Several new brands and packages hit latest monthly batch of craft retail data from IRI. And while these brands changed up rankings near bottom of top-30 brands and top-50 pkgs, some of biggest craft brands continued to have tuffer time.

Big Brands, Small Distribution: Firestone 805 Cracks Top-30 Brands; Not Your Father’s Rootbeer 6pk Cracks Top-50  Firestone 805 Blonde Ale has been on an extraordinary tear all year, and for the first time became top-30 natl brand (at #30) in IRI multi-outlet + c-store data YTD thru May 17.  Remember, 805 is solely sold in Calif yet still managin’ to make top natl ranks.  It’s growing about 150% both for latest 4 wks and yr-to-date in MULC and gained 2d most share of any craft brand in latest 4 wks (only behind Lagunitas IPA).  Firestone 805 knocked Deschutes Mirror Pond off the top brand list, which had been down mid-to-high single digits thru Apr 19.  Yet, perhaps more astounding feat; Small Town Not Your Father’s Rootbeer 6pks became #49 top selling package YTD, with the vast majority of its sales in Illinois.  Amazingly it was 18th(!) top selling pkg in latest 4 wks thru May 17, only slightly behind Sam Adams Rebel 6pk (+4%) and Lagunitas Little Sumpin’ Sumpin’ (+62%).  Nearly half (46%) of its 6pk sales for the entire year were made just in these latest 4 weeks.   Recall, sales are all incremental this yr ‘til it begins to cycle numbers in Q4.  

Ballast Sculpin a Top-30 Brand in Supers; Founders All Day 15pk a Top-50 Pkg; Opposite Ends of Pricing Spectrum  Another red hot Calif brand, Ballast Point Sculpin IPA became #30 top brand in IRI foodstores thru May (actually made the list in Apr).  It’s $$ up 120% in natl supers thru May 17 and sales are about even with #28 brand, Firestone 805 at about $3.3 mil.  Certainly doesn’t hurt that its avg price per case is a whopping $64.31, the highest avg price by a long shot (next highest is Lagunitas Seasonal at $45.62 per case in foodstores).  Then too, Founders All Day IPA 15pk is a top-50 pkg in foodstores (as of Apr); sales are flyin’ up 1331% in IRI foodstores YTD, up 482% in latest 4 wks.  It’s at the utter opposite end of the pricing spectrum compared to Ballast Sculpin, at a mere $27.08 per case; the lowest avg price among top-50 pkgs in foodstores.  And that’s down 1.3% vs last yr. 

NBB, Sierra, Deschutes IPA Intros Makin’ Various Top Lists  New Belgium, Sierra Nevada and Deschutes new IPAs each are in different sets of top brand/pkg lists YTD.  NBB Slow Ride Session IPA 6pks became top-50 pkg (at #49) in IRI MULC thru May 17.  It’s also #26 brand in c-stores.  However that’s not enough to curb other top brand declines (Fat Tire, Ranger IPA and Seasonal down for 4 wks), as New Belgium total sales were flat-to-down for 2d consecutive 4 week period.   Deschutes Fresh Squeezed IPA 6pks snuck into top-50 pkgs in IRI foodstores at #50.   Its sales are up 300%+ lapping last yrs intro, and recall, as of late April, Fresh Squeezed was already Deschutes top brand in 20 of the 28 states where co sells, at roughly19% of its total biz (see Apr 21 issue).  And Sierra Hop Hunter IPA is a top-50 pkg in c-stores at #47.   All in, Sierra Nevada total sales slightly slowed in latest period, tho still roarin’ up 26% YTD in IRI MULC; Deschutes $$ remain +9% for the yr.  

Tucked in industrial bldg under NY’s Pulaski Bridge hurdling fetid Newtown Creek and defended by FreshDirect grocery delivery trucks that run interlopers off the road, Transmitter Brewing conjures up anything but bucolic farm setting.  “Slightly off – and under – the beaten path,” cofounder Anthony Accardi readily acknowledges.  But it’s among small and apparently growing array of brewers who’re tapping into notion of community supported agriculture (CSA) programs as way to lock in regular customers while enhancing what might otherwise be tenuous cash-flow situation for early-stage brewer.  You pay in advance, but instead of picking up basketful of fruits, veggies and eggs you get 750-ml bottles of Transmitter’s elaborately crafted beers.  Other breweries experimenting with CSA-style programs include Burlington Brewing in VT, Begyle Brewing in Chicago and Ft Collins Beer in Colo.  Note that this is different concept than more common reserve system, where drinkers lock in coveted rare items ahead of time.

Year-old Transmitter just kicked off newest of its Community Supported Brewery (CSB) programs, offering for $175 plus tax an allocation share entitling member to 2 bottles per month for 6 months of co’s 750-ml beers, many of which are barrel-aged, bottle-conditioned or otherwise painstakingly crafted, along with choice of 2 glasses, t-shirt or baseball cap.  For duration of membership, participants also get 13% off any other bottles they purchase there, generally amounting to $2 discount.  Members must pick up their bottles themselves each month during taproom hours Fri thru Sun, at brewery straddling Brooklyn/Queens border, in rapidly gentrifying Queens nabe Long Island City that boasts pair of other new brewers, Big Alice and Rockaway.  Transmitter boasts of owning 20 isolated strains of Brettanomyces, Lactobacillus and Pediococcus and brewhouse library of traditional Belgian, French, English and American yeasts for its often-experimental brews.  During CBN visit on Sunday, offerings included BdG3 bitter orange biere de garde infused with allspice as well as S4 saison.

In essence, program enables Transmitter to get paid in advance for its beer, rather than well after production, Accardi said.  “Partly because we started out so small with a 3-barrel system, we realized early on we needed to capture as much retail as possible,” particular since he and partner Rob Kolb were self-financing enterprise, Anthony told CBN.  Slow fermentation cycle for Transmitter’s styles of brews means 120-150 days often elapse between time it orders grain and receives payment for beer.  By contrast, local rivals who brew hoppier beers in barely 2 weeks enjoy much brisker cash flow cycle.

Transmitter started first CSB last Jun, 2 months after it opened, and it drew immediate adherents – enough, in fact, that as fans heard about it, often during visit to taproom, there were numerous requests to join in mid-cycle.  Accardi and Kolb try to accommodate such requests, but to smooth out logistical lumpiness they now start new CSB every 3 months, making it easier for newcomers to jump aboard at beginning of cycle.  Recruitment is mainly via signage in taproom, email blasts and social media.  The partners are encouraged to see high proportion of members who re-up as current cycle concludes.  Some drive in from as far away as Penn, upstate NY, NJ and Long Island for their monthly ration.  “If we can add 15 or 20 people every quarter, it adds up,” Accardi said.  Crucially, it’s not a set-aside program: consumers show up and choose from available bottles on hand.  Some can be sampled free at counter – tho partners have cut back # and size of pours because some groups were coming in and sampling a full bottle’s worth of beer before purchasing a bottle.  “We were basically giving away the farm,” said Accardi, maintaining agricultural theme.  There’s been some social-media grousing about 1-oz pours, but consumers mainly understand, he said.

Allocations are capped at 200, figure drawn from limits of co’s initial capacity, and membership is approaching that # now.  Anticipating demand has been tuff, Anthony acknowledges.  At low end, “at first, we weren’t sure if it would just be Rob’s mom and mine who’d sign up.”  At high end, state legal requirement that consumers pick up their beer themselves may make for self-regulating cap, he theorizes.  That said, brewery is undertaking significant expansion, moving to 6-bbl system, adding pair of 12-bbl fermentation tanks and bigger hot liquor tank.  Recently ordered pair of 18-bbl tanks should arrive in early Jun.  Down road, he envisions opening 20-bbl production brewhouse and converting current facility to barrel-aging outpost.

Accardi sees CSB program as integral part of plan to build trusted brand, considering that brewery has no flagship entry but devises new beer every 3 weeks, meaning it needs on-premise accounts and consumers to be willing to buy it without necessarily trying it.  Returning CSB members are sign that it’s working, he believes.

Big names coming across craft brew wires today. Democratic Presidential hopeful Hillary Clinton chose NH’s Smuttynose Brewing as the venue for a roundtable talk with group of small biz owners, including Smuttynose founder Peter Egelston, based on live feed from NECN. Discussions revolved mostly around issues faced by these entrepreneurs. Indeed, Peter noted that “it’s a lot easier to invest in Wall Street than in Main Street,” encouraging Clinton to think about ways for folks to make small-scale investments in bizzes run by neighbors. “Finally,” Clinton noted, folks are having a real “conversation” about “different forms” of corporations that have different goals and needs, bringing up B-Corps, for example. The conversation touched on impact of foreign interests and taxes, natch. Elsewhere, celeb chef Rick Bayless announced he’s opening a brewery on Chicago’s Randolph St called Cruz Blanca. Using a 10-bbl system, the brewery’s flagship will be La Guardia, the Chicago Tribune reported, and have “a tasting room, food service, a growler program and the sale of large format bottles.” 

Another 22 small brewers crossed over 15K-bbl mark in 2014, moving from “microbrewery” to “regional brewery” status for the Brewers Assn, according to trove of small brewer stats in just-released May/June issue of New Brewer. That’s same number that made the jump last yr, but unlike in past half of these companies were not brewing in 2009. Previous “graduating classes,” as we’ve called them, included brewpubs that built production facilities and quickly expanded. But half of these 22 companies went from 0 to 15K bbls or more in 3-4 years without having a more-established retail presence. Most of the 11 operate in big craft states Calif, Oreg, Colo and Mich. Many are familiar names at this point, continually taking share from bigger craft brewers in developed markets.

LA’s Golden Road led this group, nearly doubling again last yr to almost 29K bbls (as we included in Craft Brew Guide, with others in this group, earlier in yr). Hop Valley in Oreg almost tripled to about 19K bbls. But Saint Archer of SoCal made quickest ascent we’ve seen yet: it produced just over 4000 bbls in its first yr, 2013, and then more than quadrupled to over 17K bbls last yr. Year two. It’s a new world.

Other young companies already hitting it hard at home include Two Roads in CT, Fulton in MN, Epic in UT/CO and Greenbush in MI. A handful of the cos that did exist in 2009 were still in their first year or two of production and tiny. For example, Fremont in WA and LoneRider in NC each produced less than 500 bbls in 2009 and passed 15K bbls in 2014, up 42% and 26% last yr, respectively. SanTan (AZ), Half Acre (IL), Upslope and Dry Dock (both CO) all produced around 1000 bbls in 2009 and became regional brewers last yr. More-established Kettlehouse (MT), DuClaw (MD) and Upland (IN) also all a part of the 11 companies that collectively shipped just 41K bbls 5 yrs ago. Between their growth and incremental addition of 11 more companies, the class of ’14 collectively produced almost 234K bbls in 2013. They grew another 59% all-in last yr to over 372K bbls. That’s almost 2 share of total craft segment, by BA’s count.

Check Up on Class of ’13  So how did the brewers that graduated into regional status in 2013 do in 2014? By and large, pretty darn well. Recall, that group also 22-strong. But a handful of those actually crossed 15K-bbl mark in 2012, not 2013, the updated batch of data from BA shows. Four of the remaining cos accelerated last yr on a bigger base, including Lazy Magnolia in MS and Natty Greene’s in NC, according to BA stats. Most of the others put even larger bbl-gains in 2014 than in 2013, even if pace of growth not quite as fast. Big-time growers Revolution, Devil’s Backbone, and Karbach all grew 70%+ in first year as regional brewers. Even without a pair of brewers that chose not to publish stats for 2014, the class of ’13 collectively added another 70K bbls last yr, +21%, to near 414K bbls.    

We’re lookin’ at “All Others” mkt share in 42 states where supplier data available.  That’s all suppliers other than top-5 (AB, MC, Constellation, Pabst, Heineken USA).  Includes all craft volume but also Yuengling, DGUSA, smaller importers, etc.  While these suppliers collectively about 16 share of total shipments, All Others had over 20 share of total shipments in eleven states.  That’s up from just 3 states in 2009. Three new states just passed 20-share mark for All Others last yr.  Rhode Island leaped more than 5 share to 24.9; the largest gain of any state last yr, with boost from Yuengling entry.  In Montana, All Others had its 3d largest share gain, +3.2 to 21.2.  And All Others in Utah gained 0.9 share to 20.7. 

Meanwhile, All Others in Vermont just passed 40 share. That’s the largest share of total state mkt by far. And Oregon’s All Others passed 30 share for first time, still a couple pts behind Maine (32.2).  Amazingly, in VT and OR All Others total share of shipments is now greater than AB and MC total share in state.  Remaining states where All Others share was over 20 include: PA (28.2), MA (27.4), WA (26.2), CO (24.9), and NH (23.6).  Then too, All Others collectively gained 2 share to 23.9 in 8 non-reporting states/exports last yr.  And Minn (19.8) and Wisc (19.1) on the cusp of passin’ 20 share mark this yr. 

Seven States Saw All Others Gain 10+ Share in Last 5 Yrs; Four in New England; At AB & MC’s Expense Seven states saw All Others gain over 10 share of shipments in last 5 yrs, and four are in the New England region.  Maine gained most of all, nearly 13 share to 32.2, while each of the top-5 suppliers lost share during period.  In Rhode Island, All Others gained 12.8 share in 5 yrs, nearly as hefty as ME’s, including huge gain last yr (see above).  In Mass, All Others gained 10.8 share to 27.4, and also got huge lift last yr (+3.8) in large part from Yuengling entry.  Boston Beer last yr grew to over 6 share of MA shipments for first time (including cider and tea) we estimate, yet only gained half a share in last 5 yrs.  Vermont’s All Others gained 10.4 share in 5 yrs to reach dominant 41.3.  Then too, Wash and Colo each gained about 10.3 share in 5 yrs to 26.2 and 24.9 respectively.  Minn All Others gained 10.9 share to 19.8 total.  And there’s plenty of other states where All Others had hefty 5 yr share gains too: OR gained over 9 share; NH, UT, MT gained over 8 share; WI and IL gained over 7 share; AL, TN, OH gained over 6 share; HI, NJ, NV gained over 5 share.  All in, All Others gained share in every state for 5 yrs. 

Unsurprisingly, common theme is that AB and MC combined share losses are greatest in each of the 7 states where All Others grew most.  AB and MC together lost 9.6 and 9.7 share in Mass and Minn; lost over 10 share in UT (all from AB), VT and CO; and lost 11.5 in RI, -11.9 in Wash and -12 share in ME.  Indeed, AB and MC (to lesser extent) lost substantial share in nearly all reporting states in last 5 yrs. AB managed to gain some share in HI but lost share in every other state.  Interestingly, MC gained share in 7 states – WY, NE, ND, IA, KS, SD, UT – for 5 yrs, and gained over 1 share in WV in 2014, tho still slightly down for 5 yrs.  Gotta note, AB typically losin’ much more share compared to MC in most states, tho AB also typically has significantly higher total share. 

Lotsa Room to Run in Several States There’s still several states where All Others mkt share is still miniscule in comparison to natl number, perhaps suggesting there’s plenty of room to run for growth.  All Others skewin’ real low in majority of West Central and Southeast parts of US, and a handful of other states thruout the country.   That includes big mkts like Texas (6.6) and Florida (9.1), as well as GA (8.5), MO (9.3) and TN (10.3).  Dips under 7 share in ND (3.4), Miss (4.9), Ks (5.8), Okla (5.9), Ark (6), Ida (6.4) and La (6.95).  In most cases All Others have grown relatively slow and steady in states like these for the last 5 yrs.  However growth in some states is beginning to take off too: All Others gained over 1 share in Indiana, Iowa, Tennessee (+2.2), Arizona, New Mexico, and Nevada in 2014, each markedly larger gains than in previous yr. 

(The graph below zeroes in on Vermont and Oregon, the 2 states where All Others passed AB and MC last year. Vermont is represented by bars, Oregon by lines. AB is in red, MC in blue and All Others in orange.)

Craft has been comin’ along in Europe, and now financial community takin’ notice.  “Craft beer is invading Europe” by a number of measures, according to Exane BNP report.  It points to various stats to back claim including: number of breweries in Europe up 71% in five yrs, number of breweries in UK surpassing Germany total, “craft volumes in Denmark (up sixfold),” Ireland craft up 50%, and number of brands in Norway up 4X.  Report goes on to say “big beer is no longer best” in Europe, tho it had been “over the last decade.”  Now “consolidation, standardization” is “unravelling” and “we feel it is prudent to take down our developed world estimates across big beer today.”  Exane BNP expects craft beer share in Europe to “more than double by 2020.”   

GrainCorp Ltd, Australian based global agribusiness, plans to spend $75 mil to more than double production capacity at its Great Western Malting facility in Pocatello, Idaho “by 120,000 tonnes” to 220,000, co announced.  Expansion slated to begin in Q3 this yr and to finish by mid-2017, lookin’ to “capture further value within the craft beer sector,” managing director and ceo Mark Palmquist said in release. GrainCorp already has “significant presence” in North America and “strong connections with North American major and craft brewers through its Great Western malting, Canada Malting Company, and Country Malt Group businesses.”

Brewers aren’t the only bev bizzes moving into other tiers or types of drinks. Blackberry Farm, a high-end resort in East Tennessee, opened a small brewery on its sprawling property about a year ago. It brews a small cadre of Belgian-style brands for its on-site white-tablecloth restaurants, taking some focus away from its significant wine program. Blackberry Farm recently announced it’ll be expanding distribution of its beer brands to other high-end restaurants around the US, from a select few in Southeastern cities, according to Yahoo Food. The resort already has some “Friends” in high-end food and wine places, according to its website, including Chef Rick Bayless, who recently did a beer/food event on site, and Rob Mondavi, Jr. On the other hand, Whole Foods continues expanding its image as a brewery, as its Houston brewpub has released a series of collaborations with other local brewers this spring. And Starbucks seems to be gaining traction with its Evenings menu, expanding from coffee and tea into beer and wine. It’s applied for licenses to sell alc bevs in 15 more Bay Area location, the San Jose Mercury News reports. Taking a different beer cue, coffee shops around the US have started serving nitro iced coffee on tap. Stumptown announced launch of nitro cold brew cans last month, as we reported in sister-pub Beverage Business Insights. Now Cuvée Coffee has followed with its own canned nitro offering, and “where these companies go, Starbucks will soon follow,” Bon Appétit wrote recently. The chain “already has hops-flavored syrup” too, apparently.

Led by Senate health committee chair Sen Lamar Alexander (R-TN), a group of 32 senators asked the FDA to delay implementation of its rules on menu labeling for restaurants and other bizzes by one year in a letter sent Friday. Recall, restaurant chains with 20 or more outlets will need to post calorie counts and other nutritional information on menus/menu boards for most offerings, including beer, when the rule goes into effect. But many companies still await more detailed info. “Given the outstanding guidance from the agency that is necessary to provide much needed clarity for small and large businesses impacted by the new requirements,” the letter states, the senators would like to see current “compliance date” of Dec 1 pushed to next yr. The senators “recognize the benefit” of the rule, they remind, but share that “we are concerned with the lack of clear and consistent guidance” the FDA has provided thus far. They repeatedly point to import of clarity and “appropriate time” needed for “particularly smaller businesses” impacted by the rule. “Some of the same senators sent a similar letter,” Law360 wrote this week, to Dept of Health and Human Services earlier in the month.

Now the rule is “setting up a showdown between Congress and the Obama administration,” The Hill wrote of the letter “demanding” delay, noting that a yr-long delay “could give the next president a chance to block the rule altogether.” Indeed, a pair of representatives intro’d a bill that would exempt companies that make less than 50% of revs “from selling prepared foods,” last month, according to The Hill. But a National Restaurant Assn spokesperson reminds that “if you’re serving restaurant-type food, then you should have to follow the rules,” noting that more and more supermarkets, convenience stores, movie theaters and more are competing with restaurants by offering prepared foods. Alc bev assns have been working with NRA and others to receive greater clarity for their members, as Brewers Assn director Paul Gatza recently wrote for the group’s blog. After providing some additional info to members, he notes that “if you don’t know your nutrient values and do business in chain restaurants now or plan to in the future, now is the time to start gathering your information.” 

Among various ways BrewDog plans to spend £25 mil it’s trying to raise in latest crowdfunding campaign, co lists “expected cost” for establishing US brewery at £3 mil (~$4.7 mil) in its “Equity for Punks IV” share offer info packet.  It also notes plan to “establish a UK import & distribution” division with estimated cost of £1 mil.  BrewDog already is Stone’s “exclusive UK importer” and “also regularly ship[s] Mikkeller, Ballast Point, AleSmith, Oskar Blues and Lost Abbey beers to the UK.”  And BrewDog “would be one of the only UK beer distributors to only use refrigerated transportation.”  Gotta note, BrewDog listed all of its potential plans with raised capital in “descending order of priority,” and building US brewery is last on its wish list, while UK import and distribution arm also toward bottom. So if BrewDog raises less than its goal of £25 mil “we won’t be able to do all of these things until further funds are raised,” co acknowledges.  Yet recall co’s reportedly in “advanced discussions” about building brewery in Columbus OH.

Revs Up Tho Margin Down; Americas Region Still Small But Growing Solidly BrewDog total revs grew 63% to approx $46.2 mil last yr; that’s up 16X in the last 5 yrs.  However operating margin down about 1 pt from 13.9 in 2013 to 13 last yr. US still relatively insignificant for them; just over 2% of total revs were from Americas region, which includes Canada, Mexico and Brazil as well as US.  That’s actually lower % of total revs than in 2013.  Yet biz there still growin’ solidly, $$ up 33%.     

Top Mgmt Shares & Salaries As of Apr 20, 2015, BrewDog top management held approx 74% of total shares.  James Watt (33.33%) and Martin Dickie (29.14%) are principle shareholders at 436,970 and 381,980 shares respectively.  Griffin Group LLC & Digby Holdings LLC (PE firm that owns Anchor Brewing) has 10.6% stake.  And both finance director Neil Simpson, and operations director Martin Dempster hold under 1% of shares combined.  James and Martin each made $196K as base salary, while Neil made approx. $201,365 and Martin Dempster made about $113K as base salary.  None of top execs got any bonuses or benefits.  In 2014 BrewDog had 14,777 total shareholders, over 500 more than previous yr.  BrewDog had 277 total employees last yr, and already has 365 employees as of Apr 20, 2015.