbls) roughs out to almost 1 full share-pt of all on-premise beer, he noted. And for the first qtr of this yr, if growth pace kept up, that’s another 85-90K bbls in first 3 most of 2015. So far, known US shipments still down over 660K bbls thru April, according to stats released by Beer Institute today.

A million and a half bbls of taproom + brewpub sales in 2014 was 8 share of total US craft shipments, based on our estimate of 18.77 mil bbls of craft sold in the US (printed in Craft Brew Guide, teasing out exports). It was also over 0.7 share of total US beer shipments. If this “own-premise” biz doesn’t slow as 2015 goes on, it would expand by another 375K bbls to about 1.875 mil bbls by yr-end. Assuming craft and total beer volume trends don’t change either, taproom + brewpub volume would near 8.5 share of craft and get even closer to a full share of beer. Regardless, 375K bbls represents 2 percentage pts of craft growth this yr, by our count. In other words, this “own-premise” volume has started making a real difference for the category’s overall pace and health.