Industry News

Are Grocery Stores Abandoning Craft?

Portland, Oregon-based writer Jeff Alworth reports on a disturbing trend in beer retailing. Fred Meyer, his state’s dominant grocery store chain, is scaling back the craft beer selection and giving more shelf space to macro brews and “crafty” beers, the latter being craft labels acquired by big breweries.

On the surface, Fred Meyer’s decision doesn’t make sense. The chain stands to lose business to competing stores that offer a wide selection of local craft products. However, there are fewer alternatives outside Oregon’s larger cities. Alworth adds that Fred Meyer’s parent, Kroger Company, can improve its profit margin by using its buying power to negotiate low prices and cutting costs by paring its beer inventory.

Alworth warns that in localities where the big grocery chains dominate and the public isn’t as attuned to craft beer, “crafty” beers such as Goose Island—or even the big national brands—will become customers’ default choice. That’s bad news for small breweries, especially the newer ones.

Meet the Barrel Brokers

Not so long ago, breweries that barrel-aged their beers sent employees down to Kentucky’s bourbon country to buy used barrels from distillers. Under federal regulations bourbon whiskey must be aged in new, charred oak containers. Those used barrels had to find a new home.

Since then, the popularity of barrel-aged beers has caused a spike in demand for bourbon barrels. And brewers are experimenting with wine, rum, and even tobacco and hot sauce barrels.

Enter the barrel brokers. Breweries rely on brokers because they vouch for the barrels’ provenance of the barrels, inspect them for leaks and other flaws, and handle the logistics of transporting them from distant parts of the country—even from overseas. Small breweries are especially reliant on brokers, who can fill their orders for small quantities and hard-to-find barrels.

Barrel brokering is as much an art as a science. The biggest challenge is coordinating the empty dates of the barrels with the breweries’ fill dates. Changing tastes are another challenge. Brokers are not only looking for the barrels breweries want now, but also try to anticipate what barrel-aging trends are on the horizon.

Celis Beer to Return

Christine Celis, the daughter of the late Pierre Celis, can finally brew beer under her family name. In 1992, Pierre opened a brewery in Austin, Texas, which produced his eponymous Belgian white ale. Three years later, he sold an ownership stake to the Miller Brewing Company. The rights to the Celis name and beer recipes changed hands several times over the years, and most recently were owned by South Carolina-based Total Beverage Solution and Craftbev International Amalgamated, Inc.

Earlier this month, Celis reached agreement with Total Beverage to buy back the Celis name. Now that all the pieces are in place, she plans to reopen the Austin brewery this spring. She plans to use the same recipes and proprietary yeast strains her father used, and is recruiting members of her father’s brewing team. Celis’ 22-year-old daughter, Daytona Camps coming on board as a brewer.

Celis expects to produce 10,000 barrels in the first year of production. For now, distribution will be limited to Austin, Dallas, and San Antonio.

The Friday Mash (Red Cross Edition)

On this day in 1863, a group of citizens of Geneva, Switzerland, founded an organization called the International Committee for Relief to the Wounded–now known as the International Committee of the Red Cross.

And now….The Mash!

We begin in England, where festival organizers in two of the country’s most famous beer cities, Norwich and Sheffield, are joining forces to promote their local products and attract beer tourists.

The Norwegian supermarket chain Rema 1000 is feeling the backlash after it took several local breweries’ products off the shelves. Some Rema customers switched to competitors’ stores.

Are you a DIYer who loves craft beer? You might like the Kinkajou Bottle Cutting and Candle Making Kit. You can give the candles to friends—and show off your collection to them.

“Pepper”, a robot from Japan’s SoftBank, has his first job: greeter at the Pyramid Taproom in Oakland International Airport. When not posing for selfies, he’s working on his speech-recognition skills.

A faith ministry in Nebraska has started a fund-raising campaign to buy out four stores that sell millions of cans of beer in a tiny village next to the alcoholism-plagued Pine Ridge Indian Reservation.

Heroica, a brewery in Brazil, is flavoring its Kuromatsu Kamikaze IPA with branches of bonsai trees, brought over by a Japanese family more than a century ago. Some bonsai trees are worth $20,000.

Finally, Bart Watson, the Brewers Association’s chief economist, told a gathering of brewing professionals that it’s still possible for a microbrewery to grow to regional status, but very few will succeed in doing so.

The Friday Mash (Gold Record Edition)

Seventy-five years ago, the first-ever gold record was presented to Glenn Miller for “Chattanooga Choo Choo”. The song was originally featured in the film Sun Valley Serenade (1941).

And now….The Mash!

We begin in Cincinnati, where Urban Artifact is brewing a beer made with yeasts from the historic Union Terminal, which is now a museum complex. The brewery added sour cherries to add tart fruitiness to the beer, a 7% ABV bock.

If you’re a Game of Thrones fan, Brewery Ommegang has you covered. It will release three beers whose labels bear the sigils of the Houses of Lannister, Stark, and Targaryen.

Alex P. Davis, who runs the Library Alehouse in Santa Monica, doesn’t think beer lovers should stand in line to taste rare beers such as Pliny the Elder IPA because so many world-class beers are available without the wait.

Despite being the capital of one of Mexico’s poorest states, Oaxaca City has become destination of hipster tourists—many of from other Mexican states. And it’s developed a lively craft beer culture.

TheMotleyFool.com explains how Anheuser-Busch InBev and MillerCoors are exploiting the three-tier system to keep craft products out of bars and stores. Rather than fight A-B, Craft Brew Alliance entered into in a production and distribution deal with the brewing giant.

Rochester, New York, is the nation’s unofficial Tater Tots capital. Local journalist Will Cleveland has a few pointers on pairing beer with the tots—and yes, any beer from the Genesee family is a good choice.

Finally, The Smithsonian’s National Museum of American History has appointed Theresa McCulla as historian to oversee its American Brewing History Initiative. McCulla, who will receive a Ph.D in American Studies from Harvard, also holds a culinary arts diploma.

The Friday Mash (Income Tax Edition)

On this day in 1913, the Sixteenth Amendment, which authorized a federal income tax, was ratified by the states. That’s the bad news. The good news is that you’ll have an extra three days to file your federal return this year.

And now….The Mash!

We begin on the Moon, where beer might be brewed someday. Wort and beer yeast will be placed aboard a lunar lander to find out whether the yeasts stay viable under lunar conditions.

The latest must-have accessory is the Drink Tanks growler. It looks like a piece of industrial camping equipment, and can keep up to two gallons of beer fresh for 24 hours.

Now that on-demand streaming has replaced records, classic rock bands—along with a few newcomers—are turning to branded beer as a way of monetizing their intellectual property.

Boulevard Brewing Company has added American Kolsch to its core lineup, which also includes Unfiltered Wheat, Pale Ale, and KC Pils. It debuted this week at Kansas City-area establishments.

Scientists are exploring sensation transference, the phenomenon that explains why listening to a pleasant soundtrack causes you to perceive the beer you’re drinking as sweeter.

Richmond, Virginia-based Veil Brewing Company has released Hornswoggler with Oreos, a chocolate milk stout conditioned with hundreds of pounds of the famous cookies.

Finally, Guinness really might be good for you. Researchers have linked iron deficiency anemia and hearing loss, and Guinness is rich in iron. In addition, Guinness supposedly contains antioxidants and suppresses the accumulation of “bad” cholesterol.

Guinness to Open Brewery in U.S.

After a 63-year hiatus, Guinness beer will once again be brewed in the United States.

Diageo PLC, which owns the Guinness brand, will expand the historic Calvert Distillery in Baltimore County, Maryland to include a mid-sized brewery as well as a visitors’ center and taproom. Diageo, which calls the facility an American version of the Guinness Open Gate Brewery in Dublin, hopes to capitalize on the popularity of beer tourism.

The new brewery will focus on new Guinness beers created for the American market. The iconic Guinness Draught, Guinness Foreign Extra, and Guinness Extra Stouts will still be brewed in Dublin and exported to the United States.

Diageo is hoping to open the brewery this fall to coincide with the 200th anniversary of Guinness exports to the U.S.

Forecast for 2017: Craft Beer Turf Wars

The number of craft breweries continues to grow rapidly, while the growth of the craft sector is slowing. Which means something has to give.

Jason Notte of Marketwatch.com predicts that 2017 will be the year of the turf war; there will be less mergers-and-acquisitions activity and more competition among breweries to claim shelf space.

This could be the year that craft breweries lay off workers and make other cuts in an effort to trim costs. Industry leader Boston Beer Company has been hit hard by shrinking sales of Samuel Adams Boston Lager; the company’s shares have tumbled 50 percent from their 2015 high.

We’re also likely to see more breweries bring in private-equity firms. Already this year, Victory Brewing Company and Southern Tier Brewing Company have formed such partnerships with such firms.

And we’re likely to see smaller brewers focus on taproom traffic and food sales and avoid the battle to get their products on store shelves and on bar and restaurant menus.

Notte believes that Oskar Blues is the brewery to watch because it has been the craft sector’s trend-setter for years. The brewery was the first to can its beers and the first to build a second facility in the eastern United States. Two years ago, it kicked off the private-equity trend when it sold a majority interest to Fireman Capital. It then used some of that money to acquire craft breweries in Michigan, Florida, and Texas; the latter two states are considered underserved beer markets. Oskar Blues also borrowed from the big national brewers’ playbook. It rolled out more mainstream beers, sponsored sporting events, and put an emphasis on brand recognition.

Notte concludes, “Whether drinkers benefit from [this] turf war or become victims of it remains to be seen.”

The Friday Mash (Georgia Bulldogs Edition)

On this day in 1785, the University of Georgia opened its doors. UGA is the first state-chartered university in the United States, and is the birthplace of the American system of public higher education.

And now…The Mash!

We begin in Massachusetts, where the state’s top liquor regulator is “ready to put everything on the table” in an effort to modernize the liquor code. That includes lifting Draconian limits on the number of licenses a community can issue.

Craft beer—sort of—is on the shelves at Wal-Mart. Its brand name is Trouble, it’s apparently contract-brewed by Genesee Brewing, and it got panned by a panel of Washington Post staffers.

Jake Tuck of Eater magazine explains “beer poptimism”: a growing appreciation of beers that are “unassailably popular, widely accessible, and highly quaffable”. Yes, that means macro brews.

In Bishkek, the capital of Krygystan, two women have opened a craft brewery called Save the Ales. Much of the beer sold in that country consists of bland imports and watery local products.

A startup called Colorado Craft Distributors aims to serve “small but special” breweries looking to get their beer into liquor stores, bars, and restaurants along the state’s Front Range.

Brooklyn Brewery has made a beer using Saccharomyces carlsbergensis, the lager yeast isolated in 1883 by Emil Christian Hansen, a researcher at the Carlsberg Laboratory in Copenhagen.

Finally, actor Matt Damon, the co-founder of Water.org, has joined forces with the brewer of Stella Artois beer to bring clean water to people in developing countries. Every pint of Stella sold in Britain guarantees someone a month’s supply of water.

Pabst’s Unusual Business Model

Pabst Brewing Company has 2 percent of the American beer market, which puts it in a class with Boston Beer Company and D.G. Yuengling & Son. But under Eugene Kashper, Pabst’s busimess model is much different than that of Boston Beer and Yuengling.

Jason Notte of Forbes magazine, who recently interviewed Kashper, writes that Pabst’s CEO is “also digging into corners of the beer industry where the competition hadn’t tread and using its strengths in marketing, production and scale to take on the big brewers on a much smaller budget”.

Kashper told Notte that his portfolio was “kind of in a sweet spot between big beer and craft” because his legacy brands not only have a following, but also own a library of recipes for craft-like beers that he can sell for less than the going price of craft. Kashper’s success stories include Stroh’s Bohemian, Old Style Oktoberfest, and Rainier Mountain Ale, all of which have strong regional ties.

In addition, Pabst has entered into partnerships with craft and import brewers to enable it to penetrate those segments of the market. Those partnerships emphasize the strength of Pabst’s distribution and grassroots marketing, which Kashper hopes will give it a fighting chance against brewing giants Anheuser-Busch and MillerCoors.

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