The Brewers Association has issued the following warning to its members regarding pending federal requirements to disclose the caloric value and other health criteria of beer being sold at on-premise chains: “Be ready or lose sales.”
Although the Food and Drug Administration has yet to issue the organization with “formal guidance” on the requisite labeling procedures slated to take effect later this year, the agency has provided a glimpse of what’s to come in a question and answer session with the BA.
The FDA, according to the BA, has indicated that chain restaurants with 20 or more units and “similar retail food establishments” will be subject to the stricter labeling requirements.
– “Restaurant menus and menu boards will include calorie listings for each brand of beer.”
– “FDA will require chain restaurants to have nutrient figures for each beer for total fat, calories from fat, saturated fat, trans fat, cholesterol, sodium, total carbohydrates, dietary fiber, sugar and protein.”
– “Restaurants may use a combination of methods to develop the information, including the USDA Nutrient Database, manufacturer-supplied data, calculations with defensible ideas behind the calculations, laboratory analysis and recipes.”
– “[Draft] beer will be included if listed on a menu. Nutrient values for [draft] beer will not be required if the beer is not on a menu.”
– “Each size pour will require its own listing of all data.”
– “The values for ‘regular beer’ in the USDA Nutrient Database won’t be considered accurate for craft beer and other methods of ascertaining this information will be required.”
Last November, the FDA told Brewbound that the new regulations would not impact craft brewers, clarifying that retailers — not manufacturers — would be responsible for gathering this information. Nonetheless, Paul Gatza, director of the BA, wrote on the organization’s website that brewers doing business in the restaurant channel should be prepared to adhere to the impending changes.
“While the onus rests with the restaurant chains, it is easy to foresee that companies may drop brands that do not have this information readily available,” he wrote. “If you don’t know your nutrient values and do business in chain restaurants now or plan to in the future, now is the time to start gathering your information. Menu development takes months for many chains, and they are moving on this issue already.”
The new guidelines are slated to take effect December 1 of this year.
The preliminary agenda for Brewbound Session Chicago, which takes place on June 11 at Moonlight Studios in Chicago, is now available.
The full-day business conference, which will kick off with an evening welcome reception at Revolution Brewing’s Kedzie production facility on June 10, will feature a wide array of speakers and topics, including presentations on merger & acquisition activity, the latest retail trends, and inspiring discussions with industry leaders.
View the Agenda >>>
This year’s program is packed with informative presentations from veteran industry experts like IRI Worldwide’s Tenth & Blake’s and First Beverage Group’s .
In addition to hosting conversations with notable beer executives – including Anheuser-Busch InBev’s CEO of Craft, and Oskar Blues founder , among others — Brewbound will also offer numerous structured networking opportunities throughout the day.
Haven’t registered yet? We’re less than 30 days away from Brewbound Session Chicago and a limited number of tickets remain. Don’t miss your chance to join hundreds of beer industry professionals at what is sure to be one our best events yet!
Register Now >>>
Are you producing less than 15,000 barrels of beer annually? A limited number of discounted tickets are available for early-stage craft entrepreneurs. Please contract Jon Landis at jlandis@bevnet.com or (617) 231-8834 for more information.
The Brewbound Session is a full-day business conference addressing the topics that most directly impact the decisions craft brewers are faced with as they look to grow their brands. The event focuses on the business side of craft, offering brewers a unique opportunity to learn from and network with industry leaders.
The Brewers Association has issued the following warning to its members regarding pending federal requirements to disclose the caloric value and other health criteria of beer being sold at on-premise chains: “Be ready or lose sales.”
Although the Food and Drug Administration has yet to issue the organization with “formal guidance” on the requisite labeling procedures slated to take effect later this year, the agency has provided a glimpse of what’s to come in a question and answer session with the BA.
The FDA, according to the BA, has indicated that chain restaurants with 20 or more units and “similar retail food establishments” will be subject to the stricter labeling requirements.
– “Restaurant menus and menu boards will include calorie listings for each brand of beer.”
– “FDA will require chain restaurants to have nutrient figures for each beer for total fat, calories from fat, saturated fat, trans fat, cholesterol, sodium, total carbohydrates, dietary fiber, sugar and protein.”
– “Restaurants may use a combination of methods to develop the information, including the USDA Nutrient Database, manufacturer-supplied data, calculations with defensible ideas behind the calculations, laboratory analysis and recipes.”
– “[Draft] beer will be included if listed on a menu. Nutrient values for [draft] beer will not be required if the beer is not on a menu.”
– “Each size pour will require its own listing of all data.”
– “The values for ‘regular beer’ in the USDA Nutrient Database won’t be considered accurate for craft beer and other methods of ascertaining this information will be required.”
Last November, the FDA told Brewbound that the new regulations would not impact craft brewers, clarifying that retailers — not manufacturers — would be responsible for gathering this information. Nonetheless, Paul Gatza, director of the BA, wrote on the organization’s website that brewers doing business in the restaurant channel should be prepared to adhere to the impending changes.
“While the onus rests with the restaurant chains, it is easy to foresee that companies may drop brands that do not have this information readily available,” he wrote. “If you don’t know your nutrient values and do business in chain restaurants now or plan to in the future, now is the time to start gathering your information. Menu development takes months for many chains, and they are moving on this issue already.”
The new guidelines are slated to take effect December 1 of this year.
SABMiller, the world’s second largest beer company, today announced it has acquired Meantime Brewing, one of the fastest growing craft breweries in the UK. Though specific financial terms of the deal were not disclosed, the acquisition will include all of Meantime’s retail sites — the brewer currently operates a number of bars and taprooms.
In a statement, SABMiller, the South African beer and soft drinks giant and parent to MillerCoors stateside, said it plans to grow Meantime’s sales nationally, while exploring export opportunities in other European markets.
“Meantime has been at the forefront of the modern craft beer movement in the UK and brews an outstanding range of beers across a variety of styles,” said Sue Clark, managing director of SABMiller Europe, in a news release. “This expertise will boost our strategy to develop beers that appeal to more people, including women, and which can be attractive alternatives to wine and spirits.”
Meantime’s sales volume increased 58 percent in 2014, the company said, far outpacing the 1 percent growth exhibited by the UK’s broader beer market.
“We are all excited about the opportunity to continue growing Meantime. We are also thrilled and flattered that SABMiller has given us remit to innovate,” added Nick Miller, Meantime CEO. “The team at SABMiller has stressed how important our culture is to our success to date, and have a strong record in retaining the special identities and heritage of the local businesses they’ve bought in the past decade.”
There are also plans for Meantime to open a pilot brewery to double as the center for SABMiller’s European innovation and product development, according to the news release.
The deal is expected to close in early June, at which time, Meantime will be incorporated into SABMiller Europe’s accounts.
Earlier this year, California’s years-long drought forced the state to impose mandatory water use restrictions, an ominous sign of how severe the problem has become in the state. As such, there have been a lot of questions about how this not only impacts the state’s craft beer industry, but over how much water brewers are using to make beer. To address that, the Public Policy Institute of California recently released a report estimating the “water footprint” of craft brewers in the state.
The report, which is available to read on the California Craft Brewers Association’s website, says craft brewers use an estimated 558 million gallons of water to process 93 million gallons — or 3 million barrels — of finished product. As Brewbound reported earlier this week, California brewers made 3.4 million barrels in 2014.
Together, according to the report, craft brewers use an estimated 651 million gallons of water a year, or enough to supply 1 million people. For perspective, the entire industry’s water usage is equivalent to that of a 640-acre almond orchard, the report said. As astutely noted by Quartz, there are more than 1 million acres of almond orchards in the state.
Florida’s war over the 64 oz. growler is finally over. Yesterday, reports the Tallahassee Democrat, Gov. Rick Scott signed SB 186 into law, legalizing the long banned half-gallon container often cited as the industry standard. Prior to the bill’s passage, 32 and 128 oz. growlers were legal, though the middle size was expressly prohibited. The bill, which lawmakers passed last month, also clarifies a controversial “tourism exemption” that had allowed for brewers to operate in a legal gray area as both producers and retailers.
Brewbound is excited to swing by Boulevard Brewing in Kansas City this upcoming Monday, May 18, to host the next installment of Brew Talks, our traveling meetup series for industry professionals.
Today, Brewbound is pleased to announce that Jon Poteet, vice president of marketing at Central States Beverage Co., will offer his unique perspective on things from the middle tier.
Specifically, Poteet will explain how his company, a MillerCoors-aligned distributorship, was able to sell 1 million cases of Boulevard beers throughout the greater Kansas City metropolitan area alone in 2014, the most ever by one of the brewery’s distributors in a single year. To better understand just how much beer that is, that area, which stretches across the borders of Kansas and Missouri, is only about a 10 million case-per-year market.
Poteet will walk through how – since acquiring the brand in 2007 and launching with sales of 497,000 cases – his company was able to grow it so dramatically in such a short span of time. Further, he’ll provide a glimpse into the future, expounding on how he plans to build on the brand’s momentum.
Though Boulevard accounted for roughly a quarter of all Central States case sales in 2014, it isn’t the only brand the company sells. Poteet will also provide insight on how his portfolio is acting in the marketplace, while spotlighting broader craft beer trends he has seen along the way.
Attendees will also have the opportunity to hear from Simon Thorpe, the president of Duvel Moortgat USA, and three of Kansas City’s newest craft brewery startups.
Beer industry professionals are invited to join us in Boulevard’s Muehlebach Suite (2501 Southwest Blvd, Kansas City, MO 64108) at 5:00 p.m. The first panel discussion is scheduled to start promptly at 5:30 p.m.
Since hosting our first event in the basement of a craft beer bar in Boston in 2013, the meetup series has developed into a multi-city tour where beer industry professionals can come together inside of some of the country’s most recognizable craft breweries and share business insights with one another. In less than two years, we’ve hosted 19 meetups, in 15 U.S. cities, and connected with thousands of individuals from all tiers of the industry. The events are also broadcast globally via a free live stream.
99 Bottles of beer on the wall? For craft, it’s actually about 11,727 — and that’s not a great thing.
The bigger number is the total amount of craft brands being sold at bars and restaurants, according to on-premise data supplier GuestMetrics, which tracked those SKUs through the first quarter of 2015. In two years, the number has increased by nearly 50 percent, from 8,027 in the first quarter of 2013.
Exuberant entrepreneurs might look at the number and see the pint glass as half-full. But while a broader selection of beers might be great for the drinker, it’s problematic for brewery owners and publicans alike. Despite the fact that on-premise accounts are stocking more SKUs, they aren’t turning product as fast as they were in 2013.
During yesterday’s Power Hour, hosted by the Brewers Association, GuestMetrics’ VP of strategy and insights, Peter Reidhead, displayed a graphic that highlights the growing problem: the number of craft brands being sold on-premise has continued to expand faster than the category, which GuestMetrics believes will put pressure on brewer economics.
In other words, adding more taps doesn’t necessarily mean restaurant operators will sell more beer; In fact, the effect might be the opposite. Back when there were 8,000 craft brands being sold on-premise, craft sales, by brand, indexed at a score of “100,” Reidhead said. Over the last five quarters, however, the number of brands being sold on-premise has grown by a consistent average about 20 percent. As a result, velocity has decreased and craft beer sales by brand are now indexing at a score of 78.
“The number of brands being sold on-premise has grown 22 percent and during that time craft beer sales are only up 5 percent,” he told Brewbound during a phone conversation.
The best way to understand the figures, Reidhead said, is to consider proliferation. While the number of unique craft beer brands being sold is on the rise, the sales efficiency of each brand is deteriorating.
So with more choice comes slower sales – not exactly top-secret information, but the numbers could serve as a warning sign for brewers who rely on strong on-premise sales to carry the load. Additionally, Reidhead said, on-premise trends can be a leading indicator of what could happen 3 to 6 months later off-premise.
Reidhead also pointed to the craft spirits segment as a comparison, where sales in that category are growing at a much healthier clip relative to proliferation. When including Tito’s Vodka in the data set, sales of craft spirits are up an impressive 50 percent on-premise. But brand proliferation is only up 10 percent. That’s significant, because it indicates that new product introductions are not outpacing consumer demand — something that is the exact opposite in craft beer.
“The math here isn’t particularly complicated,” he said. “Look at the growth in the offerings versus growth in actual sales. The question really is, are these new craft brewers making money?”
So, new brewers can continue to sprout up and introduce SKUs, as long as those brands are profitable.
That could explain why there’s been a glut of new IPAs hitting the market. IPAs have accounted for 25 percent of all newly launched craft beer products since 2013, Reidhead said. The style is continuing to drive craft’s share gains of total beer, however, while share gains in other styles have tapered off.
And while it’s very probable that the total number of brands being sold on-premise will continue to rise, craft’s overall share gains in the channel might not, Reidhead said.
Craft beer already accounts for 30 percent of all on-premise beer sales, he said, but share gains are slowly decreasing. Craft beer gained 1.3 share points of total beer dollar sales in the first quarter of 2015, down from 2.6 share points in the first quarter of 2014.
“Mathematically, it is probably very unlikely that craft will be 50 or 60 share of beer category on-premise,” said Reidhead. “At some point, there will have to be a peak and it will have to take place at some point in the next couple of years.”
Reidhead predicts that craft share gains will continue tapering off as restaurant and bar operators zero in on what he calls a “optimal assortment.”
“In our data, craft beer has a 30 share,” he said. “If you have 10 tap handles, why would there be more than 3 or 4 taps handles devoted to craft?”
Reidhead added that many large restaurant operators GuestMetrics’ is currently working with have indicated that they have “gone too far” into craft.
Nevertheless, there are still opportunities for growth, especially in areas like Texas, Arizona and Florida, where craft’s share of on-premise beer sales is under-indexed.
Located in the upper level of the brewery, The Brewer’s Table, Surly’s fine-dining sibling to the Beer Hall & Restaurant, opens this Friday and offers patrons a more ambitious menu and more intimate setting than what is found downstairs.
Creating the fine dining experience at a brewery has been a welcome challenge for both Executive Chef Jorge Guzman and Head Brewer Todd Haug; each of them masters of their craft, now tasked with innovating while also keeping the pairing of food and beer in the back of their minds.
The results of that collaboration are outstanding and belie the modest price point. Entrees on the menu will be changed regularly and range in price from $10 to $25. The most intriguing option, in my opinion is the $15 Beer and Bump, where the diner has no clue what they’re getting other than is is a food paired with a beer. I’m a sucker for a surprise.
A five-course food and beer pairing can be had for $75. You could combine your own, but you’ll be well-served to leave it to the experts. The pairing of Pentagram with beets & foie gras was an exercise in perfectly contrasting flavors. The tea egg paired with Cynic was a piece of art – a soft-boiled egg, steeped in black tea and a charcoal mixture to give a marbled appearance – and showed just how versatile that stalwart of Surly’s lineup is.
Octopus & Chorizo @ The Brewer’s Table (Photo: DD)
While the butter-soft pork jowl is a must-have, I will go out of my way to have the octopus and chorizo again. Spicy and smoky with a perfect texture one would not expect from a cephalopod, it was perfectly complemented by an Overrated West Coast IPA.
A different experience in different parts of the building – to paraphrase Surly Hospitality Director Linda Haug – is what Surly is offering patrons with their tours, Event Center, Beer Hall & Restaurant, and The Brewer’s Table. With the opening of the latter, the Surly vision is complete and ready to be had.
Great news from Montgomery, MN. Last night the City of Montgomery passed a provision to allow for growler sales. The city worked quickly and Montgomery Brewing Co. will be open for the state’s first Sunday growler sales this Sunday, May 24th. Don’t hesitate, though… they have a 3 bbl brewing system and the beer just won’t last.
Simon Thorpe presents at Brewbound Session, Boston
The beer business has changed radically over the last five years and, while it’s impossible to know how the landscape will develop over the next five, one thing is certain: continued evolution is inevitable.
To better understand how the beer segment could look in 2020, Brewbound has asked Simon Thorpe, the president of Duvel Moortgat USA, to share his view of the ever-evolving craft landscape at today’s Brew Talks meetup, being held at Boulevard Brewing at 5:00 P.M.
Register Today>>>
At a time when beer segment has ceded share to wine & spirits, craft beer has been a bright spot, offering consumers a unique product and a new drinking experience every time they belly up to the bar. It’s brought volumes back to the category, prompting small breweries to invest behind continued growth opportunities.
With demand for more flavorful, handcrafted products on the rise, breweries across the country have raced to build the infrastructure needed to keep pace with growth. Regional and national players have embarked on multi-million dollar brewery expansions, added millions of barrels of capacity and grown into new markets in an effort to better serve demand. At the same time, thousands of entrepreneurs have entered the fray, opening small breweries all across the country.
And with nearly every craft enterprise enjoying double-digit growth, private equity firms and multi-national beer corporations have started acquiring brands. So how is that increased investment altering the competitive landscape? And what happens if (or when) category growth slows? Will those craft brewers that have doubled down and built new breweries still be able to fill their tanks? And if not, how will that impact category dynamics?
During Monday’s talk, Thorpe will share his perspective on a wide-range of issues, including increased merger & acquisition activity, growth management strategies, overcapacity concerns and the threat of a craft bubble. Brew Talks attendees will also hear from Central State Beverage Company’s Jon Poteet, who will share insights from helping to make Boulevard one of the best-selling beers in Kansas City.
Beer industry professionals are invited to join us in Boulevard’s Muehlebach Suite (2501 Southwest Blvd, Kansas City, MO 64108) at 5:00 p.m. The first panel discussion will begin at 5:30 p.m.
Since hosting our first event in the basement of a craft beer bar in Boston in 2013, the meetup series has developed into a multi-city tour where beer industry professionals can come together inside of some of the country’s most recognizable craft breweries and share business insights with one another. In less than two years, we’ve hosted 19 meetups, in 15 U.S. cities, and connected with thousands of individuals from all tiers of the industry. The events are also broadcast globally via a free live stream.
Attention craft beer drinkers in Western Pennsylvania and the Mid-Atlantic U.S.: say hi to your new neighbor.
Narragansett Beer, the 125-year-old heritage brand out of Rhode Island, has announced plans to expand distribution throughout Maryland, Delaware and previously untapped markets in Pennsylvania, including Pittsburgh, Erie, and Reading.
For wholesale coverage in its new markets, Narragansett has signed on with Legends Distributing in Maryland, NKS Distributing in Delaware, Frank B. Fuhrer in Pittsburgh, Glenwood Beer in Erie and All-Star Distributing in Reading, the company said. In Pennsylvania, Narragansett has a pre-existing presence in Philadelphia.
Narragansett beers – including its flagship Lager, the Mash-Up and Lovecraft series – will be available both on- and off-premise in the new markets later this month.
The expansion, said Narragansett president and CEO Mark Hellendrung, was timed with the recent hire of Vinny Prattico, the brewery’s new vice president of sales and business development.
“Vinny’s valuable industry relationships played an integral role in securing distribution in these markets,” said Hellendrung. “We’re glad to have him on board and look forward to providing beer drinkers around the country with more opportunities to drink ‘Gansett as we continue to grow.”
The brewery is also in search of a facility in Rhode Island to call its own. As Brewbound reported in March, the company was getting ready to close on a 93,000 sq. ft. property in Providence before the building burned down in a fire. Narragansett was planning to share the facility with Isle Brewers Guild, a startup contract brewing outfit similar to Brew Hub and Two Roads Brewing. Narragansett also holds an equity stake in Isle Brewers Guild.
Narragansett sold 78,034 barrels in 2014. Its beer is currently sold in 15 states and Washington, D.C.
Here’s a bold prediction: 25 craft brewery transactions in the next 12 months.
At least, that’s what Bill Anderson, the founder and CEO of investment and advisory firm First Beverage Group, believes is the inevitable short-term future for craft.
Speaking to a room full of brewery executives, distributors and investment bankers who attended yesterday’s Beer Marketer’s Insights conference in Chicago, Anderson characterized craft beer as the “hottest category in CPG (consumer packaged goods)” and confidently stated that the pace of craft deals is about to pick up.
“I think there could easily be 25 more transactions in the next 12 to 15 months,” he said, adding that attractive multiples coupled with a growing pool of interested buyers and investors has led to “a huge acceleration of brewers” looking more seriously at the both exits and capital infusions from private equity firms, family offices and strategics alike.
“Big checks have a way of opening doors,” he said.
And although Anderson wouldn’t comment specifically on any transactions that his own firm was involved in – First Beverage advised on the Boulevard Brewing, 10 Barrel and Southern Tier deals – he did suggest that some fast-growing craft breweries are fetching as much as 18 times earnings.
Anderson said he’s counted “at least six or seven rollup groups” that are approaching acquisitions with more of a portfolio mindset, adding that many of those companies are also eyeing public offerings as an eventual exit strategy.
Anderson also hinted that one top-ranked craft brewery was currently looking at its own IPO; something he believes could happen within the next six months.
“The business of craft beer is going to radically change,” he said, comparing it to the real estate sector.
“This was a great little neighborhood created by Kim [Jordan], Jim [Koch] and Ken [Grossman],” he added. “Now there are a few people down the street building McMansions. They want to come to your barbeque but they aren’t bringing anything. They just want to eat your food.”
Craft businesses like Boston Beer, Sierra Nevada and New Belgium were more predictable when fewer players were competing in the space, Anderson said. But with more money flowing into craft, the “core business” will become less predictable and motivations will differ greatly from the category’s original founders.
Nevertheless, Anderson doesn’t believe the spirit of the movement or the general collegial nature of craft will suddenly disappear, even as more professional money managers take over the books.
“I think it will be frothy for another two to three years, and I think it will change the nature of the business of this industry, but the consumer part will not be as affected,” he said.
Maintaining the collegiality might be a focus for brewery founders, but not for one investment banker who, prior to attending the Craft Brewers Conference last month, opted for a more aggressive approach to dealmaking.
In a solicitation e-mail sent to craft brewers and obtained by Brewbound, a partner with Arlington Capital Advisors teased a forthcoming “top 15 brewery transaction” and indicated that foreign companies like Heineken International, Asahi Breweries, Carlsberg Group, Sapporo Breweries, and Suntory Holdings all have expressed a “deep interest” in craft.
That same email also suggested that Boston Beer Company and other domestic strategic buyers had made bids on the company’s previous transactions, which include SweetWater Brewing’s minority sale to TSG Consumer Partners and Enjoy Beer’s acquisition of Abita.
And while it’s not known which craft brewery owners are currently looking to sell, Anderson made it clear that more transactions are on the way.
“There is a tremendous amount of money on the sidelines that wants to get into this industry,” said Anderson.
“I think this is a unique window of very high multiples and very able, willing, hungry buyers,” he said. “This window may not happen again for another eight to ten years.”
California’s craft beer industry still has a way to go before it can hold a candle to its celebrated wine trade, but it’s certainly trending in the right direction.
In 2014, the market for craft beer in the state continued to flourish, contributing more than $6.5 billion to the economy, according to a newly released report from the California Craft Brewers Association (CCBA).
While the figure is representative of a “fairly conservative” uptick of 18 percent over the year prior, craft beer still boasted a higher economic impact in California than anywhere else in the nation, the CCBA said.
Tom McCormick, executive director of the CCBA, attributed the growth to a number of things, including lenient rules that govern both startup and established businesses.
“It’s a very, very vibrant state,” he told Brewbound. “For the most part, our regulatory structure here is very conducive both to startups and the growth of craft breweries, and I think that makes a big difference.”
All in, the state’s brewers – which include nationwide top 10 craft players Sierra Nevada, Stone, and Lagunitas – produced more than 3.4 million barrels of beer in 2014, while employing more than 48,000 people.
The industry’s growth, in part, was driven by the arrival of new players on the scene. In 2014, there were 519 operating craft breweries in the state, up from 418 the year prior (though as of March, California has 554 operating breweries). In 2012, California played host to only 313.
McCormick said he was only aware of one or two brewery closings in the state in 2014, though, as the space continues to crowd, he expects to see “the dynamics of that change” sometime in the next few years.
Together, the report continues, California’s brewers paid more than $56 million in both state and federal excise taxes in 2014, and more than $1.3 billion in income and other federal, state and local taxes.
Looking ahead, McCormick concluded he still sees a lot of run room for craft to continue to nab market share of the overall beer market, which he pegged currently somewhere between 20 and 22 percent.
There is, of course, also a severe drought plaguing the state that has been a popular talking point as it relates to the craft beer industry — and its future growth.
“If we can get rain out here, I think we’ll be in great shape,” added McCormick.
After investing more than $5 million on brewery infrastructure over the last five years, Wachusett Brewing is turning more attention to the contract portion of its business. But in order for the company to fully capitalize on all of the opportunities coming its way, it says, it needs a little help from Massachusetts state regulators.
In an effort to extend both its own line of craft products into cans and to attract brewers looking to do the same, the Westminster-based craft brewery acquired and refurbished an old Coca-Cola canning line in early 2012. The following year, Wachusett added a multi-packer, giving it the ability to produce 12-packs.
The company’s facility improvements finally culminated with the installation of a fully-automated, 50-barrel brewhouse earlier this year. That system, which was fabricated in Maine, is capable of churning out 600 barrels per day and has improved the company’s ability to produce greater quantities of its own beer while taking on new contract partners, like Portsmouth, N.H.-based Smuttynose Brewing.
But in a conversation with Brewbound, Wachusett founder and president Ned LaFortune said that unless Mass. regulators pass House Bill 187, which would clear the way for additional tenant brewing privileges, the company’s future contract business could be limited.
What LaFortune is hoping for is a change in regulations that would allow out-of-state brewers to transport their finished beer across state lines and utilize Wachusett’s’ canning services. The brewery currently owns two food-grade tankers and is capable of hauling up to 300 barrels of beer at a time, but those vehicles can only transport beer brewed within the Commonwealth.
It’s a resource that would give an out-of-state brewery like Smuttynose, which just built its own new brewery, the ability to brew in New Hampshire and then utilize Wachusett’s canning line, a piece of equipment it doesn’t currently own. But the state needs to allow for amended tenant brewer privileges first, LaFortune said.
LaFortune’s offer to contract brew isn’t necessarily geared toward startups entrepreneurs. While he has plenty of space for both brewing and canning, his system isn’t as accommodating for startup brands that are still working to establish a foothold in the marketplace.
“It would be our preference to work with someone who can fill 100,000 cases annually,” he told Brewbound. “Before I take on a bunch of contracts, I would want to work with someone who can take thousands of cases for one SKU. It minimizes administrative costs and overhead.”
LaFortune says he can still can for those smaller brewers, and he hopes to be able to do so regardless of their state of origin. A change to the law would also allow Wachusett to explore opportunities with larger customers — the kinds who could fill large canning runs but don’t need the company’s brewing services.
Regardless of the customer size, the increased emphasis on contract brewing is somewhat of a strategic pivot for Wachusett.
“It is partially based on my decision to keep the Wachusett brands a local, New England brand,” he said. “I don’t want to try and take the brand further away, I just want to make sure that we are diversified.”
The Wachusett line — 80 percent of which is sold in Massachusetts — is still growing, but there’s a need for contract services in New England not currently being met, LaFortune said. As new competitors enter the fray, LaFortune believes additional contract volume will help shield the company from surrendered tap and retail shelf space.
“When Yuengling entered the market, it did have an affect on us,” he said. “Fortunately, for us, it didn’t have too much impact on the company because we had picked up a lot of contract volume. Any diminishing growth for Wachusett was made up by contract volume.”
Wachusett made 32,000 barrels of beer in 2014, making it the second-largest packaging brewery in Massachusetts. The company is forecasting sales of 45,000 barrels in 2015, a figure that could increase if contract business grows.
So will there ever come a time when Wachusett is producing more beer for other brewers, a la Connecticut’s Two Roads Brewing?
“If it goes down that road and it is working for us — and if we are working with people that we respect and cash is flowing — it could happen,” he said. “It will all depends how successful the brands are in cans.”
How many empty growlers are squirreled away in your basement, in the back of your cupboard or in your garage? And of those growlers, how many do you actually use?
If you’re up to your neck in old growlers, Minneapolis Town Hall Brewery can help. Through Sunday, May 17th, you can bring your growlers to Town Hall’s flagship 7 Corners location and exchange those growlers for either a $4 gift card or a $4 discount on a fresh growler of beer from Town Hall.
Earlier this week we were told that Town Hall had accepted more than 1700 growlers. Most of the returns have come from Minnesota breweries and brewpubs, but returns have also come from places such as Wisconsin and California.
After Sunday, through the rest of the month, Town Hall Brewery will continue to accept empty growlers from other breweries. Fans that return growlers will receive a $4 discount on refills.
As Brewbound reported yesterday, Craft Brew Alliance (CBA) suffered through a difficult first quarter, which ended on March 31, 2015. Net sales and total beer shipments decreased 5 percent and 8 percent respectively.
CBA CEO Andy Thomas summarized the quarter during an earnings call with investors and analysts on Thursday.
“I’ve remarked to many of you before that I look forward to the day when our numbers speak for themselves,” he said. “Well, Q1 2015 still isn’t that time.”
The dull quarter stands in stark contrast to that of that same period from one year ago, which Thomas called an “aberration” that saw net sales and shipments increase 20 percent and 17 percent respectively, leading the way for the company to close out 2014 up double digits in both areas.
An aberration notwithstanding, CBA has made plenty attempts in recent months to stoke portfolio-wide growth. In recent months, the company has added nine states to Kona’s distribution footprint and created additional capacity at Blues City Brewery in Memphis, where it contracts some production of its beer, to better serve the Southeast. That prompted at least one listener on the call to question how, despite higher-than-average sales during last year’s first quarter, shipments could still dip 8 percent in 2015.
“The nine final states that we rolled Kona out in, candidly, are relatively insignificant and small,” Thomas responded. “The key in moving them out and into the states isn’t necessarily the volume we’re going to generate in those nine states. It’s the fact that, that will enable us to actually start to service some national accounts that have coverage in those nine states. The benefit won’t be linear, I would say, and directly proportional.”
Ken Kunze, CBA’s chief marketing officer, spotlighted a few broader, industry-wide factors that contributed to the company’s lethargic quarter, including negative on-premise traffic, a 4 percent decline in beer industry tax paid shipments, and even California’s recent ban on scanbacks that hampered its ability to provide competitive prices in the company’s biggest volume state.
Kunze also offered additional insight on the company’s portfolio of brands. CBA’s gluten-reduced offering, Omission, was the big winner. Depletions were up 33 percent on the quarter, “achieving a 50 share of the gluten-free segment,” an increase of 11 share points over the year prior, said Kunze. Kona depletions were up 9 percent and the brand now controls 21 percent of the Hawaiian beer market. Widmer Brothers depletions were down 3 percent for the quarter, though off-premise sales were up 4 percent, driven primarily by its flagship Hefe and Upheaval IPA, he said.
Redhook, on the other hand, Kunze said, has been its least profitable in the brand family, with depletions down 10 percent.
“There are geographies where we sell a fair amount of volume but make very little gross margin in the process,” he said. “The challenge is to balance sourcing more Redhook volume in more profitable geographies while we transition less profitable geographies to other more profitable brands in the portfolio.”
That process will take a while, however, and Kunze expects Redhook to continue to suffer as a result.
Looking ahead, Scott Mennen, the company’s vice president of operations, detailed the four main priorities CBA has set for itself as it looks to expand gross margins ( between 30.5 percent and 31.5 percent in 2015).
According to Mennen, CBA must:
The executives on the call, which, alongside Thomas, Kunze, and Mennen, included newly appointed CFO, Joe Vanderstelt, were also questioned about any lingering hangover from the 25 percent reduction in SKUs from 2014.
Mennen said to expect additional rationalization, noting that any further cuts would not be as dramatic. The continued reduction of struggling brands would be offset by the introduction of new items, naming Widmer’s Hefe Shandy as an example.
Though most of the call was devoted to explaining grim numbers, there were some bright spots discussed. In the company’s home markets of Oregon, Washington and Hawaii, depletion volume grew 8 percent, a credit to continued investment in the backyard.
“We’ve been explicit about our home market strategy,” added Thomas.
As Brewbound reported earlier this year, the company plans to invest a total of $25 million in expanding operations in Portland, Ore. ($10 million) and Hawaii ($15 million). All in, depletion volume grew 1 percent over the first quarter, the company said.
Chris Thorne, the Beer Institute’s vice president of communications, has announced his resignation from the organization effective May 29.
Thorne plans to open his own “media and issue advocacy” group in Washington D.C. and continue working with the Beer Institute as an independent consultant. He will represent the lobbying group as its communications counselor until the organization fills his vacant position, BI president Jim McGreevy told Brewbound.
“Chris was our first in-house vice president of communications and he is a model for the kind of person we will look to bring in as his successor,” McGreevy said. “As an advocacy organization – for our members and a category – you can’t just be talking to people inside the building. You need to talk to people in the community so that they understand the importance beer has in Washington D.C. and America. That is what Chris did so well and what he will continue to do on behalf of beer.”
Thorne began his time at the BI in April 2012, helping to rebrand the organization and execute the launch of various industry campaigns such as “Know Your Drink” and “Brand Beer.”
“Being involved in regulatory issues but also representing the category to the broader public is the piece of the job that Chris excelled at,” said McGreevy.
Not surprisingly, the BI is Thorne’s first official client, though McGreevy said it’s unknown how long the BI intends to work with his yet-to-be named venture.
McGreevy said the Beer Institute is currently searching for a replacement and will look to “have a team that is at full strength” by early summer.
Chris Thorne, the Beer Institute’s vice president of communications, has announced his resignation from the organization effective May 29.
Thorne plans to open his own “media and issue advocacy” group in Washington D.C. and continue working with the Beer Institute as an independent consultant. He will represent the lobbying group as its communications counselor until the organization fills his vacant position, BI president Jim McGreevy told Brewbound.
“Chris was our first in-house vice president of communications and he is a model for the kind of person we will look to bring in as his successor,” McGreevy said. “As an advocacy organization – for our members and a category – you can’t just be talking to people inside the building. You need to talk to people in the community so that they understand the importance beer has in Washington D.C. and America. That is what Chris did so well and what he will continue to do on behalf of beer.”
Thorne began his time at the BI in April 2012, helping to rebrand the organization and execute the launch of various industry campaigns such as “Know Your Drink” and “Brand Beer.”
“Being involved in regulatory issues but also representing the category to the broader public is the piece of the job that Chris excelled at,” said McGreevy.
Not surprisingly, the BI is Thorne’s first official client, though McGreevy said it’s unknown how long the BI intends to work with his yet-to-be named venture.
McGreevy said the Beer Institute is currently searching for a replacement and will look to “have a team that is at full strength” by early summer.
As Brewbound reported yesterday, Craft Brew Alliance (CBA) suffered through a difficult first quarter, which ended on March 31, 2015. Net sales and total beer shipments decreased 5 percent and 8 percent respectively.
CBA CEO Andy Thomas summarized the quarter during an earnings call with investors and analysts on Thursday.
“I’ve remarked to many of you before that I look forward to the day when our numbers speak for themselves,” he said. “Well, Q1 2015 still isn’t that time.”
The dull quarter stands in stark contrast to that of that same period from one year ago, which Thomas called an “aberration” that saw net sales and shipments increase 20 percent and 17 percent respectively, leading the way for the company to close out 2014 up double digits in both areas.
An aberration notwithstanding, CBA has made plenty attempts in recent months to stoke portfolio-wide growth. In recent months, the company has added nine states to Kona’s distribution footprint and created additional capacity at Blues City Brewery in Memphis, where it contracts some production of its beer, to better serve the Southeast. That prompted at least one listener on the call to question how, despite higher-than-average sales during last year’s first quarter, shipments could still dip 8 percent in 2015.
“The nine final states that we rolled Kona out in, candidly, are relatively insignificant and small,” Thomas responded. “The key in moving them out and into the states isn’t necessarily the volume we’re going to generate in those nine states. It’s the fact that, that will enable us to actually start to service some national accounts that have coverage in those nine states. The benefit won’t be linear, I would say, and directly proportional.”
Ken Kunze, CBA’s chief marketing officer, spotlighted a few broader, industry-wide factors that contributed to the company’s lethargic quarter, including negative on-premise traffic, a 4 percent decline in beer industry tax paid shipments, and even California’s recent ban on scanbacks that hampered its ability to provide competitive prices in the company’s biggest volume state.
Kunze also offered additional insight on the company’s portfolio of brands. CBA’s gluten-reduced offering, Omission, was the big winner. Depletions were up 33 percent on the quarter, “achieving a 50 share of the gluten-free segment,” an increase of 11 share points over the year prior, said Kunze. Kona depletions were up 9 percent and the brand now controls 21 percent of the Hawaiian beer market. Widmer Brothers depletions were down 3 percent for the quarter, though off-premise sales were up 4 percent, driven primarily by its flagship Hefe and Upheaval IPA, he said.
Redhook, on the other hand, Kunze said, has been its least profitable in the brand family, with depletions down 10 percent.
“There are geographies where we sell a fair amount of volume but make very little gross margin in the process,” he said. “The challenge is to balance sourcing more Redhook volume in more profitable geographies while we transition less profitable geographies to other more profitable brands in the portfolio.”
That process will take a while, however, and Kunze expects Redhook to continue to suffer as a result.
Looking ahead, Scott Mennen, the company’s vice president of operations, detailed the four main priorities CBA has set for itself as it looks to expand gross margins ( between 30.5 percent and 31.5 percent in 2015).
According to Mennen, CBA must:
The executives on the call, which, alongside Thomas, Kunze, and Mennen, included newly appointed CFO, Joe Vanderstelt, were also questioned about any lingering hangover from the 25 percent reduction in SKUs from 2014.
Mennen said to expect additional rationalization, noting that any further cuts would not be as dramatic. The continued reduction of struggling brands would be offset by the introduction of new items, naming Widmer’s Hefe Shandy as an example.
Though most of the call was devoted to explaining grim numbers, there were some bright spots discussed. In the company’s home markets of Oregon, Washington and Hawaii, depletion volume grew 8 percent, a credit to continued investment in the backyard.
“We’ve been explicit about our home market strategy,” added Thomas.
As Brewbound reported earlier this year, the company plans to invest a total of $25 million in expanding operations in Portland, Ore. ($10 million) and Hawaii ($15 million). All in, depletion volume grew 1 percent over the first quarter, the company said.
In the world of XY charts, there are companies with steady linear trajectories, the oft-coveted hockey stick growth curves and then there’s whatever geometric shape Revolution Brewing is creating.
Since diving head first into full-scale production in 2012, the Chicago-based beer company has brewed up a revolution in the Windy City – growing sales to just over 50,000 barrels in 2014. 2015 forecasts place sales from its production brewery and its brewpub somewhere north of 70,000 barrels, a figure that Donn Bichsel, Revolution’s director of sales and marketing, estimates will double by 2017.
So this summer, in an effort to keep up with increasing demand and a desire to expand into new markets, the company will embark on a multi-million dollar expansion, install a new 120-barrel brewhouse – twice the size of its current system — and four 800-barrel fermentation tanks. And depending upon how firmly the company wants to press on the gas pedal, capacity could accelerate to 225,000 barrels as quickly as Ziemann, their fermentation tank supplier, can weld together pieces of stainless steel.
But even Revolution isn’t impervious to the threat of an uprising, one that will include about 50 craft breweries in the Chicagoland area before the end of 2015.
So what’s the company’s strategy for accelerating growth at a time when so many craft breweries are competiting for valuable tap and shelf space?
The chains.
“We really embraced the chains early, knowing that we are a chain driven market and knowing that we wanted to make our beer available to as many people as possible,” Bichsel told Brewbound during a recent phone conversation. “We could have done this without getting involved in the chains. We just have to make sure they are taking care of our brands the right way and selling them at the right prices.”
Propelling Revolution’s growth in the chains is its flagship IPA, Anti-Hero, which accounts for nearly 60 percent of company-wide sales.
“It’s our horse,” Bichsel said during a conversation at last month’s Brew Talks meetup, held on April 28 at the Revolution Brewery in Chicago.
“We try to temper it down, but we like to let it run,” he added.
Bichsel believes the brewery’s recently introduced Fist City “Chicago Pale Ale,” brewed with all “C-hops,” could one day be the lead brand.
Despite the optimism, there was a very practical reason for behind Revolution’s introduction of a fifth year-round product in cans, Bichsel said.
“Some chains are deeply committed to craft and deeply committed to giving us a full shelf in the cooler,” he said. “That is one of the reasons why Fist City was created — to be able to have a fifth brand that can fill out a shelf.”
But while that strategy plays well in Chicago, it’s tougher for Bichsel and Revolution to command cooler space as it moves farther away from home.
“In home markets, chain buyers have become quick to adapt and know that their local brands will be their horses,” he said, noting that Revolution is probably “over-indexed” in Chicago.
“As we move farther afield, and start to move further into Ohio, that is where the pushback becomes more evident. It is give me your number one and give me your number two. If number one performs well, we will give you your second placement. If that performs well, we will give you your third,” he added.
In our latest video from Brew Talks Chicago (above), Bichsel provides an update on Revolution’s progress through the midway point of the year, offers his takeaways from the 2015 Craft Brewers Conference, and shares his vision of craft category development over the next 12 – 18 months.
Brewbound is pleased to announce that the Startup Brewery Challenge, our bi-annual business pitch competition, will return for a fourth edition at the June 11 Brewbound Session in Chicago, IL.
Presented by Craft Brew Alliance, the Startup Brewery Challenge gives U.S. craft breweries who have been on the market for less than two years a chance to show off their business plans, sample one core product offering and receive immediate feedback from a panel of expert judges.
“Since launching the competition in December 2013, we’ve seen the level of entrepreneurial talent and the quality of both the beer and the pitch improve immensely, and we expect that to continue in 2015,” said Brewbound editor Chris Furnari.
Competing for the chance to become the Widmer “Brother for a Day,” the winning company will receive an all-expenses-paid trip to Portland, Ore. and the opportunity to craft a new collaboration beer with Widmer Brothers Brewing. Winners will also take an extensive tour of the company’s production brewery, participate in Widmer Brothers’ daily taste panel and receive business coaching from CBA executives as well as sales, marketing, graphics, quality assurance and packaging department leaders.
Participating entrepreneurs will be given three minutes to explain their business propositions, and company mission statements, and will receive immediate feedback from a judging panel that will include accomplished beer executives, innovative brewers and savvy craft retailers. Pitching in front of a more than 200 industry professionals, Startup Brewery Challenge participants will also be allowed to visually showcase their brands with Powerpoint slides.
Simply visit the application page for a complete listing of rules and selection criteria. Applicants will be evaluated and chosen by the Brewbound team. Questions about the competition can be directed to Jon Landis at jlandis@bevnet.com or 617-231-8834.
Complete details on the Startup Brewery Challenge, including exact timing of the competition and judging announcements will be made in the coming weeks.
Past winners of the Startup Brewery Challenge include CODA Brewing, Appalachian Mountain Brewing and 5 Stones Brewing. Last December, as a direct result of participating in the Startup Brewery Challenge, Appalachian Mountain Brewing and CBA formed a strategic partnership. That partnership recently evolved into a master distribution arrangement and a commitment from CBA to market, sell and distribute AMB products exclusively through its wholesale network.
Combining the best in business information and networking, the Brewbound Session offers an unmatched strategic learning opportunity for craft brewers and wholesalers. Focused on the business side of craft brewing, the event will take place in Chicago, IL on Thursday, June 11. Current speakers include Anheuser-Busch InBev’s CEO of Craft, Andy Goeler; Oskar Blues founder Dale Katechis; Tenth and Blake president Scott Whitley and Alchemy & Science president Alan Newman, among others.
The Brewbound Session provides an excellent opportunity to learn marketing, investment, and distribution strategies, as well as hear case studies of successful brands in a highly collaborative atmosphere. The upcoming conference aims to address the topics that most directly impact craft brewers as they look to grow their brands.
Brewbound is pleased to announce that the Startup Brewery Challenge, our bi-annual business pitch competition, will return for a fourth edition at the June 11 Brewbound Session in Chicago, IL.
Presented by Craft Brew Alliance, the Startup Brewery Challenge gives U.S. craft breweries who have been on the market for less than two years a chance to show off their business plans, sample one core product offering and receive immediate feedback from a panel of expert judges.
“Since launching the competition in December 2013, we’ve seen the level of entrepreneurial talent and the quality of both the beer and the pitch improve immensely, and we expect that to continue in 2015,” said Brewbound editor Chris Furnari.
Competing for the chance to become the Widmer “Brother for a Day,” the winning company will receive an all-expenses-paid trip to Portland, Ore. and the opportunity to craft a new collaboration beer with Widmer Brothers Brewing. Winners will also take an extensive tour of the company’s production brewery, participate in Widmer Brothers’ daily taste panel and receive business coaching from CBA executives as well as sales, marketing, graphics, quality assurance and packaging department leaders.
Participating entrepreneurs will be given three minutes to explain their business propositions, and company mission statements, and will receive immediate feedback from a judging panel that will include accomplished beer executives, innovative brewers and savvy craft retailers. Pitching in front of a more than 200 industry professionals, Startup Brewery Challenge participants will also be allowed to visually showcase their brands with Powerpoint slides.
Simply visit the application page for a complete listing of rules and selection criteria. Applicants will be evaluated and chosen by the Brewbound team. Questions about the competition can be directed to Jon Landis at jlandis@bevnet.com or 617-231-8834.
Complete details on the Startup Brewery Challenge, including exact timing of the competition and judging announcements will be made in the coming weeks.
Past winners of the Startup Brewery Challenge include CODA Brewing, Appalachian Mountain Brewing and 5 Stones Brewing. Last December, as a direct result of participating in the Startup Brewery Challenge, Appalachian Mountain Brewing and CBA formed a strategic partnership. That partnership recently evolved into a master distribution arrangement and a commitment from CBA to market, sell and distribute AMB products exclusively through its wholesale network.
Combining the best in business information and networking, the Brewbound Session offers an unmatched strategic learning opportunity for craft brewers and wholesalers. Focused on the business side of craft brewing, the event will take place in Chicago, IL on Thursday, June 11. Current speakers include Anheuser-Busch InBev’s CEO of Craft, Andy Goeler; Oskar Blues founder Dale Katechis; Tenth and Blake president Scott Whitley and Alchemy & Science president Alan Newman, among others.
The Brewbound Session provides an excellent opportunity to learn marketing, investment, and distribution strategies, as well as hear case studies of successful brands in a highly collaborative atmosphere. The upcoming conference aims to address the topics that most directly impact craft brewers as they look to grow their brands.
San Francisco’s 21st Amendment Brewery today announced it has inked a deal with Stone Distributing, the growing wholesale arm of Stone Brewing, to bring its beers to southern California later this month.
Per the terms of the agreement, Stone will distribute 21st Amendment beers – including Hell or High Watermelon and Brew Free! Or Die IPA – throughout San Diego, Los Angeles, Orange County and the Inland Empire, effective May 11.
The expansion was facilitated in part by 21st Amendment’s $21 million investment in a new production facility, located in San Leandro, Calif., per a statement from the company. 21st Amendment will begin producing and shipping beer out of the 95,000 sq. ft. space this June, enabling it to expand deeper into its home state, it said in a statement. At the time of the project’s announcement, the company told Brewbound the facility would have an initial capacity to brew 100,000 barrels in a year.
Prior to the build-out, 21st Amendment had, since 2008, produced most of its beer under contract at Minnesota’s Cold Spring Brewing. The company was originally founded as a brewpub in San Francisco in 2000.
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Brewbound is pleased to announce that Brew Talks — a traveling meetup series for beer industry professionals — will make its next stop at Boulevard Brewing in Kansas City on May 18.
Beer business professionals are invited to join the Kansas City meetup, being held inside of the Muehlebach Suite at the Boulevard Brewing’s production brewery (2501 Southwest Blvd, Kansas City, MO 64108), at 5:00 P.M. on Monday May 18. Panel discussions will begin promptly at 5:30 P.M. and guests are invite to imbibe and socialize until 8:00 P.M.
Register for Brew Talks Kansas City Today >>>
Brew Talks — gatherings designed to provide craft brewers, distributors and retailers the opportunity to come together and have in-depth discussions on the business side of craft beer – will offer attendees an excellent opportunity to gain business lessons and network with other beverage entrepreneurs.
In Kansas City, Brew Talks attendees will hear from Simon Thorpe, the president of Duvel Moortgat USA, and John McDonald, the founder of Boulevard Brewing. Additional speaker announcements will be made in the coming days.
In addition to hosting conversations with industry experts, Brewbound will also be raising money for The Animal Rescue Alliance (TARA), an all-volunteer organization dedicated to helping homeless pets in the Great Kansas City area. 100 percent of the admission sales will be donated to TARA.
Over the last three months, Brewbound has connected with more than 600 beer industry professionals, in four different cities and raised over $6,000 for local non-profit organizations.
After Kansas City, Brew Talks will make its next stop in Michigan in July. Stay tuned for additional announcements, including the official dates and locations of our four remaining 2015 Brew Talks meetups.
Since hosting our first event in the basement of a craft beer bar in Boston in 2013, the meetup series has developed into a multi-city tour where beer industry professionals can come together inside of some of the country’s most recognizable craft breweries and share business insights with one another. In less than two years, we’ve hosted 19 meetups, in 15 U.S. cities, and connected with thousands of individuals from all tiers of the industry. The events are also broadcast globally via a free live stream.
Craft Brew Alliance today announced its first quarter financial results, highlighting depletion volume growth of just 1 percent and a net sales decrease of 5 percent across its core family of brands, including Widmer Brothers, Redhook, Kona and Omission. Total beer shipments decreased 8 percent during the quarter.
In a release, CBA attributed the sluggish first quarter results to “higher-than-average” sales during the first quarter of 2014 as it “adjusted” for out-of-stocks that hampered the company toward the end of 2013.
Depletions in CBA’s home markets of Hawaii, Oregon and Washington grew 8 percent during the quarter, however, as the company focused on strengthening its core brands — Kona Longboard Lager, Widmer Brothers Hefeweizen and Omission.
“Our first quarter net sales and shipments are in line with our internal plan and put us on track to deliver our full year guidance of 6 percent to 8 percent growth in shipment volume,” CEO Andy Thomas said in the release.
Despite an overall lackluster start to 2015, there were a few bright spots. Increased pricing and lower distribution costs drove the company’s gross margin rate up 50 basis points, to 29.7 percent for the quarter. At the brand level, both Kona and Omission posted positive depletion figures — up 9 percent and 33 percent, respectively. Kona’s shipments, however, were down 0.9 percent, according to SEC filings. Omission shipments increased 9.1 percent. Both Redook and Widmer shipments fell, however — 16 percent and 12.3 percent, respectively.
CBA shipped 167,700 barrels of beer during the quarter, down from 182,800 barrels in 2014. It’s worth noting that the Beer Institute estimates industry-wide production figures were down about 3.7 percent through March.
A full press release detailing CBA’s first quarter performance is included below. Brewbound will have additional information following tomorrow’s earnings call with company executives.
Craft Brew Alliance, Inc. (“CBA”) (Nasdaq: BREW), a leading craft brewing company, today reported its financial results for the first quarter ended March 31, 2015. The results for the first quarter are in line with management’s expectations, and the Company reconfirms previously reported 2015 guidance.
First quarter 2015 financial highlights include:
Depletion volume grew 1% over the first quarter of 2014, primarily due to the continued momentum for our core flagship brands, including Kona Longboard Lager, Widmer Brothers Hefeweizen, and Omission, our innovative craft beer brewed with traditional beer ingredients and specially crafted to remove gluten.
In our home markets of Hawaii, Oregon, and Washington, depletion volume grew 8% over the first quarter of 2014, which we attribute to the continued strategic focus on strengthening our core brands in their home states.
Net sales and total beer shipments decreased 5% and 8%, respectively, compared to the first quarter of 2014. The decreases reflect the higher-than-average sales and beer shipments reported in the first quarter of 2014 as we adjusted for out-of-stocks that challenged us in 2013.
As wholesaler depletions increased and shipments decreased in the first quarter, we lowered our wholesaler inventories, reflecting continued efforts to optimize wholesaler inventory levels.
Our beer gross margin rate increased 50 basis points to 29.7% in the first quarter, compared to 29.2% in the first quarter last year, due to increased pricing and lower distribution costs on a per barrel basis. The increase was partially offset by planned lower capacity utilization in our owned breweries as we fully integrated our Memphis operations. Our restaurant gross margin rate decreased by 350 basis points to 9.7%, compared to 13.2%, due to closures resulting from inclement weather during the first quarter and the closure of our Koko pub for a full remodel. As a result, our combined first quarter gross margin rate decreased 20 basis points to 26.8%, compared to 27.0% for the first quarter last year.
To address the wide variances in quarterly results and provide a more representative view into our financial performance, we are sharing trailing 12-month comparisons for the periods ended March 31, 2015 and March 31, 2014.
For those periods, our beer shipments increased 4%, depletions increased 5%, and net sales increased 6%.
Our beer gross margin expanded by 110 basis points to 31.9% and restaurant gross margin declined by 90 basis points to 12.6% for the same 12-month periods, for a combined gross margin expansion of 80 basis points to 29.3%, compared to 28.5%.
Owned capacity utilization decreased to 58% in the first quarter of 2015 compared to 68% in the first quarter of 2014, which reflects the addition of our brewing operations in Memphis, as well as continued efforts to balance and normalize inventories.
As a percentage of net sales, our selling, general and administrative expense (“SG&A”) increased to 31% in the first quarter of 2015 from 28% in the first quarter of 2014, primarily due to the decrease in our net sales.
Diluted loss per share for the first quarter of 2015 was $0.06, compared to $0.01 for the same period last year.
“Our first quarter net sales and shipments are in line with our internal plan and put us on track to deliver our full year guidance of 6% to 8% growth in shipment volume. While the first quarter was challenging, we made steady progress in key strategic areas, including 8% depletion growth in our brands’ home markets and 50 basis point improvement in our beer gross margins, reflecting strong underlying fundamentals,” said Andy Thomas, Chief Executive Officer, CBA. “We continue to believe that this momentum, coupled with the strategic investments in our home markets, will enable us to realize our vision for meaningful and sustained growth over the long term.”
Components of anticipated 2015 financial results and developments:
We are confirming previously issued guidance regarding our anticipated full year 2015 results, as follows:
Statements made in this press release that state the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future, including shipments and sales growth, price increases, level of contract brewing revenue and gross margin rate improvement, the level or effect of SG&A expense and business development, the amount of capital spending, and the benefits or improvements to be realized from strategic initiatives and capital projects, are forward-looking statements. It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including, but not limited to, the Company’s report on Form 10-K for the year ended December 31, 2014. Copies of these documents may be found on the Company’s website, www.craftbrew.com, or obtained by contacting the Company or the SEC.
CBA is a leading craft brewing company, which brews, brands and markets some of the world’s most respected and best-loved American craft beers.
The company is home to three of the earliest pioneers in craft beer: Redhook Ale Brewery, Washington’s largest craft brewery founded in 1981; Widmer Brothers Brewing, Oregon’s largest craft brewery founded in 1984; and Kona Brewing Company, Hawaii’s oldest and largest craft brewery founded in 1994. As part of Craft Brew Alliance, these craft brewing legends have expanded their reach across the U.S. and more than 15 international markets.
In addition to growing and nurturing distinctive brands rooted in local heritage, Craft Brew Alliance is committed to developing innovative new category leaders, such as Omission Beer, which is the #1 beer in the gluten free beer segment, and Square Mile Cider, a tribute to the early American settlers who purchased the first plots of land in the Pacific Northwest.
Publicly traded on NASDAQ under the ticker symbol BREW, Craft Brew Alliance is headquartered in Portland, OR and operates five breweries and five pub restaurants across the U.S. For more information about CBA and its brands, please visit www.craftbrew.com.
What does it mean to be small and local in today’s crowded craft beer market?
The Brewers Association might define all of its members — those making less than 6 million barrels annually — as small, but not all companies are created equal. The craft beer industry has grown to the point where some craft breweries are churning out more than a million barrels of suds each year while other, more niche startups roll out less than 100. In the eyes of the BA, both are considered “small,” but ask a handful of brewers to define what being a small brewer really means, and you’ll likely get some varied responses.
During our Brew Talks Chicago meetup, hosted last week at Revolution Brewing, we dug into the matter with Wirtz Beverage’s craft beer manager, David Kahle; Pipeworks Brewing co-founder Beejay Oslon and Une Année founder Jerry Nelson.
Pipeworks, founded in 2012, is projecting sales of 6,000 barrels this year, triple the amount it made last year. Though small, the brewery has released more than 150 different brands since its conception and has remained exclusively focused on the Chicagoland market. As for Une Année, the company — run by Nelson as its only full-time employee — is even smaller, but sells its line of Saison and Belgian-style beers in Chicago, Wisconsin and Michigan.
So how do the founders of two very different craft startups define what it means to be “small and local?” And how does a distributor — one that represents some of the largest and fastest growing craft brands in the country as well as small brands like Une Annee — sell the narrative of “small and local” to bar owners?
Answers to these questions and many others are included in the video (as well as a condensed and slightly edited dialogue), below.
When we started our company there was three of us. We were one of the few self-distributing breweries in the city. What that meant for us was we had our hands in every part of operations. We were salesmen. We were distributors. I think going about it in that way kept us really close to the community of drinkers we were dealing with and it made us really responsive. It gave us this responsiveness I think maybe larger brewers don’t have.
I do pretty much everything myself. I don’t have any full time employees. I have one guy who comes and helps me on my bottling days and that’s it right now.
Small I think is a tougher thing to discuss and I think it’s less relevant. I don’t think anybody’s business plan is to stay very small and barely make enough money to survive. Everybody’s in a business and everybody wants to grow. But we also want to separate ourselves — craft breweries from macro breweries. It’s more relevant for me selling beer maybe on an account level where you’ve got buyers in an account serving on-premise who are bombarded with people coming in every day.
You need a way to pare down your beer list. Whether saying, “We only want American craft” or “We only want Belgian beers” or “We just want local,” small can be a component in that.
Small is relative.
Une Année is not going to be what Revolution is right now. We’re not going to make as much beer as they are right now… I have to realize what my brand is specifically and really try to hone into what my brand can be.
For us, it was an organic choice. Our current facility is at capacity and has been for about a year. We literally can’t fit another tank in the building. At that point, you have to either accept where you are in the market and continue to feed that, but if you have more retailers asking for your product, who am I to tell them no? For us it was a very organic decision. More people want our beer; we clearly wanted to grow as long as it’s organic, so long as we’re not pushing ourselves into the market when it’s not wanted.
As you grow, you’re going to lose parts of that business because it’s going to get too big. We’re not three guys anymore. We’re approaching 20 people in our family.
Now you have to start giving parts of that to other people and letting them take the reins. That might mean at other times letting distributors start working with your product, and that’s a scary thing.
Local is an easy one. I think everyone uses local as a branding and marketing term because there’s a perception of freshness and quality with that. Obviously I say perception because just because it’s local doesn’t mean it’s fresh on the shelf.
Not everyone’s going to win, there’s going to be bad pints of beer out there. And I don’t think that we can sit here and be like ‘hey this is a small local beer and I’m going to buy it to support this guy even though I’m not enjoying the drink that I’m having.’ Like, I’m always going to go to Lagunitas or Sierra Nevada if that’s the beer that tastes the best. We as small local brewers need to strive to make the best possible beer that we can make because it’s not going to be enough just to be small and local, because now there are 50 small and local brewers.
Massachusetts state regulators have accused Craft Beer Guild LLC, one of the state’s most prominent craft wholesalers, of unfair trade practices and illegal pay-to-play activities.
The Alcoholic Beverages Control Commission (ABCC) said Wednesday that Craft Beer Guild — a subsidiary of the Sheehan Family Companies, which owns multiple alcoholic beverage distributorships across more than a dozen states – violated state laws that prohibit wholesalers from offering inducements and unfair discounts.
According to an April 29 hearing notice, Craft Beer Guild – which distributes many high profile craft brands in Massachusetts, including Yuengling, Sierra Nevada and Lagunitas — is accused of offering incentives of “substantial value” and charging different prices for the same product in an effort to influence how retailers conduct business.
Though it’s unclear what specific illegal behavior Craft Beer Guild reportedly engaged in, the hearing notice states that alleged violations occurred on Wednesday, March 18.
“The alleged wrong-doing in this case is serious and as the Commission examines this matter, we’ll continue the work to ensure license holders across the state are acting in a proper manner,” said state Treasurer Deborah Goldberg in a prepared statement.
A public hearing will be held by the ABCC on Tuesday, June 23 at 11:30 a.m. in Boston.
Kris Foster, general counsel at the state agency told Brewbound that if found guilty, the Commission could suspend or revoke Craft Beer Guild’s operating license, noting that penalties in these types of cases do “not typically” carry fines.
Multiple phone calls placed to Craft Beer Guild and Sheehan Family Companies were not returned as of press time.
Nicole Giambusso, a spokeswoman for the Beer Distributors of Massachusetts, a lobbying group, told Brewbound that its members — Craft Beer Guild and others — are aware of the hearing notice.
“At this point, the notice constitutes allegations only and a full hearing is currently scheduled,” she wrote in a statement. “Full cooperation has been provided to the ABCC investigation and we look forward to a full and fair process to be administered by the Commission. The ABCC’s process is the appropriate venue in which to address this issue.”
“Beer Distributors have an established track record of working collaboratively with brewers and retailers to ensure that new brands are able to enter into and achieve success within the Commonwealth’s highly competitive beer market. Sales of craft beer have experienced near 100 percent growth over the past year, and craft beer now occupies a 15.5 percent share of the Massachusetts market – more than double the national average,” she added.
Matthew Sheaff, the director of communications for Treasurer Goldberg told Brewbound that the ABCC is still in the process of investigating illegal pay-to-play activities, but would not confirm if other brewers, wholesalers or retailers could face similar charges.
The ABCC currently has 14 investigators, he said.
Sheehan Family Companies currently operates 19 different beer distribution companies in 13 states. It also owns St. Killian Importing – which imports products like Carlsberg, Crabbie’s and San Miguel, among others — and Blueprint Brands, a spirits wholesaler with outposts in Connecticut, Washington D.C., Maryland, Massachusetts, New Jersey, New York and Rhode Island.
The charges against Craft Beer Guild come nearly six months after the ABCC issued subpoenas to a number of beer businesses in the state, including various retailers, Harpoon Brewery, Night Shift Brewing, Idle Hands Brewing and “unspecified members” of the Beer Distributors of Massachusetts.
But it was Pretty Things Beer & Ale Project founder Dann Paquette, however, who helped spark the investigation last October when he took to twitter to complain about the habit of illegal pay-to-play practices. At the time, he described Boston as a “pay to play town,” accusing bar owners of conducting under-the-table transactions and accepting incentives from wholesalers and brewers in exchange for guaranteed placement.
“Ever heard the term “committed lines”? This is what it means. Breweries buy draft lines so their lame beers aren’t irrelevant,” he tweeted at the time.
Pretty Things, and a host of other craft breweries represented by Craft Beer Guild, currently participate in what the distributor calls its “Accumulation Program,” whereby bar owners are discounted as much as $20 per keg when purchasing from a list of specific craft brands. Companies such as Lagunitas, Abita, and Southern Tier, among others, currently participate in the program.
It’s not entirely clear whether the company’s discount program is considered illegal under current Mass. law, but Brewbound has learned that it was first introduced after the ABCC’s investigations had already begun.
Brewbound will continue to follow this story as it develops.
Bell’s Brewery has announced plans to expand its presence on the east coast, detailing this afternoon imminent launches in both Delaware and Maryland.
Bell’s, the nation’s 7th largest craft brewery, according to the Brewers Association, has signed on with N.K.S. Distributors for coverage in Delaware. In Maryland, the brewery has inked deals with a group of wholesalers, including Bond Distributing Company, Buck Distributing, Carey Distributors, Inc., and Wantz Distributors, Inc.
“With recent and future expansions, we are able to slowly increase our distribution footprint and we are looking forward to working with our new partners,” said Laura Bell, vice president, Bell’s, in a press statement. “It’s also very exciting to be able to tell our fans that we will be seeing them very soon.”
Specific launch dates have not been announced, but the brewery said it plans to bring both its core line – including Two Hearted, Midwestern Pale Ale, and Kalamazoo Stout – and seasonal offerings to both states. The brewery said it will also ship specialty beers to the two states as “production allows.”
With the addition of Delaware and Maryland, Bell’s products are now available in 22 states as well as Washington D.C. and Puerto Rico. The brewery sold 318,000 barrels in 2014.
Massachusetts state regulators have accused Craft Beer Guild LLC, one of the state’s most prominent craft wholesalers, of unfair trade practices and illegal pay-to-play activities.
The Alcoholic Beverages Control Commission (ABCC) said Wednesday that Craft Beer Guild — a subsidiary of the Sheehan Family Companies, which owns multiple alcoholic beverage distributorships across more than a dozen states – violated state laws that prohibit wholesalers from offering inducements and unfair discounts.
According to an April 29 hearing notice, Craft Beer Guild – which distributes many high profile craft brands in Massachusetts, including Yuengling, Sierra Nevada and Lagunitas — is accused of offering incentives of “substantial value” and charging different prices for the same product in an effort to influence how retailers conduct business.
Though it’s unclear what specific illegal behavior Craft Beer Guild reportedly engaged in, the hearing notice states that alleged violations occurred on Wednesday, March 18.
“The alleged wrong-doing in this case is serious and as the Commission examines this matter, we’ll continue the work to ensure license holders across the state are acting in a proper manner,” said state Treasurer Deborah Goldberg in a prepared statement.
A public hearing will be held by the ABCC on Tuesday, June 23 at 11:30 a.m. in Boston.
Kris Foster, general counsel at the state agency told Brewbound that if found guilty, the Commission could suspend or revoke Craft Beer Guild’s operating license, noting that penalties in these types of cases do “not typically” carry fines.
Multiple phone calls placed to Craft Beer Guild and Sheehan Family Companies were not returned as of press time.
Nicole Giambusso, a spokeswoman for the Beer Distributors of Massachusetts, a lobbying group, told Brewbound that its members — Craft Beer Guild and others — are aware of the hearing notice.
“At this point, the notice constitutes allegations only and a full hearing is currently scheduled,” she wrote in a statement. “Full cooperation has been provided to the ABCC investigation and we look forward to a full and fair process to be administered by the Commission. The ABCC’s process is the appropriate venue in which to address this issue.”
“Beer Distributors have an established track record of working collaboratively with brewers and retailers to ensure that new brands are able to enter into and achieve success within the Commonwealth’s highly competitive beer market. Sales of craft beer have experienced near 100 percent growth over the past year, and craft beer now occupies a 15.5 percent share of the Massachusetts market – more than double the national average,” she added.
Matthew Sheaff, the director of communications for Treasurer Goldberg told Brewbound that the ABCC is still in the process of investigating illegal pay-to-play activities, but would not confirm if other brewers, wholesalers or retailers could face similar charges.
The ABCC currently has 14 investigators, he said.
Sheehan Family Companies currently operates 19 different beer distribution companies in 13 states. It also owns St. Killian Importing – which imports products like Carlsberg, Crabbie’s and San Miguel, among others — and Blueprint Brands, a spirits wholesaler with outposts in Connecticut, Washington D.C., Maryland, Massachusetts, New Jersey, New York and Rhode Island.
The charges against Craft Beer Guild come nearly six months after the ABCC issued subpoenas to a number of beer businesses in the state, including various retailers, Harpoon Brewery, Night Shift Brewing, Idle Hands Brewing and “unspecified members” of the Beer Distributors of Massachusetts.
But it was Pretty Things Beer & Ale Project founder Dann Paquette, however, who helped spark the investigation last October when he took to twitter to complain about the habit of illegal pay-to-play practices. At the time, he described Boston as a “pay to play town,” accusing bar owners of conducting under-the-table transactions and accepting incentives from wholesalers and brewers in exchange for guaranteed placement.
“Ever heard the term “committed lines”? This is what it means. Breweries buy draft lines so their lame beers aren’t irrelevant,” he tweeted at the time.
Pretty Things, and a host of other craft breweries represented by Craft Beer Guild, currently participate in what the distributor calls its “Accumulation Program,” whereby bar owners are discounted as much as $20 per keg when purchasing from a list of specific craft brands. Companies such as Lagunitas, Abita, and Southern Tier, among others, currently participate in the program.
It’s not entirely clear whether the company’s discount program is considered illegal under current Mass. law, but Brewbound has learned that it was first introduced after the ABCC’s investigations had already begun.
Brewbound will continue to follow this story as it develops.
Great news from Montgomery, MN. Last night the City of Montgomery passed a provision to allow for growler sales. The city worked quickly and Montgomery Brewing Co. will be open for the state’s first Sunday growler sales this Sunday, May 24th. Don’t hesitate, though… they have a 3 bbl brewing system and the beer just won’t last.
