They weren’t talking to each other, but both Brooklyn cofounder Steve Hindy and New Belgium cofounder Kim Jordan commented recently about the values of their own companies, their perceptions of shared values among other craft brewers and whether or not “money” drives the category. “Has it really been 27 years?” Brooklyn Brewery co-founder Steve Hindy wondered when writing press release announcing new titles of Ottaway brothers (see last issue), or so he recalls in ruminative blog post on “changing of the guard.” In winding tale of Ottaway’s involvement in the co, Steve recalls that “many of the brewery founders of my generation have moved on,” as “some...sold” to the big guys, others to ESOPs or PE firms and still others went public. In the ’90s, “the Dot-Com years,” Brooklyn “went to our investors with a plan to look for public money to grow the company,” Steve writes. “Eventually the Ottaways agreed to buy into the company on terms similar to what we would have gotten had we gone public,” about a decade after Eric and Robin’s father David initially put up $10K, “mainly on the basis of our friendship,” when Steve started the company. And Steve is “pleased to report that the Brooklyn Brewery has done much better with the Ottaway investment” than others that went public, he argues: “only Boston Beer has flourished as a public company.” Steve concluded “a few years ago” that his stock in the co “would be more valuable” with the Ottaways at the helm, but “it is not just about money,” he urges. Being “a good corporate citizen of Brooklyn and New York City” was a key objective of Steve and cofounder Tom Potter.

Kim of course is one of those founders that went the ESOP route, which she discusses in lengthy interview with local paper, the Fort Collins Coloradoan. “Being all-in about employee ownership has been a really important part of the process,” she notes, referencing New Belgium’s culture of involvement as a key factor that makes the ESOP work. “I hear of other companies who have employee ownership but it’s really not expressed very deeply in the organization,” she contrasts to NBB’s utilization of open book management, monthly strategy meetings, “financial literacy training” provided to all co-workers and more. “To say, ‘Hey you’re owners, but you don’t know any more about this today than you did yesterday,’ that kind of squanders the potential,” in Kim’s view. She’s also “seeing signs” of folks entering the biz thinking more about money than craft’s “ethos of camaraderie and friendship.” She’s “talked to someone who is on the buy/sell side of the alcohol adult beverage space. He said he is really surprised about some of the new brewers he’s meeting who are like, ‘I’m opening this brewery, I’m planning to sell it in three to five years and make a pile of money.’” That’s not so of some with longer tenures in the craft industry. “And I worry about that,” Kim concludes, “because I think beer drinkers like us in part because we are a bit iconoclastic and alternative and we do what we do because we get a lot of joy from it.”

Some Still Driven by Passion: NYC Nanos Not Breaking Even, Room for 50 in City As Kim notes, many new breweries starting up today do still think lots about that craft “ethos,” as expressed in video from The Guardian focused on NYC nanobreweries. The city’s been fairly late to cultivating a brewery count to match its massive population, in part due to difficulty finding an affordable space, NYC Brewers Guild prexy/KelSo Beer cofounder Kelly Taylor told the paper. But he thinks “we’re gonna see a great explosion in New York City over the next decade. I don’t see a reason why there shouldn’t be fifty breweries in New York City,” many of them “nanos” that can be “put in a corner in a basement somewhere” to “supplement” another biz. “The challenges of making beer on this scale are endless,” Rockaway cofounder Marcus Burnett told the paper. The co made “very little profit” on a 2-bbl system, but is looking at making “a decent profit” now that it’s upgraded to a 5-bbl system, including selling beer out of its taproom. But “why’s it worth doing? Cuz that’s what we love doing,” he said, and beer drinkers “can feel the love you put into it.” Bridge & Tunnel Brewery  cofounder Rich Castagna agreed that on such a small scale, the money may not totally cover the time and energy put into his biz. But folks getting into the nano biz, in his view, are “doing this for other reasons.”

On its 3d qtr earnings call last week, as on past calls, analysts pushed back against Boston’s conservative guidance, which ceo Martin Roper, again, politely rebuffed. While “optimistic,” Boston maintains plenty of potential pressures looming. But fascinating factoid offered in response to follow-up question about on- and off-premise trends: “frankly we aren’t seeing too much difference in trends,” Martin said. Noting that on-premise data is “somewhat limited,” Martin continued that “we’re pretty happy,” since retail-focused sales force “drove both seasonal handles, lager handles,” plus Rebel and Angry Orchard, so “we’re seeing pretty similar trends on- and off-premise.” Considering overall on-premise picture has been anything but bright (total on-premise beer biz down 3.4% YTD in GuestMetrics data), Martin’s comment suggests wide variation in on-premise performance for beer cos and bars/restaurants generally.

That “large and talented sales organization,” as Martin called it, will continue to get focus: Boston is “committed to growing and adding to that group as the market warrants,” he continued. This yr, Boston amped up here with “launch type efforts” behind Rebel and new Cold Snap spring seasonal. Tho no launches coming next yr that quite match size, scope of those in 2014, “we’re planning on continuing the high investment levels,” Martin said, as “we see the big brewers adding sales people to try and compete with us and with others…. So we will react to what we see,” he added. Competition from big brewers also came up while referencing cider biz, where there’s “a lot of competitive activity,” per Martin, and craft biz generally. Chairman Jim Koch sees big brewer craft entrants “as a permanent fixture of the beer landscape and they, I think, will continue to step up their efforts.” This expected competition explains just a piece of Boston’s conservatism.

Other unknowables like freight and ingredient costs impact the co’s outlook too, Martin explained. Transportation continues to be a concern, and “we don’t have full visibility yet” on how that will progress, he said. Both “availability of transportation and cost of transportation” have been challenging, and “we expect that’s going to continue into next year.” Lower fuel prices may help, as CLSA’s Caroline Levy suggested, but “the availability and the driver hours seems to be a much bigger inflationary factor,” Martin commented to close call. On ingredient side, Boston’s also trying to assess “exactly what the barley situation means,” he said earlier (recent press clips have noted very difficult weather in some of the crop’s major growing areas).

Craft Doubling, More IPA the “Next IPA,” Session Rebel Rider Coming; Upping A&S Spend  The folks at Boston are “generally very positive about the craft category,” Martin said on call. So he thinks “craft is likely to maintain a low double-digit growth rate next year and we would like to get a reasonable share of that.” Further, “we and most other craft brewers are very optimistic about multiple years of double-digit growth,” Jim added later, and craft “could double over some reasonable period of time.” Tho Jim thinks “at some point it’ll be tougher for new entrants,” he sees “drinkers becoming much more eclectic and drinking across categories,” which provides “opportunities for brewers big and small...to innovate.”

Meanwhile, IPAs are “certainly providing a lot of energy and growth” to craft category, Jim said. “I don’t know how long that’s going to be,” he added, but “turns out, the ‘next IPA’ is just more IPA.” Tipping 2015 hand just slightly, Jim noted that “we’re going to continue to support and look at some product line extensions off of Rebel,” reminding that IPA category continues to “blossom and bloom with session IPAs, with double IPAs.” Not coincidentally, those are 2 directions Boston’s moving with Rebel extensions: recall, double entry Rebel Rouser announced last month, and session-version reportedly called Rebel Rider coming not too far behind.  Further, looking into Boston’s expected expenses next yr, looks like ad & selling energy behind Alchemy & Science division about to pick up. Boston pegs full-yr 2014 “increased expenditures” on A&S brands at $3-5 mil, but that’ll shoot up to $6-12 mil in 2015. That’s as capex on these brands should be $7-9 mil by yr-end, dipping to $5-7 mil next yr, tho co added usual note that these “could be significantly higher.”

Analysts Call Out “Conservatism,” Again, Expect Bigger 2015 Than Boston Execs  About that conservative outlook: tho couple of analysts again questioned Boston’s guidance on call, most alerted investors to the co’s consistent conservatism in write-ups following call. After repeating Boston’s reminders that it’ll be drawing down some inventory and has moved some expected 3Q spend to 4Q, “full-year guidance still appears conservative,” Goldman Sachs’ Judy Hong wrote. “We appreciate the management’s conservatism,” the Cowen Insight repeated twice in its analysis, reminding that even if sales slow at same pace as Sep to Oct in Nielsen scan data, Boston’s performance would still “result in full year growth at the high-end of guidance.” Indeed, “in each of the last five years,” Boston’s “guidance has ended up proving to be conservative, at least on the volume line.” RBC’s Nik Modi went one further, reminding that “2012 initial guidance was revised upward twice; 2013 three times, and 2014 two times,” both in pre- and post-results analysis. So Nik thinks 2015 guidance of 10-15% volume growth “is the floor where Boston Beer expects the core portfolio to perform,” per report.

IPAs have been especially hot in scans this yr, up around 50% all yr long in IRI Multi-Channel + Convenience, so CBN thought to take a closer peek under the hood to see what’s really driving growth.  Main boost is from nearly 100 new IPAs tracked by scans that gained a whopping 10 share of total IPA sales.  Over 200 IPAs growing 50%+ collectively gained another 9.5 share of style.  Sam Adams Rebel intro, and Lagunitas’ impressive portfolio of IPAs were biggest growth contributors to this sizzlin’ style all yr, but there’s lots more to the story.

Intro IPAs Gained 10 Share of Total Craft IPA Sales thru 9 Mos Takin’ a rare peek at long list of all IPAs sold in scans this yr, 714 IPAs tracked by IRI MULC thru Oct 5 (list doesn’t include most seasonal IPAs, variety pk-only IPAs or specialty IPAs).  Nearly 100 (99) of those are brand new to scans this yr.  They managed to grab 2.3 share of total craft $$ and 10 share of total craft IPA sales.  Looming large of course is Sam Adams Rebel IPA. Rebel snagged strong 1.5 share of total craft $$ and 6.6 share of total craft IPA sales in just 9 mos.  Only Lagunitas IPA and Sierra Torpedo IPA have higher share of IPA.  Lagunitas IPA gained nearly 1 share of style to 8.4, but Torpedo actually lost 3 share of IPA $$ yr-to-date, from 12.6 to 9.6.  That’s even tho brand continues to grow double-digits. Torpedo, Lagunitas and Rebel IPA are a quarter of IPAs.

Deschutes Fresh Squeezed IPA and Widmer Upheaval IPA each gained over a half a share of IPA’s in their first yr, tho cos’ other IPA offerings ain’t keepin’ pace, either scaled back or replaced.  Deschutes Inversion IPA only up 1%, and even with Upheaval intro, Widmer total IPA portfolio down 19%.  Stone Go To IPA and Rhinegeist Truth IPA are next best-selling IPAs new to scans, ahead of Anchor IPA, Lagunitas Sucks Ale, and Hop Valley Proxima IPA. Rest of new IPA entries made by long list of big and small cos from all over US. 

Lagunitas IPA Portfolio Leadin’ the Way for IPA Growth; Most Large Craft Cos Losin’ Share of IPA Aside from Sam Adams, Lagunitas leadin’ the way for IPA growth with 6 different brands (included in IRI’s IPA data, tho not all specifically labelled “IPA” by Lagunitas). They collectively gained 1.9 share to 13.8 of total IPA sales and 3.15 share of total craft sales.  Lagunitas IPA, Little Sumpin’ Sumpin’, Hop Stoopid and Maximus are all top-20 IPAs followed by DayTime IPA, #40, and Lagunitas Sucks at #96.  Founders and Ballast Point were next largest share gainers of IPA sales.  Founders’ five IPAs, led by All Day and Centennial, and Ballast Point’s six IPAs, led by Sculpin, each gained 0.7 share.  Foothills (+0.5), 10 Barrel (+0.3), and Bell’s (+0.2) were next largest share gainers of IPA.  Gotta note Bell’s total IPA sales nearly triple the size of 10 Barrel and 4x the size of Foothills.     

Meanwhile, IPA growth is so crazy and dispersed that many larger craft cos losin’ lotsa share of IPA, even as most continue to see strong double-digit growth.  Ten top cos collectively lost 9 share of IPAs: Sierra (-3), New Belgium (-0.3), CBA (-2.1, mostly from Redhook), Harpoon (-0.8), Ninkasi (-0.6), Dogfish Head (-0.75), Bear Republic (-0.5), Stone, Deschutes, and SweetWater (each down 0.3).   

346 IPAs Growing Double-Digits, Yet Nearly 230 IPAs Down in Scans There’s plenty of considerable growth among IPAs as 346 of ’em growing double-digits; 90 of those more than tripling, 48 are more than doubling, and another 76 up 50+%.  Those brands more than doubling gained a combined 7 share of IPA sales to 13.1, and there’s a handful of larger brands in group that continue to flourish: Founders All Day, Ballast Point Sculpin, New Belgium Rampant Imperial IPA, Foothills Hoppyum, 10 Barrel Apocalypse IPA, Revolution Anti-Hero, Bell’s Two Hearted, and Cigar City Jai Alai. Those well-known brands all among top share gainers of IPA.  Also gotta note, North American Breweries ramped up its Magic Hat Blind Faith IPA big time, as sales crankin’ up 250% YTD, even as NAB total craft sales lagging.  Last yr Blind Faith was down 9%.

Yet there are still 226 IPAs that declined in IRI thru Oct 5.  Most of ’em are much smaller long tail brands, down 8.3 share to 6.4 of total IPA sales. But there’s also a handful of larger brewers with declining IPAs.  In some cases it’s brands that are getting phased out, or scaled back for another newer offering.  Every Sam Adams and Widmer IPA other than 2014 intros are down yr-to-date, and Pyramid Thunderhead IPA down as Outburst IPA up double-digits.  Other declining IPAs are from larger brewers like Gambrinus, with BridgePort Hop Czar (-23%), BridgePort IPA (-18%), Abita Jockamo IPA down 43%, Full Sail IPA (-4%), and World Brews (private label) Double Take IPA, down 34%.  And a coupla brands from mid-range craft brewers that’ve notably slowed in scans last coupla yrs like Anderson Valley Hop Ottin IPA, -9%, and Big Sky IPA, down 4%.  All in, 226 declining IPAs collectively down 35%, shed 8.3 share of IPA sales and 1.3 share of total craft. 

Founders All Day Leads Comparatively Small Session IPAs  There’s been lotsa talk this yr about session IPAs becoming the next big trend, but not too many poppin’ up in scanner data quite yet and they’re still collectively less than 1 share of craft $$.  All session IPAs are just 2.6 share of total IPA $$ thru Oct 5, mostly just 3 brands.  Founders All Day IPA leads the way, tripling sales to 1.1 share of total IPA’s.  Then Stone’s new session play, Go To IPA is new to scans this yr and already in top-50 IPA’s. It’s not too far behind other relatively new session brew, Lagunitas DayTime session IPA, which only started selling late last yr.  Next largest session brand is 10 Barrel’s India Session Ale, at just over a third the size of DayTime.  Rest of Session IPA’s in scans include much smaller brands, tho some larger craft breweries got in the Session game early, like Boulevard’s Pop Up Session IPA, Boston Beer’s Anytime IPA (Alchemy & Science’s Just Beer brand), Ballast Point Even Keel, Flying Dog’s Easy IPA and ABI-owned Blue Point Mosaic Session IPA.

Lotsa Hot Local IPAs Gainin’ Share Inch by Inch Plenty of newer local IPAs are on fire in scans this yr.  A handful of Oreg cos – Hop Valley, Laurelwood, Worthy, and Goodlife – combined IPA portfolios make up 1.2 share of IPA sales in scans, and collectively grew 0.8 share yr-to-date.  Three Va IPAs – 3 Brothers Hoptimization, IPA Devils Backbone Eight Point IPA and Lost Rhino IPA – Tex’s Karbach Hopadillo IPA, Ida’s Payette Outlaw IPA and Sockeye IPA, OH’s Madtree Psychopathy IPA, and Four Peaks Hop Knot out of Ariz, all gained 0.1-0.2 share of IPA sales. 

Key IPA Takeaways  Even as IPAs continue to grow great guns this yr, plenty of churn going on behind lead brands in red-hot segment. Top 3 IPAs, Sierra Nevada Torpedo, Lagunitas IPA and Sam Adams Rebel collectively at near a quarter of all IPA sales. Torpedo’s still growing but losing 3 share to just under 10 share of IPAs. Lagunitas’ portfolio of 6 IPAs at just under 14 share. Energy behind Rebel intro put it at just under 7 share. Founders and Ballast Point IPAs are also gaining share, followed by Foothills, 10 Barrel and Bell’s. Session IPAs making a lot of noise, but still less than 3 share of IPAs, less than 1 share of total craft sales. Broadly, almost 350 of over 700 total IPAs are growing double-digits this yr, as nearly 230 are declining.

Lagunitas and Bear Republic are two top brewers among “major epicenter” along Calif’s North Coast that have “big plans” for future growth, noted lengthy feature in Santa Rosa Press Democrat.  Sierra Nevada, the largest of the group, of course opened its 2^nd facility in Asheville NC this Aug, and on pace to ship over 1 mil bbls in 2014, and further south Stone has big plans of its own to build Berlin and and Va breweries.  But Press Democrat focused on Lagunitas, the fastest-growin’ of the group, which will produce “about 120,000 barrels this year out of a total 600,000 for the company” at its new Chicago facility, and already plans on having capacity for 1.2 Mil bbls in Chicago by next summer, cmo Ron Lindenbusch told paper.  Petaluma facility will likely “max out between 700,000 and 750,000” bbls next yr.  Lagunitas becoming player in Chicago, where ABI just recently added its “high-end US business unit”; a move Tony Magee, Lagunitas founder, believes to be “capitulation”; “Now they’re playing on our turf,” he told Press Democrat.  As CBN reported earlier this yr, Lagunitas already lookin’ into a 3^rd US location, and Tony sees “as much as a total of five US breweries if trends continue” for Lagunitas, paper noted.  “That’s also in addition to an international plant, most likely in the United Kingdom,” Tony said.

Bear Republic More Regionally Focused Plans; 2^nd Facility in San Diego? Bear Republic plans are more regionally focused, after “downsiz[ing] from being sold in 35 states four years ago to 22 states in order to maintain quality.  Then too, Bear Republic apparently lookin’ at “a likely future plant in the San Diego area and launching a whiskey line” (that’s the first CBN’s hearin’ about a San Diego facility, stay tuned).  Brewmaster and coo, Richard G Norgrove’s motto: “Let’s be stronger in our backyard.”  

As World Series came to close, “one take-away that San Francisco Giants and Kansas City Royals fans can agree on: this was a great World Series for beer,” reported MarketWatch’s Jason Notte in piece dubbed “Giants – and craft brewers – win World Series.”  Both ball clubs happen to have partnerships with iconic local craft brewers of their respective cities, Jason points out.  Kansas City Royals sought sponsorship from Kansas City’s Boulevard Brewing a few yrs prior, after ABI notably “cut back the amount it was willing to pay teams for sponsorship rights…. Boulevard jumped at the deal and became huge backers of the Royals” adding “two Boulevard Grill locations in the stadium and beer vendors with backpack-mounted kegs of [Boulevard] Unfiltered Wheat Beer,” Jason noted.  Since Duvel purchased Boulevard, deal with Royals has “remained intact” as Boulevard “stayed in the stadium and affixed to the Royal’s postgame show.” 

The San Francisco Giants delved into its local beer scene long before, dating back to ’94 when Gordon Biersch “opened a stand in the Giants’ Candlestick Park and began selling” their beers and their garlic fries.  Gordon Biersch has continued to have a stand as Giants moved to AT&T Park, and “found a home” in long list of Calif sports team stadiums, including 49ers, Dodgers, Chargers, Padres, San Jose Sharks, Sacramento Kings, and even Ariz Diamondbacks.  However nowadays largest brewing partner with San Fran Giants is San Fran’s Anchor Brewing.  Co “just opened a taproom and plaza outside AT&T Park, and is collaborating with the Giants…to build a 212,000 square foot brewery, restaurant and museum just outside the ballpark” by 2017, Jason noted.  

These aren’t the only ball clubs with local craft beer partnerships, and there may be more to come as craft beer continues to gain share, and number of breweries continues to shoot up, Jason suggests.  Back in the 50’s and 60’s, it was “the default, the norm,” for local brands like Naragansett, Ballantine, Rheingold, Stroh’s and Goebel’s to have “local beer ads” tied to their hometown sports teams.   

Tho they’ve been basically running biz for some time now, Eric and Robin Ottaway took on new titles at Brooklyn Brewery this week. Eric takes on ceo position after years as coo as his brother Robin moves into prexy role from veep/sales mgr, the co announced. Recall, the Ottaways purchased cofounder Steve Hindy’s voting shares “a few years ago,” tho Steve “still holds stock,” according to release, and remains chairman of the Brooklyn board. Also this week, up in Boston, Harpoon named previous mktg veep Charlie Storey to role of prexy. Recall, Harpoon became a partially employee-owned company this summer, simultaneous to cofounder Rich Doyle passing the ceo baton to cofounder Dan Kenary.

Urban Chestnut started in 2011, and rapidly found acceptance and a niche for itself in hometown St Lou.  In just 3 yrs, it became the 3d largest Missouri craft brewer behind Boulevard and St Louis Brewing, and the fifth largest craft in the state, even including out-of-state craft brewers, noted co-founder David Wolfe.  That’s even tho it sells about 95% of its volume in St Lou metro alone, between self-distribution (about 40%), AB distribs Grey Eagle and Krey, and others.  Just expanded to KC a few weeks back with Major Brands, it’s 1^st non AB-distrib. 

Urban Chestnut should nearly double in 2014 to 12,000 bbls, and there’s a “good possibility” it will double again next yr, said David.  Co plans to expand to other major Midwest mkts and even pursue what David called an “alternative high spotting strategy” in select East coast mkts as soon as 1^st qtr next yr. In East, Urban Chestnut will “tease” those mkts and “pulse” small amount of volume to test demand.   A number of AB distribs came by to check out the Chesnut in times surrounding AB’s recent wholesaler meeting in St Lou. 

Recall, Urban Chestnut started by 2 ex-AB execs, brewmaster Florian Kuplent and mktg exec David Wolfe, plus minority investors who include other former AB execs.  In keeping with brewmaster Florian’s classical German training in brewing, Urban Chestnut’s lead brand is Zwickel.  That’s a lager style that you don’t run into that often, and yet it’s 40% of their volume.  Urban Chestnut rapidly outgrew its first establishment, a biergarten in midtown St Lou.  CBN paid a visit to Urban Chestnut in its big shiny new digs in St Lou area called The Grove.  The new Urban Chestnut facility has 70,000 sq feet and cost about $13 mil to buy land and build out.  Urban Chestnut already has over 90 employees, including those in its retail establisments, and about 25-30 full-time employees in its breweries.  Current capacity is 25-30,000 bbls, between the two facilities.  But with the simple addition of fermentation tanks, it could get to 100,000 bbls. So there is plenty of room to grow.  

In case you thought otherwise: “A jug is not a public menace.”  So asserts a rhetoric-filled lawsuit filed against Fla’s Dept of Biz Regulation and its alc bev division.  It’s the latest chapter in the long-running battle there to allow 64-oz growlers, a currently prohibited package size.  “This case involves nothing less than a small business’ economic liberty, and at the same time it involves all Floridians’ economic liberty, as well,” according to the plaintiff’s opening salvo.  That would be The Crafted Keg, a Stuart, Fla “full-time ‘growler bar’ supplying the best crafted beers, wines, ciders and sodas from throughout the world.”  Not only are Floridians suffering mightily by having to buy growlers limited to 32 oz or less or 128 oz or more, but there’s apparently a huge number of tourists regularly visiting The Crafted Keg and similarly situated businesses “with their 64-ounce growlers in tow,” who get angry when they’re told said growlers can’t be filled and instead have to purchase different-sized growlers.  Some of said tourists allegedly “do not believe the law actually” prohibits their growler size and think the retailers are “attempting to gouge” them.  The ban “has no rational basis,” violates the plaintiff’s rights to due process and equal protection under the 14^th Amendment and is “therefore unconstitutional.”  It should be dropped, immediately, sez the suit.   Large corporations can package in the various sizes that Fla law allows, but the ban limits “smaller sellers of beer,” it further claims, harming them “irreparably” via lost sales.  Indeed, the ban represents a “deprivation of the right to earn a living free of unconstitutional restriction.”  Who’da thunk it? 

The Pacific Legal Foundation, that’s who. The “free enterprise legal organization” PLF fights the good fight for economic liberty “free of charge” on behalf of those who need assistance.  “There is simply no defensible reason for Florida to single out the most popular craft brew jug and ban it,” said PLF’s Mark Miller in a press release, adding that “the ban isn’t to help the public, it’s to protect major beer interests by holding back the growth of craft brewers.”  That’s even while the same release cites data that suggests “there are currently 50 craft breweries in the state, with another 28 set to open soon.”  PLF anticipates that the state may defend the ban by claiming it “somehow discourages drinking and driving.”  But that can’t be the case, since other sizes, including larger ones, can be sold.  Helpfully, PLF’s lawsuit points out: “Growlers don’t drink and drive.  People who drink too much alcohol drink and drive.”  Thus the proclamation above about a jug’s inherent innocence.

What the Hell Is Going on Here?  A few observations, questions and possible answers.  As widely reported, tho perhaps PLF unaware, it appears that a “clean” growler bill will be before the state legislature to end this horror next session. We also hear that attempts may be made to add some labeling/handling rules (as other states have) which craft brewers may not enthusiastically embrace.  Both of Fla’s distributor assns support a 64-oz growler.  We reported The Beer Industry of Florida’s position in our Oct 10 issue.  Mitch Rubin of the Florida Beer Wholesalers Assn told CBN that his group also “supports a 64 oz growler” but points out that “it is up to the state legislature to pass such a law allowing the package, not the courts.”  Why are 64-oz packages banned in Fla anyway?  The state has a history of packaging battles; importers fought for years to free sizes that differed from some big domestic brewer offerings.  One source with institutional memory recalls that the ban on packages between 32 and 128 ouncers stems from efforts to keep out large packages of malt liquor (think 40 ouncers) and other sometimes high-ABV malt bevs.  Another suggests that the 32-oz cap on individual sizes acts a “nudge” to consumers to think before purchasing a second one and/or opening it.  So there is some at least claimed public interest.

Do a lot of tourists really bring their 64-oz growlers with them to sunny Fla, in their carry-ons, then have to put them in checked luggage, or guzzle them down while on an airport security line?  Are craft brewers and The Crafted Keg truly suffering?   We were in one of Cigar City’s taprooms just the other day for a quick beer, where patrons seemed to have no trouble getting their larger and smaller legal growlers filled, including the whiz bang “crowler” can that gets capped on the spot (and has gotta be a nice-margin offering for CC).  Finally, we can’t help but note that PLF is at least the 5^th free-enterprise, rightward-leaning organization that has come to the rescue of – or perhaps attempting to ride upon the coattails of? – beleaguered craft brewers and their fans, joining Competitive Enterprise Inst, Mercatus Center, Generation Opportunity and Institute for Justice.   

A steady stream of locals and visitors alike stopped by Great Divide’s Denver taproom last week, while we stopped by to enjoy the post-GABF quiet with founder Brian Dunn. Great Divide maintains its consistent growth, currently trending +17-18% YTD, Brian told us, even as his focus has largely been about a half-mile away at the construction site for the company’s new facility. When construction finishes there, Great Divide will operate two urban breweries with the ability to produce upwards of 100K bbls per year. But that’s still a couple of years out and there’s a lot to do before then. In the meantime, Brian expects to finish out this year between 43-44K bbls, up 18-19% over the 37K bbls it shipped in 2013.

Half of Great Divide’s biz is still in home-state Colo, Brian told us, overall up about 15% this yr. But growth rate’s “a little higher in the metro Denver-Boulder” area, where it’s up about 19% in the most densely populated part of the state. Brian sees plenty of room for growth even in a market with one of the greatest concentrations of breweries in the US, so “still my number-one focus is to grow in Colorado,” Brian said. He employs 5 sales folks in Colo alone, tho 3 of them cover some out-of-state territory. Great Divide has 2 more sales folks working exclusively out of state, and by Jan 1, 2015 a third, already hired, will hit the streets for the co. Another super-crowded craft market, SoCal, is Great Divide’s largest of about 24 out-of-state markets. And it’s up about 30% there, Brian said. Texas is next, +20%, followed by Mass, +29%.

IPA continues to carry a fair amount of weight for Great Divide. And a good thing too: lead brand Titan IPA’s about a quarter of its volume and up 25% this yr. It’s got a coupla other big brands in a coupla other hot style categories too. Behind Titan come the co’s farmhouse Belgian-style ale, Colette, up 20% and around 15% Great Divide’s biz. The co’s big imperial stout, Yeti, falls in just behind at 12% of GD’s biz and growing faster: +35% this yr. Tho it’s not one brand, the co’s Brewer’s Picks variety 12-pack is its 2d largest package, +18% YTD. Its other variety pack, The Big Show, is “up around 65%, but on a much smaller base,” Brian said. Over the last few years, he’s watched as 12-oz bottles have slowly grabbed a little bit larger share of his co’s biz from 22-oz bombers. The larger format is now about 20%, as 12-oz has grown from about 45% to half of Great Divide’s overall output. Draft biz has held at around 30% for a while now.

That’s set up to change again though as Great Divide will roll out cans for the first time next summer. Brian hopes to finish phase 1 of construction at the new facility by then, which will include a canning line, as well as keg packaging, warehousing and another small taproom. At that point, Great Divide will be running beer about a half-mile from its current spot to the new facility for packaging. That won’t affect the brewery’s annual capacity at all, currently around 65K bbls. Phase 2, which will include a larger brewhouse at the new space, should start at the end of next year or early 2016 and that “will start with an initial capacity of around 100,000 barrels,” Brian said. Since he and his team “plan for steady growth,” the co’s construction timeline should line up nicely with its growth trajectory, barring major delays. While he pays attention to growth and ensuring the co keeps climbing upwards, Brian is “not strictly growth-driven,” he told us. Instead, remembering “to make good beer and have a good quality of life” at the same time seems to be making for a steady, if slower, ascent.

week before it reports full Q3 results, CBA released updated guidance for full-yr while breaking news that tho costs of launching ops at Blues City Brewery in Memphis “largely in line with our expectations,” cfo Mark Moreland said, they totalled about $1.4 mil before taxes during 3-mo period. So earnings pressured by this move. But the relationship is a longer-term margin play, ideally increasing CBA’s efficiency over time, recall. In meantime, CBA met “shipping demands from buffer stock brewed during the second quarter,” just in case Memphis didn’t go off without a hitch. But the launch went smoothly, so expect to see lower utilization rates in 3d qtr results, the co announced. In same pre-results release, CBA narrowed guidance for full-yr depletions to +7-9%, tho as of Aug it expected 2014 depletions could reach as high as +11%. It also shaved a million dollars off top-end of expected sales, genl and admin expenses to $52-53 mil and narrowed capital expenditures guidance to $16-18 mil from $15-20 mil. Gross margin likely to come in between 29-30%, narrowing a half-pt off each end of 2d qtr guidance. The co’s pegging full-yr price increases at about 1.5% and revs from contract brewing at about +40% (from +25-50%). Stock down $3, 17-18% since release.