Breweries

Who’s Getting Hurt by Flat Sales?

Data compiled by the Brewers Association show that the bigger craft breweries bore the brunt of last year’s slump.

Twenty-five of the top 50 craft breweries, as defined by the BA, didn’t grow in 2016; and more then one-third of BA-defined regional breweries had either flat or declining sales. The damage was heaviest at the top of the standings: four of the five biggest crafts—D.G. Yuengling & Sons, Boston Beer Company, Sierra Nevada Brewing Company, and Gambrinus Company—suffered a sales decline. The top five’s only gainer was New Belgium Brewing Company.

According to the BA’s Bart Watson, the regionals are getting squeezed by both ends of the industry. Anheuser-Busch Companies, whose acquisition of craft brands has stirred up controversy, is snapping up retail space at the expense of the regionals. Meanwhile, many retailers are focused on getting the products of small local breweries on their shelves, again to the regionals’ detriment.

There were some bright spots, however. Regionals that upped production in 2016 include Bell’s Brewery, Firestone Walker Brewing Company, and Rheingeist Brewery. Several others that no longer meet the BA’s definition of “craft”, such as Founders Brewing Company and Lagunitas Brewing Company, also posted gains for the year.

The Friday Mash (Boiling Point Edition)

On this day in 1743, Jean-Pierre Christin developed the Centigrade temperature scale, with 0 degrees representing water’s freezing point and 100 degrees its boiling point. However, the scale is named for Swedish astronomer Anders Celsius, who came up with a similar idea independently of Christin.

And now…The Mash!

We begin in Chicago, where the Lincoln Park Zoo is collaborating with DryHop Brewers on a new beer that will raise money for polar bears and raise awareness of climate change. The beer, Ursus Mapletimus, is a smoked maple imperial white ale.

Some years ago, a pub owner in England told Arthur Johnson that he’d get free beer for life if he lived to age 100. Johnson reached the century mark, and now he shows up every day for a pint.

Is there a beer without malt or hops? Yes. It’s an alcoholic ginger beer from Ginger’s Revenge, a new brewery in Asheville, North Carolina. The beer is also gluten-free.

Congratulations to Garrett Marrero and Melanie Oxley, who own the Maui Brewing Company. The U.S. Small Business Administration named them “National Small Business Persons of the Year.”

Heineken has launched a zero-alcohol version of its namesake beer. Alcohol-free beers are attractive to brewers because that segment of the market is growing, and beers without alcohol are taxed less heavily.

English heavy-metal band Iron Maiden is coming to the U.S. Also coming to America is Trooper, an award-winning ESB inspired by the band and brewed by Robinsons Brewery.

Finally, Breckenridge Brewing Company has announced the winner of its annual competition to name the official beer of Denver Comic Con. This year’s winner is “I Am Brewt,” a pun on the Guardians of the Galaxy superhero film series.

Counterpoint: Craft Beer Isn’t Dying

Jim Koch, the founder of Boston Beer Company, warned last month that industry consolidation had put craft beer on the endangered list.

John Hall, the founder of Goose Island Brewery, begs to differ. He predicts a bright future for craft as a whole because it is so diverse, innovative, and in-sync with customers. Hall cites self-distribution (which is legal in many states), and state laws allowing breweries to serve pints, as two factors that change the equation for small breweries.

Hall also explains why Goose Island agreed to be taken over by Anheuser-Busch. One alternative was contract brewing, as Boston Beer has done for many years. Another was to take the company public; however, he didn’t like the idea of having to report every quarter to Wall Street. That left A-B.

Of the A-B deal, Hall said, “Like all big business decisions, it was risky being one of the first craft brewers to partner with a big brewer. But we preferred to partner with brewers who understood the beer business. Through our partnership with Anheuser-Busch, Goose Island was able to do what Boston Beer did, reach consumers nationwide while retaining the quality and integrity of our beer, and our brand.”

The Friday Mash (Old School Edition)

On this day in 1364, Jagiellonian University was established in Krakow, Poland; and on this day in 1551, the National University of San Marcos, the oldest in the Americas, was established in Lima, Peru.

And now…The Mash!

We begin in Rochester, New York, where Genesee Brewing Company, which is undergoing a $49 million expansion, plans to transport 12 fermentation tanks via the Erie Canal. The tanks are too big to transport by highway or by rail.

It’s baseball season, and CraftBeer.com would like to introduce you to seven beers brewed especially for minor-league teams. Enjoy them with your peanuts and Cracker Jack.

Think you can’t sing? Organizers of the Twin Cities Beer Choir want to convince you otherwise. You buy the beer, and the Choir provide you with sheet music and plenty of friends.

An Indiana gas station owner found a clever loophole to the state’s ban on selling cold beer at convenience stores. He instal

1997: A NYC Brewpub Closes

Beer history guy Tom Acitelli takes us back 20 years, to when the Zip City brewpub in Manhattan closed its doors. Its cause of death was heavy competition.

Zip City, named for a fictional town invented by Sinclair Lewis, opened in late 1991. At the time, there were no brewpubs in New York City. For a while, Zip City had the city to itself. Then came the brewpub bubble of the late 1990s. In July 1996, an event called the New York City Brewpub Crawl Marathon stopped at 12 establishments. At the same time, a flood of microbrewed beer arrived on store shelves in New York. This at a time when craft had a tiny share of the nation’s beer market.

After Zip City’s demise, some in the media were ready to write off brewpubs—and even craft beer—as a passing fad. But, to paraphrase Mark Twain, reports of the sector’s death have been greatly exaggerated.

Why Is A-B Buying Craft Breweries?

hris Herron, the CEO of Creature Comforts Brewing Company, has an explanation for why Anheuser-Busch is acquiring craft breweries.

Herron, who worked in finance in the beverage industry, starts by explaining that goodwill—the value of a brand above its physical assets—makes up more than 50 percent of A-B’s assets, $136.5 billion to be exact. However, if A-B’s flagship brands, Budweiser and Bud Light, continue to lose market share, A-B will have to take an “impairment charge” to reflect the brands’ loss of value. That charge would amount to tens of billions of dollars, which would clobber the company’s stock price.

Impairment charges are looming because A-B positioned Bud and Bud Light as “premium” brands, which commanded a higher price and were perceived as superior to competing brands. However, with the growth of the craft beer sector, Bud and Bud Light are no longer considered “premium”. Nor can A-B restore those brands to premium status by raising prices, because doing so would cause them to lose even more market share, this time to Miller and Coors.

Back to the craft brewery acquisitions. Herron believes that A-B bought them for two reasons. The first is to capture some of craft beer’s growth and, at the same time, slow it down. The acquisitions help capture growth; meanwhile, A-B’s sheer size allows gives it an advantage over independent craft breweries. It can use its buying power to secure raw materials, push its craft brands through its distribution network, and spend heavily to market those brands. A-B’s second objective is to regain the goodwill associated with the Bud and Bud Light brands. Aggressive competition by A-B’s craft breweries will force independent craft brewers to cut prices; that, in turn, would narrow the price gap between craft and A-B’s brands, and diminish the perception that those brands are no longer premium.

Herron sums up A-B’s strategy:

The impairment charges AB InBev could face are worth billions more than any craft brand they have purchased, and those purchases would be a small price to pay to save a legacy brand. These craft brands, whether they realize it or not, may just be pawns in the AB InBev game of chess. AB InBev is not a collaborator, they are a competitor, and a damn smart one. If one of these craft brands they buy is a successful long-term brand, great, but more important to AB InBev, is the vital role they play in the short-term of ensuring that their premium brands retain long-term value.

Craft Pilsner Comes of Age

From the beginning of the craft beer movement, pilsener has been a pariah style because of its association with light lager beer that dominated the American market. Brewers reacted to pilsener by making ales, the hoppier the better.

Today, pilsener accounts for a lowly 1 percent of the craft beer market. That, however, is about to change. In the past year, top-tier breweries such as Founders Brewing Company and regional players such as Captain Lawrence Brewing Company have added the style to their lineup.

The new pilseners are inspired by European classics, but many have a distinct American accent. For example, Founders’ PC Pils is brewed with Centennial, Cascade, and Chinook hops rather than floral European varieties. For American drinkers accustomed to hoppy beers, that eases the transition to pilsener.

Pilsener also responds to increased demand for beers that carry a lighter alcoholic punch than American IPAs. There are times—such as on the beach or while golfing—that call for an alternative. And Pilseners are low-maintenance; their appeal is to those who simply want to enjoy a beer, not analyze and review it in depth.

The Friday Mash (Carnegie Hall Edition)

On this day in 1891, Music Hall in New York City—later known as Carnegie Hall—staged its grand opening and first public performance. The guest conductor that day was none other than Peter Ilyich Tchaikovsky.

And now (cue up the music)…The Mash!

We begin in Bozeman, Montana, where Amy Henkle’s Happy Dog Beer Company is brewing “beers” for dogs. They don’t contain alcohol or hops; instead they’re a supplement to be poured on top of regular dog food.

Thirty-five years ago, Knoxville hosted a World’s Fair. Several city residents have teamed up to brew a beer celebrating the fair. It will be available through October, when the fair closed.

Sacramento Bee correspondent Blair Anthony Robertson wonders why new breweries price their beer at world-class levels. High prices result in disappointed customers and ruins the brewery’s goodwill.

If you hold bottled beer by its base, you’re holding it wrong. You should hold it by the neck to prevent the beer from getting warm—just as you should hold a wine glass by the stem.

When a Finnish brewery released a 100-pack of its beer, rival brewery Nokian Panimo one-upped it with a 1,000-pack of Kaiseri beer. To buy one, you need 2,160 euros ($2,350)—and a truck.

Researchers in the UK have found that beer is a more effective pain reliever than generic Tylenol. Having three or four beers—resulting in a BAC of .08—reduces pain by up to 25 percent.

Finally, today is Cinco de Mayo. The Chicago Tribune’s Josh Noel prepared for it by drinking Mexican beers in an effort to find out why they’ve become so popular. The answer is a “complex mix of demographics, marketing, history and nostalgia”.

The Friday Mash (Mutiny on the Bounty Edition)

On this day in 1789, crewmen led by Fletcher Christian seized control of the HMS Bounty from its captain, William Bligh; and set Bligh and 18 loyalists adrift. Bligh survived, and then began the process of bringing the mutineers to justice.

And now…The Mash!

We begin at the 2017 Craft Beer Conference, where Virginia governor Terry McAuliffe rolled out the red carpet for breweries. The governor said he personally recruited Stone, Deschutes, Ballast Point, and Green Flash to come to the state.

In Birmingham, England, Anheuser-Busch came under heavy criticism from city officials after the company’s guerrilla marketers were caught handing out free beers to homeless people.

Tony Gwynn, Jr., is working at AleSmith Brewing Company, which released a pale ale to salute his father’s .394 batting average in 1994. The younger Gwynn is concentrating on a session IPA.

Draft magazine correspondent Brian Yeagar visited a couple of the world’s most-remote breweries. One is in Ushuaia, Argentina; and the other is on Easter Island, some 2,300 miles west of South America.

Fair warning: If you use swear words inside a Samuel Smith pubs, the landlord has the power to cut you off—or even ban you—under the brewery’s zero-tolerance policy for cursing in its establishments.

In Myrtle Beach, South Carolina, golfer John Daly showed he hasn’t changed. Daly entertained fans by teeing off with a beer can instead of a golf ball, then finishing off the can’s contents afterward.

Finally, the Brewers Association is cracking down on sexist beer names. Under the BA’s terms of service, brewers of offending beers will no longer be allowed to advertise that those beers have won a medal at the World Beer Cup or the Great American Beer Festival.

Trendy Beers: A Bad Business Decision?

Boston Beer Company’s slumping sales have been a topic of conversation in the craft beer community. Author Jeff Alworth blames the company’s propensity to chase trends. Alworth explains:

Boston Beer has made a series of decisions that may have resulted in short-term profits–spinning off alcoholic apple juice, tea, and seltzer divisions–but they enhanced the sense that this was a big company as bland and personality-free as Kellogg’s or Proctor and Gamble. No one could ever fault Sam Adams for failing to release new beers, but the ever-multiplying new lines of random beer types (IPAs, barrel-aged beers, nitro cans) has created a brewery with no there there.

Trend-chasing isn’t limited to Boston Beer. Breweries across the country are scrambling to bring out their versions of grapefruit IPAs, golden ales, and New England IPAs. If the past is any indication—remember the wheat beers of the 1990s?—today’s fad beers stay trendy very long.

According to Alworth, breweries that specialize in trendy beers fail to establish a connection with their customers. That connection is more important with beer than with other consumer products. He cites four examples—Sierra Nevada, Hill Farmstead, Schlenkerla, and Genesee—each of which has a distinct “personality”. Those personalities are built in collaboration with their drinkers, who expect the beer will embody that personality.

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