Craft Beer Share Reaches 10%

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The preliminary numbers for 2014 are out, and the news is fairly spectacular, especially if you remember Kim Jordan’s keynote speech in New Orleans predicting and challenging the industry to set 10 percent share of the market as an attainable goal. The Brewers Association today revealed that craft beer’s share of market finally blew past 10% and is now 11% of the total beer market, by volume.

From the press release:

In 2014, craft brewers produced 22.2 million barrels, and saw an 18 percent rise in volume2 and a 22 percent increase in retail dollar value3. Retail dollar value was estimated at $19.6 billion representing 19.3 percent market share.

“With the total beer market up only 0.5 percent in 2014, craft brewers are key in keeping the overall industry innovative and growing. This steady growth shows that craft brewing is part of a profound shift in American beer culture—a shift that will help craft brewers achieve their ambitious goal of 20 percent market share by 2020,” said Bart Watson, chief economist, Brewers Association. “Small and independent brewers are deepening their connection to local beer lovers while continuing to create excitement and attract even more appreciators.”

But wait, there’s more.

Additionally, the number of operating breweries in the U.S. in 2014 grew 19 percent, totaling 3,464 breweries, with 3,418 considered craft broken down as follows: 1,871 microbreweries, 1,412 brewpubs and 135 regional craft breweries. Throughout the year, there were 615 new brewery openings and only 46 closings.

Combined with already existing and established breweries and brew pubs, craft brewers provided 115,469 jobs, an increase of almost 5,000 from the previous year.

“These small businesses are one of the bright spots in both our economy and culture. Craft brewers are serving their local communities, brewing up jobs and boosting tourism,” added Watson. “Craft brewers are creating high quality, differentiated beers; new brewers that match this standard will be welcomed in the market with open arms.”

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Patent No. 2108096A: Merchandise Display Apparatus

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Today in 1938, US Patent 2108096 A was issued, an invention of James E. Barsi, assigned to Anheuser-Busch, for his “Merchandise Display Apparatus.” There’s no Abstract, but the application states that “this invention relates to apparatus of the kind that are used for advertising and displaying merchandise and has for its main object to provide an advertising and/or display apparatus that is of attractive appearance and of such construction that, in addition to holding a plurality of samples of the advertised product in such a way that said samples may be easily handled and inspected by the public, it will also display in an attractive manner other articles or packages containing material that is particularly adapted for use in connection with the advertised product. For example, if the apparatus is intended to be used primarily to advertise a certain brand of beer, it will be equipped with a tray or equivalent part for holding a plurality of bottles or cans of beer and it will also be equipped with a shelf or equivalent part for sustaining packages of various kinds of food that are frequently served With beer, such for example, as pickles, olives, cheese, sausage, crackers, etc.”
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The (Big) Companies Who Actually Make Your Beer

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Here’s yet another look at the changing landscape of brewery ownerships, this time from Vinepair, and while they primarily write about wine, they also must tacitly accept the well-trodden wisdom that “it takes a lot of beer to make great wine,” since they do occasionally tackle beer. Last week, the posted their “Map: The Companies Who Actually Make Your Beer.” It’s restricted to ten of the largest companies who own multiple breweries and, to their credit, it’s been updated four times so far, meaning they’re doing their best to get it right, which given its complexity, not to mention who often it’s changing, is no easy task.

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Click here to see the chart full size.

Urban Chestnut To Buy German Brewery

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Here’s some interesting news, and a nice twist or role reversal of recent events. Florian Kuplent, the talented former Anheuser-Busch brewer, in 2011 opened the Urban Chestnut Brewery in St. Louis, after A-B was acquired by InBev. I first met Florian in Denver shortly after he’d brewed an excellent German-style hefeweizen at the Fort Collins A-B brewery. Kuplent was born in Bavaria, Germany, and also was trained as a brewer at Weihenstephan.

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According to the St. Louis Post-Dispatch, Urban Chestnut “has acquired the Bürgerbräu Wolnzach brewery in Wolnzach, which is about 35 miles north of Munich.” That’s right, a small craft brewery has bought a German brewery. Apparently, Bürgerbräu Wolnzach closed down around six months ago, and Klupent saw an opportunity. The Post-Dispatch explains that the “St. Louis-based company plans to brew small batches of beer at the Bavarian facility in the second quarter of 2015. Financial terms of the acquisition were not disclosed.”

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Super Bowl Advertising Through The Years

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The Wall Street Journal, in their Life & Culture section, took a look at the commercials during the big game next week in Super Bowl Ads Turn Serious.

The 100 million-plus viewers expected Sunday will see a host of emotion-rich commercials that tug on the heartstrings or take on problems. Coca-Cola ’s spot will shed light on the rash of Internet bullying while the National Football League will air a public-service announcement aimed at ending domestic violence. Procter & Gamble will re-air an ad for its feminine-care brand Always that tries to fight gender stereotypes and remove the stigma associated with the phrase “like a girl.”

The article also talks about what’s at stake, with a chance to reach the largest audience for a TV event, which last year was viewed by 111.5 million, compared to number 2, which is the Academy Awards broadcast, which in 2014 had 43 million viewers. As a result, “[t]he Super Bowl also commands the highest ad rates. This year, 30 seconds of time costs roughly $4.5 million.”

The article then goes in to give a short synopsis of each major company’s plans. ABI is, of course, the only beer company advertising again this year, and here’s their plans:

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Last year’s Super Bowl stars—the Clydesdale horses and an irresistible puppy—are looking to repeat. This year, the Clydesdales come to the rescue of the puppy. Stepping in at the last minute, they save him from a hungry wolf and bring him home safely. The twist: The spot adds extra emotion by using a reworked version of “I’m Gonna Be (500 Miles)” by the Proclaimers performed by Sleeping At Last. Is it enough to outdo last year’s spot that had “Let Her Go” by Passenger as its soundtrack?

Perhaps more interesting, the article also includes an interactive Super Bowl Ad-Spending Tracker, which breaks down the history of Super Bowl commercials by industry and even by company over the past fifteen years. For example, here’s the spending trends from the beverage industry, which included non-alcoholic as well as alcohol.

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Then here’s Anheuser-Busch from 2000 through 2008, the year they were acquired by InBev and became Anheuser-Busch InBev.

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Then ABI spent at least as much, and usually more, in the subsequent years.

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Then just for fun here’s the lone ad from the Beer Institute in 2006, which if I’m not mistaken was for Anheuser-Busch’s failed attempt at rallying the industry behind its “Here’s to Beer” educational website.

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Here’s the Beer Institute ad that ran during the Super Bowl in 2006.

Anheuser-Busch InBev To Buy Elysian

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Anheuser-Busch InBev and Elysian Brewing of Seattle, Washington announced today that they had reached agreement for ABI to buy the small Elysian brewpub chain.

From the press release:

“For two decades, we’ve welcomed guests into our brewpubs and served them creative and impeccably crafted beers,” said Joe Bisacca, Elysian ‎CEO and co-founder, who will continue with Elysian along with his partners, Dick Cantwell and David Buhler. “After a lot of hard work, we’ve grown from one Seattle brewpub to four pub locations and a production brewery. With the support of Anheuser-Busch, we will build on past successes and share our beers with more beer lovers moving forward.”

Dick Cantwell, Elysian co-founder and Head Brewer added, “Throughout our journey we’ve been focused on brewing a portfolio of both classic and groundbreaking beers and supporting innovation and camaraderie in the beer industry through collaboration and experimentation. By joining with Anheuser-Busch we’ll be able to take the next steps to bring that energy and commitment to a larger audience.”

Elysian sold more than 50,000 barrels of beer in 2014, with Immortal IPA accounting for more than a quarter of the company’s total volume.

“Elysian’s story includes everything we look for in a partner,” said Andy Goeler, CEO, Craft, Anheuser-Busch. “The team has spent their careers brewing distinctive beers in the thriving West Coast beer community and building unique venues that celebrate beer. As the fastest growing brewer in Washington, their recipe is working. Elysian’s brands are an important addition to our high-end beer portfolio, and we look forward to working together.”

In addition to the Seattle Airport Way brewery, the acquisition includes the company’s four Seattle brewpubs, Elysian Capitol Hill, Elysian Tangletown, Elysian Fields and Elysian BAR.

Anheuser-Busch’s purchase of Elysian is expected to close by the end of the first quarter of 2015. Terms of the agreement were not disclosed.

Not sure what to make of the news yet, all I know is what’s in the press release. So far, there’s been no statement from anyone at Elysian, though I suspect we’ll learn more throughout the day.

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Ninkasi Drops Big One, Signs With Smaller Distributors

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Here’s an interesting little item that speaks to the image that a brewery can, and often strives, to create. While small in and of itself, given the changes we’re seeing in brewery ownership and other business dealings, an important one. This is especially true in the wake of another prominent up and coming Oregon brewery that witnessed a pretty severe backlash for selling an interest in the company to Anheuser-Busch InBev (ABI) last year. And witness how the tribe reacted to the lawsuit that Lagunitas initiated for trademark infringement against Sierra Nevada, despite it being a perfectly reasonable and understandable business decision. What those recent incidents have taught us, if anything, is that perception often matters more in the eyes of customers than following traditional business practices. Apparently, this really isn’t your father’s brewing company, and woe be to any brewery that doesn’t at least follow its own heart, if not the perceived heart of its fanbase.

Ninkasi Brewing, of Eugene, Oregon, announced that they were ending their relationship with their large beer distributor, owned by ABI, and signing with two smaller, locally owned distributors to cover the same territory — “Eugene-based Bigfoot Beverage Distributors and Bellevue, Washington-based Odom Corp.” Apparently, the only reason Nnkasi was with ABI distributors in the first place was because of a buyout a few years ago of the beer distributors that originally sold their beer to the larger ABI-owned one.

According to a story in the Register-Guard, CEO and co-founder Nikos Ridge remarked that this “arrangement did not fit well with Ninkasi’s world view” and added. “We are committed to being an independent and locally owned craft brewery, and feel we will be better aligned long term with independent and locally owned wholesalers.”

It’s interesting that Ninkasi wants to stay true to their roots, even as they expand into other markets, preferring local distributors over potentially more efficient and possibly more effective ones. Even at the expense of their business, they chose what they perceive to be the better fit with their company ethos. That’s a lesson many other brewers will have to learn as they navigate the landscape of the modern age of beer. These things matter to a lot of people, even if they rarely even understand how to run a business, what are the intricacies of trademark law, or what’s involved in signing with a distributor. Perception is your street cred in this day and age, and that’s likely to only intensify as a growing number of breweries are vying for your attention, your loyalty and most importantly, your business.

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The Ninkasi brewery during a quick visit to Eugene last summer.

Schooner’s To Open Production Brewery

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Antioch’s brewpub Schooner’s Grille & Brewery is currently looking for a space to build a production brewery and begin offering their award-winning beers in bottles. The restaurant and brewery was purchased by new owners last May, and they planned from the beginning to start packaging the beer. But recently they decided to close the restaurant as of February 1, 2015. So Schooner’s beer will likely be a little harder to find for a few months, while they transition from brewpub to production brewery.

I spoke to longtime brewer at Schooner’s, Craig Cauwels, and he tells me they hope to be brewing in a new space by mid-to-late summer. They may contract some beer during the downtime, but a final decision on that hasn’t been made yet, and will most likely be dependent upon how the search for a new building for the brewery is going. They expect to know more about potential sites for the brewery over the next month.

Cauwels also will be investing in the new brewery, and will become a partner in the venture, which is exciting, because Craig is an incredibly talented brewer and it will be great for him to have a stake in the company. Schooner’s was named “Brewery of the Year” at last year’s California State Fair Brewery Competition, and has won countless awards over the years. His Old Diablo Barley Wine is consistently one of the best barley wines you’ve never heard of (but should have) and hopefully will soon be available in bottles, along with many of Schooner’s other beers. Look for bottles of Schooner’s beer on store shelves soon, or at least by the end of the summer if all goes according to plan.

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Schooner’s brewmaster Craig Cauwels.

North Coast Doubles Their Square Footage

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The local paper near Fort Bragg along the North Coast, the Ukiah Daily Journal is reporting that “North Coast Brewing Company expands,” adding a “[n]ew location will house brewery overflow.” North Coast Brewing apparently has leased a new warehouse, effectively doubling the size of their footprint, which “will increase North Coast Brewing’s storage by 10,000 feet, which is about equal to the brewery itself.” According to the Daily Journal:

18661 Old Coast Highway, in Fort Bragg, the former location of Mendocino Sports Club and Circus MECCA, will be a temporary storage facility for finished beer before being trucked to a their larger distribution point in Petaluma, according to Doug Moody, Senior Vice President at North Coast Brewing Company. The brewing company signed a 10-year lease for the property.

The move gives them greater flexibility in managing their product flow, much of which is immediately trucked to a storage facility in Petaluma because they’ve run out of room in Fort Bragg. The brewery, now in its 27th year — part of the class of ’88 — is, like many well-established breweries, growing by leaps and bounds and is hoping to remain in Fort Bragg. They’ve been trying to buy a part of an old mill site formerly owned by logging giant Georgia Pacific, but they haven’t yet been able to come to terms. If they do, you can plan on seeing a bigger single space that would “include a 200-seat performing arts center, restaurant and [North Coast] reestablishing brewery tours.” Even if it was approved tomorrow, it would likely take another three years to open the doors of a new brewery, but I for one would love to be there for the grand opening.

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The current brewery in Fort Bragg.

Beer Giants Still Giant

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The Wall Street Journal had a piece on the beer business entitled Beer Giants Cultivate Their Crafty Side which I can’t read in its entirety because I don’t have a subscription, but it did include a chart showing the current state of affairs in the beer industry.

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Shifting Suds. “Independent brewers are selling more beer,” but given this comes from the Wall Street Journal (which is all about BIG business) they can’t help but add “but their shipments remain small compared with the big beer brands.”

What the Wall Street Journal forgets to mention is that Anheuser-Busch was founded in 1852 and didn’t hit 1 million annual barrels until 1901, when they were 49 years old. Sierra Nevada took only 35 years (or less) to reach 1 million, and Boston Beer needed even less time, reaching their first million barrels 1996, meaning it took Samuel Adams 12 years.