From option that didn’t exist 30 yrs ago, direct shipments of wine from vintners to consumers now a $1.57 bil biz, Wine Institute VP Steve Gross told CLE “Wine Spirits and Beer Law” conference last week.  That’s 8.6% of total off premise wine sales, 5.6% of total US wine mkt, 2% of off premise volume, 1% of total volume. And that biz growing mid-high single digits, faster than overall wine sales.  So, not huge perhaps, but certainly significant.  Direct sales now legal in 41 states; 14 states allow retailers to ship direct.  (All figures from Direct to Consumer study done by Ship Compliant.)  About half of cases/value being shipped by “small wineries” which produce 5K-49K cases/yr.  Another 19% of volume, 1/4 of $$ shipped by even smaller wineries.  Mid-sized wineries (50-500K cases) sell 29% of direct volume, 23% of value.  Big wineries (largest 55 in US) just 5% of shipments, only 4% of $$.   How much are consumers spending?  Avg price/bottle for those small wineries is about $37.  Goes up to avg $49/bottle for smallest players, dips to $27/bottle for big wineries. 

Given: 1) growth/size of direct shipping in wine; 2) anticipated challenges for smallest brewers to get distribution going forward; 3) growing importance of taprooms, where consumers could ostensibly order beer for shipments “back home”; and 4) higher and higher prices commanded by most in-demand beers, is direct shipping becoming more of a beer option?  Look at the numbers again.  Wine consumers are spending avg $400/case for the wine from the “small” wineries, ($600+ for the top end wines), plus $40-100 per case for shipping.  Not many craft beers commanding that kind of price, even for most exclusive offerings.  And tho some varieties certainly challenge traditional perceptions, beer by and large even heavier than wine with greater aging issue.  Also not yet too many beer consumers looking to pick up full case of a single super-high-end beer, as most beer clubs still offer smaller quantities.  Entrance of retailers into this space, ahead of breweries, plus success of direct-to-consumer sales without shipping (see below) could reduce incentive to find make direct shipping as a truly viable model for beer.  

Regulators from many states expressed slew of new issues cropping up right along with growth in number of industry players they need to regulate at CLE alc bev law conference last week and CAP meeting earlier in month.  While multiple state ABC officials not necessarily complaining about lack of compliance or complexities added by craft players, most regulators need to do more with less. 

New Suppliers Causing Trade Practice Issues in Va; Tap Takeovers Exclusion?  “Explosion of craft brewing and distilling” in Virginia has created issues over growlers, on-site sales, sampling, and more just as non-traditional bizzes from art galleries and studios to river cruise operators seek to sell alc bevs there, ex-state director Curtis Coleburn said at CLE last wk.  Trade practice challenges in Va “largely involve new entrants,” he said, that “don’t understand history or the need for tied house” laws.  New breweries and others “don’t tend to ask before they do something and don’t know why giving/receiving” things of value to promote their product is illegal.  “They just do it.”  Tap takeovers dicey there: “it looks like exclusion,” to the ABC, especially if brewer pays for night of takeover, provides personnel to pull taps and talk about beer.

NJ Understaffed to Process Licenses, Raises Cross Ownership and Festival Questions  NJ has also seen “explosion” of licenses for craft brewers/brewpubs since law changed in 2013 easing process and operations, ABC director Michael Halfacre said.  But state created “new licenses without the time or personnel to process them,” so it takes 4-6 mos “if you have your act together” and that’s creating a “big problem.”  Meanwhile, NJ craft brewers, not allowed to serve food, now inviting food trucks to park nearby, adding tvs to taprooms, etc.  “Is that tasting room now a restaurant” or bar?  Importantly, NJ has per market quotas for alc bev retail licenses, so some have sold for up to $1.5 mil.  Echoing comments from Ill ABC director at CAP mtg earlier this mo, NJ facing “very complicated” issue of  hedge funds, other financial co’s investing in alc bevs and ABC trying to disentangle potential cross-ownerships.  “How far do we follow the money?” Michael and other ABC directors ask.  Festivals cause a bit of an issue too as number of events growing but still no statute/reg to address them.  So some unlicensed promoters operate outside law, others guarantee charities say $5K to use their permits and pocket the rest.  And there are “as many variations as you can think of,” said Michael.  That’s “illegal in NJ,” and nothing to address issue right now.  ABC has “pilot program” to study mkt and “we’ll do rules later.”

Nebraska “Struggling to Keep Up”  Above comments dive in to more specific issues, but general sentiment a mirror of difficulties faced in Nebraska, according to Omaha World-Herald article over the weekend.  The state’s Liquor Control Commission hopes to be approved for a “second field auditor” to help inspect licensees, specifically to ensure accuracy of excise tax reporting.  “In a perfect world, we would have had a new auditor a few years ago,” NLCC director Hobert Rupe told the paper.  Brewpub licenses have grown from 21 to 37 in 2 yrs as farm wineries and special event licenses have consistently increased too.  

Dogfish Head Brewing Co held its Distributor Summit in Rehoboth Beach, DE area last week.  Just a couple of hours after news broke on Southern Tier deal, Dogfish founder Sam Calagione kicked off his meeting assuring he’s “in this for the long haul,” noting he has said no to offers and Dogfish Head remains “in charge of our own destiny.”  Evidence of Sam’s continued commitment and investment was everywhere from expansion of original brewpub in Rehoboth Beach, to its new state-of-the art warehouse, a planned $9 mil water filtration system, and its recently opened Dogfish Inn.  Expansion of original brewpub, which Sam describes as the “soul of our company,” will double seats and capacity as long lines outside have become the norm. 

Dogfish Head total sales are up 20% YTD and on pace to hit 233K bbls in 2014, sales veep Adam Lambert told distribs.  “August was the biggest month in the history” of the brewery.  Sales were up 23% higher than its best month in all of 2013 and hit 352K cases. DFH core brands are up 27%, while its Seasonals are up 41% and Punkin seasonal up 49% YTD.  60 Min IPA still up double-digits, +17%, and Namaste, which has been in high demand and short supply, has soared to over 900% growth.  In “new” mkts, Dogfish hit ground running and then some with big gains compared to 2010 trends (when the brewery last sold in those mkts).  DFH +137% in Wisc, +61% in Tenn (with just 2 distribs), +60% in Calif, +50% in Ill, +36% in RI and 20% in Ind, where it has reached just 1/3 of the state vs 2010.   

Dogfish Head Reducing SKUs, Investing At Home  Dogfish will release 24 different SKU’s in 2015, down from 32 in 2013, said dir of mkting Neal Stewart.  That “scaling back” is because DFH knows “it’s all about brand building.”  DFH is going to “throttle back to smart growth,” assured coo Nick Benz, who pointed to co’s smart investment strategy as stabilizing and empowering factor for DFH.  To date, Dogfish “put $67 million into the ground here,” to build up and expand its 60 acre campus, DFH borrowed “less than 40 cents,” for every dollar spent.  That “keeps us lean,” added Nick, and means that at DFH “we don’t have to go for fast growth,” because growing too fast “changes your culture,” and you also “burn through people” quickly.   

Digging Into DFH in IRI  Avg Dogfish case price is a hefty $52.20 at retail, Adam reminded.  And 96% of DFH cases sold at full price, as consultant Bump Williams pointed out, while that figure is at “maybe 80%” for total craft category.  “People see you as a value,” Bump told Sam.  DFH $$ sales were up 29.4% in IRI multi-outlet + c-store data thru Aug 10 vs 22.9% growth for total craft and 4.2% gain for total beer.  It more than doubled (+118%) in drug store channel vs +24.3% for total craft and jumped 43% in c-stores vs 31.4% gain for category.  DFH $$ sales up 29.4% to $17.7 mil thru Aug 10 in IRI’s MULC data.

Bump noted that DFH brands that have “been in the market for a long time” are healthy and “continue to push double-digit growth.”  DFH’s 90 and 60 Minute IPAs rank #14 and #21 among top 50 craft brands ranked by $$ sales percent-chg vs yr ago in MULC thru Aug 10.  DFH family of IPAs has gained 33% YTD while red-hot IPA category is up 50.8%.  Note too that over 97% of DFH IPAs sell at full revenue.  DFH is “not a one trick pony,” either reminded Bump, with healthy $$ sales gains across the board.  Besides 60 and 90 Min gains, Namaste flying; some other DFH gains to note in MULC data: Indian Brown Ale (+37.9%), Midas Touch (+24.1%), Palo Santo Marron (+18.1%), Burton Baton (+78.6%), My Antonia Lager (+15.8%), HellHound (+17.5%), Sixty One IPA (+128%) and Red and White (+913%). 

What’s Up at the Inn?  Distribs got a tour of Dogfish Head’s newest attraction, the Dogfish Inn, located in Lewes, DE, just a few mins down from Sam and Mariah’s home and just off the docks and canal that lead down into Rehoboth to the brewpub.  With so many out of state visitors coming to see DFH, this 16 room, sleek and modern Inn with 24 total beds will serve as yet another way to immerse folks in everything Dogfish.  On walking tour, Sam pointed to waterfront room that served as its only guestroom for out of town brewery guests. (First person to stay there was the late beer scribe Michael Jackson.)   Now with strategically located Inn of its own, DFH will be able to host both beer enthusiasts and biz partners too.  DFH will be starting a program next yr to bring 500 distribution partners to the Inn. “We have something special going on down here,” said Adam, and Inn will enable DFH to bring 2 visitors at a time from distribs and send them back to their home mkts “super excited.”  Plan is to stagger visits Jan thru early May and then start up again Sep-Nov, which avoids heavy tourist season in area.  During 2 night visits, distribs will be given tours of the brewery and brewpub and educated about latest programs at DFH and can also sit around firepit at the Inn enjoying beers with perhaps Sam or others from his team.  

Brooklyn Brewery total shipments +17% YTD with 20% forecasted for year end, which would mark the “5th straight year” of above 20% growth, noted vp of sales, Robin Ottaway at Brooklyn’s annual sales mtg. That’d put ’em just under 260K bbls for 2014, and well on their way to hit internal goal of 300K bbls/yr by 2015.  Brooklyn continues steady growth in home mkt, NY metro, where depletions up 11% YTD, and out of state mkts +9% on depletions.  But overseas biz proving to be greatest growth engine for Brooklyn: export shipments +53% YTD.  “Our international venture is sort of the proverbial freight train that cannot be stopped,” said coo Eric Ottaway. 

Indeed, “this year we will sell well north of 1 million cases overseas, and that number is not going to slow down.”  Recall Brooklyn already US craft’s largest exporter last yr at about 60K bbls, about 20 share of craft exports.  They’re on pace to ship close to 92K bbls in 2014.  Both Sweden and UK, Brooklyn’s two largest overseas mkts, “in a race to see who can get to 600,000 CEs each” by next yr.   And “great growth all over,” including some “real sleeper markets from around the world,” like Australia, Brazil, France, Norway, Italy, Eric rattled off the top of his head. “Asia is another interesting area where we’ve been dabbling for awhile” that “could become a really interesting powerhouse for us in the future,” he added.  So Brooklyn makin’ serious strides to become a “global specialty brand,” a repeated message thruout the mtg, attended by “roughly 50” of Brooklyn’s overseas partners, as well as US distribs.

“No Flagship Fatigue”; Seasonal 12pks & Sorachi Ace 4pk Cans Comin’; Brand Intros, Changes “No flagship fatigue” here, as Brooklyn Lager cases up 8% total (9% in NYC metro), and still the lead force that’s “exported around the world,” noted NYC and natl sales manager, Chris Rom.  It’s still about 40% of Brooklyn’s volume.  Seasonals portfolio 22% of overall biz and “growing rapidly” led by Brooklyn Summer Ale, now the 2nd largest brew they do annually, up 23%.  In just the last 3 yrs Summer Ale has doubled volume to 350K cases, and next yr Brooklyn will intro its 12pk Seasonal package in Q2 for added focus on Summer Ale.  Sorachi Ace quickly became “one of our foremost priorities” sez Robin.  It’s unique, has “broad appeal across all demographics,” Chris said, adding the “female consumer will love this brand.”  Starting Jan 2015 co will showcase new 4pk cans of Sorachi Ace.  Recently released Brooklyn Blast 4pk “really has lifted all boats” as “draft has gone up 39%” and velocity up 12% since intro.  And it’s getting in the “chains and liquor stores (and c-stores, etcetera) throughout the country.” 

Brooklyn also made a few tweaks to its portfolio.  It discontinued Pennant Ale and Brooklyn Weisse because both brands weren’t carrying as well “as we got further away from home,” sez natl & chains sales manager, John Boegel.  They’ll introduce two new brands to fill those spots.  Half Ale, a 3.4% ABV farmhouse ale that’s “gonna get us into a demographic maybe we haven’t played in as much as a brand,” that potentially can “tie in with Blue Moon drinkers,” thought Chris.  Brooklyn has tested it out in Texas, Sweden and other select markets, and plans to do “slow rollout” starting with NY Metro this Oct.  Greenmarket Wheat, a 5% ABV wheat beer with 70% of grain locally sourced will replace Brooklyn Weisse, available on draft starting Oct and 4pks by spring.  Formerly Brooklyn “East India Pale Ale” has been shortened to “Brooklyn East IPA” to avoid consumer confusion on whether it’s a Pale Ale or an IPA.  “Same liquid, clearly better name.”  And lastly, new bourbon barrel aged series dubbed “BQE series” all planned out for 2015, now that Garrett Oliver has space and equipment to ramp up barrel aging program.  So Brooklyn “just getting started,” with their new toy, brewmaster Garrett Oliver declared.  Tho 750 ml bottles only account for 1.3% of sales, they’re 5% of revs. 

New Brewery Clarifications; Brooklyn Always Home Base; 2d US Facility by 2017-2018; Sweden Brewery Doesn’t Brew Brooklyn In US “leading contender at the moment” for new production facility “is a site in Staten Island,” noted Eric, as CBN reported earlier this summer.  Recall, it’s a 25-acre complex with 300K sq-ft facility with eventual “over 1 million barrel capacity” that would likely require $100 mil investment.  Brooklyn’s hoping to have it up and running by 2017 but “if it slips into 2018 I wouldn’t be surprised.”  Yet Brooklyn’s “home base will always be here in Brooklyn,” Eric clarified.  When lease ends on current Brooklyn location in 2025 “obviously we would love to re-up, but we’re not assuming we will be able to.”  If needed “we will look for another site in Brooklyn where we can replicate what we have here.”  Once new production facility’s up and running, Brooklyn will “slowly transition our volume out of” FX Matt Brewery operation.  Plan is for “all of capacity in house at our new brewery” by 2021.

Then too, Stockholm brewery, Nya Carnegie, is “not brewing Brooklyn over there,” only new brands, Eric clarified.  It’s “going quite well” since opening in May, and expects to sell “around 5K barrels” in 2014.  “We’re looking forward to filling up the brewery next year,” he added.  “We want to be very well established in Sweden before we start taking it to other countries.”

Brewery Restaurant at JFK Airport, Just One of Many Retail Projects Comin’ Soon; Overseas Too  A coming brewery restaurant at Jet Blue terminal in JFK Airport is near top of Brooklyn’s wish list for future retail projects, tho “just one” of the many “incredible retail opportunities that have been coming our way,” Eric acknowledged.   “More and more” of these oppys “getting thrown our way” so it’s more about “figuring out what not to do” rather than what to do.  There are even “a number of them overseas,” so we’ll likely “see some announcements in the next 9-12 months.”

After recently completely San Francisco brewery to boost presence outside of city brewpub (and building new attached BBQ restaurant), Magnolia announced it’ll be working with Crooked Stave’s Colo distribution outlet to serve Denver area too, just in time for GABF, the co announced yesterday.  That’s as 21st Amendment, still building big new Bay Area brewery tweeted out it’ll be opening up Maine and Rhode Island.

Craft not quite as hot over 3 months of pretty cool summer, segment $$ +18.4% for 13 wks thru Sep 7 in latest IRI multi-outlet + convenience data.  That brought YTD trend down to a still-impressive +21.3%.  Craft over 7 share of all beer sales in 13-wk all outlet data, grabbing almost another full share pt.  Avg craft case prices up near 3% over the summer, almost a buck to $34.74.  On supplier-level, Boston’s total biz still up near 28% for 13 wks by $$, Sierra +15% and New Belgium +29%.  Lagunitas up high-50s, Stone mid-40s, Bells and SweetWater mid-to-high 30s, Dogfish Head low 20s and New Glarus mid-teens.  Deschutes up 8%, Gambrinus and CBA +6%.  Odd exception is total Duvel Moortgat USA brands, about flat for 13 wks, -10.6% for 4.

Leadership of IPAs now very well developed across channels.  All IRI-tracked brands labelled “IPA” still up 44.4% for 13 wks thru 9/7, gaining 4.16 share to 23.11.  Soon one in four craft beers bought in IRI universe will be an IPA.  Style determinations in these stats not always easy to parse, but IPA still one of only “styles” gaining share, even if most still growing.  Which others gaining share?  Non-styles, of course.  That is, variety packs and special releases, next 2 “styles” below IPA gaining share.  Variety pks +26.7% for 13 wks in MULC, gaining half a share of craft $$ to 7.8.  But in foodstores, variety pks gaining closer to a full share-pt to over 9 share of $$ for 13 wks.  Craft variety is gearing up to overtake pale ales, -0.9 share of $$ to 9.88 in grocery channel.  Meanwhile, special releases +50% in grocery, +37.5% in MULC, but still just over 1 share of craft.

Seasonal Trends All Over Map; Sam Octoberfest Over 8 Share, Big Boost from Sierra Flipside  Fall seasonals haven’t quite hit their stride yet all in, tho a coupla top players got nice boost from changeover to fall offerings in late summer.  Lead craft brand Sam Adams Seasonal $$ up 8.8% for 13 wks, +7.3% for 4 wks in MULC.  Slower trends but check out share boost the brand gets after switch to Octoberfest: it hit near 8.2 share of craft $$ for 4 wks, compared to less than 6.5 for 13 wks and 5.7 YTD.  Flipside release gave big boost to Sierra Nevada Seasonal too.  It’s up 33% for 4 wks thru Sep 7, bringing YTD trend up to +1.2%.  Other major seasonals a mixed bag, Bell’s offering still posting 20% growth, Shiner’s up low double-digits, NBB’s seasonal single-digit 4-wk trend slowing YTD picture and Deschutes’ offering still up low singles.

General Health Across Top Brands; Hoppier Offerings Slowing Bigger, Older Brands?  Slightly slower 4-wk trends compared to longer 13-wk period holds true across most top craft brands, still a pretty healthy bunch across the board.  Lagunitas IPA remains biggest share gainer, taking another 0.46 share of craft $$ for 13 wks in all-outlet data, +54.6%.  NBB Fat Tire holding $$ share, +18.6% for 13 wks.  Shiner Bock up over 7% and Sierra Pale up over 5%.  But is Octoberfest strength costing Boston Lager?  Sam Adams flagship -2.3% for 13 wks, -3.1% for 4 wks.  Kona Longboard Lager trends nearly identical.  Handful of other flagships declining faster during more recent period, including Deschutes Mirror Pond, now -3%, Goose Island 312 Urban Wheat -7.5% and Magic Hat #9 -13.2% for 13 wks, all down faster for 4 wks (but just barely for #9).  

What else do all these brands have in common?  Each brewer debuted hoppier brands, IPA, IPL or other-style earlier in year.  Biggest of course is huge Sam Adams Rebel IPA success, but Kona debuted Castaway this yr and put extra emphasis on Big Wave Golden Ale (that one of reasons “Craft Golden Ales” almost doubling YTD?).  Deschutes founder Gary Fish recently told us about success with Fresh Squeezed IPA rollout; Goose intro’d 312 Urban Pale to join original wheat; Magic Hat rolled out Dream Machine IPL.  Yes, hops are still where it’s at.  Only a coupla top IPAs not showing at least double-digit growth, with many up in 20, 30, 40, 50 or 60% range for 13 wks.  Exceptions: Redhook Long Hammer, +3.3% and Harpoon IPA, +3.1% and actually down 1.7% for 4 wks.  Also: flip-flopping of #30 craft brand between Lagunitas Seasonal (back off) and Ninkasi Total Domination IPA (back on) continues, with Total Dom up 12.5% for 13 wks, just under 0.5 share.

Southern Tier, a rapidly growing regional craft brewer located in upstate NY, has sold undisclosed stake to family office Ulysses Group. (That stake is a majority, CBN understands).  And simultaneously, Southern Tier has hired a new prexy, John Coleman, formerly prexy of Pabst Brewing, an AB region vp out west and a NY native.  John starts Monday.  

Deal allows owners Phin and Sarah DeMink to simultaneously cash out and stay in.  They retain stakes in company, but get infusion of patient capital from Ulysses Group, which has sought to enter beer space before, even looked at a sizable beer distrib.  Ulysses Group has about $1.5 bil under mgt. In press release, Southern Tier referred to this deal as “partnership.... This partnership will support the continued expansion of the brewery, new distribution support, sales force growth and enhanced branding and marketing initiatives.”   Ulysses Group “investment is subject to licensing approval.”  First Beverage Group, which advised on Boulevard deal last yr, acted as advisor to Southern Tier.  First Bev reportedly has other craft deals in the works.

Southern Tier was founded by Phin and Sarah in 2003 and has averaged 48% growth since inception. And it’s up another 40%+ this yr.  It will pass 100,000 bbls and has capacity near 200,000 bbls.  This yr it launched DeMunck’s Hard Cider and it will be opening a craft distillery in 2015.  Southern Tier is in 30 states, but its core biz in 3: NY, Pennsylvania and Ohio.  There are presently no plans to move into new states.

“The driving force” behind the Ulysses Group investment “was not liquidity,” founder Phin told Craft Brew News, but rather after a “lot of sleepless nights” and “uneasy decisions” even amidst “pretty phenomenal growth,” he and his wife looked for answer to question: “What does Southern Tier need for the future?”  Ulysses Group plus hiring of John will bring “right resources, right tools.”  Tho the announcements coincide, Southern Tier had been looking for ceo prior and separately.  Phin praised new ceo John’s relations with distribs, retailers: “This business is about relationships.  That’s very important to me.”

Phin wants to get back to doing what he does best, which he sees as brewing and innovating.  “I see myself even more involved,” said Phin.  Ulysses Group’s “vision” is “very much aligned” with Phin’s and he “would never have taken on a partner” if that were not the case.  Interestingly, he is childhood friends with Firestone Walker’s Matt Brynildson.  They grew up together in Kalamazoo, Mich and began brewing together as teens, even buying home brew supplies at Larry Bell’s store.  This transaction on top of recent Uinta deal, Harpoon ESOP, increasing involvement of private equity firms and other deals in works, suggests that long-rumored craft-dealmaking is finally heating up.

Pabst sale to Oasis Beverages and TSG announced yesterday. Oasis did 5.4 mil bbls in Eastern Europe last yr and will be majority owner.  Entrepreneur Eugene Kashper, who is the engine behind Oasis, is a Russian-born US citizen, who started at Stroh over 20 yrs ago.  With a group of investors, he bought, built up and sold a couple of old breweries in Russia.  Then he started Moscow Brewing, which took off with retro brand called Zhiguli.  Eugene has lived in the US last 4 yrs.  

Together with his minority partner TSG Consumer Partners, they formed a holding company called Great American Brewing Company to buy Pabst, for around $700 mil.  TSG Consumer Partners is a private equity firm that has long looked for stake in American craft brewer (earlier invested in Vitaminwater, Muscle Milk and Yardhouse) with several reports, as yet unconfirmed, that it has already done so.  In letter to distribs, Eugene references “unique selling propositions” across the spectrum of beer biz, including craft segment.  And interestingly, letter to distribs notes that Brooklyn’s coo Eric Ottaway will be on board.  Clearly, Eugene also intends to send Pabst brands to Eastern Europe in synergistic play, but will be very interesting to watch Pabst’s development here, including in craft space. 

Sierra Nevada had its first ever natl sales conference attended by several hundred people (“a lot more than I expected,” said founder Ken Grossman) near Asheville.  Opening reception held at its majestic new facility in Mills River, NC, which sits on 218 acres, 26 developed, incorporates many cutting edge technologies and has big focus on consumer experience as well as environmental sustainability.  Many distribs CBN talked to came away wowed and it ain’t even finished.  The restaurant and pilot brewery won’t open until early next year, the amphitheater and Beer Camp cabins will come after that.  Already clear that Sierra Nevada, perhaps the most historically respected of all craft brewers, has raised the bar again.  

This yr, Sierra Nevada is up 7.3%, which means that it will end 2014 over 1 mil bbls.  “Next year is our 35th anniversary,” said mktg and sales director Joe Whitney.  And Sierra has never had a down yr.  Founder Ken Grossman is “still investing,” said Joe, “investing at a higher level than he ever has.  He does it because this is his love, his passion and he wants this business to be sustainable” and “because his family is involved.”  Indeed, Ken’s son Brian is the general manager at the new facility. Brian said they don’t say how much they’ve spent, but that it is “over $110 million” and overages are more than 15%.  “We are in it for the long haul,” Ken said.  

Next yr, Sierra looks to start the yr with a bang.  It seeks 30% growth in Q1, said Eastern sales director Tommy Gannon. “Our year is really front-loaded” so Q1 “becomes absolutely critical for your success.  We need to be a priority.... We’re going for it. We need you guys to do the same.”  Editor’s note:  Both Boston Beer and New Belgium got off to rapid starts this yr, with growth in that 30% range.  Next yr, Sierra looks to do the same.  Whether that objective fully achieved or not, plan for full yr is more like 10%, CBN hears.  

Sierra Nevada will have 2 new brands next year, plus 2 new seasonals, new variety packs, new packaging and more.  Sierra’s next session play will not be a session IPA.  Flagship Sierra Nevada Pale Ale is arguably “the original session IPA,” said Joe Whitney.  “We’ve got that covered.”  So instead Sierra will put out its Pilsener, rated tops at 2010 World Beer Cup, as Nooner Pilsener.  

Then too, IPAs are more important than ever.  They could get to as much as half of craft segment, Joe noted.  And if craft doubles, then IPAs alone could be as big as craft today.  That means it’s “time to double down.”  Torpedo Extra IPA did 180,000 bbls last yr and was biggest IPA (tho Lagunitas may pass it this yr) and is up 8% this yr.  Plus Sierra already has variety pack of IPAs, called 4-Way IPA.  Variety packs account for 61% of Sierra’s growth so far in 2014.  Next yr’s innovation and “big bet of the year” will be Hop Hunter IPA made with “distilled hop oil,” clocking in at 6.2% ABV with 70 IBUs.  This brand will “bring something new to the space....  If you believe IPA can be as big as craft is today,” said Joe, “you’ve got to cover the gamut thoroughly.” 

“The Grossmans are the new leading family in our industry now,” said Chris Clements of Golden Eagle Distribs.  “Everyone I spoke to was blown away by the brewery and the attention to detail – especially with their sustainability initiatives.  The meeting was about true partnership, was heartfelt and meaningful.”  Another AB distrib quipped it was “nice to go to a meeting and not get yelled at.”   This meeting, the opening of the Mills River facility, the Beer Camp Across America festivals as well as the widespread wholesaler reception to all of this seemed to represent some kind of psychological turning point for Sierra and the beginning of its next phase.  More on this meeting in the next issue of Craft Brew News.  

From quick 1990s boom of 400+ brewery openings and subsequent shakeout, Japan’s local beer scene has grown deeper cultural roots allowing it to support well over 200 breweries again, according to recent presentation and tasting at Japan Society in NY by Mark Meli.  NY-native Meli has spent 18 years as an academic in Japan, more recently becoming authority on country’s beer scene, writing for Japan Beer Times and recently publishing Craft Beer in Japan: The Essential Guide.  His take:

Context: 1990s Boom Fizzled, But Deeper Roots for Current One  Craft breweries took off in ’94 after production threshold required to obtain beer license lowered from 2 mil liters to 60K liters (about 17K bbls to just over 500 bbls).  There soon were 400+ operating, many tied to local tourism efforts, and most copied German styles.  Since homebrewing was (and still is) illegal in Japan, most entrepreneurs came to effort with no brewing experience, yielding poor-quality beer at high prices, Mark said.  No surprise then that 300 of them were shaken out.  New openings have raised total to 223 today.

Besides limited homebrew tradition, Japan has other obstacles to craft beer development.  As accompaniment to sashimi and other foods, beer was long viewed as being best with least taste.  Dry-beer wars of late 80s was extreme expression of that.  But there are several pluses.  Meli regards sake as more akin to beer than wine, and that tradition goes back 2,000 years.  Beer taxes keyed to malt content in Japan, so industry now overrun by cheap beers with almost no malt (sometimes peas or soybeans instead).  “No one drinks these because they like them,” said Meli; they’re purchased strictly on price.  So big Japanese brewers have embraced craft as alternative, priced at 2-4X cheap stuff, sometimes harnessing country’s beer history, as Kirin has by resurrecting Spring Valley Brewing name from 19th Century.

American Styles Dominate; Exploitive ‘Festival Network’ a Concern   Second craft boom started around 2010, and this time American brewers and styles exert dominant influence.  Recently launched importers have made it easier to find items from West Coast’s Green Flash and Ballast Point in Japan than East Coast brewers, Meli said.  (Among American brands, Brooklyn, Stone and Rogue have big presence, too.)  Among small breweries, there’s more participation by non-Japanese across board, mainly Yanks and Brits.  Interestingly, about half of craft bar patrons are women, who’ve also taken on high profile as brewers and pub owners.  German influence has by no means vanished, but there’s been boom in IPAs using bold Pac NW hops and parallel fruit beer growth.  Session IPAs caught on fast while barrel-aging trend lagged US by yrs.  Japanese craft brewers’ efforts at UK and Belgian styles are “not quite right yet,” says Meli.

Most breweries are almost at capacity now and readying major expansions (except for sake makers for whom beer is sidelight).  Hitachino Nest just announced plans to open brewery in South Korea, one of a few Japanese brewers looking overseas for growth, largely elsewhere in Asia.  Several operate tied taprooms (Baird, one of largest ex-pat run breweries, has 4) and recent debut of cans is facilitating move into c-stores.  Brewpubs are booming too, some with ancillary themes, as with Yokohama’s Thrashzone, featuring thrash-metal music.

Meli pointed to some worrisome trends.  One is big presence of “festival network,” for-profit operations that brewers view as moneymakers, charging high prices to “uninformed dupes.”  By now, traveling Octoberfest has become so popular it starts in Apr.  What happens when the dupes get wise?  Meli’s also concerned by omiyage or “souvenir” beers sold at train stations as gifts to be taken home by visitors: with no feedback loop back to brewers, there’s weak incentive to offer quality.  Price is big issue too: at $10-12 per pint at a bar, prices are high and rising.  Not least, advent of Blue Moon and big-brewer offerings presented as being indie craft beers has raised “crafty” beer as divisive issue there, as in US.

From Cedar Aging to Szechuan Peppers, Craft Brewers Aim to Create Distinctively Japanese Styles  With momentum building, craft brewers in Japan are bringing their own touch to category.  They’re incorporating local traditions such as cedar aging (from sake-making) and local ingredients – not just rice but matcha green tea, miso, wasabi, katsuobushi (smoked tuna), sansho (Szechuan pepper), shiso leaf and myriad fruits.  Wild-yeast beers are now common, but they’re not at all like Belgian sours: they employ yeast cadged from cherry or beech trees or persimmons, and may subtly take on those flavor characteristics.  “Brewers are aiming for something that can be to the Japanese market what the IPA was to America,” Mark figures.  Nobody’s cracked code yet, and his hunch is country’s sake connection may prove most fruitful down road.