With Congress actually acting on a few issues in recent weeks, industry assn leaders expressed modest confidence some things may “get done” before 2016 Presidential campaign gets into full gear (it hasn’t yet?), according to comments at NBWA Legislative Conference yesterday in DC.  But fed excise tax relief, via Small BREW or Fair BEER, not likely to happen, said several speakers at NBWA’s Spring Legislative Conference.    Not with competing bills, asserted Bill Earle, who heads importers’ assn, NABI. MillerCoors CEO Tom Long said that’s a recipe for “stasis,” i.e. doing nothing. That sentiment shared by other DC insiders (tho not BA leadership) and even while BA and BI continue to support their respective bills and add (a few) cosponsors. BEER has 63 cosponsors in House, BREW 55; Small BREW has 32 in Senate, where BEER has 9.

Irony #1: all brewers, including Boston Beer, do better under Fair BEER, than Small BREW, especially the smallest brewers.  Continued discussions to craft a compromise bill, including a mtg in Portland during CBC between BA and NBWA, so far unsuccessful.  BA’s CEO Bob Pease reminded yesterday that Small BREW “is not BA legislation,” but legislation proposed by its sponsors in House and Senate. “When they say it’s time to deal, we’re going to be right there with them.”

Basic arguments for BREW and BEER have not changed.  So what’s new?  NBWA dialed up anti-BREW stance at Legislative conference.  Distrib assn sticking to theme that 6 mil bbls isn’t small and that “cap” could work its way into state franchise and other laws.  Included in materials for distribs to use on their Hill visits, these talking points:

• 99% of brewers produce less than 2 mil bbls and already get a break; 97% of US breweries make 60K bbls or less, 93% produce 15K bbls or less, 91% at 7,143 bbls or less (break point for BEER bill under which brewers pay no fed tax) and 88% are really tiny, under 1K bbls.

• Changing cap to 6 mil bbls will “benefit only a few specific brewers”;  these are unnamed, but include most visibly Boston and Yuengling. 

• “Outdated estimates of the BREW Act understate its projected cost and fail to take into account” new brewer entries in recent years and big growth.  

Officially, NBWA supports neither BREW nor BEER, but it actively opposes Small BREW and takes position that if Congress were to consider excise tax relief, BEER “offers a balanced approach” that gives everyone (including importers) a tax break and “reflects current industry structure.”  Irony #2.  NBWA ramped up opposition to BREW even while it continues to position distribs as especially craft-friendly, including new video shown yesterday that again stressed argument that independent 3-tier system and distribs are “Benefit to Craft Brewers” by giving them access to mkt equal to that enjoyed by huge global brewers. 

Myths and Facts about BREW, from BA  Not surprisingly, as NBWA presented these points yesterday, BA released letter from Bob Pease to Congress re-stating support for BREW, noting that “NBWA does not speak for small brewers.”  BA also provided 4-page backgrounder with “Myths and Facts Regarding the Small BREW Act.”  BA attacks each of the key claims being made by big brewers and distribs about BREW. 

• BREW “benefits every small brewer in America,” BA insists, tho NBWA has argued it “is solely designed to benefit Boston Beer.”  BA acknowledges Boston gets bigger break under BEER, yet Boston supports BREW.

• BREW does not pick “winners and losers,” as critics claim, but “recalibrates” tax to “better reflect changes within the industry” since tax last changed.  Besides, IRS already picks winner and losers since global brewers pay lower corporate tax rates than US brewers, BA adds. 

• BREW does not “define” small as 6 mil bbls – nothing in IRS code defines small – and there’s “no evidence that states would seek to incorporate the 6 million barrel level” into their laws.  Nor does TTB “define” small, as 7,143 bbls per yr or anything else, BA insists, quoting TTB documents. 

• BREW does not violate World Trade Org agreements.  (Bill Earle said at NBWA that current situation whereby small importers do not get a tax break, is “non-tariff trade barrier,” that tax policy needs to “recognize the original craft brewers in the rest of the world” and create “a level playing field.”  If not, issue will arise in trade negotiations and/or a case at World Trade Org, Bill said, tho Fair BEER is “more elegant way” of getting to level playing field.)  BA insists Congress never changed fed tax despite decades old ruling that disparate tax treatments violate non-discriminatory provisions of trade agreements.  Besides, other countries subsidize domestic producers, BA adds.

• BREW has “best chance of enactment,” sez BA, while BEER “not politically feasible.”

• BREW still needed by small brewers to expand their bizzes, even tho lotsa small brewers thriving and growing. Tax break would be “additional wind in their sails,” while “large brewers, in contrast, are laying off workers in the United States.”  

And so, a mighty wind is blowin’ over DC tax battle.  Has it already blown away any chance of success?

As Bell’s heads towards goal to pass 400K-bbl mark in 2015, it’ll start construction to significantly expand capacity and capabilities at its Comstock, Mich brewery. The co will spend $35 mil so its primary plant will be able to produce 1 mil bbls per yr, according to Crain’s Detroit Business. Project expands Comstock campus by about 200K sq ft, making room for new packaging hall, keg and other storage space, plus additional “new 100,000 square-foot logistics center,” MiBiz wrote today. First stage of construction should be complete by end of this year, the rest by next Feb.

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Dayton Brewing plans to open a second brewery, adding to existing suburban facility with brewery and beer hall/tap room near downtown of its namesake city. The 8K sq-ft space is half production brewery and half beer hall, owner/brewmaster Pete Hilgeman told the Dayton Daily News. New spot, located near almost $5 mil in new commercial and residential development, will include 36 taps totally “devoted to Ohio beers, many from Dayton-area breweries,” according to report. A couple hours due west, Blind Owl Brewery will hit a northeast Indianapolis strip mall in June, planned and run by restaurant division of Lux Commercial Real Estate Services, according to Indianapolis Biz Journal blog. Brewery and restaurant will occupy 12K sq-ft ex-Entenmann’s bakery in strip mall that was 50% vacant when Lux bought the property in 2013. After opening in just over a month it’ll be 85% full, founder Rick Lux told IBJ. Pub will have 6 Blind Owl originals on tap, 10 more dedicated to Indiana beer and another 10 available on 26-tap system. The co also plans to make Blind Owl brands available at 5 other Lux restaurants around town.

Miami, FL (+117%) was listed as “fastest growing food & drink city” last yr in terms of number of food & drink events hosted, and beer events were main growth driver, according to an interesting study from Eventbrite.com. (Eventbrite is a website acting as 3d party event organizer, where cos can set up events, sell tickets, and track sales.) This is yet another stat pointing to further development of southern/southeast regions’ craft beer scene.  Washington DC (+56%) was only other city in top-10 that listed beer events as main reason for growth. But other fast-growing food/drink event cities include Charlotte, NC, Orlando, Houston and Atlanta.  Analysis is “based on 40,000+ US food and drink events on Eventbrite in 2014.”  All in, “total number of food and drink events on the Eventbrite platform increased by 47%” vs last yr.  

Lagunitas ultimately exported 12,000 bbls ($3 mil worth) out of its Chicago brewery last yr, reported Crain’s Chicago Business in piece dubbed “Foreign beer drinkers are craving Chicago brew. Hard.”  Shipments to Japan and Canada all come outta Petaluma brewery, “but the rest of its exports come out of Chicago,” paper notes.  That’s Sweden, England, Scotland and just recently added Ireland (in Feb 2015).  Co also has “plans to start shipping to Italy in June.”  Recall, Lagunitas is one of the few cos that hired a sales rep for UK territory.

Meanwhile, “I’m finding almost daily that small breweries are shipping a pallet here, a pallet there,” Brewers Assn export development program manager Mark Snyder told paper.  “The breweries are approached I would say weekly, many of them to export their beers overseas.” For example Revolution Brewing sent “a small amount of beer to Japan on a lark,” founder Josh Deth told paper.  And Pullman-based Argus Brewery (2,500 bbls/yr) “plans to start shipping four of its brands to Germany and England in about three weeks.”  Indeed, “there is so much demand for American craft beer overseas and in this country that (breweries) can pick and choose,” said Mark.  “It’s really small what’s being exported from our country, but it’s growing.”  Recall, craft exports grew 35.7% to 383,422 bbls in 2014 (see Mar 24 issue), pinned at $99.7 mil in revs Mark told paper. 

But exporting certainly ain’t for everyone.  “We’re not even considering Milwaukee right now so considering Japan or Sweden, it just doesn’t make sense,” said Half Acre President Gabriel Magliaro.”  Once 2d brewery is completed it “expects production to double this year” but co mainly will use that extra production “to expand outside city limits, where 85 percent of Half Acre’s beer is consumed.”

New Belgium Brewing announced its plans to enter its 39th state, PA starting Aug 31, 2015 with 12 distribs (mix of AB and MC) thruout state: Ace Beer Distributors (MC); Allentown Beverage (AB); City Beverage (Miller); Durdach Brothers (MC); Erie Beer Company (AB); Frank B. Fuhrer Wholesale Co. (AB, Coors); Gretz Beer Company (AB); LT Verrastro, Inc.(MC); Penn Distributors (AB); Von’s United Beverage (AB); W&L Sales (MC); W.R. Hickey Beer Distributors (AB). 

Recall, NBB nabbed big incremental gains in Florida and Ohio last yr after opening those states late in 2013.  So co likely lookin’ to replicate that success in PA, and perhaps other new states too, once its Asheville brewery is up n’ runnin’.  Last we heard NBB still on pace to complete its Asheville brewery by “late 2015,” presumably right on time to start crankin’ out production to PA.  It entered KY this March and previously announced plans to enter Hawaii, tho yet to provide an updated timetable.

Cincy brewery scene exploded in 2014, according to pair of reports last week from Cincinnati.com.  First one listed all Cincy breweries’ production last coupla yrs along with projections for 2015, including some newcomers this yr.  (Editor’s note: this list does not include Sam Adams Cincy production facility or Christian Morlein Brewing, which does not share its production info).  Rhinegeist and MadTree Brewing both managed to produce 11,000 bbls in 2014, just two years after each opened. Both grew around 8-9K bbls last yr.  Rhinegeist previously announced plans to reach 30,000 bbls this yr and eventually add up to 100K bbls/yr of capacity (see Mar 16 issue), and MadTree expects to nearly double to 20,000 bbls.  Rivertown Brewing grew 67% to 10,000 bbls last yr and expects to tack on another 3,000 bbls, +30% this yr.  All other Cincy breweries only produced 2,000 bbls or less, tho two of ’em opened toward the very end of the year – Old Firehouse (285 bbls) opened in Sep 2014 and Tap & Screw (56 bbls) opened in mid-to-late Dec 2014, and each plan on brewing 1,000 bbls plus this yr.  Three new breweries already opened in 2015, two of which opened within the last month or two: – Taft’s Ale House expects 3-6K bbls this yr and Braxton Brewing expects 2K bbls. Cincy outlet for national Rock Bottom brewpub chain was only brewery to post decline in 2014, -4%.  All in there were 12 breweries operating in Cincy in 2014 together produced 38,610 bbls, a 140% increase vs 2013.  “Greater Cincinnati was home to more than 36 breweries, according to Steven Hampton, executive director of the Brewery District Community Urban Redevelopment Corporation,” in separate article on Cincinnati.com. 

117 Breweries in OH, 50-Plus “In the Pipeline,” w/ “At Least 20” Opening This Yr There’re “currently 117 breweries operating in the state, up from only 58 in 2012,” per executive director of Ohio Craft Brewers Association, Mary MacDonald.  “I’ve got another 50-plus that are in the pipeline,” she added, and “expects at least 20 of those to open throughout the state this year.”  Indeed, “we’re just catching up to what’s happening on the west coast,” said Rhinegeist’s Bryant Goulding.  He pointed to Calif and Portland mkts where “they have twice as many breweries per capita (than in Cincinnati),” as a sign that there’s still plenty of room to grow.  Couple other folks talked about craft “naysayers” that think there’s going to be “oversaturation” or “a bubble”: “I’m not remotely worried about it,” said Kentucky Guild of Brewers founder (and Against The Grain Brewery co-founder), Adam Watson.  “I don’t see us hitting a saturation point for a very long time,” said MadTree co-owner, Kenny McNutt.  Yet “I envision a point many years down the road where brewery openings and closings will be like restaurant openings and closings,” Brewers Assn chief economist Bart Watson, told paper.

On its way to boost production from 6,000 bbls last yr to 10,000 bbls this yr, NYC-based Bronx Brewery announced deal with local private equity firm Tenth Avenue Holdings this week (as reported Monday in sister-pub INSIGHTS Express). The “strategic partnership” means Bronx will benefit from TAH’s “guidance and funding” as it fills out employment and equipment at new brewery it opened in Bronx borough of city last summer. Recall, Bronx brand grew in NY on back of pale ale focus, brewing at Cottrell facility in CT and City Brewing in WI (see vol 4 #39). This “latest addition of capital will allow” Bronx leadership “to hire additional employees,” plus “purchase additional brewing equipment,” according to release, as it moves more production in-house. The co plans to expand distribution further outside the city, where it’s been focused since opening in 2011, including hint at sending beer out to UK. TAH manages “permanent equity capital in excess of $500 million” with examples of pretty disparate array of investments on it’s website, from software to oral care products. Tho Bronx co-founder Chris Gallant calls deal “collaborative effort” for “long-term,” no details of terms provided.

BrewDog “set out to raise £25 million ($37.5 mil) in its latest crowdfunding drive, giving the Scottish craft brewer an implied valuation of around £300m,” reported The Herald (dollar to British pound conversion rate is about $1.50 to £1 at presstime).  Recall, BrewDog “already raised £7m in three previous crowdfunding exercises,” where it made 8.5% of co available in “Equity for Punks” share offer.   Co “has issued a further 526,316 shares which, if fully subscribed, would mean 23 per cent of its shares are held by ‘punk’ investors,” paper noted.  Also, in Mar co received £1.5 mil grant from Scottish Govt to expand its Ellon brewery and add 130 employees (see Mar 10 issue).  BrewDog earnings shot up 69% to 4.9 mil pounds or $7.3 mil in US $$ in 2014, reported The Herald Scotland in article earlier this mo. A 64% surge in sales to just over $44 mil was fueled by opening of 12 new bars, 6 of them in international mkts last year. That brings BrewDog's total bar count to 26 with more planned this yr including openings in Berlin and Rome (see Apr 3 issue).

“Also on the agenda,” co-founder James Watt revealed “that he hopes to agree to terms on a site in Columbus, Ohio, as early as next week.”  Stay tuned.