Oskar Blues Brewery

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.”

Are Growlers Obsolete?

Writing in Draft magazine, Zach Fowle told his readers that he was throwing out his considerable collection of growlers. The reason? They’re a terrible way to serve beer, and breweries are wising up to this.

Many breweries have invested heavily in their packaging lines. The technology keeps oxygen levels low and keeps beer product as fresh as possible for as long as possible. Growlers, on the other hand, are what Fowle calls “a glorified pint glass”; the process of filling it introduces oxygen, which over time makes the beer’s quality deteoriate. Growlers are also a pain for breweries, whose employees spend inordinate amounts of time cleaning and filling growlers. Breweries also get unfair online criticism from customers who inflicted bad beer on themselves by bringing in dirty growlers.

The growler’s replacement might be the Crowler. The Crowler machine is a modified soup canner that dispenses beer into 32-ounce cans. The technology was pioneered by Oskar Blues Brewery, which has sold nearly 1,000 of the devices. The Kroger Company is test-marketing Crowlers at one of its locations in Memphis.

The Friday Mash (Stanley Cup Edition)

On this day in 1892, Lord Stanley, Canada’s former Governor-General, pledged to donate a silver challenge cup to the best hockey team in Canada. The Montreal Canadiens have won 24 Stanley Cups, nine more than the second-place Toronto Maple Leafs.

And now…The Mash!

We begin in Silver Bay, Minnesota, where the city council banned a local microbrewery’s products from the municipal liquor store after the brewery opposed against taconite mining in the area.

Hops have been used in folk medicine for centuries. Today’s scientists have been working on harnessing hops’ anti-inflammatory and anticancer properties.

Releases draw big crowds of beer geeks. Unfortunately, some of them behave badly, pushing and shoving, cutting in line, and abusing breweries on social media when the beer runs out.

The pace of mergers and acquisitions in the brewing industry is picking up, and now craft breweries are taking one another over. Recently, Oskar Blues Brewery has bought Cigar City Brewing.

Tom Osborne and Mike Robb appeared on the television show Shark Tank to pitch The Beer Blizzard, a freezable product that fits on the bottom of a beer can, keeping it colder longer.

A craft brewery in London is attacking the problem of food waste by salvaging heels from bread loaves. The heels—which normally go to waste—are made into a beer called Toast Ale.

Finally, Dogfish Head Craft Brewery’s Sam Calagione says he got his first taste of the beer business waiting tables at a Manhattan bar. That inspired Calagione to buy a homebrewing kit. On a whim, he added overly ripe cherries…and the rest is history.

How Oskar Blues Managed Growth

Can a craft brewery get the funds needed to expand without its independence? Dale Katechis, the CEO of Oskar Blues Brewery, found an answer. Instead of selling out to a larger brewery, he brought in Fireman Capital, a private-equity firm in Boston. Katechis met Dan Fireman while developing a succession plan for his brewery, and concluded that Fireman would make a good business partner. He said, “It was refreshing to meet someone who understood the heart and the soul of this business was and knew how important the heart and the soul is to it. Sometimes, it isn’t the best business decisions that are the heart and the soul.”

Oskar Blues used some of Fireman’s cash to acquire Perrin Brewing Company of Grand Rapids, Michigan. Katechis was introduced to the brewery by Keith Klopcic, a co-owner of Oskar Blues’s Michigan distributor. Perrin had gone from zero to 14,000 barrels in two years, and had a distribution network in place; however, it “wasn’t into packaging.” After taking over the brewery, Katechis introduced a canning line. Cash flow doubled within three months, and Perrin is expected to grow substantially. Klopcic is in charge of Perrin, which will remain independent of Oskar Blues.

Which Colorado Breweries Are Takeover Targets?

Colorado has some 225 breweries, and the Denver Post’s Eric Gorski is asking the (much more than) $64,000 question: Which of these breweries is going to be acquired? Recent activity suggests that the most attractive takeover targets are breweries that turn out more than 40,000 barrels a year. Colorado has a number of those.

However, the owners of Colorado’s top five breweries insist that they’re not selling out. Oskar Blues Brewery said that it’s going to be a buyer, not a seller. New Belgium Brewing Company’s founder sold her shares to brewery workers, and the company is 100-percent employee owned. Odell Brewing is “not on the market.” Left Hand Brewing is committed to staying independent. And Breckenridge Brewing says it had no intention of selling out.

Despite the breweries’ denials, Gorski maintains that an acquisition is not out of the question. He says, “If the recent industry upheaval shows anything, it’s this: Don’t be surprised by anything.”

The Friday Mash (Railroad Tycoon Edition)

Two hundred years ago today, the state of New Jersey awarded the first-ever railroad franchise to Colonel John Stevens III, the inventor who constructed America’s first steam locomotive.

And the bar car is open!

Fore! We begin at the 16th hole of the Phoenix Open, where rowdy spectators celebrated Francesco Molinari’s hole-in-one by showering him with beer and other flying objects.

A Minnesota brewery found out that it can’t sell “Rated R” beer. Not because of violence or sex, but because the Motion Picture Association of America trademarked the phrase. Molson’s XXX is, presumably, still in the clear.

MillerCoors has installed 10,000 solar panels at its Irwindale, California, brewery. The new system will generate enough electricity to brew seven million cases of beer each year.

Blank Slate Brewing Company joined forces with Oskar Blues Brewery to brew “Cincy 3-Way Porter.” The beer contains cumin, coriander, allspice and cinnamon, which are found in Cincinnati-style chili.

Researchers in China have discovered that xanthohumol, a substance found in hops, contains anti-oxidants that may delay or even prevent the onset of dementia and other forms of cognitive decline.

Ontario’s government plans some changes to its relationship with The Beer Store, the province’s quasi-monopoly. However, those changes won’t bring beer into convenience stores.

Finally, Yeti Coolers has invented a super-luxury koozie. The Colster, which retails for $30, wraps a beer in a stainless steel, double-walled, vacuum-insulated enclosure; and its “No Sweat” design prevents condensation from forming.

Beer…By the Numbers

  • Top ten breweries’ share of the world beer market in 2004: 48 percent.
  • Top ten breweries’ share of the market in 2013: 65 percent.
  • Barrels of Castle, SABMiller’s biggest-selling beer, sold in 2013: 17.68 million.
  • Barrels of Carling Black Label, SABMiller’s second biggest-selling beer, sold in 2013: 17.59 million.
  • Average cost of a beer at a National Football League stadium: $7.53.
  • Increase over last year’s average cost: 23 cents.
  • Survival rate for microbreweries that opened in 1980 or later: 76 percent.
  • Survival rate for brewpubs that opened in 1980 or later: 51.5 percent.
  • Share of the sale price of a craft beer that goes to the retailer: 31 percent.
  • Share that goes to the distributor: 21 percent:
  • Share that goes to industry workers: 1 percent.
  • Beer’s share of alcoholic beverage consumption in 2001: 59.6 percent.
  • Beer’s projected share of alcoholic beverage consumption in 2015: 50.1 percent.
  • Size of a “crowler,” a metal beer container pioneered by Oskar Blues Brewery: 32 ounces.
  • Cost of a “crowler starter package”: $3,000 (machine, cans, and lids).
  • The Canned Craft Beer Pioneer

    Ten years ago this November, Dale Katechis, the founder of Oskar Blues Brewery, made what was then considered a risky move. Katechis decided to make Oskar blues the first craft brewer to can all of its beer. He started with a tabletop machine to create a hand-canning line that sealed one can at a time. This year, Oskar Blues is on track to turn out 90,000 barrels this year–all of it in cans.

    Tom Rotunno, a senior editor at CNBC.com, talked about Oscar Blues with Katachis, who explained how mountain biking influenced his decision to switch to cans:

    I didn’t really set out to start canning beer in order to align it with the outdoor industry, but it was an obvious arena and we felt like we could market our beer based on its portability. I’ve always been an entrepreneur and a risk taker and someone that lives by the moment. Life is short and we might as well have a good time while we’re here. I tend to have some of my best moments, or be most fulfilled, when I’m outdoors on two wheels on a mountain bike. So once we started to align marketing efforts with both parts of my life, it just made sense.

    It made financial sense, too. Oskar Blues has posted seven years of consecutive double-digit growth, and is one of the three “Biggest Momentum Gainers” on the Brewers Association’s list of the top 50 craft brewers.

    Best Bars for Canned Craft Beer

    According to CraftCans.com, more than 600 craft beers from over 200 breweries are sold in cans, and there is a growing number of bars that specialize in these beers. Their staff has chosen 15 “cantastic” establishments, including a bar attached to the Oskar Blues Brewery, which was one of the first to can its beer.

    CraftCans’ choices also include the Full Circle Bar in Brooklyn, New York, which features several Skee-Ball alleys; a bar inside the Whole Foods Market in Chandler, Arizona; and the Star Bar, which is within walking distance of Denver’s Coors Field.

    News of a Virtual Tasting

    The folks at Oskar Blues Brewery, who pioneered craft beer in cans, are at it again. They’ve organized the first-ever Virtual Colorado Beer Tasting, which will take place Thursday evening, September 9.

    To take part in the tasting, you need to do the following:

    One. Buy some Colorado-brewed beer at your local beer store.

    Two. At 7 pm Mountain Time, crack open the first beer “in a resounding chorus heard around the web.”

    Three. Tell us what you think about the beer on Twitter (use the hash tag #bbc10 and the one for the brewery), Facebook, your own blog, or the Beer Bloggers Conference website.

    You also might want to carry some ID, just in case there’s a virtual bouncer inside your computer.

    Powered by WordPress