A survey of “nearly 700 visitors at breweries across Virginia” conducted by Visit Loudoun, tourism agency in Va county just west of DC, found 75% of respondents “visit two to three breweries per trip.” Additionally, around 80% “also visited local restaurants, historical sites and wineries,” according to Washington Post report this week.  On average, “visitors who tour multiple breweries and stay overnight” spend about $364 per trip, which isn’t “quite as much as the wine visitors, but just in terms of sheer numbers, this market is much larger,” paper acknowledged (i.e beer is 49 share of total alc vs 17 for wine).  Respondents averaged 39.5 yrs old, about two-thirds were male with many categorized as a “highly educated professional.”  

Yoda, Kermit the Frog and Mr. Banks walk into a brewery…. Too easy, but the punchline remains: look at the talent the craft industry is attracting these days. Ninkasi hired Jon Rogers to take on chief marketing officer role after his tenure at Lucasfilm and Disney, the co announced this week. Jon will likely need to narrow his focus on Ninkasi’s relatively small distribution territory after the global roles he held at those cos. 

As craft continues its rapid ascension, there’s gonna be lots more states that’ll need to re-visit current laws regarding definitions of “craft,” production caps on self-distribution and brewpub/restaurant laws.  Latest example is in Ariz where news broke that a coupla Ariz brewers, Four Peaks and San Tan, are set to pass 40,000 bbls in annual production, which state uses to define maximum amount a brewer can produce and still be considered “craft,” reported The Republic.  Under current law, any brewer that produces over 40K bbls/yr can no longer legally self-distribute “up to 3,000 barrels” a yr, or “sell their own beer at their own restaurants,” according to state law. 

Beer & Wine Distributors of Arizona and Arizona Craft Brewers Guild worked together to draft a revised bill which would allow brewers that surpass 40K bbl cap to have “up to a combined total of seven retail licenses,” in Ariz.  “Arizona’s microbrewers should not be penalized for their success and expansion – they should not be required to forfeit vital portions of their business operations once they hit the production threshold of 40,000 barrels,” Beer & Wine Distribs of Ariz stated in release.  Revised bill maintains that brewers over 40K bbls/yr will give up “nearly all their rights to engage in self-distribution,” aside from “beer sold at the restaurants, bars and pubs they own that are on or adjacent” to breweries.  Lastly, revision would allow “microbreweries to sell the beer produced by other microbreweries” via their own tasting room bar or restaurant, as “farm wineries” are already allowed to do in Ariz. “Opponents to our legislation, who primarily represent wine and spirit interests in the alcohol industry, want to force the microbrewers in Arizona to forfeit the few retail licenses they hold…if they reach the 40,000 barrel per year cap,” BWDA stated.    

Beer biz buzz words come and go, but “quality” seems to be picking up steam recently. A big part of that is big emphasis from big boss at big brewer, MillerCoors ceo Tom Long, who’s brought up the Q-word at NBWA, MC’s Q3 report, our Beer Insights Seminar in NYC earlier this month and again at Calif distrib assn meeting just last week. Much of that feels like prep for a whole lot more “quality” talk in MC marketing to come. Previously focusing on “lifestyle, fun, humor and camaraderie,” the major brewing companies made room for “a big misperception,” Tom said in NYC. Many beer drinkers now equate more intense flavor with quality, Tom finds, and that just ain’t true in his view. Indeed, “no brewing expert would dispute” quality of MC’s beers, Tom said during NBWA. So big brewers like MC have a big oppy to refocus marketing of mainstream lagers on their “intrinsic qualities, ingredients and heritage.” Correcting this misperception and returning conversation to quality will bring megabrand volume back to growth and increase per capita beer consumption, he believes.

Here, Tom’s using “quality” in the way brewers and beer judges often do: to discuss the technical merits of a beer in question. Many of the more diplomatic small brewers have long reminded that the beers MC and AB produce are of very high quality in this respect. And recall, MC regularly takes home medals for their American lagers/American light lagers (including a sweep of the category at most recent GABF). Tho still quite small, a growing number of consumers can recognize “off flavors” that result from errors during the brewing, storage or serving process, upping the ante for brewers. And MC plans to remind drinkers that it “can’t mask imperfections behind stronger taste,” as Tom said during Q3 call.

But that’s not how everyone thinks about or uses the word “quality,” Brewers Assn chief economist Bart Watson told us. He draws a line between quality and consistency. Indeed, “consistency is pretty close to becoming the bare minimum needed in the beer market, if it isn’t already,” he said, arguing that inconsistent brewers will be weeded out in an ultra-competitive market. On the other hand, “quality” indicates “general excellence or distinctiveness,” to Bart. Quality beer, or any product, “stands out from the crowd,” in his view, “due to the way it is crafted, its flavors” or more. Once they’re brewing consistently, brewers can differentiate based on the beer they’re brewing or the way they brewed it, and “many are doing both,” Bart reminded.

Noting that MC brands like Miller Lite are “perfectly engineered for the most occasions,” Tom too touched on the possibility that his co could market based on not just what’s in the bottle but how it got there too. But a fantastic beer for one occasion might not be appropriate for another. Same for consumers, whose preferences seem to be becoming even more variable, not less. So far, brewers have largely responded to more variable consumer tastes with product intros in high-end segments. How long before stylistic variations outside of pale American lagers begin to appear at premium or even sub-premium price points? By preparing to speak to beer drinkers more specifically about their beers rather than the drinking experiences associated with them, MC is simultaneously flipping some typical craft talking points back on its smaller competitors. “We are no longer going to stand by and allow our scale to be demeaned as a weakness, when it is actually a strength,” Tom said at NBWA. Will other cos follow suit? And how well will this play with distributors, retailers and consumers?

Importance of Hispanic millennial consumer for future of beer emerged as major theme during last week’s BA Power Hour hosted by Nielsen’s Danny Brager and Maria Monistere. Hispanic millennials are the “biggest opportunity” for craft, Maria continued, as Hispanic is “almost synonymous with youth.”  Indeed, median age for Hispanic craft consumer is 28 vs 42 for non-Hispanic, Nielsen found.  And 35% of all Hispanic craft purchases are from millennials (age 21-34), compared to just 23% of non-Hispanic craft purchases.  A higher % of total Hispanics say they’re drinking more craft beer according to Nielsen survey results; 57% of Hispanics responded they’re drinking “a lot/little more” craft compared to 42% of non-Hispanics, and fewer Hispanics are drinking “a lot/little less.”  Since 2010 “craft Hispanic sourced case sales” are growing at faster rate than non-Hispanic in 33 of 45 Nielsen measured food mkts.

Hispanic retailers are another potential oppy for craft; while 61% of Hispanics surveyed said they do shop at Hispanic retailers, 77% of those said it was preferred, mainly for “food that they offer,” that “they can’t find at mainstream stores.”  So Hispanic retailers are “very important to Latino consumers,” Maria said.  Anyone “creating a presence at any of these stores?” she asked. Danny still trying to decide whether “Hispanics haven’t embraced craft…or craft hasn’t embraced Hispanics.” 

Lastly, Hispanic consumers over-indexed in Light, fruit flavored, Belgian-style beers, and Golden Ales compared to non-Hispanics, according to Nielsen survey that asked all consumers to select top-3 favorite styles.  Among all drinkers, both Hispanic and non-Hispanic, Lager & Pale Ale were tied for highest % of preferred style, followed by Amber, Light, Stout, Belgian, Pilsner, and Fruit. 24% said they didn’t have a preference, and interestingly IPA was toward the bottom of the list.  Maria separately alluded to the “Latinoization” of American products, including characteristic Hispanic foods and spices that are becoming very common with non-Hispanics as well.  “There’s already brewers out there that have gone this direction,” she said, referencing different “citrusy” flavors, “earthy” flavors such as “oak, pine, and hickory,” and “canela” (cinnamon) flavors.

Reasons why consumers pick up craft can vary as much as the products they’re picking up, but experimentation with flavors and beer styles remains a major driver, according to Nielsen analysis presented by Danny Brager and Maria Monistere during Brewers Assn Power Hour last week. When asked for “the primary reasons” they buy craft, a full 50% of consumers surveyed earlier this yr said it’s because they “like to experiment.” The response came in only slightly more frequently than perception that craft “tastes better,” reported by 46% of all respondents. A slightly smaller portion of just millennial respondents turn to craft for its “better” taste, just over 40% saying so, but a much larger group of millennials choose craft because they “like something local.” That drives purchases of about 44% of millennials surveyed, compared to just 28% of all consumers. Not surprisingly, almost two-thirds of millennials “like to experiment.”

Across the board, consumers “like the seasonal offerings” the craft segment provides, but emerging populations of millennials and Hispanics like them even more. About 40% of all consumers surveyed pointed to “seasonal” as a “primary reason” to choose craft, the third most popular choice. The portion of respondents driven by “seasonal offerings” jumped up to about 55% of millennials and the group’s second-most common answer. And tho a smaller percent of Hispanics pointed to the “seasonal” driver, just over 45%, it’s still the #1 reason Hispanics decided to pick up a craft. But as Hispanics were more likely to say they turn to craft as a “treat,” either at home (about 41%), at others’ homes (32%) or when “out” (27%) than all consumers, millennials tended to be less likely to say so. Instead, while less than a third of all respondents think a craft beer is “nice to have at home when relaxing without guests,” about 45% of millennials think the same is true, likely indicating the group considers craft more of an everyday item than older craft drinkers.

Based on those earlier results, it should come as no surprise that 32% of consumers surveyed said their “interest in purchasing Upscale beer” would increase with “more flavor options.” That’s just slightly ahead of the 28% that’d come out for “more seasonal offerings.” But all 3 of the next most-popular answers point to opportunities to improve not what’s available but how: 26% of respondents said they’d be more interested by “more trial packages,” followed by “broader availability” and “more ability to mix and match” (both 23%). 

The Food and Drug Administration’s pre-Thanksgiving surprise turned at least a few heads early this week, dropping its final ruling on nutritional labelling on restaurant menus and vending machines. “Perhaps the most surprising,” per the NY Times: alcoholic beverages, for the most part, will not be exempted as they had been in drafts of the ruling in 2011. This blind-sided plenty of alc bev industry assns that will have counsel pore over the ruling to determine full responses in the coming weeks and months. In the meantime, this much is clear: restaurant chains with 20 or more locations with substantially similar menus will be required to provide calorie counts and other nutritional information for the vast majority of menu items, including alcoholic beverages, effective Dec, 1 2015. Importantly, the FDA clearly puts the onus for this reporting on restaurants rather than alcohol manufacturers, drawing a clear line between these rules and the TTB’s regulation of alc bev labeling.

To this end, restaurants may use standard nutritional information from the USDA National Nutrient Database, a clause highlighted by Brewers Assn director Paul Gatza for a blog entry. If a retailer chooses not to use the standard data, it seems likely to Paul said retailer will in turn expect suppliers to provide that info, forcing small brewers to “make a decision of whether to do the analysis required for all of the nutritional information and provide it or not have [its] beers available in that chain.” A check-in over at the USDA’s database turned up 7 entries of standard “beer” info, including “regular,” “light,” malt bevs including non-alc beers and 4 AB brands: Bud, Bud Light, Bud Select and Mich Ultra. It seems likely that nutrient information for at least a few other beers would differ substantially from these options. That’s as rotator bars could have an advantage: across the board, the ruling exempts seasonal menu items around for less than 60 days per year as well as test items available for up to 90 days.

The only exemption for alcoholic beverages offered by the FDA applies to mixed drinks not on a restaurant’s standard menu. While the exemption doesn’t exactly make the lives of beer suppliers easier, its language does support the Beer Institute’s Know Your Drink campaign, as BI prexy/ceo Jim McGreevey picked out in note to members. “The FDA recognized in this rule that recipes for cocktails and hard liquor drinks that are not in the restaurant menu can vary greatly in alcohol and other nutritional content,” he wrote, so “it would be too confusing to even try to determine the nutritional information for those drinks.” Questions remain, including how retailers will decide to respond to this ruling in practice: will menus only include products from companies that can provide nutritional information or will regular menu items be discarded altogether? On a larger scale, how will this proposed ruling change consumers’ perceptions of their drinking behaviors? Confronted with calorie counts, which in beer can be largely affected by alcohol content, will drinkers choose beer differently?

In Calif, craft $$ up 22%, +1.5 share to 10.9 in IRI multi-outlet + convenience (MULC) yr-to-date thru Nov 2.  Sierra Nevada remains largest craft supplier by far in largest state and has gained momentum thru 2d half of yr: $$ up 13% yr-to-date, with 20.7 share of segment.  However, it’s lost 1.6 share of craft $$ (tho gained 0.15 share of total beer $$).  Large chunk of craft growth in Calif continues to come from three of the hottest Calif cos – Lagunitas, Firestone Walker and Ballast Point. Combined they make up 49% of Calif craft growth while just 20% of total craft sales. 

Lagunitas IPA By the Numbers; DayTime Already Makin’ Noise Lagunitas actually trending better in home-state than nation-wide. Co does over half of its total scan biz in Calif.  Its $$ up 68%, volume up 73% in Calif; up a whopping 3.6 share of $$ to 12.8.   No question that Lagunitas IPA has driven majority of co’s growth, up 69%, +3 share of craft $$ on its own.  It’s the 3d top gaining brand in total Calif scans, only behind Modelo Especial and Modelo Chelada.  So Lagunitas IPA gains in Calif this yr are greater than total sales of both AB Rita intros (Mang-O and Raz-Ber) and Miller Fortune intro in Calif.  Lagunitas IPA is 2d largest craft brand, and 23d best-selling brand just behind Shock Top Belgian White, Michelob Ultra and Natty Light.  In latest 13 wks Lagunitas IPA sales were bigger than all 3, and not too far behind MGD, Pabst Blue Ribbon and Corona Light.  All Lagunitas top brands growin’ very solid double-digits and they’ve got 6 of the top-50, including DayTime session IPA.  In Calif, DayTime already ahead of 21st Amendment Brew Free or Die IPA (+40%) and Green Flash West Coast IPA (+16%).

Firestone 805 and Ballast Sculpin IPA Pave Way for Top Growth Firestone Walker (+69%) and Ballast Point (+140%) are the other hottest craft cos in Calif.  Each gained well over a share of craft $$ in Calif MULC to become #7 and #8 top craft suppliers (#14 and #16 top total suppliers) in state.  Firestone jumped ahead of Phusion Projects and is gaining ground on Stone, while Ballast Point sales pulled ahead of Anchor Brewing, Bear Republic, Lost Coast, and Deschutes (+9%) in Calif scans this yr.  Then too, both cos’ biggest brands nearly tripled sales in Calif: Firestone 805 up 191% and Ballast Point Sculpin IPA up 173%.  Firestone 805 is 11th best-selling craft brand in scans, gained 1.3 share of $$ on its own to-date. It’s quickly gaining ground on Bear Republic Racer 5 (+20%) and Sierra Seasonal (+2%).  And Ballast Sculpin is 16th best-selling craft brand, just behind Anchor Steam (+13%) and Lost Coast Great White (+5%).  Nationally both brands’ trends even better (see Sep 26 issue). 

Other Top Craft Cos in Calif; Whole Lotta Locals Trendin’ Up Up Up Meanwhile, Craft Brew Alliance, Boston Beer craft portfolio and New Belgium, #3-5 top craft cos, each up 8-10%, tho each lost a hefty chunk of craft share.  Boston Beer total co up 48% in Calif, driven by continued Angry Orchard (+150%) success.  Craft Brew Alliance growth in Calif driven by healthy Kona portfolio; particularly Kona Big Wave (+96%) and Island Hopper Variety Pk (+32%).  NBB has had a bit of a bounce back yr in Calif.  Even tho Fat Tire, Ranger IPA and NBB Seasonal each down yr-to-date in scans, Snapshot Wheat intro, NBB Variety Pk (+24%), and Rampant Imperial IPA (+95%) more than made up for those declines.  Combined CBA, Boston Beer Craft, and NBB shed 3 share of craft $$.  Stone (+37%), Anchor (+33%), and Bear Republic (+19%) round out top-10 craft cos in Calif.  

Then too, there’s a whole lotta of other Calif cos growin’ solidly in 2014.  Larger regional craft cos like 21^st Amendment, North Coast, and Hangar 24 each up between 26% and 34%.  Coronado still managing +38% growth in home-state, even as it’s expanded to lotsa new east coast mkts in 2014. Speakeasy Ales continues to grow solid double digits, +17%.  And plenty of smaller local brewers have some of best trends in scans – Saint Archer (+211%), Golden Road (+113%), Drakes (+96%), Mission (+71%), Port (+61%), Knee Deep (+52%), Mother Earth (+284%), Tioga Sequoia (+118%), and Russian River (+56%).

Green Flash Volume Takes Big Hit in Calif; Same Handful of Cos Continues to Decline Not all hunky dory for Calif craft, as same handful of Calif cos continue to decline and/or slow in home-state scans.  Most recently Green Flash joined that list, as sales starting to take hit in home-state, particularly on volume.  Green Flash dropped from $$ up 31%, volume up 20% thru Apr 27, to $$ only up 4%, and volume actually down 7% yr-to-date thru Nov 2.  Green Flash volume down 19% in latest 13 weeks.  Meanwhile, Lost Coast (-4%), Mendocino (-18%), Gordon Biersch (-23%), and Mad River Brewing (-9%) all continue to decline, and Anderson Valley (+1.3%) sluggish in scans.  Other top cos down yr-to-date include North American Breweries Craft portfolio, down 30%, World Brews, -42%, Gambrinus, -4%, and Alaskan Brewing, -3%.   Gotta note, Karl Strauss was able to rebound to +10% growth YTD after being down double-digits thru Apr 27. 

Top Calif Cos’ Newer Variety Pks Quickly Becoming Top Brands Sierra Nevada, Firestone Walker, Ballast Point, Stone, and Anchor each have newer variety pks that’re quickly becoming top brands in Calif scans.   Sierra’s is of course largest; the #20 best-selling brand just behind Kona Variety Pk (+32%) and Sam Adams Variety Pk (-15%) in state yr-to-date (ahead of both in latest 13 wks).  Stone Variety Pk (#35) and Firestone Walker Brewery Select Pk (#44) each top-50 craft brands, while Ballast Point Variety Pk not far off, at #59, and Anchor Variety Pk is 75th best-selling brand in Calif scans.

A 9th circuit US District Court judge in Northern Calif tossed Lost Coast’s trademark infringement suit against NC’s Aviator Brewing late last week, charging the court has no jurisdiction over the case, Law360 reported. Court accepted Aviator’s motion to dismiss as the smaller brewing co “doesn’t have sufficient contacts here to justify personal jurisdiction,” the judge ruled. (See our Aug 1 issue for details of suit based on Lost Coast’s Great White brand.)

Following lead of states like Alabama where grassroots consumer orgs have helped change beer laws, Okla beer drinkers banding together to begin process there too. League of Oklahomans for Change in Alcohol Laws (LOCAL) looks to allow Okla brewers to sell “high point beer” (over 3.2% alc by weight, usually around 5% abv) at breweries, with hope that eventually beer can be sold refrigerated in liquor stores (currently barred from being sold cold). The group’s director knows “it could take years,” according to Oklahoma Gazette, but wants to “start the legislative process in 2015,” potentially even hiring a lobbyist for help.