NBWA Brewery Count Over 4,800

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Some very interesting analysis from the NBWA, and their economist Lester Jones, about the number of breweries in America. Lester’s analysis uses slightly different metrics from the TTB and doesn’t define craft breweries as narrowly as the BA, and also the TTB doesn’t distinguish exactly what mat beverages are being made, if they’re licensed as a brewery then they’re included in the data. Those difference in calculating show the NBWA’s number for how many breweries there in America is 4,824, or over 550 more. But even more remarkable is that based on the number of “permitted breweries on record” at the TTB by the end of last year, that number could swell beyond 6,000, which seems absolutely crazy. The number is California alone, at 788, is just shy of 800. Sheesh!

Here’s the entire analysis below since the whole summary is worth reading:

Each year, the NBWA requests data from the TTB on tax paid withdraw volumes by size of brewery. Once again, this year’s TTB data provides some interesting brewing industry insights into the dynamics of the U.S. brewing industry. This data also is helpful for us to supplement the Brewers Association data on overall independent craft beer growth and brewery count. According to the BA, craft brewer volumes grew by 13 percent to 24.5 million barrels in 2015. The BA also reported 4,269 total operating breweries for 2015. As with all statistics, how the numbers are collected and reported can vary across organizations. In our industry, the numbers also change quickly.

As of April 2016, the U.S. domestic brewing industry had 4,824 reporting breweries according to the TTB. As with the BA’s brewery count of 4,269, this number is expected to change as additional new brewers are counted that may not yet have been fully recognized and/or reported by either the TTB or the BA data. The data presented below is for all types of malt beverage manufacturers and recognizes only the individual facility, not the ownership or control group.

Highlights from the 2015 TTB brewery count data include:

  1. The small brewer group (making less than 7,500 barrels) accounted for less than 2 percent of all domestic volumes yet accounted for 93 percent of all breweries. The smallest of this group has 566 breweries reporting less than one barrel of production each in 2015. These super small brewers can thank the contracting brewing industry for helping them sell almost 100,000 barrels – a figure well beyond their reported production capacity.
    The medium brewer group (making between 7,501 and 60,000 barrels) is a much smaller group consisting of 246 breweries, but these few breweries account for 1.6 times more volume than the 4,475 breweries in the small brewer group.
  2. The large brewer group consists of only 82 breweries making between 60,001 and 1.9 million barrels. This is a unique group within the industry as they pay the mixed rate federal excise tax of $7 for the first 60,000 barrels and $18 on each barrel over 60,001. While a much smaller group of only 82 breweries, they collectively produce more than four times the amount of beer as the medium brewer group. The large brewer group also has the largest range of production volumes and saw the fewest number of new entrants (17 breweries) into its ranks in 2015.
  3. Finally, we get the extra-large group. This is a group of only 21 breweries that produce more than 84 percent of all domestic beer – more than five times the amount made by all 4,803 combined. The closing of the MillerCoors brewery in Eden, North Carolina, will reduce this class of brewers by one in future reports and will take a significant-sized brewery offline for the first time in many years.
  4. The industry added around 1,500 new breweries in 2015 – that is equivalent to four new breweries a day entering the marketplace. As a highly capital-intensive business, starting small is the name of the game. Growing a beer brand takes a long time, and economies of scale are earned over decades. The largest U.S. breweries have been in operation for decades, and economies of scale should help maintain the beer volumes even in the face of declining per capita beer consumption.
  5. With more than 6,000 permitted breweries on record at the end of CY 2015, 2016 is set to be an even more competitive year for the brewing industry. Just as economies of scale drive the brewing side of the industry, logistical expertise and local market insights drive the efficiencies inherent in beer distributor networks. Working together and maximizing their comparative advantages, brewers, distributors and retailers will deliver unprecedented choice and value to American beer consumers in 2016.

Brewery counts by size 2015_Page_1

Brewery counts by size 2015_Page_2

ABI Buys Devils Backbone

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In what’s becoming almost routine news, Anheuser-Busch InBev announced this morning the acquisition of Devils Backbone Brewing of Roseland, Virginia.

Here’s the press release:

Today, Anheuser-Busch announced an agreement to acquire Devils Backbone Brewing Company, the leading and fastest-growing craft brewery in the state of Virginia. Devils Backbone will be the latest partner to join the diverse portfolio of craft breweries within The High End, the company’s business unit comprising unique craft and import brands.

“I am extremely pleased to announce the partnership of Devils Backbone Brewing Company with Anheuser-Busch. While we are joining a creative group of craft breweries in the division, Devils Backbone will retain a high level of autonomy and continue its own authentic DNA within The High End framework,” said Steve Crandall, co-founder and CEO of Devils Backbone Brewing Company. “The existing management team plans to stay on board for many years, while continuing to innovate and bring locally crafted Virginia beer to the nation.”

In 2008, founders Steve and Heidi Crandall opened the doors to Devils Backbone Brewing Company in the Virginia Heartland, after being inspired by a ski trip to northern Italy in 1991 where they had their first taste of Germanic style beer. After success with the first brewpub, Basecamp, the decision was made to break ground on the Outpost facility, in Lexington, Virginia. Originally projected to produce 10,000 barrels of beer in its first ten years, the Outpost produced almost 45,000 barrels in its first three. Steve credits much of this early success to the excellent network of distributors within his system, which is weighted heavily towards Anheuser-Busch.

“I congratulate Steve and Heidi Crandall and the entire Devils Backbone team as they partner with Anheuser-Busch,” said Virginia Governor Terry McAuliffe. “Through the strength of Anheuser-Busch’s network of distributors, Devils Backbone’s award-winning craft beer will soon be available throughout the country and beyond. I want to thank Devils Backbone for their immense contribution to Virginia’s world-class craft beer industry, and I look forward to the additional exposure for Virginia as a leading state for craft beer lovers.”

Today, the Outpost Brewery & Taproom in Lexington serves as the primary production brewery while the Basecamp Brewpub & Meadows in Roseland, serves as a visitor destination. Devils Backbone takes full advantage of the scenic 100-acre Basecamp property surrounded by the Blue Ridge Mountains, offering a variety of opportunities for guests to enjoy the outdoors. In 2015, the two locations hosted more than 500,000 guests.

“Devils Backbone has captivated beer drinkers in Virginia since opening its doors eight years ago,” said Felipe Szpigel, President, The High End. “From the beginning, they have shown creativity and talent with the great beers they brew, and they’ve been able to use the authentic offerings at Basecamp Brewpub & Meadows to cultivate a fun, outdoor lifestyle that resonates with everyone. Pair these qualities with dynamic leadership and a dream to do something bigger, and you have the recipe for an even more promising future.”

While best known for its flagship Vienna Lager, which accounted for nearly 60% of Devils Backbone volume in 2015, the portfolio also includes other award-winning year-round favorites like Eight Point IPA and Schwartz Bier. Developing beers with personality and individual integrity of flavor has helped enable Devils Backbone to win four National titles: 2014 Great American Beer Festival Mid-Size Brewery & Brew Team, 2013 Small Brewing Company & Small Brewing Company Brew Team, 2012 Small Brewpub & Small Brewpub Brewer, 2010 World Beer Cup Champion Brewery, and the Virginia Craft Brewers Fest Best of Show medals in 2015, 2014, 2013 and 2012.

First Beverage Group acted as financial advisor to Devils Backbone Brewing Company. Anheuser-Busch’s partnership with Devils Backbone is expected to close in the second quarter, subject to customary closing conditions. Terms of the agreement were not disclosed.

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Scranton Media Family Buys Flying Fish

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I somehow missed this news, which seems to have come out without too much fanfare a few days ago. Maybe we’re becoming desensitized to brewery M&A? Certainly Twitter wasn’t abuzz with the news. Flying Fish Brewing, one of New Jersey’s earliest small brewers, was bought by the Lynett and Haggerty families, who own Times-Shamrock Communications. They own a dozen newspapers and eleven radio stations. On April 8, they announced that they’d bought a controlling interest in the Somerdale, New Jersey brewery, though the deal was quietly done a month earlier, on March 11.

Flying Fish was founded in 1995 by Gene Muller. They started in Cherry Hill, but moved to larger quarters in Sommerville four years ago.

According to the Scranton Times-Tribune (one of the papers owned by the family), this is how it went down.

The family’s expertise in marketing, events and promotions will help the brewery continue to grow and expand its footprint, said Bobby Lynett, manager of L&H Brewing Partners, the entity that now holds a majority interest in Flying Fish. They declined to disclose the cost of their acquisition.

“Flying Fish is a nice brewery with good people and a great product,” said Mr. Lynett, a publisher of The Times-Tribune. “We want to help it grow.”

Flying Fish currently employs 33 people who produce about 24,000 barrels of beer each year.

Gene Muller, founder of Flying Fish, said he began looking for new partners when some initial investors began to cash out on their investment in the company. He joked that the Scranton family emerged as a good fit “because they are Irish.”

Mr. Muller, 61, believes Flying Fish will benefit from events and other business interests of the Lynett-Haggerty families, whom he refers to as “The Scranton Guys.”

“There are obvious synergies,” he said. “We saw an opportunity to inject some enthusiasm into the company and take care of our initial investors. The Scranton Guys are part of a 100-year-old company. They understand the long-term horizon.”

The capital for L&H Brewing Partners came from some individual family members and Elk Lake Capital, set up by the family to invest in non-media companies to add diversity to the family’s holdings beyond Times-Shamrock’s media holdings of newspapers, radio stations and outdoor advertising. Elk Lake already owns a land-surveying company and water-testing company.

Toasting the Class of '96: Greg Koch, Mark Edelson, Bill Covaleski, Tom Kehoe, Gene Muller & Sam CalagioneAt a Philly Beer Week event celebrating the Class of '96: Greg Koch, Mark Edelson, Bill Covaleski, Tom Kehoe, Gene Muller & Sam Calagione.

First Casualty Of Cuban Tourism: Beer Shortages

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You’ve no doubt seen the news that we’ve finally relaxed travel restrictions to Cuba, along with many other changes to our policies regarding the island nation. Last summer, the two countries agreed to reopen embassies on their respective soil, and re-establish diplomatic relations. President Obama recently visited Cuba, the first American head of state to do so since 1928, 88 years ago. Despite the travel ban, small numbers of Americans had been visiting Cuba by going through Mexico or other countries where travel there is not restricted. But now that it’s legal again, record numbers are visiting, leading to the first real problem caused by this influx of American tourists. According to Mashable, Tourists are drinking all of Cuba’s beer.

“The first clear sign that Cuba will have difficulty keeping up with the influx of American tourists — certain only to increase as restrictions are loosened — is a beer shortage.

Good job, America.”

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The Top 50 Annotated 2015

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This is my ninth annual annotated list of the Top 50, skipping two years ago because the BA provided that information then, so here again you can see who moved up and down, who was new to the list and who dropped off. So here is this year’s list again annotated with how they changed compared to last year.

  1. Anheuser-Busch InBev; #1 last ten years, no surprise
  2. MillerCoors; ditto for #2
  3. Pabst Brewing; ditto for #3
  4. D. G. Yuengling and Son; Same as last year
  5. Boston Beer Co.; Same as last year
  6. North American Breweries; Same as last year
  7. Sierra Nevada Brewing; Same as last year
  8. New Belgium Brewing; Same as last year
  9. Craft Brewers Alliance; Same as last year
  10. Lagunitas Brewing; Up 1 from #11 last year
  11. Gambrinus Company; Down 1 from #10 last year
  12. Bell’s Brewery; Same as last year
  13. Deschutes Brewery; Same as last year
  14. Minhas Craft Brewery; Up 2 from #16 last year
  15. Stone Brewing; Down 1 from #14 last year
  16. Sleeman Brewing; Down 1 from #15 last year
  17. Ballast Point Brewing & Spirits; Rocketed up 20 from #37 last year
  18. Brooklyn Brewery; Down 1 from #17 last year
  19. Firestone Walker Brewing; Up 3 from #22 last year
  20. Founders Brewing; Up 3 from #23 last year
  21. Oskar Blues Brewing; Jumped up 9 from #30
  22. Duvel Moortgat USA (Boulevard Brewing/Ommegang); Down 4 from #18 last year
  23. Dogfish Head Craft Brewery; Down 4 from #19 last year
  24. Matt Brewing; Down 4 from #20 last year
  25. SweetWater Brewing; Down 1 from #24 last year
  26. Harpoon Brewery; Down 5 from #21 last year
  27. New Glarus Brewing; Down 2 from #25 last year
  28. Great Lakes Brewing; Up 1 from #29 last year
  29. Alaskan Brewing; Down 3 from #26 last year
  30. Abita Brewing; Down 3 from #27 last year
  31. Anchor Brewing; Down 3 from #28 last year
  32. Stevens Point Brewery; Same as last year
  33. Victory Brewing; Up 2 from #35 last year
  34. August Schell Brewing; Down 1 from #33 last year
  35. Long Trail Brewing; Down 1 from #36 last year
  36. Summit Brewing; Down 2 from #34 last year
  37. Shipyard Brewing; Down 6 from #31 last year
  38. Full Sail Brewing; Up 5 from #39 last year
  39. Odell Brewing; Up 1 from #40 last year
  40. Southern Tier Brewing; Up 1 from #41 last year
  41. Rogue Ales Brewery; Down 3 from #38 last year
  42. 21st Amendment Brewery; Jumped up 7 from 49 last year
  43. Ninkasi Brewing; Down 1 from #42 last year
  44. Flying Dog Brewery; Same as last year
  45. Narragansett Brewing; Not in Top 50 last year
  46. Pittsburgh Brewing (fka Iron City); Down 1 from #45 last year
  47. Left Hand Brewing; Up 1 from #48 last year
  48. Uinta Brewing; Down 2 from #46 last year
  49. Green Flash Brewing; Not in Top 50 last year
  50. Allagash Brewing; Same as last year

Not too much movement this year, except for a few small shufflings. The top is virtually unchanged, with only numbers 10 and 11 switching places. And apart from those two small changes, the top 13 were all the same as 2014. The biggest jump came from Ballast Point, which leapt up 20 spots, while Shipyard slipped the furthest, dropping six slots. Only two new breweries made the list; Green Flash Brewing and Narragansett Brewing. Off the list was World Brew/Winery Exchange, a California contract label brewer making private label beers for retailers, and Bear Republic Brewing.

If you want to see the previous annotated lists for comparison, here is 2014, 2013, 2012, 2011, 2010, 2009, 2008, 2007 and 2006.

Top 50 Craft Breweries For 2015

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The Brewers Association just announced the top 50 craft breweries in the U.S. based on sales, by volume, for 2015, which is listed below here. I should also mention that this represents “craft breweries” according to the BA’s membership definition, and not necessarily how most of us would define them, as there’s no universally agreed upon way to differentiate the two. For the eighth year, they’ve also released a list of the top 50 breweries, which includes all breweries. Here is this year’s craft brewery list:

2016_Top_50-craft

Here is this year’s press release. The last couple of years, the BA has helpfully annotated the list, saving me lots of time, since I’ve been annotating the list for the last eight years, but they’ve abandoned that practice this time around. So for the eighth consecutive year, I’ll also posted an annotated list, showing the changes in each brewery’s rank from year to year, but it will take me some time to put together so I’ll have that again later today.

The BA, this year, did create a map showing the relative location of each of the breweries that made the list.

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Deschutes Announces New Brewery In Virginia

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In the rumor mill for several months, today Deschutes Brewing of Bend, Oregon announced that they’ll be building a second brewery in Roanoke, Virginia. They’ve set up a separate page for information about the new facility in Roanoke. Here’s the press release:

Deschutes Brewery announced its much anticipated decision on an east coast location today at an event in downtown Roanoke, Virginia. The growing brewery, which was founded in Oregon in 1988 by Gary Fish, has explored hundreds of potential locations in the region over the last two years. The company selected Roanoke based on several criteria including a culture and community that fit well with Deschutes’ decades-deep roots.

“We started Deschutes Brewery when craft beer wasn’t burgeoning and led with a beer style that wasn’t popular at the time – Black Butte Porter,” said Gary Fish, CEO and founder of the brewery. “This pioneering approach was a key driver behind our decision to go with Roanoke, as that same spirit exists in this community and its fast-growing beer culture.”

The future Roanoke facility has been lovingly dubbed “Brew 4” as it takes its place in line after the original Bend, Oregon public house (Brew 1), the brewery’s production facility in Bend (Brew 2) and the Portland, Oregon public house (Brew 3). Brew 4 will be located at the eastern edge of Roanoke with construction on the site beginning in 2019. Eventually, a little over 100 new jobs will be created for the region, and the new brewery will produce approximately 150,000 barrels to start, with a design to increase capacity as needed. Deschutes expects to start shipping beer from the Roanoke location in about five years.

“Roanoke is honored to be chosen as Deschutes Brewery’s East Coast location after a very thorough review of several communities in the Southeast,” said Roanoke City Manager Chris Morrill. “It is a company with a strong culture of community engagement, recognized for its craftsmanship and will be a perfect fit for Roanoke’s vibrant outdoor lifestyle. We are thrilled to welcome Deschutes as we continue to build a diverse, resilient economy.”

Deschutes Brewery chose to add an east coast location after the company’s distribution footprint (which currently includes 28 states and the District of Columbia) reached the east coast. By having a production facility on the eastern seaboard, the brewery will be able to deliver beers – such as its flagship Black Butte Porter – to states east of the Mississippi quickly and more sustainably.

Michael LaLonde, president of Deschutes Brewery, who was an integral part of the east coast location selection team, said, “Although it was a tough decision – we loved so many of the communities that we visited over the past two years – we are very excited to be heading to Roanoke. We love the region and everyone we’ve had the opportunity to meet and work with during this process has been incredible. We have absolutely been blown away with how the community rallied around bringing us here and has given us such a warm welcome. #Deschutes2Rke we’re on our way and proud to be able to now call Roanoke our second home.”

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Craft Market Exceeds 12%

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The preliminary numbers for 2015 are out, and the news is again pretty damn good. The Brewers Association today revealed that craft beer’s share of market, which finally passed 10% last year, is now 12.2% 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 volume and a 22 percent increase in retail dollar value. 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, in 2015 the number of operating breweries in the U.S. grew 15 percent, totaling 4,269 breweries—the most at any time in American history. Small and independent breweries account for 99 percent of the breweries in operation, broken down as follows: 2,397 microbreweries, 1,650 brewpubs and 178 regional craft breweries. Throughout the year, there were 620 new brewery openings and only 68 closings. One of the fastest growing regions was the South, where four states—Virginia, North Carolina, Florida and Texas—each saw a net increase of more than 20 breweries, establishing a strong base for future growth in the region.

Combined with already existing and established breweries and brewpubs, craft brewers provided nearly 122,000 jobs, an increase of over 6,000 from the previous year.

“Small and independent brewers are a beacon for beer and our economy,” added Watson. “As breweries continue to open and volume increases, there is a strong need for workers to fill a whole host of positions at these small and growing businesses.”

If you’re curious how those numbers are calculated, BA economist Bart Watson posted an explanation of the 2015 Craft Brewing Growth by the Numbers.

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Cigar City Bought By Fireman Capital

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In an exclusive this morning, Brewbound is reporting that Fireman Capital to Purchase Cigar City. According to Brewbound, “Cigar City, a leading independent brewery based in Tampa, Fla., has agreed to sell controlling interest to Boston-based private equity firm Fireman Capital Partners, which already owns majority stakes in Oskar Blues, Perrin Brewing and the Utah Brewers Cooperative outfit that includes the Wasatch and Squatters brands.”

The overall entity created by Fireman Capital for their brewery acquisitions is United Craft Brews LLC, incorporated in Delaware. The SEC Form D lists Fireman Capital’s address is Waltham, Massachusetts, but information on OpenLEIs lists a registered address in Delaware, but Oskar Blues’ Longmont address as Headquarters for United Craft Brews. Last year, Westwood was still asking Does Oskar Blues Still Own Oskar Blues? This will undoubtedly continue to muddy the waters surrounding the answer to that question.

Rumors had been swirling that ABI was considering Cigar City as their next target for acquisition, and founder Joey Redner confirmed that he’d gotten as far as signing an LOI. But ABI let their exclusivity period pass without executing a formal purchase agreement, leaving Cigar City free to entertain other potential buyers.

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Cigar City’s website posted a joint press release about the transaction:

Oskar Blues Brewery Rolls up a Cigar City Blunt

Longmont, CO, & Tampa Bay, FL — Oskar Blues Brewery announced the acquisition of Tampa’s Cigar City Brewing. Putting months of acquirement rumors to rest, the decision is driven by mutual irreverence, respect and desire to stay true to craft beer roots.

The combination stems from the want to take risks, sniff out bullsh*t and grow against-the-grain in an era of increasing competition within craft beer. The collaboration will match years of large-scale growth, expansion expertise and resources of Oskar Blues with the strength of Cigar City’s local following to help both breweries strengthen their future position. Similarly to Oskar Blues, Cigar City’s award-winning brews are well known and respected within the craft community.

“Cigar City is facing next-level challenges and we needed to develop next-level skills and resources to meet them. But, we got into beer out of passion and an unwavering desire to travel our own path. We didn’t want to just shove our round peg into some f*cking square hole and hope for the best. Florida craft beer drinkers want something they can proudly stand behind. These guys get that. They wrote the book on keeping it real,” says Joey, founder of Cigar City Brewing. Joey will remain as CEO of Cigar City following the transaction.

Since 2009, Cigar City Brewing achieved a near constant growth pattern reaching nearly 60,000 barrels in 2015, placing the Tampa Bay area and the state of Florida on the craft beer map. The partnership will provide additional investment for Cigar City’s infrastructure growth within Florida.

“What Cigar City has done for the community of Florida craft beer is impressive. It’s important for our culture to do business with people we want to hang out with and Joey and the gang fit,” Dale Katechis, Soul Founder of Oskar Blues, stated about the new partnership.

Oskar Blues Brewery is the funky brewpub that started brewing beer in 1999 in the small town of Lyons, CO and is responsible for starting the craft beer in-a-can movement in 2002 with Dale’s Pale Ale. In 2008, the brewery expanded down the street to Longmont, CO. and added an additional brewery in Brevard, NC in 2012. Oskar Blues brewed 192,000 barrels in 2015 and announced another brewery in Austin, TX scheduled to open in May of 2016.

Terms of the acquisition are not disclosed.

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