Craft volume jumped 137,000 bbls, 30%+ in Mich last yr, according to data prepared by Rex Halfpenny for Michigan Beer Guide.  Rex pegs craft at 587K bbls in Great Lakes State.  That’s 9.6 share based on Beer Inst estimate for state total and up over 200K bbls 3.5 share in just 2 yrs.  Bell’s is biggest in-state player by far.  Shipped 128K bbls there last yr, up very healthy 26%, but still dipped a share of  Mich craft to 21.7.  Bell’s just behind Pabst as 5th largest supplier in Mich at over 2 share of entire biz.  That’s bigger than HUSA and less than half-share behind #3 Constellation.  Note too Bell’s avg price/case is 2.3X higher than Pabst’s, about 30% higher than Constellation’s, according to IRI.  So Bell’s likely #3 player in $$ in Mich.  Bell’s still does about 40% of its biz in home state.  AB and MC still combined for 78 share in Mich, but that’s down steadily from 83 share 5 yrs ago. 

Boston Beer is #2 craft brewer in Mich at 89K bbls, up less than 10% last yr and at 15 share of craft.  That’s down 5 points in 2 yrs, while Bell’s dipped 3.4 share.  Founders grabbed #3 spot last yr, passing New Belgium with 53% surge.  And Short’s almost passed New Belgium too, also up 50%+.  Both Founders and Short’s basically doubled volume over last 2 yrs, while Bell’s up by more than 1/3, so Mich likes its local brewers.  Indeed, top 3 local brewers up 26%, 53% and 51% while top 3 natl players up single-digits each.  New Belgium slowed to 9% gain after big jump in 1st full yr in mkt in 2013.  Seven other brewers shipped between 10K and 16K bbls last, all but one in-state.  Sierra Nevada biggest of the bunch, but not by much.  And it was up just 3%, following flat 2013.  Atwater’s next at near 16K bbls, up almost 50% last yr.  Then come New Holland, Keweenaw, Dark Horse, Arcadia and Perrin, each up double digits in 2014.  Just-purchased Perrin is hot potato: gained more bbls in 2014 than Atwater, other local peers.  Michigan’s long tail getting’ fatter and longer too.  Has about ¼ of Mich craft biz, up about 50% last yr.  

First quarter of craft sales brought tons of movement within top 100 craft brands in IRI MULC universe, measured by $$ sales. Six brands grew $$ sales by over $2 mil each year-to-date thru Mar 29 in these channels, collectively grabbing 1.4 share of craft $$ to 14.6.

1. Lagunitas IPA kept up 61% gain pace, +$5.5 mil to over $14.4 mil and near 2.5 share of craft $$; it passed Sam Adams Variety Pk and Sierra Nevada Torpedo to move to #6 craft brand by $$
2. Rebel IPA (#8) still up 93%, $4.7 mil; neither line extension Rider nor Rouser hit top 100 yet
3. Sierra Nevada Variety Pk (#18), +$4.1 mil, almost entirely incremental and nearing 1 share of craft $$
4. Sierra Nevada Pale Ale, top craft brand, accelerated to +10.6% growth, gaining $2.9 mil
5. Shiner Bock also up near 11%, gaining $2.0 mil to 3.6 share; it passed Fat Tire to take #4 brand spot
6. Lagunitas Little Sumpin’ Sumpin’ gained just over $2 mil thru end of Mar, +68%, flying to #15 brand

Two other brands got close to adding $2 mil in sales thru first qtr of 2015: Sierra Torpedo gained over $1.8 mil, +16% and New Belgium’s new session IPA Slow Ride so far largest new brand with over $1.8 mil in sales (read on for more).

3 Brands Flew Into Top 50, Each More Than Doubling $$ and Vol

• Firestone Walker 805 (#32) $$ +149% to $2.8 mil; vol +140% to over 82K Case Equivalents
• Ballast Point Sculpin, (#34) $$ +144%  to $2.65 mil; cases +152% to near 41K CEs
• Founders All Day, (#43) $$ +176% to $2.2 mil; cases 235% to over 69K CEs
  • Note that 2 are IPAs, 2 are session plays and 2 are from Calif. The largest, 805, is sold exclusively there. Much higher-priced Sculpin got almost as much $$ growth as 805 on about half the number of cases. Intro/growth of All Day cans 15-pk likely explains much of the difference between that brand’s $$ and vol growth.

4 New Brands Already Hit Top 100: Over $5.9 mil in Sales (Over 1 Share) Collectively

• New Belgium Slow Ride IPA (#52) got 0.3 share of craft $$, just behind Boulevard Wheat +3%
• Sierra Nevada’s 2 new brand intros each hit over $1.5 mil in sales: Hop Hunter (#62) slightly ahead of Nooner Pilsner (#64)
• Small Town Not Your Father’s Root Beer, selling mostly in Chicago area, came in at #85, with sales ahead of local fave Revolution Anti-Hero IPA (#93) +139%

IPAs All the Way: 33 IPAs in Top 100, 20 in Top 50

• Top 33 IPAs at $112.7 mil, 19.3 share of craft $$, +$32.4 mil, 40.4%; up almost 3 share of craft $$; vol +38.8%, almost 850K cases to over 3 mil; avg of $37.10/case
• 26 grew $$ double-digits; just 1 IPA brand declined by $$ YTD thru 3/29, 1 more down by vol
  • Deschutes Inversion $$ -9% (#46); Redhook Long Hammer $$ +1%, vol -1% (#13)
  • but Deschutes Fresh Squeezed is already #67, +1400% to near $1.5 mil, 0.25 share (see below)           
• 2 more IPAs up low-singles: NBB Ranger (#11) and Harpoon IPA (#30) up 4-5%
• Look at Lagunitas’ IPA portfolio: flagship IPA (+61%), Little Sumpin’ (+68%), see above; Maximus (#53) +74%; Hop Stoopid (#59) +36%; all 4 collectively +$8.7 mil to $22.8 mil
• Other big IPAs: Stone IPA (#17) +28%, +0.05 share; Bell’s Two Hearted (#19) +44%, +0.13 share; Dogfish Head 60 Min (#25) +18%, -0.01 share; SweetWater IPA (#29) +49%, +0.1 share
• Goose IPA now #44, +90%, over $1 mil to $2.1 mil; 10 Barrel Apocalypse IPA +52% to #65
• Southeastern IPAs comin’ on: Cigar City Jai Alai (#78) +68%; Foothills Hoppyum (#81) +35%

Biggest Declines and Slower Growth Among Flagships and Seasonals

• Sam Adams: Boston Lager (#3) -2.2%, vol -3.4%; Seasonal (#2) +0.5%, vol -1.1%
• NBB: Fat Tire (#5) +2.5%, vol +1.6%; Seasonal (#24, back 10 spots) -23.5%, vol -23.4%
• Widmer Hefe (#16) growing again, now outperforming these others, +4.6%, vol +2.5%
• Magic Hat #9 (#23) -11.6%, vol -13.9%
• Goose Island 312 Urban Wheat (#26) -1.9%, vol -3.1%
• Deschutes: Mirror Pond (#27) -4.2%, vol -7.3%; Seasonal (#35) -5.7%, vol -8.7%; Black Butte Porter (#37) +3.4%, vol flat
• also $$ down: Redhook ESB, Anchor Steam, Rogue Dead Guy, Lost Coast Great White

Variety Packs Heating Up: 11 in Top 100 at $30.2 Mil Total, +22%, $5.4 Mil to Over 5 $$ Share

• Biggest gainers: Sierra (see above) and Stone outta nowhere +208%, $1 mil to $1.6 mil
• Other variety pks up: NBB +38%; Kona +21%, SweetWater +27%; Shiner +4%; Goose +5%
• But 4 variety pks down: Sam Adams -14%; Redhook -16%; Magic Hat -8%; Widmer -9.5%

Top 100 Brands Makeup: Brand Subsets by $$ Growth; 1/3 of Brands from 4 Co’s, Half from 8, 23 Loners

Graph below (click to enlarge) shows groupings of brands by $$ growth. So 6 brands growing more than $2 mil thru 3/29 make up first subset. Graph indicates both number of brands in each subset and craft $$ share held by each group: growers in green, decliners in red and all other brands outside top 100 grouped in blue. In Q1, total craft $$ grew by very near $100 mil. So 24 brands representing just over a 1/4 of craft $$ thru 3/29 put up almost half of total craft $$ growth. Half of these brands are IPAs. On other end of the spectrum, just 3 brands that had over 6 share declined by over $3 mil. Another group of 13 brands collectively lost another $3+ mil in sales. Largest subset includes 32 brands that had almost 18 share of craft $$ YTD thru end of March and posted wide array of trends: +0.5% to +139%. Breakout of top 100 brands by company shows a handful of co’s make up over half the list:

• 10 brands from CBA (4 Kona, 3 Redhook, 2 Widmer, 1 Omission); 9 from NBB; 7 Sam Adams brands from Boston Beer and 6 from Sierra Nevada in top 100
• 4 co’s have 5 brands each in top 100: Shiner, Lagunitas, Deschutes, AB (4 Goose, 1 10 Barrel)
• 9 co’s with 2 or 3 brands in top 100 make up one quarter of the list
• 23 co’s have one brand on the list, but just 7 of them are in the top 50

By early 2017, the largest Portland, OR brewery will be about 36% larger, at least in terms of production capacity, Craft Brew Alliance announced this week. CBA will spend about $10 mil to boost the Widmer Bros plant’s annual capacity by about 200K bbls to 750K bbls. Expansion of the Widmer facility, in its current location since 1990, will improve its efficiency, add fermentation space and introduce a new 10-bbl “innovation brewery,” plus tasting room. CBA points to the return to health of flagship Widmer Hefe last year (shipments +9% just in Oreg last yr, co reminds), plus newer entries Upheaval IPA and “session-style” Replay IPA. Widmer brands represented about a third of total CBA production last yr, up almost 6% to 267K bbls, including fast-growing Omission brands. So the brewery also produced quite a bit of CBA’s other brands. Total CBA in-state shipments from its Portland brewery increased significantly too, +18% to near 95K bbls, after being -9% in 2013. But note that neither figure includes shipments from its other breweries sent to Oreg, so trend could be quite different. In Feb 2014, CEO Andy Thomas explained announcement that CBA would add up to 100K bbls of production thru alt-prop at Blues City Brewing in Memphis by noting it was “capacity constrained out of Portsmouth,” its only East Coast plant. Last year, it utilized about 40,000 bbls in Memphis after June start up. 

Toned-down tenor taken during opening session on government affairs and regulatory issues continued into Thurs AM seminar from BA gen’l counsel Marc Sorini, of McDermott Will & Emery. But volume turned way up in separate legal seminars the same afternoon. There, fiery discussions provoked some of real emotion that simmers underneath many disagreements between small brewers and the middle tier. One seminar featured tongue-in-cheek but pointed comments from long-time wine and spirits distrib advocate “Tuck” Duncan, of KS-based Duncan Law Office, including drawing direct line between Jesus and wholesalers. Directly after, another put on stage the smash-mouth plays of Wesley Donehue, CEO of Push Digital, national digital strategy firm largely working with Republican politicians, who insisted distribs “are the enemy” when discussing his work for SC Brewers Guild. On the other hand, Marc chose “to emphasize that this system is largely very good for small producers of beer,” before noting that “the system has evolved” and “it will continue to evolve.”

Evolution Vs Revolution Coming 3-tier change, Marc argued, “mirrors the evolution of the system over the last 80 years.” Indeed, “reasonable evolution has happened.” And to those seeking to “blow it all up” when faced with “barriers,” he explained that “there’s a lot of reasons why that’s a really really bad instinct.” Instead, he worked to instill the value of the system to players of all sizes. Tho change happens, it “doesn’t happen very fast,” Marc reminded, partly because of the relatively small size of the group of highly interested parties, compared to broader legislative and regulatory issues. He reiterated expectation that “this is going to be long-term,” using “wine direct-shipping battles as a model,” which took “two decades” to be legal in just over 40 states. “The best way to avoid the disastrous revolution is to allow reasonable evolution,” Marc maintained, citing “editorials” hoping to do away with 3-tier entirely. “To avoid that kind of pressure, I think reasonable evolution makes sense.”

In later seminar, moderator RJ O’Hara of PA firm Flaherty & O’Hara seemed to concur, kicking off with quote from alc policy tome Beyond Liquor Control: regulators must be “on our guard against any system of control that has outlived its usefulness or that no longer represents the prevalent ideas and attitudes of the community,” for “it cannot succeed.” Tho author was “talking about Prohibition,” RJ thinks the sentiment “applies to the three-tier system” too.

Allies and Opponents in SC   But much more explosive comments from Wesley, self-proclaimed “political hack” with high-powered “Republican digital strategy” firm that’s handling Marco Rubio’s presidential campaign, got a lot closer to those “editorials” referenced by Marc. Small brewers in South Carolina found “biggest allies” in “economic developers” because “‘jobs jobs jobs’ is still the big message” and “they understood that when we change the laws we can actually recruit big brewers over to the East Coast.” He also noted help of finding “legislators who were actually big craft beer fans” to go to bat for brewers. But the “biggest opponent” was “distributors” (who he suspected may be “in the room” to find out “what we’re gonna do to f*** with you”). “You give them money and they’re fighting you,” which is “crazy to me,” he said to small brewers. Further, “they’re not fighting because they’re against you,” he claimed, it’s “because their biggest client is against you” and distribs are getting “orders from the big dogs.” In SC, his team faced “fifteen paid lobbyists against us.” Meanwhile, “I work free for beer.”

Distrib Opposition to Change: Granholm, History, Slippery Slope In previous seminar, Tuck gave voice to reasoning behind some distrib opposition. He pointed to the “Granholm problem” of treating in- and out-of-state brewers differently and explained “I’m not one of those” who think volume caps are ok for self-distribution, retail rights or franchise reform, calling them “discriminatory” and later “unconstitutional.” Tho Tuck believes distribs have “legitimate concerns” about caps being challenged by larger brewers, fellow panelist Duke Tufty of Wyse Kadish in OR disagreed, at one point noting useful “incubator” model that self-distribution can provide. But Tuck believes that implies “there’s room for another wholesaler,” but only “if it’s good product.” The system is “accommodating to good product,” he said, noting that there are “bad products out there that complain they can’t get distribution.” But in his view, they “can’t get distribution because people don’t want it.”

When asked why distribs resist change, Tuck said flatly “because we’ve never done it that way before” and “we have a business model that works. It’s making people money.” It was the “historical argument” that Marc said to “beware of” earlier in the day, insisting “you should be able to articulate some sort of public policy” argument for holding onto system, tho stakeholders shouldn’t “mess with it gratuitously.” Tuck also questioned that “if [laws are] more flexible for craft breweries, then why aren’t they more flexible for” everybody else? Marc too combated the “slippery slope” argument by insisting that, legislators “can make reasonable line drawing judgments here.”

These days, Tuck believes, it’s large retailing companies that are now “the tail that’s wagging the dog,” citing Costco and Walmart. “Thank God you have a wholesaler” to separate you from their power, he told small brewers, since after all “God did put Jesus Christ on Earth as a middleman to spread the gospel.” While the line got laughs, the firmly-held belief in maintaining status quo is serious. So seemed to be Tuck’s argument that 3-tier laws work as antitrust, asserting they’re the “best” [antitrust laws] laws ever written. To that an audience member piped up, noting distributor consolidation and power held by mega-distribs operating separately with the “same parent company.” An “oligopoly” perhaps, Tuck responded, but not a “monopoly.”

What Lawmakers Care About and Using Stone The SC-focused seminar got colorful too. Wesley reminded that “95% of [legislators] don’t give a s***” about craft beer, they “don’t care about you. They don’t care about the industry.” They care about “bringing jobs into their state” and “region.” So “all we talked about is jobs,” so when passing “Stone Bill,” to allow brewers with restaurants to conduct on-site sales of all kinds, they compared it to work that landed Boeing in state. “We simply used the news of Stone to help these guys,” Wesley said of SC brewers, echoed by Will McCameron of Brewery 85, who “could live on my taproom now.” Will added later that when “you know [legislators are] taking money,” brewers should “yell it as loud as you can” so people know “these are bad dudes,” that, as Wesley added “don’t care about jobs” but “just care about padding [their] bank account[s] with” big brewer money.  In many ways, the battle was about combating the campaign contributions with people power, the panel maintained, and getting “this message to your Senator: jobs before politics.” So when the “one issue we could never get past was the distributors,” Wesley said, since “they are the enemy,” adding “it’s just what it is,” he stayed “on message” telling legislators to “stop playing politics and stop trying to pad your bank account.” And in the end, in SC at least, this strategy got the brewers what they wanted.

From the four corners of the Earth, Craft Brewers Conference attendees filled Portland, Oreg’s four districts this week. Well over 10% of attendees came from outside the US, Brewers Assn prexy Charlie Papazian shared in his opening remarks, vendors and exhibitors make up at least half of folks in town for CBC and running into a sour-sipping banker or private equity exec is about as commonplace as connecting with a craft brand salesperson. The largest gathering the city’s ever hosted brought swarms of attendees to its Convention Center and dispersed them for tours and events throughout the spread-out city. Containing the crowds and getting them where they wanted to go, proved challenging. For 30+ years, craft’s grown by pushing and breaking boundaries. No exception, this week.

Yet, the BA continued “very important” work to “capture the spirit” of the diverse crowd, as Charlie said Weds. “Never ever underestimate the importance of defining yourself, your brand and your uniqueness,” he argued, dismissing the way “others defined craft beers as ‘fussy beers’,” a reference to much-discussed Bud Super Bowl ad. “Others say beer is beer and there’s no need to define craft beer,” an increasingly common sentiment recently adopted at All About Beer Magazine by Editor John Holl. “Those that demean, deny or mislead” seem to seek a “return to the past,” he said. But “our needs are very, very, very different than the past,” and “the past doesn’t define your future.” But as BA and CBC work to define and contain the bourgeoning group of beer makers and lovers, while encouraging change, adaptation and evolution, not all assn members and conference speakers make that work easy.  Read on. 

Kroger is 5^th-largest retailer in the world and #1 craft and cider retailer in US by $$ and volume.  This yr, Kroger’s craft segment growin’ 11% by volume, 16.5% by $$ (in IRI thru Feb 22), Bump Williams Consulting’s Jeff Nowicki noted, hosting a CBC panel with several of Kroger’s top alc bev mgmt. So it’s pretty significant to hear straight from top mgmt that “every time we do a set process those bigger guys’ space is shrinking because of your growth and what craft’s doing,” said category mgr, Mike Davis during Q&A. Their assortment mgr, Craig Marshall “takes a lot of heat” from those large cos, so more shelf space for craft might not be happening quite “at the pace you’d like to see, but trust me it’s coming.” Indeed, “each year some of the largest domestic players have in a lot of our stores seen reduced count,” natl beer coordinator Jason Millburn acknowledged. And Kroger lookin’ to “continue to kind of expand on craft hopefully to where it looks more like QFC” (PacNW chain under Kroger umbrella) where craft segment is 50% of beer. Kroger has 2,640 stores (25 different banners) thruout 34 states it has a whopping 1.2 mil skus of beer, 337,900 craft skus.  (That’s total # of stores X avg number of craft SKUs per store.)

Kroger’s had success in craft segment ‘cause of its ability to be “flexible” and its “ability to adapt to the way the market’s changed,” being able to “instill new philosophies…being open to new outflow, new assortment,” said Jason. Kroger takin’ “more nimble” approach that can focus on smaller local brands “relevant for each individual store.” Indeed, “what’s relevant for that little area really can help grow craft,” said Craig. That’s “been the difference for us,” and Kroger “continues to evolve that philosophy.” Kroger also looks for “closer interaction with what’s going on on-premise” and relies on distributors “pretty heavily to tell us what’s new in the market” good and bad. They’re “big fans of product sampling” too, noted category mgr, Katy Greiner. Lookin’ at on-premise and talking to wholesalers, “they can see who’s starting to build trends” and “if it is someone who’s only on draft” distribs can “let us know” if canning/bottling comin’ soon. Also, suppliers should “tell them which stores you want to be in” and “shouldn’t leave it up to them” Jeff chimed in. But you “can’t assume you know exactly what stores you want to be in,” and only “data will tell,” said category mgr, Mike Davis. For instance, it’s not just the high end stores that work best for craft placements: some “value customers, they want craft too.”

Most Common Issues: UPCs and Communication Number one issue concerning suppliers: make sure you’re GS1 certified and registered and you own those UPCs (universal product codes), noted Craig. Then too, “once you get placement make sure the package gets to the shelf,” said Katy. There’s times where cos think it should “substitute packages” or “think a different UPC of yours could perform better” than the one that’s in the set. “But that’s never the way to go” ‘cause “you end up really doing yourself an injustice,” and don’t get credit for the package that’s supposed to be there or the package the you substitute in, chimed Jeff.Another issue regarding UPCs: if a company uses one universal UPC for all its packages and there’s “major recall in the system,” that’d force Kroger to “turn off everything that you have” in their stores.

“Other than that, just communication…Knowing when we need the info.” “It sounds simple but that’s what we’ve struggled with.” For example, when asked about how Kroger manages one-offs, Craig responded: it’s about “knowing the locality of that store” but also suppliers need to give “enough time to turn stuff around.” Typically Kroger “needs communication 4, 5, 6 weeks out,” said Katy. All acknowledged that their system is a little slow, and it takes “at least 3 weeks from start to finish to get an item pushed through our system” so it’s all about lead time for one offs, seasonals, or any brands lookin’ for placements.

Bottles vs Cans; “Educate” that “Can is Fresher”; Don’t Do Both Separately asked about bottles vs cans, QFC director Ryan Comer said: gotta “educate the consumer that the can is fresher.” He suggested freshness message “on the can in some way, some form,” and used Wash’s Fremont Brewing as “a definite example of how cans have grown their product. They’re just on fire.” Editor’s note: OH’s Rhinegeist is another example. Recall, Rhinegeist was top new craft vendor in IRI-tracked OH foodstores, largely thru Kroger outlets. It launched cans in Feb 2014 and only had product in five Kroger stores by last July, then jumped to 65 by Sept, reported Cincy Biz Courier. One ask from Jason: “not do both” cans and bottles. While “consumer is starting to become more engaged with cans” the issue is “in a lot of our markets, you have the same liquid in the can and the bottle, and the bottle is still outperforming.” Cans “not as advanced…in some of our eastern markets,” but Kroger is “trying to make sure we capitalize on trends” and “paying close attention to it,” said Jason.

“Active” on 3.2% Laws & (To Lesser Extent) Growlers Regarding legislative issues, Kroger most actively lookin’ to change 3.2% (ABV) laws in states like KS, CO, and UT. “We feel like that’s something that everybody in the room benefits if we can get Kansas and Colorado and Utah, and I think that’s going to be big for us from a craft beer perspective.” But Kroger also, to lesser extent, “actively involved…trying to do a lot with growlers in our stores,” Jason acknowledged. Indeed “several” growler stations planned for 2015 and even “full bar set-ups in some stores” that can sell “by the glass.” Of course, “with that comes a lot of legislation,” Jason noted.

How to Handle “Winefication” Asked about “winefication,” Kroger determines “flow of our sets” by constantly “looking at how brands interact with each other across segments,” noted Jason. Typically it’ll “carve out local space” then have space for “all other crafts.” But “customers are telling us by their shopping patterns” which help determine how sets should be laid out. QFC stores sell wine and liquor as well, so they’re checking “what that customer buys when they buy a bottle of wine” vs bottle of beer vs bottle of both. 

In keynote address at craft wholesaler meeting that precedes Craft Brewers Conference, consultant Bump Williams said “consumer thirst for variety creates chaos at retail.” He pointed to estimated 12,000 SKUs by end of 2015, on-and-off premise, the prevalence of “rotator bars” and the emergence of craft spirits as factors. Then too, “local is king and will not slowdown in marketplace dynamics.” He cautioned distribs to avoid “brand investment” demanded by some new suppliers as “brand investment landscape is a slippery one.” Editor’s note: CBN hasn’t written about this issue in a while, but one craft brewer reportedly asked for and got 4.5X GP upfront for its brands in some recent expansions.

Meanwhile, legislative battles between craft brewers and distribs are “detracting from efforts to sell beer and build brands,” said Bump. He emphasized “quality” and “relationships” as key markers for success. (Note: CBN write-up based on Bump’s deck, since media not allowed in CBC wholesaler meeting this yr.)

The Ascension of IPAs; Almost 5X the Revs in 4 Yrs Bump showed some great multi-yr data that dramatically illustrated the stunning ascension of IPAs within craft. For 52 weeks thru Jan 1, 2011 (calendar 2010), IPAs generated $115 mil in sales of IRI multi outlet + convenience out of $1.16 bil, or not quite 10% of craft $$ . IPAs grew over 40% in each of the succeeding yrs. In 2014, IPAs jumped 49% to $523 mil in revs in IRI MULC. That’s almost 5X the $115 mill in 2010, while craft basically doubled to $2.36 bil. Bump also showed that craft cans grew from almost nothing in 2010 to 8% of craft volume by 2014. 

Tho Boston Beer had bang-up year from most perspectives, didn’t meet all of its financial, operational or “stretch” goals, upon which incentive compensation relies.  As result, several top execs, including prexy/ceo Martin Roper and chairman Jim Koch, got smaller incentive pay in 2014 than in 2013 and their total compensation actually dipped.  That’s even while straight salaries boosted.  Still, given stock price gains and amounts realized in sales we reported earlier, neither Jim nor Martin actually took a serious financial hit.  Martin maintained total compensation over $1 mil, at $1.2 mil, but that was down from $1.5 mil in 2013.  Martin made $764K salary last yr, up 3.2%, but non-stock incentive pay came in at $443K, down from $770K in 2013, hence the decline.  Jim made same $395K salary as he did in 2013, but incentive slipped from $316K to $277K, and he got fewer options awarded.  So Jim took a $77K, 8% reduction in total compensation to $918K.  CFO Bill Urich got slightly larger raise (+ 4.9% to $428K) and slightly higher incentive pay ($203K), so his total pay package up $24K to $641K.  Sales veep John Geist also got bigger raise and higher incentive pay, so his compensation rose $19K, 3.2% to $617K.   Boston’s brand development veep Robert Pagano got $718K total pay in 2014, including options.      

At by far the biggest CBC event yet (11,000+, up 22%) in Portland, OR, the city with the most breweries in the world (58), the Brewers Assn justly celebrated craft’s continued remarkable record of growth (5 yrs of double digit gains in a row and counting). Recall, BA-defined craft grew 3.4 mil bbls, 18% to 22.2 mil bbls in 2014. And that’s almost as much growth in 1 yr as craft got for 10 yrs between 2000-2009, BA economist Bart Watson pointed out. Craft up 3.8 mil bbls those yrs.

Last yr, 1412 brewpubs climbed 20% to 1.17 mil bbls, over 1 mil for 1st time. And 1871 microbrewers (smaller than 15,000 bbls) really sizzled. Up 33% to 3.17 mil bbls. There were 1464 microbrewers a yr earlier. Meanwhile, regional craft brewers (over 15,000 bbls) grew 17% to 17.6 mil bbls. There are now 135 of them, up from 119.

Craft Brewers Have 34.6 Mil Bbls of Capacity; Could Grow Into It in 3 Yrs Interestingly, craft brewers have 34.6 mil bbls of capacity, according to Bart, over 12 mil bbls more than they produced. That would be “a little scary” except that it’s also the same ratio of bbls produced to capacity as in last couple of yrs, 64%. And at current growth rates, small brewers will grow into that capacity in 3 yrs. Last yr, 615 craft brewers opened, compared to 502 in 2013 and 450 in 2012. Only 46 closed last yr, tho not all info in yet. There will be more closings, “it’s only natural” and “isn’t a sign of problems,” Bart assured. Meanwhile, there are over 2000 breweries still in planning.

Importance of Small Brewer Definitions; Govt Affairs Efforts BA president Charlie Papazian staked claim to the continued critical importance of self-definition of craft brewers as “small” and “independent” both for craft brewers themselves and the association that serves them. It’s a “cornerstone from which to build your brand,” Charlie added. “Capturing the spirit that defines” small and independent brewers “is extremely important.” Editor’s note: but that definition could still be a moving target with the influx of private equity deals. BA director Paul Gatza brought those deals up as a “concern” and bluntly said twice “I don’t know” how/if that will affect perception of craft movement, even amongst brewers themselves.

This yr, there was again considerable focus on govt affairs efforts, but with a shift in emphasis from the structures that small brewers found “unfair” or oppressive to the work that they are doing to improve their position. It was a thread woven through several speeches. Small brewers “are increasingly pressing for reforms without damaging the important frameworks that benefit them,” said Charlie Papazian. BA gave early speaking slot to new govt affairs manager Katie Marisic, who, tho highly optimistic overall, acknowledged Fed tax reform bill Small BREW will be “uphill battle.”  There’s a “barrage of opposition within the industry,” said BA chairman Gary Fish, but “we’re making progress,” he added. “Our efforts have already yielded success,” Gary said, with more to come. Several Congressmen who support the bill also gave brief taped speeches.

Far Less Talk About Franchise Reform But there was much less emphasis this yr on contentious issues with distribs, such as franchise reform. In fact, difficulties with distribs only glancingly referred to this yr. Chairman Gary Fish expressed his disappointment in the “unfortunate” stance of distribs against BA’s Small BREW act. “Why would they be against” a bill that helps small brewers grow, Gary asked, since craft growth helps distribs. And BA director Paul Gatza mentioned as “concern” difficulties for some small brewers who “can’t get out” of underperforming distribs, recognizing “by far ... more wholesaler relationships are in great shape.” Distribs are “getting beer out there,” and craft “wouldn’t have great growth we’re seeing without them.” That’s a markedly different tone than last yr.

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