Green Flash plans to break ground on its 2nd brewery in Virginia Beach this upcomingMonday, reported The Virginia Pilot.  Recall the $20 mil, 58,000 sq-ft, 100K bbl/yr brewery to be was announced over a yr ago and originally expected to be completed sometime in 2015.  Green Flash still pluggin' away +26% growth in IRI multi-outlet + c-stores thru Sep 7.  

One of the most visible distribs in craftland, Jim Schembre, is moving to Rogue as sales veep.  A fixture at CBC wholesaler program, Jim’s been mgr at World Class Bev, craft-centric arm of big Monarch Dist in Indianapolis, established in 2001. Jim worked with Monarch for 19 yrs, after selling Schembre Bev in 1995.  World Class was early adopter of big craft book, consumer education, social media and more to drive craft interest.  He’s been on Rogue board of directors for 8 yrs, so no stranger to its portfolio or approach.  Rogue prexy Brett Joyce calls Jim a “great distributor partner, an insightful board member and a trusted friend,” so “perfect choice to help lead us in Revolution” and assist growth in US and abroad.  Jim sez “support of the 3 tier system remains at the core of what I believe” and “collaboration of tiers is at the heart of what makes this business tick.”  

As Alchemy & Science’s Miami-based Concrete Beach Brewery slated to open sometime this fall, Alchemy & Science’s Alan Newman sounded off on difficulties he’s faced opening a brewery in Miami due to arduous “local permitting process,” in South Fla Biz Jnl.  “In places where craft beer's been around for a while, the community has realized what a great resource this burgeoning industry is,” and “Miami doesn’t get that,” Alan noted.  “I also think part of the reason it’s so difficult is the process is alien to Miami,” Alan added. “It is alien because there have not been enough breweries.”  Currently there are 140 active breweries (or nearly active) in Fla, with estimated economic impact of $432 mil to $875 mil in 2013, and “across Palm Beach, Broward and Miami­ Dade counties, there are only about 20 craft breweries,” paper pointed out.   So the process of opening a brewery isn’t completely foreign to South Fla, but rather “behind the curve” as another South Fla brewer, Twisted Trunk’s Matt Webster put it.  “If a town has not seen a brewery in it, you have to get amendments changed and deal with the town council.... We're definitely behind the curve, but we’re catching up.”  Concrete Beach Brewery and Twisted Trunk are two of six coming South Fla breweries set to open in the near future.

Not sure if lightning can strike twice, but Boston Beer is certainly throwing one-two punch at IPA category in 2014-15.  New Rebel Rouser Double IPA debuts early next yr, building on huge success of Rebel IPA.  It’s bigger, up at 8.4% ABV and 80 IBUs, so may not have quite the same volume potential as Rebel.  But plenty of nodding heads during debut tasting at GABF media brunch likely a good sign.  Suggested retail for Rebel Rouser 6-packs at $8.99-$10.99, about a buck higher than Rebel and Boston Lager, per co.  Founder/chairman Jim Koch and Boston team “can’t claim a lot of innovation” with this particular release, Jim said during Friday event in Denver, as “it’s a double IPA,” now a well-known style done straight up with combo of classic and en vogue hop varieties.  

Three-tier dominated NBWA discussions, as noted above, but other craft issues popped throughout convention this yr.  Much of the material below appeared in our Express and/or INSIGHTS letters, but we share it here for our CBN readers who don’t subscribe to those publications.

Consultant Joe Thomson sounded some themes with implications for craft brewers, big brewers and distribs alike. While some craft brewers express concern about access to mkt going forward with number of brewers expanding while number of distribs contracting, current system still provides “tons of access to market” for craft brewers, Joe stressed, just as NBWA leadership noted.  Consolidation will continue, but expansion of self-distribution, specialty and other wholesalers will also continue to allow craft to grow, Joe believes. Craft brewers have proven themselves to be “smart, creative and entrepreneurial.” They are “creating excitement in the market” and “deserve all the accolades they get.”  At same time, Joe suggested distribs ramp up pre-sales, other efforts for big brewer brands, tho making sure to point out “we’re are not saying to diminish efforts on All Others,” specifically craft, imports, FMBs, “only increase effort on premium, premium light and sub premium.” 

Question of distribs’ financial commitments to and efforts on behalf of brewers also came up in consultant Andy Christon’s seminar.  Andy was talking about aspects of AB contract that limit marketability of distribs’ bizzes, including mktg spend requirements, etc.  Mktg spend issues may increasingly come into play as distribs now agree to big upfront commitments to some craft brewers, Andy’s colleague Craig Van Horn reminded.  And as craft brewers build bizzes and seek to move brands, they could also be a “real engine of potential match and snatch” down the road, Andy believes, when brewer uses option to match a potential buyer’s bid and re-direct a distrib deal.  States like NY, with “carve out laws” that allow brands to move for fair mkt value if under a volume cap of distrib’s biz “don’t really solve the problem,” Andy said, as “real issue is [determining] fair market value,” which he calls one of the “most abused, misused terms in valuation practice.”

Will Bev Diversification Erode Distrib Protections?  Back to Joe, another key theme: “distributors with more diverse portfolios,” i.e. becoming “beverage distributors,” make it “harder to defend beer’s protections,” i.e. franchise laws.  Also pressuring protections, in Joe’s view: “violations of 3-tier,” like industry members being in multiple tiers, self-distribution, selling direct to consumers, etc.  Question pops more and more: “Why do distributors need protections for beer, but not for Red Bull” or wine/spirits?  

Asheville is a crazy scene.  Three of nation’s top 25 craft brewers are building (or finished building) in either Asheville or surroundings (Sierra Nevada, New Belgium and Oskar Blues), and there are already 14 breweries within the city limits for a population of 84,000 (according to 2010 US Census).  At least 4 more on the way in Asheville itself, including New Belgium.  There’s literally one every couple of blocks downtown.  Recall, when BA’s Charlie Papazian ran his Beer City USA poll, Asheville won 4 yrs running.  It’s a very beer-centric community.  Its core values are very much in tune with craft movement, such as a sign we saw in a store window that said: “Love Asheville, Choose Independents, Buy Local.”  Every restaurant CBN frequented in a couple of days there offered numerous local brews on tap (and virtually no mass domestics).  INSIGHTS hit a few breweries too.  Here are quick highlights.

The 2d largest brewery currently in Asheville is Green Man, founded in 1997, but purchased in 2009 by Dennis Thies.  Dennis is someone familiar to many longtime readers of Beer Marketer’s INSIGHTS’ publications.  The Thies family owned a good-sized MC Fla distributorship that sold in 2007.  When Dennis bought Green Man in 2009 it did around 700 bbls.  This yr, it will do about 8,000 bbls, he told CBN.  Next yr, it is partnering with Brew Hub and opening the state of Fla with old friends in the MC network.  Dennis expects to sell well over  15,000 bbls next yr, including Brew Hub-produced volume.  That would put it in top 150 or so craft brewers, which have attained BA “regional” status, i.e. more than 15,000 bbls. Fla will be its 4^th state (NC, SC, Tenn).

Green Man is on that kind of rapid growth trajectory, so familiar these days in craft movement.  And you know what that means: lots and lots of investment.  Indeed, the $2 mil investment a couple yrs ago will be followed by several mil more in next phase, adding 17,000 square foot packaging hall, building rooftop outdoor beer garden, bigger fermenters, and more.  Even that will only take Green Man to about 25,000 bbls capacity, not including Brew Hub production.  This is Green Man’s 3d expansion since 2009 and each one has approximately doubled the previous one, Dennis told CBN.  Current tasting room has a laid back, hip and funky vibe that is somehow oh so Asheville.  Green Man’s branding retains its irreverent personality. 

But the rising beer geek darling in Asheville is Wicked Weed, which has a flagship double IPA, but is best known for being first craft brewer in Southeast to focus much of its energy and many of its offerings on sour and barrel aged beers.  It just opened the Funkatorium to house its sour and barrel-aged beers, “a sign that our beer scene is evolving into one with the variety of Portland’s,” gushed Mountain Xpress columnist last week.  Eventually the Funkatorium will have more than 1,000 barrels of all types and its taproom “will almost exclusively pour sour and wild beers aged in those barrels.”  

Fast-growing Wicked Weed expects to virtually double from 2800 bbls to 5000 bbls this yr.  And it is busting at the seams at its popular well-designed restaurant, tasting room and small brewery downtown.  We sampled a complex, tasty and very drinkable sour called Black Angel.  Wicked Weed does not lack for funding.  Multiple projects are happening almost simultaneously.  Next yr, it will also open $6 mil brewery on outskirts of town that will take it to around 40,000 bbls capacity.  And Wicked Weed so far only self-distributes in Asheville, Charlotte and Raleigh-Durham, but also reportedly expects to easily surpass regional status in 2015, its 3d yr of existence. 

Asheville’s largest brewer so far is the venerable Highland, which opened 20 yrs ago and sold 34,000 bbls last yr (unfortunately, we didn’t get to Highland this visit).  Of course, it too is in expansion mode, spending $5 mil and adding 15 employees over next 3 yrs to get to 60,000 bbls of capacity, according to Asheville Citizen Times. If Wicked Weed and Green Man represent two of the faster growing and more ambitious locals, another side of scene exhibited by the Wedge, a well-regarded but much smaller establishment in the River Arts district. On a Friday afternoon, the Wedge had way more than a hundred people outside basking in the sun amidst art sculptures, drinking local craft beer and ushering in the weekend.  One 60+ regular there proclaimed the Wedge’s IPA the best beer in town, adding that he comes frequently and often gets into conversations with out-of-towners like us.  The Wedge is right around the corner from a colossus in the making, New Belgium’s $140-175 mil brewery. When CBN took peek at the site, there had been a lot of earth moved around and holes dug, but no buildings visible yet.  But construction “continues at a furious pace,” wrote Asheville Citizen Times.  And NBB still expects to finish in late 2015, another huge addition to the burgeoning local craft scene.  Click here to check out our blog post on our Asheville visit.

Weight put against educating consumers, brewers and industry members alike by festival organizers evident in every corner of GABF hall and surrounding events.  This year, BA put continued pressure on culinary world to think about beer more often, while amping up attention on state guilds’ promotional and legislative efforts.  Top priority here and for Julia Herz’s work at craftbeer.com remains bringing more attention to beer and food pairing.  Separate Farm to Table Pavilion (and for media, lunch briefing with carefully planned pairings) drove home this continued focus.  But Julia and team at BA putting in extra effort, debuting free online food/beer course at craftbeer.com (note that BA picked up new craft.beer domain in addition to 1300 other breweries that’ll look to migrate to a .beer web address).  That course, 2 yrs in making, provides culinary educators with resources they’ve lacked to bring beer into their classrooms for aspiring chefs and restaurateurs.  Wine has traditionally received major focus from most culinary institutions and “we think it’s time that that changed,” Julia said during briefing.  

Julia also turned media attendees’ attention to state guild efforts, bringing in guild leaders for meet and greet after lunch and pointing towards much-larger Support Your Local Brewery Pavilion on fest floor.  Indeed, the SYLB “Protect Beer” banner was largest in hall, BA’s chief economist Bart Watson pointed out to us.  Manned by BA staff, including guild coordinator Acacia Coast, the pavilion provided opportunity to meet with folks from 18 of state-level guilds (now present in all states after Wyo group came on line, but plenty smaller regional or city-level assns too).  Colo’s Dry Dock co-owner Kevin Delange noted at lunch that “we are bipartisan, beer is bipartisan,” indeed “it’s something [politicians] can agree on.”  The Colo guild actually worked with state legislators to create 2 collaborative beers, senators working with Kevin and Dry Dock on a wet-hop pale ale and representatives brewing a saison with Denver Beer Co.  Attendees could vote for their favorite at the guild’s booth.  That wasn’t the end of political mentions at the fest as BA prexy Charlie Papazian encouraged brewers to get involved in local politics and vote during his remarks at awards ceremony, echoed by Colo Gov. John Hickenlooper during his awards ceremony speech.  

GABF attendees could taste 1 oz samples of about 3500 beers from 710 breweries at this year’s fest, the Brewers Assn’s Julia Herz shared during packed media luncheon on Friday.  Half of those attendees came in from out of state, she added, sipping samples from 6900 kegs, handled by 3200 volunteers.  Next year the BA will have access to an additional 90K sq-ft for the fest, so onwards and upwards.  A full 170 of the breweries pouring in the hall were there for the first time.  The GABF competition gets stiffer every year: over 5500 commercial beers were evaluated from over 1300 breweries.  A full third of those breweries had entered the competition for the first time and 52 of them (near 12%) won a medal.  That’s just a bit below the 18% of all breweries that entered the competition and walked away with some hardware.  Once again, American IPA remained the most-entered category, as it has been since 2002.  Official count hit 279 American IPA entries this yr, up 10% from just over 250 last yr.  Add in Imperial IPA (135 entries) and English-style IPA (just 39) and over 450 of all entries were IPAs.  Other competitive categories included Herb and Spice Beer (150 entries) and other hop-heavy styles American Pale Ale (145) and American Amber/Red (140).  Craft heavyweight states once again walked away with the most medals: Calif with 46, Colo with 39 and Oreg with 22.  But note that NJ breweries posted the highest ratio of medals (3) to entries (16).  

Two speakers on different NBWA panels last week insisted that “distributors are brewers’ customers”: consultant Mike Mazzoni and Lagunitas’ Tony Magee.  Tony got big applause as he said it right after calling carve outs to franchise laws a “negative.”   He acknowledged some “impediments” that distrib protections sometimes place on “carrying out our business,” but what that means is “either I make you a better customer, or I have to become a better supplier.”  And while comments from BA execs at CBC this yr, piggybacking on NY Times op ed in Mar, highly critical of “archaic distribution laws” as “unfair” to craft brewers and ripe for reform, Tony said distribs “don’t hide behind their protections” and “undoing regulations, and the industry somehow seeing craft as above the past, is hubris.”

Two other craft brewers on same panel also highly supportive of distribs and echoed NBWA mantra that 3-tier system in some measure responsible for craft success.  Steve Crandall of Devils Backbone said distribs are “teaching us the business” and loss of 3-tier “would create a lot of havoc.”  No-Li’s John Bryant agreed that without 3-tier system “No-Li can’t go to market.”   There are “a lot of small craft brewers who don’t know the business yet,” who “still have a long way to go,” John said, and “need to understand what the state regulations are” to “prevent resentment down the road.”   Indeed, he asked distribs help “advise” small brewers along these lines.  John very complimentary of local northwest distrib that’s been a “mentor” and helped “prevent mistakes.”  John not seeking “unfair advantages” but “mutual accountability.”  Distrib-brewer relationship “not always going to be perfect,” said John, but he, Steve and Tony all agreed that it has to be based in “honesty and integrity” (Steve) or “trust and respect” (Tony) and that problems can be worked out via communications  between ’em.  Another place where these brewers agreed with NBWA (and BA too, for that matter): AB branches aren’t good for craft brewers.  Tony has “steered away” and Steve said he’s “totally against any kind of cut to the 3-tier system.” 

Other Points of Consensus: Puttin’ Feet on the Street; Know Your Accounts, Said John  You gotta have “feet on the street” these days, was consensus of the panel.  “If we don’t have a person in the market we shouldn’t be there,” said John.  That’s “different from 5, 10 years ago” when you could “ship beer and have a great marketing program, great pricing, great brand story, all those things.”  Today, “you’re not out hustling local, local, local: you’re done, done, done.”   “We invest a lot in feet on the street,” and “spend a lot of time…telling our sales people the Lagunitas story,” added Tony.  

It won’t come all at once, far from it, but plans for how Founders Brewing could produce near 9X its 2013 output are now in place.  And all that growth will come from just one place: the brewery’s current location in Grand Rapids, Mich, as the co announced it’ll be building out its current facility in place of finding a new location for expanded production.  The co “always loved the idea of staying put,” co-founder/ceo Mike Stevens told CBN.  Recall, Founders looked into other properties in Grand Rapids for a new facility, but “skinned the cat this way,” Mike said.  But figuring out where to brew “damn near a million barrels,” it’s “not easy to put” a brewery that size “on a city block.”  Facilities have to be “highly efficient with...square-footage” to do so.  But Founders figured out how to put the pieces in place, “got city tax approvals” for abatement plan late last week and is now waiting on state-level approvals.  Combined, those tax abatements likely to offset about $4.5 mil of the $35 mil Founders plans to spend.  

Mike thinks the co could have found a way to expand capacity cheaper, elsewhere (recall initial reports this spring claimed this would be about a $25-mil project).  But his team wanted to “try to make this work in the city.”  So tax abatements will “offset that efficiency” lost by adding on where they are.  “When you need $35 million when you just” spent $26 mil on another expansion, you end up “dealing a lot with bankers,” he told us.  While rumors swirled about the reasons for banker-visits, this initial phase of expansion, scheduled to break ground at the end of the month, will be “all managed through debt-financing,” Mike insists.  And it’ll bring “sellable capacity” to around 400K bbls by July 2015.  This phase entails essentially “building a second brewery attached to our existing brewery,” right “on the other side of the wall.”  That’s “critical to the process,” Mike said, because it provides “zero interruption” of current production.  Space will include a new 300-bbl Krones brewhouse, plus new bottling, canning and kegging equipment.  Mike reminds that Founders’ offsite warehouse that handles all shipping and receiving for the brewery provides a huge help to make the current space work.  The warehouse makes for a “highly efficient” process, as Founders runs just “one truck back and forth” during the day.

The second phase of construction is likely to begin in the “front end of 2016,” Mike said, coming online by July 2016.  By then, the Founders facility will be able to produce closer to 600K bbls.  “Then it’s dropping in fermentation” at “whatever rate our growth tells us.”  Speaking of that growth, Founders will “finish this year right around 200K bbls” and “next year we’re forecasting 300K bbls,” all of it within current distribution territory with “no plans to add” til maybe 4th quarter 2015.  But that’s just a “rough guess.”  Founders brands will hit the West eventually, with new markets in 2016 “for sure.”  Sure, Founders just broke 100K-bbl mark last yr, finishing out 2013 at 111K bbls.  So it’s eyeing near 80% growth this year.  But the brewery’s produced 22-24K bbls in each of a couple recent months, so just under 300K bbls on annualized basis.  That usually slows down later in the year, Mike said, but it’s surely giving volume big pop in 2014.  

All in, Founders up just about 51% YTD thru August, Mike reported.  Same-market sales still a “key indicator” for him and those up 32%.  “That’s where we see our future growth.”   It’s also “pretty obvious what All Day’s doing,” Mike added, now the #1 “session ale” by volume in Nielsen cut Mike looks at, +167% thru Aug.  Mike believes his co’s “just scratching the surface” with All Day.  It will be 80K bbls in 2014 and the co is planning on 140K bbls of it in 2015, all in existing markets.  That 75% jump in volume “allows us to break into some other channels,” particularly chains where it’s “mostly still playing in the independent world.”  Overall, Founders’ chain penetration is “only 30%,” and though it has some great partnerships already, the majority of chain biz is still locally-focused.  “We’ve got the whole United States to explore,” Mike said, so the co has put together a “team of four to focus on chains.”  Those folks still saying “not yet...not yet” to a lot of calls.  But when 5 more 600-bbl tanks come in Dec (which will allow co to hit that 300K-bbl/yr mark), the co can “start opening the gate a bit more.”  But don’t think it’s just All Day, as Mike sees “great brand strength across the board.”  All of its brands are growing, including Centennial IPA +62%, Dirty Bastard +42%, and Porter +76%.