At the end of 2014, selling beer is neither what it was, nor what it will be as the marketplace keeps shifting, in large part due to craft’s growth. The increasingly loud voices of mostly grassroots efforts behind small brewers made for exciting times in some corners of the country this year, very likely to continue into next. In the early part of 2015, state legislators will face a handful of bills affecting beer bizzes in addition to what will likely become fiercer, more public debates potentially leading to significant shifts.

AB’s Acquisitions Attract Attention in Kentucky; Ida ABC Agrees with AB  Where AB goes, so goes the beer industry’s focus. Recall the unexpected battleground of Kentucky this year, where AB sought approval for purchase of distrib in Owensboro. It got it, but not without much protest. Many expect a push for anti-branch legislation there in 2015. Ironically, while small brewer critics of AB owning branches in Ky say those branches stifle craft, USA Today yesterday detailed the “exploding’ craft biz there, especially in Louisville, where AB has had branch for decades and sells no competing brands.  

AB’s purchase of Bend, Oreg’s 10 Barrel Brewing could lead to more legal/legislative activity in Idaho, where 10 Barrel operates a brewpub. Distribs there questioned the purchase, which AB clearly sees as no problem. And the state Alc Bev Control dept seems to agree with AB. Recall, the Idaho Beer and Wine Distributors Assn seeks a ruling from the state police.  It argues that Ida’s law bars brewers from holding multiple licenses if they brew over 30K bbls anywhere, not just in Ida. But “we don’t believe that’s what the code says. We believe it’s beer manufactured in Idaho,” the ABC bureau chief told the Bend Bulletin this month. Will there be efforts to change that too?  Also, AB is currently all 3 tiers in Bend, Oreg (owns branch there).  That too seems ripe for further controversy.  

Simple Solutions Hard to Craft in Florida; Difficulty Gaining Ground in Georgia  In Florida, greater consensus could clean up a messy battle earlier this year. The struggle with lifting the state’s current ban on 64-oz growlers (or any 64-oz package of beer) seems to be coming to a close now that all major stakeholders have publicly expressed support for a bill to do just that. But the state brewers guild has balked at the suggestion of additional rules on the sale of growlers offered by the Florida Beer Wholesalers Assn, according to CBS Miami. The tone of the growler debate turned ugly for many, even though many deemed the issue a no-brainer and the ban on 64-oz packages unnecessary. What happens if folks in Fla start considering broader law changes in earnest, like those that had been tied up in the growler issue in Fla and those being considered in neighboring Georgia? There, brewers have ramped up efforts to gain support for bills that would allow on-site sales for on- and off-premise consumption. While numerous crowd-funding brewery projects have earned tens of thousands of dollars to get up and running, the Georgia Craft Brewers Guild has so far attracted less than $10,000 in its IndieGoGo campaign to help fund a lobbyist for the 2015 legislative session, just 32% of its $30K goal. Distribs have resisted previous attempts at change there. Will lines between tiers in the Southeast stay as clearly drawn?

Shifting Alliances with No Clear Lines Show Difficulty of Unity, Progress in Montana; Quotas in NJ  Traditional lines between tiers in these debates got significantly blurrier in Montana this year. There, a “Coalition” of industry members across tiers met a handful of times during 2014 to offer a unified voice to the legislature after the contentious 2013 legislative session. Recall the Montana Tavern Assn (MTA) intro’d a bill then to limit what breweries could sell in their taprooms, which the group of tavern owners saw as encroaching on their valuable liquor licenses. Montana’s a quota state, so licenses to serve alcohol can be expensive and hard to come by. Lawmakers dropped that bill after debating it strained some relationships. So in 2014, a year with no state legislative session, members of the MTA, the Montana Brewers Assn and the Montana Beer & Wine Distributors Assn (MBWDA) formed an Alcohol Beverage Coalition to find a solution that would allow brewers to operate tap rooms even if they grow beyond 10K bbls, where a 1999 law caps production in order to keep that privilege, per the Helena Independent Record.

But MBWDA announced its departure from the coalition this month, with support from at least a few brewery owners. Alleging that the Coalition supports “a bill designed to make sweeping changes” to alc bev regulations in state, the MBWDA distanced itself from the group. While a draft of the proposed bill isn’t yet available, the Coalition seeks to legalize a form of “license stacking.” The proposal would allow brewery owners to buy a retail license and tavern owners to buy a brewing license. But the distrib assn believes the proposal amounts to the “destruction of a very good system” that “would change the fairness aspect,” exec director Kristi Blazer told the Record.

Instead, the MBWDA plans to intro a bill that would raise the 10K-bbl cap, under which breweries can sell beer and over which they can only offer free samples. A handful of brewery owners side with the distributors too, more interested in raising the production cap than allowing license stacking. The quota system is part of the issue with the proposal, Brian Smith, managing partner at Blackfoot River Brewing, told the Record. Because quotas make a limited number of licenses available in different areas, “some breweries would be able to obtain a license possibly years before another,” the paper wrote. Further, the proposal wouldn’t limit the size of breweries that could buy a retail license. But the pressure is on for something to pass in 2015, when up to 4 breweries will butt up against the 10K-bbl cap, according to MBA prexy Josh Townsley of Tamarack Brewing. Note: the mixing of brewer and retail licenses and the competitive pressures that creates between brewpubs/ taprooms and traditional on-premise licensees is at the heart of the Mont situation, as well as the “loopholes” issue that stymied the Fla growler bill last yr.   

Separately, others in Mont seek scrapping the state’s quota license system, at least in part. Such a move has proven very difficult there and other states with similar systems, like New Jersey where quotas push license values into the millions. But a lawmaker in NJ plans to introduce an entirely new category of liquor license after working with industry members. A drafted bill would create a license purely for small restaurants, hoping “to support downtowns and redevelopment projects,” according to North Jersey’s The Record. Not clear yet, if or what the effect will be on brewpubs/taprooms.

Raising the Cap in Arizona; Lowering License Fees in West Virginia  A proposal in Arizona would allow small breweries “to meet their potential for success,” Rob Fullmer, exec director of the Ariz Craft Brewers Guild told the Prescott Daily Courier, “without unreasonable bureaucratic limitations and being forced to give up their hard-earned property rights.” Note that’s the second time in a month property law has been invoked to defend small breweries’ operations (the first: in nearby Tex, see Dec 10 issue). The Arizona Beer Bill doesn’t seek to change the production cap for “microbreweries,” but instead, would adjust some of the privileges of license holders over that cap. Brewers that produce less than 40K bbls would still be able to self-distribute, but would be limited to holding 7 retail licenses (currently there is no limit, nor any licensee with that many retail operations as far as we can tell). Instead, the change affects brewers producing more than 40K bbls, a group soon-to-include a handful of fast-growing players in the state. If passed, the bill would allow brewers over 40K bbls to keep retail licenses, which current law bars. They couldn’t add any more retail licenses and would have to cease self-distribution.

State legislators started listening to small brewers in West Virginia, where a change in licensing fees and more could be coming down the pike. After the state brewers guild sent recommendations to an interim committee earlier in the year, that committee in turn recommended reducing brewing license fees, according to a WV Metro News report. Currently all brewers pay $2500. The new license structure would cost $1500 for brewers over 20K bbls, $1000 for those producing 6000-20K bbls and $600 for those producing less than 6000 bbls. Additionally, brewers could pay $400 for a license to sell beer on site, necessary to run a brewpub. Bills making way for growler sales and tastings could appear too.

Is there really a location in San Diego County that not a single brewery is willing to establish a retail location, even with the promise of subsidies? The Del Mar Fairgrounds seems to be such a place, according to the Del Mar Times. Recall, the 22nd District Agricultural Assn (DAA), which operates the Calif-owned grounds, sought to turn an off-site betting facility at the site into a craft brewery. The board nixed an original proposal for a Blue Moon-branded site in order to find a “local partnership” way back in Feb (see Feb 25 CBN). The group issued a request for proposals (RFP) in Sep, seeking a local brewery willing to establish a small brewery, restaurant, tasting room and brewing museum at the site. The DAA committed to investing $1 mil for the project, asking brewery tenants to commit $1.5 mil over 5 yrs. But when the RFP deadline came this month, not a single brewery had bitten. And “Blue Moon ultimately decided to invest elsewhere,” the Times wrote, pegged as Colorado by DAA director Stephen Shewmaker for the Coast News. A handful of brewery reps showed up for a tour of the space, he told that paper, but “it didn’t pencil out financially for them or us.” The assn will go back to the drawing board next yr, but still plans on a taproom with some form of exhibit on “local brewing history.”

Merry Christmas to all of our readers!  

A few questions persisted after announcement that Founders Brewing of Grand Rapids, Mich sold a 30% stake to Mahou San Miguel of Spain last week. First: where’s the money going? Tho not much info about exact deal details, cofounders of the US co Mike Stevens and Dave Engbers wrote that the deal allows Founders “to afford some liquidity to our long-standing stakeholders.” So Mike and Dave seem to be swapping out some early investors for a longer-term, strategic partner.

What of those “international growth opportunities” afforded by Mahou? Neither party has been very specific about these oppys, but Mahou does distribute to 50 countries on 5 continents. Its biggest biz outside of Spain, where it brewed just over 11 mil bbls in 2013, +5.2%, is in Western Europe. Other important markets include Chile, where it bought about a third of its distributor just last month, per Spanish biz press Cinco Dias, and India where it established a wholly owned subsidiary and brewery. Mahou has upped its focus on mkts outside of Spain, which represent 13% of its total sales now. Coincidentally, the co hopes to expand that to 20% of its total biz by 2020, according to Spanish paper El Mundo. It’s likely Founders will be a part of that, as Mahou expects to provide oppys to Founders outside the US during that same time period, “in the medium term.”

Still many others wondered if the deal affects Founders’ “craft” standing. Founders will no longer be considered a “craft brewer” by the Brewers Assn once the deal is done, as many sources including the Grand Rapids Press (GRP) have acknowledged. Some suggest that this deal challenges the BA’s own 20 by 2020 goal. Others point out that the deal underlines differences between the BA’s hard line on “craft” and consumer perceptions. Those differences may come into sharper relief if the pace of craft deals continues, which many expect, including Founders’ Mike: “Mark my words,” he told GRP, “we’ll open doors that many more will follow.” 

Jack’s Abby will open a 2^nd brewery in downtown of hometown, Framingham, Mass, with plans to break ground by spring and have brewery completed by “late 2015,” co-founders Jack, Eric and Sam Hendler announced via company blog.   New brewery will be “significantly larger,” at 67,000 sq-ft (compared to 12K sq-ft at current facility), and will have initial capacity to brew 50,000 bbls a yr, with room to reach 125,000 bbls.  Co hints that newfound capacity will help feed increasing demand in Mass as well as “expanded territories” such as Conn (added this Aug), upstate NY and Vermont.  They’ll also add new canning line, 12 pks, and a 5,000 sq-ft tasting room and restaurant.  Jack’s small but one of fast-growing brands in northeast in recent yrs, more than doubling shipments in 2013 to 6,200, according to Brewers Assn.  

On a farm less than 20 miles south of its Frederick, Md facility, Flying Dog plans to open a small 15-bbl brewery to churn out experimental, barrel-aged and sour beers. The new Farmworks Brewery will occupy about 5 acres of the 53-acre Shadow Farm, where a pair of co’s have come together to operate the mid-Atlantic’s first commercial hop processing center. Flying Dog’s still in the process of nailing down specifics, in terms of exact ownership structure, licensing and more, cmo Ben Savage told Craft Brew News. Still in “never-say-never mode,” the co doesn’t have current plans to distribute Farmworks beers in “foreseeable future,” Ben said, as it’s “really trying to create a destination.”

Longtime Flying Dog brewmaster and coo Matt Brophy will lead the experimental brews at Farmworks, building on his relationship with Jonathan Staples, owner of James River Distillery in Richmond, Va, who bought Shadow Farm under his co Black Hops. Jonathan brought on the owners of Organarchy, a 450-acre farm that grows organic hops in Oldtown, Md, to help operate Lucketts Mill & Hopworks on Shadow Farm. Farmworks will use the hops grown or processed by Lucketts Mill, which will also provide small-scale local hop growers the opportunity to process their wares for broader commercial viability. But the “original intent” was to grow hops at Shadow Farm, Ben said, and “poles are already up” for next year. Farmworks beers will be appropriately agriculturally-focused and “highly-experimental,” utilizing barrels and wild fermentation techniques, the co said in statement as well as other agricultural products grown on site, like pumpkins, lavender or anything else, Ben said. The co hopes Farmworks will “remind people that beer is an agricultural product,” Ben said, which some folks get but “not nearly as much as they do with wine.”

After officially opening Mill’s River facility in Aug, Sierra Nevada quickly upped brewing capacity there to 300,000 bbls a yr, and will boost capacity again to 500,000 bbls per yr after adding next round of “giant fermenting tanks,” reported Herdersonville Lightning.  “We’re actually a couple of years ahead” of “what we thought it would be,” director of logistics and plant co-manager, Stan Cooper told paper, tho tanks won’t arrive until “later next year.”  Earlier this mo Sierra began canning out of Mill’s River, and “peak for production” outta Mill’s River was just two weeks ago, when “plant loaded 92 trucks, each carrying 1,400 cases of beer, over a 6 day period.”  So production comin’ along quickly in NC.  Plans to eventually “move export out of here” too, which is “about 3 percent of our business,” Stan said.  

Meanwhile, plans for its outdoor amphitheater are being fast-tracked as well, and tap room and restaurant slated to open in Apr 2015, according to paper.  There’s “about 105” total employees in Mill’s River, and once all “‘visitor experience’ amenities” completed, Mill’s River will have 300 full time employees.  “Already 5,204 people have toured the brewery,” paper added.

One of oldest brewpub groups in US, the RAM Family of Restaurants and Breweries, offered a “Holiday Bonus” in the form of an Employee Stock Ownership Program late last week. The co operates about 30 restaurants in 6 states, including 21 RAM locations in Wash, Oreg, Ill and Ind and a handful of CB & Potts spots in Colo. All told, 16 pub breweries (not every location brews on-site, as is the case for many brewpub groups) averaged about 1000 bbls/yr in 2013, plus another 2500 or so at the co’s production facility, based on Brewers Assn stats; the co produced about 19K bbls across all properties last yr. Founded in 1971 by current prexy Jeff Iverson and coo and brother Dave Iverson, RAM employs about 2000. The Iverson brothers “will continue to lead and grow The RAM along with the senior leadership team,” according to release from CSG Partners, which advised the ESOP transaction.

Snapshots of holiday pricing around US  thru week of Christmas showed similar range of deals based on geography as in past, but by and large pretty healthy craft pricing. While anecdotal reports indicate a few dollar-a-bottle craft discounts, only a couple of $6.99 6-pks turned up in our spot-checks. Stronger pricing on East Coast still holding true for most part, with plenty of craft twelvers priced at $14-15 in MA and NY while some brands going for $12.99 and $11.99 on West Coast. Binny’s in Chicago has some CBA 12-pks at $10.99 this week. Same store has most of its craft 6-pks at $7.99 or $8.99, similar elsewhere. But coupla specialty brands command some pretty high prices for sixers, like Great Lakes Christmas for $12.99 at Binny’s and $11.99 in Akron Giant Eagle.

Angry Orchard showed up on weekly price-checks at over half of outlets we checked. And almost across the board, retailers kept it $13.99. A Buffalo Tops has the hot cider brand at $14.99, right on par with most of its other above-premium brands, including Redds and Mike’s Hard, Stella and Guinness, plus Sam Adams, Sierra Nevada, Magic Hat, Blue Moon and local Southern Tier. Not too many stores discounting or aggressively pricing up local craft either, though Seattle Albertsons promoting ’em more than other stores we checked.

Comparing to last year’s prices: some up, some down, some steady. Mainstream brands in Mass, Tex, Colo and Calif all up 50-cents to a buck, but down on Long Island, NY and in San Diego. Same goes for difference in Sam Adams prices: up in Mass, down in NY. Lotsa shifting in brands priced at $12.99 vs $13.99 on West Coast, with most locations pushing imports hard. While some big craft brands priced on par with imports, a handful of smaller (but still sizeable) nearby players getting better pricing in San Fran.

Chicago’s Finch’s Beer co has nearly finished deal for 45,000 sq-ft facility to build 2^nd brewery somewhere “on the west side of Lincoln Park – north of Division and south of Fullerton, on the river,” founder Ben Finch told Chicago Tribune.  Deal only “95 percent complete” so co didn’t disclose exact location just yet, tho expects “formal announcement” in early 2015, and “hope(s) to have the new space open by late 2016,” paper noted.  New brewery is all part of Finch’s plan to “become a national brand,” sez Ben, as he sees particular oppy with 16oz 4pk cans, Finch’s “go-to package.”  Finch’s beer already distributed in 23 states plus DC, yet currently has no taproom, and “offers tours only part of the year,” noted paper.  So new brewery will look to be destination spot and production spot with 4 acres of leased land to grow into.  It’ll include 4,800 sq-ft taproom, “a bottle shop; riverwalk improvements;” boat parking; and “plans to dedicate some of his space – possibly the current Finch’s facility, on Elston Avenue – for contract brewing.” 

It’s been a long, winding, expensive road, but Surly Brewing will open its new destination brewery in Minneapolis to the public on Friday, according to the Star Tribune. Its new 100K-bbl/yr brewery started cranking late last month with massive beer hall with room for 275 visitors opening Friday. A high-end restaurant and outdoor space will follow. The Surly team ballooned to 154 employees in recent months, with more jobs coming on soon. But it’s taken more time and investment than originally planned. Originally planned for $20 mil, the brewery complex has cost upwards of $30 mil, the Trib wrote, with extra costs largely to do with the site’s conditions. And the co hoped the new brewery would come on line in 2013, judging by CBN coverage of Surly’s plans back in 2011. Now, “half the life of Surly has been spent getting to this,” founder Omar Ansari said during toast with employees, according to the paper. The co shipped near 29K bbls in 2013 and now waiting til 2015 for room to run.