While handful of larger craft brewers have opened 2d facilities in far away parts of the country, there’s been an increasing number of smaller craft breweries opening multiple facilities in home-state to keep up with fast-paced growth.  Another wave came just in the last couple weeks; each at different stages of growth with different models.  In ID, Payette Brewing announced plan to build separate $4.5 mil, 32K sq-ft brewery and tasting room in Boise by Q1 2016, reported Idaho Statesmen.  New brewery will include “new 60-barrel, four-vessel brewhouse” that has eventual “potential to crank out more than 100,000 barrels of beer annually,” founder Mike Francis told paper.  Last yr Payette doubled production to just over 10K bbls (“two-thirds” in cans), and it expects to reach 20-25K bbls once new brewery is complete.  With new facility, co’s lookin’ to expand distribution further into neighboring states, particularly into “larger markets, such as Seattle,” Mike noted.  Currently “about 80 percent” sold in home state, with the rest trickled out to Oreg, UT and “parts of Nevada and Washington.” 

In OH, after faster than expected growth during its first year, Ohio City’s Platform Beer Co has fast-tracked plans for its contract brewery concept.  Platform paid $125K for former Leisy Brewing co’s “cavernous five-story dilapidated building” just one mo after opening its $600K Platform brewhouse in July 2014. It plans to convert the space into “a 120,000-square-foot contract brewing production facility,” called Gypsy Brewery, reported Crain’s Cleveland Business. Co expects “$9 million redevelopment” project to be “two-phase, three-year build out” that can “accommodate five to 10 other brewers.” Recall, owners also have a separate co, JC BeerTech, based in Cleveland “that cleans draft-beer lines for restaurants and distributors” across the country(see Dec 31, 2014 issue).  Platform plans to brew 2500 bbls of its own brand this yr and “triple that volume in the next three years,” according to Crain’s. 

In Florida, Big Storm Brewing’s plannin’ a whole bunch of expansions to accommodate for fast-paced growth in its 3d yr.   It’ll move HQ to “other side of West Pasco industrial Park,” “triple” size of its brewery, and open separate 16,000 sq-ft facility in Clearwater, reported Tampa Tribune.  “Plan starts with moving Big Storm headquarters” into 8,000 sq-ft building by Aug 1, followed by opening 16K sq-ft brewery and taproom at “a converted warehouse” in Clearwater.  This yr Big Storm is “on pace to triple” sales to approx $1.5 mil.  It’s currently in 1500 accounts – “more than 400 in the Tampa Bay region” – and “started canning” last fall.  Co has “five sales staff” in state, “but we want to expand outside the state,” founder Mike Bishop told paper.  

Beyond federal and state layers of regulation, the sometimes thorny world of local government can have serious implications on beer industry members. While trekking thru the thicket, a couple of ongoing trends and recent events could prove useful: 1) Generally speaking, local governments have won greater regulatory control over alc bev bizzes than state regulators have consolidated that work; 2) Recent dust-ups between brewing bizzes and local governments have brought some impassioned debate; 3) Startups and expansions continue apace, adding complexity.

More Local Control, Not Less  In Colorado, breweries planning taprooms will receive greater local scrutiny due to passage and signing of new bill, according to Denver Biz Journal report. City and county governments will be able to weigh in now when breweries seek to sell beer on-site at taprooms. Local governments won’t have veto-power, they’ll just be able to “offer input” to state regulators, who once had “sole discretion” on the matter, the journal wrote. This movement towards more local control isn’t unique. Across the US, public health advocates tend to back legislation that moves regulatory oversight into smaller municipalities, even if state regulators oppose the change. The new Colo law may spur “conversation ahead of conflict,” as a state restaurant assn spokesperson told the paper. But more local oversight, usually in the form of relatively small boards and committees, isn’t always welcome.

Recent Community Pushback  Difficulty with a local board surprisingly hit Delaware biz darling Dogfish Head when a town board denied its bid to expand its Rehoboth Beach, DE brewpub last month. This week, the co won approval for a re-hearing, next month at the earliest, according to Delmarva Now. The surprising outcome of the original vote confused many and the critiques of Dogfish Head from board members brought critiques of the board’s motives in a News Journal report, also posted by USA Today.

Around the same time, communities in Virginia and Georgia separately dealt with necessary land rezoning for proposed farm breweries, killing one and tabling the other. In Fairfax County, VA, residents told a prospective brewery owner “you’re not wanted here,” according to the Washington Post. So investors scrapped the plan to build Loudmouth Brewery in Fairfax and look elsewhere. In Dougherty County, GA, owners of plantations that neighbor a prospective site for a farm brewery argued against the plans. The board tabled the issue, according to local Fox affiliate WFXL.

Communities push back against development plans, in these cases and others, by citing traffic or drunk driving concerns, odor, noise or other impacts on neighbors and sometimes-fuzzy community interests. The above Colorado bill rose out of concern about a brewery’s operations near a school, last year. In Michigan, neighbors worked to stop a planned beer biz near a homeless shelter that provided services for recovering alcoholics. Emotions ran high in both places. Maintaining sensitivity while distinguishing between legitimate concerns and unfounded NIMBYism can be crucial in establishing a community-minded brewing biz.

More Local Breweries, Not Less  For every handful of stories about combative neighbors or town boards, numerous new and expanding breweries win approvals every week, with little to no fanfare. Growth in the number of small brewing bizzes means more communities considering and becoming familiar with these issues, potentially easing the path for future entrepreneurs. At the same time, finding a welcoming community and receptive local government further complicates the small brewery real estate hunt.

Enjoy Beer LLC, which last month did its first deal with Abita Brewing, just made a significant new hire: BK Krueger, leaving New Belgium to join the new co.  BK was NBB’s sales co-pilot and had been with the co for 16 yrs.  He will join the Enjoy Beer team as its veep of sales strategy and execution.  BK was a leader in NBB’s extensive wholesaler selection process.  As such, he has a vast knowledge base about many US mkts and distribs that compete within them.  He’s probably seen more wholesaler decks and presentations than just about anyone in recent yrs and remained well-regarded through those often difficult choices.

Recall, Enjoy Beer LLC is partnership between private equity firm Friedman, Fleisher and Lowe and Harpoon founder Rich Doyle.  Enjoy Beer purchased Abita, as Rich told Boston Globe, but key Abita shareholders then bought a stake in Enjoy Beer.   With addition of BK, Enjoy Beer has already filled some key roles on its exec team, including CMO Jessica Jones (ex-Ninkasi).  

More evidence of Lagunitas outperformance popped in set of Q1 GuestMetrics data CBN saw.  Lagunitas gained 0.19 share of volume in GuestMetrics Q1 on-premise data, slightly more than the 0.18 it gained last yr.  That made it the largest share gainer of any beer co in GuestMetrics data in Q1, just slightly ahead of Boston Beer at 0.16.  Boston Beer was the largest share gainer last yr, by far.  Up 0.56 share; share growth propelled in both periods by Angry Orchard.  Interestingly, Constellation didn’t lead share growth on-premise like it did off-premise. It gained almost as much share on-premise as Lagunitas last yr at 0.17, but its on-premise share growth slowed to 0.07 in Q1. 

Other leading share gainers in GuestMetrics data are some of hottest craft brewers overall:  Bell’s, Ballast Point, Revolution and Founders.  Bell’s gained 0.10 share last yr and .09 in Q1 this yr in GuestMetrics data, Revolution .09 last yr and .08 in Q1, Ballast Point .09 in each period.  Founders jumped from .04 share gain in GuestMetrics last yr to .08 in Q1 this yr.  Firestone Walker up .05 both periods.  So lots of craft brewers put up significant share gains in GuestMetrics data (even more so of $$).  GuestMetrics ceo Bill Pecoriello cut data in slightly different way last week at our Spring Conference, asserting new brands gained 1.9 share, accounting for all of growth in aggregate.  That’s one way of looking at it.  But looked at another way, of course there were many cos and brands that gained (and lost) share in GuestMetrics data.  While these craft brewers collectively put up some sizable gains, AB and MC each lost more than 1 share on-premise in 2014 (2.4 between ’em) but collectively only lost 1.5 share in Q1.  

While most larger craft brewers are struggling to maintain their positions in tuff on-premise channel,  Lagunitas grew a whopping 46% last yr on-premise and is growing at close to that rate again this yr, chief operating officer Todd Stevenson told Craft Brew News.  Considering that by now Lagunitas is a well-established craft brand, that’s pretty eye-poppin’.  In fact, Lagunitas is still firing on just about all cylinders midway thru 2015.  Shipments up 50%, sales-to-retailers up 42%, said Todd. 

Lagunitas faces tuffer comps in 2d half 2015, but still expects “to finish the year up 40-45%,” said Todd, “in both shipments and depletions.” That will put it in neighborhood of 850,000 bbls, adding incremental 250K bbls or so, compared to a mere 200K last yr. So it keeps “aggressively adding capacity,” as Todd notes.  Lagunitas expects to have 1.5 mil bbls of capacity on line by yr-end and looks to add another 420K of capacity in Chi next yr. Lagunitas has already explored locations for a possible 3d brewery for some time and has made progress in its search.  This summer, Lagunitas will have to make a decision on where to locate a 3d brewery, founder Tony Magee said, as Calif will “run out of capacity within a year and a half.” 

Lagunitas Will Gain About 750K Bbls, 2010-2015  If Lagunitas continues to grow at pace it’s on thru mid-May and hits target it expects, that means Lagunitas will have grown about 750,000 bbls between 2010-2015.  That will  easily exceed any other craft brewer.  Boston Beer will probably be #2 with 600,000 bbls or so of growth in craft beer, while Sierra will be in neighborhood of 500K bbls. No one else is even close.  What is it about Lagunitas that enables it to continue putting up such extraordinary growth numbers?   Perhaps it’s the heady combo of its unique branding, the organization it’s rapidly built, the liquids themselves and the co’s “go for it” mentality.   Lagunitas has simply bet bigger and been more right about its big bets than virtually anyone else in last few yrs.  Those include its 2d brewery in Chicago, its focus on IPAs, the numerous sr execs it’s hired as it built out significant infrastructure, and other factors. 

Another key differential between Lagunitas and most other larger craft brewers: lead brand Lagunitas IPA still growing great guns. Lagunitas IPA is about 58% of company volume and up faster than co, about 45%.  So no sign of flagship fatigue.  In fact, over 60% of Lagunitas growth still came from flagship IPA in Q1.  What’s more, almost half of growth (45%), came from “same store same SKU placements,” according to Todd.  And sure, c-stores less developed and growing at a faster rate (up 65%), but supers still up 48% too.  Meanwhile,  much smaller international biz nearly doubled (+94%) in Q1.  Both package (+45%) and draft (+35%) “off to a strong start.”  Lagunitas also has strong 2d brand in Little Sumpin’ Sumpin’, about 14% of volume and up 43% YTD.  By the way, why are shipments so far ahead of depletions this yr?  That’s driven by “newly launched Pils 12 pack, Sucks 6-packs and expansion of IPA 12-pack into new markets,” according to Todd.

Even tho Lagunitas entered 6 new states last yr, “new markets and new products combined” accounted for only 15% of growth in 2014.  Lagunitas continued to grow 45% in home state Calif last yr. IPA 12-pack “was the number one craft SKU and the number 3 overall beer SKU” in the Bay Area during last 13 weeks in IRI.  And Lagunitas IPA 12-pack still up 43%. An impressive set of numbers overall. 

If you’re looking for more exclusive coverage of the craft beer segment from the editors of Craft Brew News, order the second edition of CRAFT BREW GUIDE today. Along with lots more data analysis, it includes essays on complex and dynamic regulatory and deal landscapes currently faced by small brewers. It’s also one of the only places to find in-depth looks at big brewer entries in the segment. Get more info and order soon.

Florida Governor Rick Scott signed into law the much-discussed growler (among other things) bill yesterday. The law legalizing 64-oz growlers that also codifies rules for brewery taprooms goes into effect July 1. Up in West Virginia, Gov Tomblin signed into law a bill he supported from get-go to decrease license fees for small brewers and increase availability of growlers in the state, according to the Charleston Daily Mail. In nearby Ohio, perennial attempt to increase allowable alcohol content in beer (from 12% to 21%) still awaits committee action after being intro’d in Feb, according to a Cleveland Plain Dealer report. And in Pennsylvania, the state Senate is considering a tax credit for breweries making equipment purchases, Public Opinion reports. Elsewhere, attempt to expand sales of beer over 3.2% alc by weight to grocery, big-box and c-stores in Kansas died in state Senate, according to the Wichita Eagle.

SABMiller purchased UK craft brewer, Meantime Brewing for “undisclosed sum,” reported Financial Times along with several other news outlets earlier today.  This marks SAB’s first full craft deal (only a 25% stake of Terrapin).  SAB deal announced just over 1 week after news broke that ABI’s Latin America unit purchased Colombia craft brewer, Bogota Beer Co.  Indeed, craft ain’t just a US thing, and the big brewers are seemingly lookin’ to get involved earlier elsewhere.  Similar to past deals involving strategic buyers in US, there’s been backlash from local community and craft community in UK in particular.  “Any credibility they had will be gone but I’m not sure how much it will affect them because I think they’ve been going into the mass market where customers are not so bothered,” one UK craft brewery founder told The Guardian.  Yet, top management from both SAB and Meantime spoke to “increasingly redundant” craft definition that’ll eventually “disappear”; “craft for us is more about style, authenticity, than it is about the kind of label,” said managing director of SABMiller Europe, Sue Clark.  Meantime Brewing grew production 58% to approx 55,400 bbls last yr, with very small portion of volume exported to US. 

Meanwhile, MillerCoors has yet to pull trigger on a craft deal in US, tho “studying the space pretty hard,” new Tenth & Blake prexy, Scott Whitley assured at our Beer Insights Spring Conference earlier this week.   However right now “we have a lot of upside with our current portfolio,” and “we want to be smart and thoughtful, strategic about what we decide to do ultimately.”  Also, “we pay attention to the pushback if you will, when ABI buys a craft brewer,” but “frankly I don’t think the consumer cares that much.  Ultimately they’ll be the judge,” said Scott.  ABI, on the other hand, reportedly still persistently shoppin’ for more craft brewers in US.  Stay tuned.

Even in highly-developed California market, small brewers keep putting up big growth across many measures. Well over 500 craft brewers called the big state home in 2014, adding over 100 new brewers for the second year in a row to 519. As of March, that number already swelled to 554, the California Craft Brewers Assn announced last week. The group produced 3.4 mil bbls during the year and shipped just 1.3 mil bbls out of the state. So over 60% of Calif-produced beer never left the state. And Calif brewers continue to make big impact on the state, adding $6.5 billion to the Calif economy. That includes over 48K jobs.

Small-scale beer really is big biz in California. And the CCBA continues to expand its political clout in the state too. This year, the group didn’t go to legislators with very big asks, CCBA executive director Tom McCormick shared during CBC panel last month. But it did sponsor 4 separate bills and has a very good track record: the group has “never lost a single bill,” he said, and “most of those bills have been voted unanimously.” During this session, a bill that would expand exemptions of commercial businesses that may offer patrons beer or wine for free to salons and barbershops passed the state Assembly unanimously, according to the LA Times. The group is now reconsidering its long-time approach of depending solely on grassroots efforts. Tom is “beginning to realize that our industry needs to also provide influence at the state capitol through that sometimes-bad-word PAC fund,” he said during CBC. Not that the CCBA would halt any current efforts. But the group is considering continuing grassroots works “in conjunction with a PAC.”  The assn still has work to do to fully understand what that looks like and “how that is distributed,” Tom said, but he does think this perhaps more traditional method will become “more of our political influence as we grow and mature as an industry.”

NC PAC Too?  California doesn’t seem to be the only state considering such an option. Brewers in North Carolina find themselves at a “weird inflection point where we have to decide whether we’re going to play the game or not,” owner of Fullsteam Brewery Sean Wilson told a HuffPost writer. The guild there is considering “whether we’re going to lobby and exert our political capital and create a PAC,” he said. But he acknowledges that “I think we’re stronger by being the grassroots, by defying the rules, by not playing the game,” as brewers “don’t have the resources,” especially compared to recent opponents there, state wholesalers. “So can we win the money game? Probably not,” Sean noted, “but we can absolutely win the PR game.” Likely referencing recent tussle over increasing volume cap for self-distribution and retail rights, he differentiated between wholesalers, which “we really rely on,” and “their association,” which “will manufacture fear in an attempt to keep the status quo.” 

Potential craft “plateau” in on-premise, described by GuestMetrics’ Bill Pecoriello at our Spring Conference earlier this week (see yesterday’s issue), reiterated by his colleague Peter Reidhead for BA Power Hour yesterday, tailored for audience with stats using BA’s craft definition. So it ain’t just craft brands from big brewers. (The rest of this article will match Peter’s use of “craft,” with BA def’n.) Craft gained 1.3 share of on-premise beer $$ in the first qtr of 2015, but that’s just half the gain it posted during 1Q14, Peter showed. When asked if this means “the craft movement is ending,” Peter stopped folks from making that interpretive leap. But by just extending “this trajectory,” expect “at least another four, five quarters of craft share growth in the on-premise,” until about “mid-2016.” If there’s no change, of course. “You already have 30 share of the category,” he said, so “there has to be some kind of ceiling.” While that “certainly hasn’t been reached yet,” Peter did say it “probably will take place sometime in the next couple of years.”

IPAs and new craft brands got increasing portions of those share gains too, again as Bill shared on Tuesday. In first qtr of this yr, IPAs represented over 3/4 of craft’s share gain, +1 share, while all other craft brands +0.3 share. During last qtr of 2014, new brands represented all of craft’s 1.9-share gain. Then in 1Q15, new brands gained 2 share of beer $$, while existing brands lost 0.7 share. Shown another way: the top 20 craft brands had 32 share of craft $$ for 52 wks thru Mar 29. On qtr-to-qtr basis, the top 20 slipped to 31 share during 1Q15, down from 35 share 2 yrs prior. Collectively, the top 20 grew $$ just 2% for 52 wks. All other craft brands collectively up 10% on-premise during that period. Note that Bill reported negative trend for top 20 brands by units, using broader category parameters. Also worth mentioning here that Belgian Wit style has 6.4 share of total beer on-premise $$, Peter shared, but BA-defined Belgian Whites are just 1 share.

Day Parts and Sub-Channels: Better Earlier and Higher-Priced, Late Night “Whammy”  Craft does better on-premise earlier in the day than later, when it’s gaining more share too, Peter said. But that’s true of beer generally, so craft’s share of total beer sales during lunch and happy hour is about average. Instead, craft does better during dinner, when it hits 32 share of beer $$. But it’s just 10 share of total alc bev $$ at that time, as wine ramps up to 30 share. At same time, wine lost 0.3 share of dinner $$ for 52 wks thru Mar 29, while craft beer gained 0.5. Craft gained more share during happy hour and lunch day-parts, +0.6 and 0.7, respectively. Late night’s the “big whammy for the beer category,” Peter said. Craft dips to just 24 share of beer $$ from 10pm to 5am. Across the board, “the most expensive craft beer brands,” those priced at an avg of $6.50, $7 or more per unit, are “doing disproportionately well.”

Interestingly, craft has about the same share of beer $$ in each of 4 major on-premise channels, getting up just slightly to 31 in fine dining and dipping to 28 in lodging channel. Overall, craft posted its biggest share gain in bars/clubs for 52 wks, +0.8 share. Peter shared that GeustMetrics does “have brewpubs and tastings rooms” in its universe, but only 30-40 of them, so “not a huge sample.” But those stats appear in this bar/club sub-channel. In fine dining channel, typically tough for beer, craft gained 0.2 share, while all other beer lost 0.1 share of $$. Craft’s gain also made up for more than all other beers share loss in lodging.