Latest set of cos planning to expand capacity includes various sizes of bizzes, mostly out west.  San-Fran’s Speakeasy Brewing will increase production cap 6X to 90,000 bbls/yr at its brewery once it installs new 60-bbl brewhouse as well as “new canning and kegging line, a lab, centrifuge, and eight 300-barrel fermenters,” co announced.  Expansion is expected to be completed sometime in 2015, presumably “by July 4^th”   in time for it to “release their first beer in a can, Baby Daddy IPA, part of their new Session 47 series.” Then too, speculation regarding where Deschutes will build its east coast brewery dialed up again this week.  After recent news that co visited Asheville, NC lookin’ at potential sites, news broke this week that Deschutes plans to visit Charleston, SC region later this mo.  Indeed, much like last yr with Stone Brewing, this is likely only the beginning of speculation from local press in several states, towns etc. that could be in the running for Deschutes east coast brewery. 

On a much smaller scale, pair of small breweries in Denver are building or lookin’ to build 2d facilities.  River North Brewery is “currently in negotiations for a production space” and “hopes to have something signed by the summer,” reported Westword.com.  However co “likely” will be “forced out” of its current facility, as their lease expires in less than a year, founder Matthew Hess explained.  Ideally Matthew would like to keep smaller tap-room in River North space and have “a larger production-oriented space that would possibly be somewhere else,” he said.  But all in, “timing may not be so bad, as River North has been actively searching for a larger production facility” since it’s currently “packed to the brim.”  Co expects to nearly double production this yr to 2500 bbls.  Separately, TRVE Brewing “cranked up its new production facility for the first time last week,” reported Westword.  Its new 5,000 sq-ft brewery “includes a ten-barrel system” and “room for dozens of wooden barrels and two twenty barrel…fermentation tanks” primarily devoted to expanding “its line of increasingly popular bottled wild and sour ales.”  “Majority of the rest of TRVE’s lineup will continue to be brewed at the Broadway tap room.”  And lastly, Seattle’s Reuben’s Brews officially opens its “new, bigger brewery and tap room” this Saturday, reported Washington Beer Blog.  New location is just a couple blocks from old location, however new space is “palatial, sprawling, and cavernous” in comparison.  Reuben’s now working off of 15-bbl system and 30-barrel fermenters.

Latest set of cos planning to expand capacity includes various sizes of bizzes, mostly out west.  San-Fran’s Speakeasy Brewing will increase production cap 6X to 90,000 bbls/yr at its brewery once it installs new 60-bbl brewhouse as well as “new canning and kegging line, a lab, centrifuge, and eight 300-barrel fermenters,” co announced.  Expansion is expected to be completed sometime in 2015, presumably “by July 4^th”   in time for it to “release their first beer in a can, Baby Daddy IPA, part of their new Session 47 series.” Then too, speculation regarding where Deschutes will build its east coast brewery dialed up again this week.  After recent news that co visited Asheville, NC lookin’ at potential sites, news broke this week that Deschutes plans to visit Charleston, SC region later this mo.  Indeed, much like last yr with Stone Brewing, this is likely only the beginning of speculation from local press in several states, towns etc. that could be in the running for Deschutes east coast brewery.

On a much smaller scale, pair of small breweries in Denver are building or lookin’ to build 2d facilities.  River North Brewery is “currently in negotiations for a production space” and “hopes to have something signed by the summer,” reported Westword.com.  However co “likely” will be “forced out” of its current facility, as their lease expires in less than a year, founder Matthew Hess explained.  Ideally Matthew would like to keep smaller tap-room in River North space and have “a larger production-oriented space that would possibly be somewhere else,” he said.  But all in, “timing may not be so bad, as River North has been actively searching for a larger production facility” since it’s currently “packed to the brim.”  Co expects to nearly double production this yr to 2500 bbls.  Separately, TRVE Brewing “cranked up its new production facility for the first time last week,” reported Westword.  Its new 5,000 sq-ft brewery “includes a ten-barrel system” and “room for dozens of wooden barrels and two twenty barrel…fermentation tanks” primarily devoted to expanding “its line of increasingly popular bottled wild and sour ales.”  “Majority of the rest of TRVE’s lineup will continue to be brewed at the Broadway tap room.”  And lastly, Seattle’s Reuben’s Brews officially opens its “new, bigger brewery and tap room” this Saturday, reported Washington Beer Blog.  New location is just a couple blocks from old location, however new space is “palatial, sprawling, and cavernous” in comparison.  Reuben’s now working off of 15-bbl system and 30-barrel fermenters.

While MillerCoors started off yr with STRs down 2.7%, better news from MC’s Tenth & Blake thru Q1.  Blue Moon franchise “accelerated to mid-single digits” gain, thanks in part to seasonals, which had been struggling, up double digits.  Leinenkugel Shandy also up double-digits and total family up high-singles. 

Lookin’ at scans, each of Blue Moon top-4 brands drove growth for total franchise: Blue Moon flagship Belgian White volume up 8%, Seasonal up 14.5%, Variety Pk up 2% and Cinnamon Horchata sold incremental 17,000 cases YTD thru Apr 19 in IRI multi-outlet + convenience data.  Yet all other tracked brands declining, many of which have been discontinued.  Gotta note, still no sign of Blue Moon’s new Belgian White IPA, but once that hits it’ll likely give franchise an added boost.  Meanwhile, contrary to double-digit total brand trend (see above), Leinie Summer Shandy trend slowed to +3% in IRI thru Apr 19.  Yet new Grapefruit Shandy sold incremental 50,000 cases, accounting for over half of family’s total growth.  All in Leinie family up high-single digits in scans too.

Rough financial first qtr for Craft Brew Alliance as it missed analyst earnings estimates and had $1.8 mil operating loss.  Stock down 18% today, including drops both before and after conference call.  Execs spent this morning’s earnings call working to “explain, not excuse” those results, CEO Andy Thomas said. Indeed, he and his team “look forward to the day when our numbers speak for themselves,” he kicked off call. “Well, Q1 2015 still isn’t that time,” he said flatly. But again and again Andy, CMO Ken Kunze and COO Scott Mennen pointed to “underlying fundamentals” that make them “confident” that they’ll hit goals for “medium-to-long term.” Indeed, “a deeper-dive shows progress” toward the co’s goals, Andy said, as CBA continues “refocusing” its efforts towards “more profitable” and “sustainable” growth from home markets and flagship brands. But co’s comments didn’t keep analysts from pushing hard in Q&A, nor its stock’s tumble.

Recall CBA announced yesterday that while overall depletions up just 1% in first qtr, they’re up 8% in home markets of OR, WA and HI. As co works to “refocus against certain brands in certain geographies,” Ken said today, it’s also putting money where its mouth is by making big capex investments in each of those markets, Andy reminded. But “the journey will be bumpy,” Ken said, with “a number of puts and takes.” For example, ban of scan-backs in California had “short-term negative impact” on CBA’s ability to “deliver competitive pricing” there, he added. But overall, CBA’s growth is “less fragmented” and “more profitable” than competitors’ growth thru territory expansion and constant flow of new brands, Andy asserted.

Kona Depletions Up 21% in HI; Where Will Trend Settle? Vol “Vagaries”?  Brand color particularly bright for biggest family, Kona, Ken shared, as home-state Hawaii depletions up 21%. But outta the gate, a “puzzled” Tony Brenner of ROTH Capital Partners pressed about “vagaries of your shipments and depletions” trends, noting that last year’s 1Q depletions trend of plus 17% “was lapping an 8.5% decline” and comments at time indicated that growth was “not an aberration.” How does it fit in with Kona’s expansion into new territories, he wondered. And later Cowen and Co’s Vivien Azer sought a “good normalized run-rate” for Kona. Andy countered Tony that “there was pipeline involved” in last year’s shipments and that the “nine final states” Kona entered were “relatively insignificant and small.” So entrance more about CBA’s ability to “service some national accounts that have coverage in those nine states.” And Ken told Vivien that Kona trends still may “go up and down a little bit,” based on “distribution opportunities,” including possible movement of 6-pk to 12-pk merchandizing, and coming “media efforts.” CBA is “not just trying to grow through distribution expansion and throwing a bunch of new brands out there,” Andy added. So when taking out those comparatively easy paths to growth, what CBA is “left with is the hard work.” While that’s “contrarian,” Andy acknowledged, “we really are playing a medium-to-long-term game.”

“National” Vs “Regional” Trend “Disparities”; Widmer Hefe Up 18% Off-Prem in Oreg, 4% On  “There seems to be a growing disconnect between what you guys are printing and what we’re seeing in the scanner data,” Vivien asked CBA team, touching off a sore spot for many a regionally-focused co. Indeed, seeing those “disparities,” Andy offered, “always plagues companies.” But “I don’t have a great answer,” he said, and for the second time on the call, a CBA exec had to couch that they weren’t trying to “blow off” questions. However, Ken’s dip into Widmer trends in Oreg certainly addressed the point: total Widmer portfolio up 11% in Oreg, with Hefe depletions up 4% on-premise, +18% off-premise. So the co’s making progress, but has plenty more work ahead. It’s still “right-sizing” inventories at wholesalers, which were reduced by a high-single digit number of days during first qtr, Andy said, tho those numbers maybe “misleading.” It’s still working on gross margin improvement, which decreased slightly from 27% to 26.8% in 1Q. The co still maintains that depletions will grow 6-8% in 2015 and gross margin will expand to 35% in 2017.

After a yr of searching and interviewing a dozen or so candidates supplied by top exec search firm Spencer Stuart, hottest craft brewer of recent yrs, Lagunitas Brewing, today named Maria Stipp as ceo of co and founder Tony Magee will become exec chairman.   Maria will come on board Jun 15, leaving her position as ceo of Eco-ATM, a unit of publicly traded Outerwall.  EcoATM “recycles consumers old phones, mp3s, tablets and more,” while “paying cash for most devices,” according to its website. She previously worked at Activision, helping to build videogame Mortal Kombat into a billion dollar brand.  And she started her career with Miller Brewing Co, working there for several yrs in chain sales and other depts.  So full circle, Maria is coming back to beer.   

Ironically, Maria announced on exact same day that MillerCoors named Gavin Hattersley interim ceo for up to 6 mos, while its search for departing ceo Tom Long’s successor continues.  What’s the irony? MillerCoors employed same search firm Spencer Stuart in its search. But to no avail.  And so it has just switched to Russell Reynolds, reports Chi Biz Jnl.  That’s where beer biz is today; top search firm finds ceo for fast-growing craft brewer but unsuccessful in finding ceo for MC. 

Lagunitas still growing shipments at about a 50% clip, depletions up 41% thru Apr, founder Tony told CBN,   Shipments runnin’ ahead of depletions to get ready for peak selling season.  Hiring a new ceo is “not about bringing in something new,” Tony continued, but rather about “expanding bandwidth in the c-level suite.”  Tho Tony interviewed many top candidates, Maria the “right person,” the “right fit,” with the “right skill set” at “the right time,” he said.  Spencer Stuart  brought Tony many outstanding candidates.  But Maria stood out. Tony described her as “very, very smart,” “personable” “empathetic” and “nurturing”; also as “able to drive good results” and “get the best out of people.”  As Tony moves to role as executive chairman, he will be “focusing only on the future,” the stuff he’s best at anyway he says.  Tony describes how he started with all the key roles in company, but gradually named Todd Stevenson chief operating officer, Leon Sharyon as cfo, Ron Lindenbusch as chief mktg officer, and added other key execs, while he continued as ceo.  This is just further evolution of co that’s still “growing so rapidly,” Tony says.  

In-state Oregon shipments, including expanded analysis of top players done above, is already available in this yr’s edition of Craft Brew Guide. The one-of-a-kind book also includes info on craft shipments and top players in Washington, Wisconsin and a first-ever look at total craft and in-state craft in Florida. We also include a 3-yr series of in-state shipments of top Calif craft brewers, thru 2013, and exclusive analysis of scan data in key markets like Portland, OR, Seattle, 3 top Calif cites, 2 Tex mkts, Chicago and full-state pictures of Ohio and Florida. We sometimes clip this data for Craft Brew News, but there’s only one way to see it all: orderCraft Brew Guide today.

Progress small brewers are making in amending state laws to accommodate growth and biz models evident in handful of beer-related bills, passed earlier in year by state legislatures, now being signed by respective governors. Most of these bills we’ve covered before. For example, Indiana Gov Pence signed bill raising small brewer cap in state from 30,000 bbls to 90,000 bbls. Under cap, brewers can self-distribute and sell beer on-site. Recall, that bill championed by largest brewers in state, Sun King and 3 Floyds. In that process, those cos reminded that they chose to ship all production above 30,000 bbls out of state (as law only covers volume sold within IN), allowing them to maintain current distribution and retail operations. But that choice quickly conflated with previous law: even in covering Gov Pence’s signing of new bill, Indy Star wrote that “currently, any production beyond 30,000 [bbls] must be distributed out of state.” >

After a “rough journey,” drastically-changed version of brewer-backed bill in Georgia was signed into law by Gov Deal this week, Atlanta Journal-Constitution wrote. That bill went from allowing limited on-site sales at breweries for on- and off-premise consumption and at brewpubs for off-premise consumption to one adjusting and expanding current system in which visitors pay breweries for tours and can get free “souvenir” beer. State brewers guild leadership and members “weren’t thrilled with the final product,” AJC wrote, “but still celebrated what they said was an improvement.” Indeed, pic of bill-signing with guild leaders and staff surrounding Gov Deal, picked up by Creative Loafing Atlanta, described as a “photo opp” and “PR moment” where gov could “pay lip service” to state brewers. In nearby Florida, growler/tap room bill still awaits gov’s signature.
Elsewhere, Iowa Gov Branstad signed 3 separate beer bills into law: one allowing brewpubs to sell beer to distribs out of state, one allowing grocery and c-stores to fill and sell growlers and another changing definition of “beer” (now, over 5% alc by weight is also legally considered “beer”), according to the Iowa City Press-Citizen. Oklahoma legislators in both chambers have considered and approved a bill that would allow breweries there to sell beer on-site. But that bill still has special conference consideration to get thru before being sent to the governor, Tulsa World reports. Similarly, a bill in Maryland passed both chambers and now awaits final consideration before heading to the governor. It increases “micro-brewery” cap from 22,500 bbls to 45,000 bbls but only in Wicomico County (in Maryland, alc laws can change county-by-county). It’ll allow local Evolution Craft Brewing (EVO) to grow without giving up its on-site restaurant, WBOC16 reported.

This isn’t a beer suit and may have no bearing on how a different judge will view claim that Blue Moon misleads consumers into thinking it’s a craft beer (see last issue).  But interesting to note judge’s logic and language in tossing similar attempted action filed vs producers of Maker’s Mark bourbon in US Dist Ct in Fla.  Plaintiffs there claimed Maker’s Mark misleads consumers into paying premium by using word “handmade” on label, when it isn’t handmade.  But judge ruled plaintiffs “have been unable to articulate a consistent, plausible explanation of what they understood ‘handmade’ to mean in this context.”  Therefore, they had no standing to sue, he ruled.  Recall, in Blue Moon suit, plaintiffs make much of fact that Blue Moon maker (MillerCoors) isn’t craft brewer under BA definition.  But even BA does not define “craft beer” and gotta wonder who would venture to “articulate a consistent, plausible explanation” of what “craft beer” means these days.  Just wonderin’.

Specifically, judge in bourbon case rejected various attempts by plaintiffs to define “handmade.”  Pointed out that “nobody could believe a bourbon marketed this widely at this volume is made entirely or predominantly by hand.”  Then too, if handmade means “made from scratch and in small units,” or involves “close attention by a human being,” MM fits the bill, as it’s produced in small (19-bbl) “carefully tended” batches.  Plaintiffs also tried to define handmade as something that “connotes greater value and trades on the current fashion that also brought us craft beer.”  But, MM has been using “handmade” for decades, well before craft beer explosion, judge notes, and “one might question whether bourbon drinkers really prefer an analog to craft beer, or whether one could really think Maker’s Mark could fit in that category.”  Finally, if use of “handmade” is “some ill-defined attempt to glom onto a trend toward products like craft beer – the statement is the kind of puffery that cannot support claims of this kind,” the judge concluded.  Case dismissed.

Some big craft brewers made some big distribution moves last month. Lagunitas added western PA, and both Louisiana and Oklahoma either opening or on the verge of opening.  It also plans to open Hawaii, Arkansas and West Va by this summer, making it a fully natl brand.  Dogfish Head re-entered more parts of Tenn.  Oskar Blues entered its 6th new state this yr, Louisiana, and plans to add “4 or 5 more states” this yr according to Longmont Times-Call paper.  VT’s Long Trail Brewing added OH (Cincy, Cleveland and Columbus area) – its first new state since 2012.  Tex’s Saint Arnold Brewing expanded Fla distribution to Miami area.  Mich’s Atwater added central/western NC and previously added CO in Mar.  Recall, Atwater plans to open 2d brewery in Austin TX and a 3d brewery in NC by end of 2016.  Co also expects to open CA, NY, and NJ later this year according to recent MLive article.  VA’s Starr Hill Brewery entered northern & central AL. CT’s Two Roads Brewing added Philly area.  And Chicago’s Small Town Brewery expanded distribution to part of Pennsy and Wisc, as its Not Your Father’s Root Beer brand making big impact in Chicago mkt. Find a roundup of these moves, including selected wholesalers, here.

May Preview Later this mo Deschutes will add central PA counties with WR Hickey and extend Mich distribution to south Detroit with West Side Dist.  Bell’s recently announced it’ll add Delaware and Maryland starting this summer, tho didn’t specify exact date(s).  Victory Brewing added Arkansas with Arkansas Craft Distributors.  AB-owned Blue Point will expand to ME and TN by “end of the month” and SC and KY “soon,” according to 47 Hops blog post.  NY’s Sixpoint Brewing added South Carolina with RAFA Dist.  Mich’s New Holland just launched in Dallas/Fort Worth TX with Andrews Dist.  DuClaw will enter OH.  And Alpine Brewing (partnered with Green Flash) enters central OH with Premium Bev Supply.span>

Over the last 10 years, average in-state monthly shipments from Oregon breweries more than doubled from 22-23,000 bbls per month to 49,000 bbls/mo. And new breweries that started up during that time represented over 70% of that growth, the Oregon Office of Economic Analysis showed in intriguing sneak peek of future reports. Charting those average monthly shipments from Oreg breweries sold in the state, the OOEA shows that “Legacy Breweries” (Bridgeport, CBA, Deschutes, Full Sail, Portland, McMenamins, Rogue) grew their in-state biz modestly since Jan of 2006. The group collectively sold about 20K bbls/mo back in early ’06 and represented close to 90% of all Oreg-made beer sold in the state. That shrank to about 70% by Jan ’12. As of this Jan, those brewers sold just under 25K bbls/mo in the state, or 52% of in-state monthly shipments of Oreg beer. That’s as breweries and brewpubs that opened since early 2006 represented almost 40% of all Oreg beer sold in the state early in 2015. That’s almost 8 share of total Oreg beer shipments. Average monthly shipments in Oreg of these “startups” grew from nothing in 2006 to 7-8,000 bbls in 2012 to 18-19,000 bbls in 2015. And they’re still accelerating.

Strength of Oreg startups, which focus almost entirely on local growth, shown clearly in state numbers released by state brewers guild last month and our report of in-state Oreg shipments in Craft Brew Guide. We estimated that total Oreg-brewed craft shipments grew about 16% to over 581K bbls last yr, very near 20 share of the state’s total 2.9 mil-bbl beer biz. OBG pegged the stat at 585K bbls sold in state, adding that total Oreg brewery production hit over 1.64 mil bbls in 2014, +17%. So Oregonians buy over 35% of beer brewed in state.

But that’s skewed significantly by larger players. Craft Brew Alliance sold almost 95K bbls of the beer brewed at its Portland brewery in Oreg last yr. That’s up over 18%, but had been down over 9% the year before. Remember, Oreg reports beer brewed in state, sold in state and CBA almost certainly shipping beer from its Washington brewery into Oreg too. Deschutes grew its in-state shipments about 2%, to 92K bbls in 2014. Those 2 cos about twice as big as #3 in-state player, Ninkasi, which slipped slightly in-state (at least in part due to mid-yr reporting change and distrib shift later). Mac’s Taproom up 8% to about 31K bbls and 10 Barrel shot up to #5 spot, up 61% to near 26K bbls sold in Oreg. Full Sail held in-state shipments about flat and Bridgeport’s Oreg sales declined for 3d year in row.

Just behind, Hop Valley ramped up at its new production facility, its total shipments in Oreg more than doubling again to over 19,500 bbls, moving it ahead of Rogue, +5.5% in Oreg. Boneyard, up 16% in Oreg in 2014, posted slower in-state trend than recent yrs. But at over 14,500 bbls it’s still well ahead of Hopworks Urban Brewery, +21% to over 9,500 bbls. Group of fast-growers outside of top 10 includes Fort George, Worthy, Cascade Lakes and Breakside, which collectively grew over 11K bbls, 71% to about 28K bbls all in.