Oddly enough, a long-established small brewpub chain based in Oklahoma with declining sales plans to go public. Bricktown Brewery Restaurants, LLC, an OK-based brewpub chain with 14 locations thruout OK as well as KS, TX, AR and MO, announced terms for an IPO yesterday, as detailed on NASDAQ. Bricktown plans to raise ~$15 mil by offering 1.875 mil shares at anticipated price range of $7 to $9 per share. Co will be listed on NASDAQ under symbol “BEER.” With IPO, Bricktown is “actively looking to expand our business and the number of Company restaurants” in both current 5-state footprint and thruout Southwest, Midwest, Southeast and Mid-South regions via organic expansion and/or thru acquisition, co details in Prospectus Summary.

Bricktown first opened in Oklahoma City, OK in 1992 and gradually began opening new locations over time. Its own beer biz is relatively tiny, tho volume grew consistent low-double-digits in recent yrs and hit 2,375 bbls in 2017, according to Brewers Assn stats. Yet revenues and profits were down in 2018. Revs declined 6% to $28.1 mil last yr, and co incurred net loss of ~$1.3 mil each of the last 2 yrs, according to financial statement. Alc bev sales account for roughly 1/4 of total sales, and Bricktown beers account for just 1/3 of its alc bev sales, co detailed. So Bricktown beers accounted for just over $2.2 mil in sales last yr.

A little more than 2 mos after Weyerbacher laid off pair of sales reps and acknowledged it was seeking new investment (see Feb 12 issue), co simultaneously filed for chapter 11 bankruptcy and sold majority stake to private investment group called 1518 Holdings, LLC, it announced earlier this week. “This is the last step in the process to investment,” said Josh Lampe in released statement, who will now become president of Weyerbacher (previously COO). “We were hoping to get through without entering Chapter 11, but the group of investors that we’re working with felt that it was necessary in order to move forward quickly.”

Recall, after moving into sizable new 30K sq-ft facility, Weyerbacher peaked around 18K bbls before declining to 15K bbls in 2017. Co declined double-digits again to 11K bbls last year, according to Lehigh Valley Business. Indeed, Weyerbacher filed for Chapter 11 bankruptcy in order to clean up $2.1 mil in debt, LVB detailed (among others). 1518 Holdings acquired 55% stake of co and has taken over the debt, now working to pay off outstanding accounts (between 100 and 199 creditors, according to bankruptcy filing). So John and Chris Lampe retain minority ownership of the co, and founder, Dan Weirback will continue to consult Weyerbacher as he’d done the past 3 yrs.

While “this was the only avenue we had,” Chris Lampe referred to it as “a little bit of a new beginning as well,” to paper. “Part of the reason” Weyerbacher declined last yr was due to not being able to pay for raw materials that were on order, and “that’s really where the revenue shortfall came in last year,” he explained. This yr, co expects to “be almost doubling production” with addition of some contract brewing, Josh detailed in release. Production expected to hit 20K bbls with contract brews from Funk Brewing and “more [contract brewing] deals likely to follow” to help fill 30K bbls/yr capacity, according to The Morning Call. Revs projected to reach somewhere between $6.5 and $7 mil vs $5 mil in 2018, per LVB. So all told, Weyerbacher brand is alive and has path forward, all things considered. All 50 employees will stay on board. Future plans also include opening more taprooms (on top of recently opened 2d location in New Hope, PA earlier this yr), and “more offerings” for its spirits line.

Pair of very different plans for summer activity supporting biggest brands for top 2 craft brewers goin’ public this week. Sam Adams announced reformulated Summer Ale prior to launch on April 1. But it’s amping up attention on “amped up” citrus character “for a lighter and brighter taste,” this week. Beer still riffs on classic German Hefeweizen style, but new version (first revise of recipe in 23 yrs, co notes) pulls in purees of citrus fruit a-plenty. New Summer Ale also among first Sam beers in new packaging. “Now lighter & brighter” called out on 6-pks, featuring some of classic Sam Adams iconography and coloring. (This article appeared in INSIGHTS Express yesterday.)

Meanwhile, Sierra Nevada blazing its own trail. Literally: co announced “Pale Ale for Trails” program, partnering with American Hiking Society to support National Trails Day on June 1. Sierra gathering folks for trail maintenance that day followed by celebrations at both CA and NC breweries. Also includes a pledge program, where drinkers can pledge support to clean up local trails. And initial partnership just “the first of several Pale Ale for Trails projects to be rolled out across the Summer.” Recall, Sierra launched first-ever broad-based ad campaign focused on outdoor recreation late last yr. But Trails program separate, under new CSR division helmed by founder Ken Grossman’s daughter Sierra, co points out.

Boston Beer’s biz is less and less about core beer every time you look. In fact, Truly hard seltzers were collectively larger than Sam Adams for latest 4-wk period in scans! Sam Adams fell to 18% of total Boston Beer volume and 19% of $$ sales for latest 4 wks thru Apr 13 in Nielsen All Outlet data. Truly still nearly tripling for latest 4 wks and reached 20.6% of Boston volume and 19.4% of $$. Sam Adams declining at 20% plus rate for latest 4 wks and down 17% YTD. Meanwhile, Twisted Tea improved to low-double-digit growth for 4 wks and made up 38% of Boston’s volume, 36.5% of $$ in scans. Angry Orchard takin’ a backward step this yr, down 5% YTD and -11% for latest 4 wks thru Apr 13 in Nielsen, struggling to lap last yr’s sizable Rosé cider launch. Yet it still represents 23% of total Boston volume and 25% of $$ for 4 wks.

Indeed, “it’s all about FMBs and innovation,” headlined Consumer Edge analyst Brett Cooper in latest report ahead of Boston Q1 results, using some notably tuff language regarding Boston’s beer prospects. “We see no reason for optimism on the Sam Adams trademark,” and “best opportunity…in beer is likely from expanded offerings under new brewery names” i.e. Marathon, in his view. Sam Adams trends are “troubling” and “meaningful decline…seems likely to continue irrespective of Boston’s efforts,” he added. Yet Boston Beer remains up solidly overall. Boston $$ and volume up 10% YTD thru Apr 13 in Nielsen.

Boston Beer posted a crazy 32%, 263,000-bbl shipments gain in first qtr, far beyond optimistic analyst estimates. Boston had said it would boost inventories this qtr so that it would not again be plagued by out-of-stocks, especially on Truly. But analysts expected more like 20% growth. Meanwhile, Boston Beer depletions still very healthy. Sales-to-retailers up 11% in the quarter, 12.5% thru Apr 13. And Boston Beer raised its guidance for the full yr, increasing expected range of STR growth to 10-15%. Previously it was 8-13%. This was Boston’s 4th consecutive qtr of double digit depletions growth, noted chairman Jim Koch. Yet “we are still seeing challenges across the industry, including a general softening of the craft beer category,” he added. “We are disappointed with our Samuel Adams brand trends,” said Jim “and continue to work hard on our brand messaging,” plus package redesign and reformulated Sam Summer Ale. “We plan to continue to invest in the coming months to improve trends and remain focused on the longer term goal of returning Samuel Adams to growth,” Jim added.

But for now its growth is all about Truly and Twisted. Truly “continues to grow beyond our expectations,” said ceo Dave Burwick. (Recall, Boston expected Truly to approximately double this year.) And Twisted Tea “continues to generate double-digit volume growth, consistent with 2018 full year growth trends.” Meanwhile, Angry Orchard declined in Q1, going against last yr’s rollout of Rose. But Boston expects Angry Orchard “to improve for the remainder of the year.”

Distribs have 6 weeks of inventory on hand on average, according to Dave. That’s “an appropriate level based on the supply chain capacity constraints and inventory requirements to support the forecasted growth of Truly and Twisted Tea brands over the summer.” Inventories will return to more normal levels of 3-4 weeks over the remainder of the year.

Boston oper income more than tripled to $29 mil in 1st qtr. But it didn’t change earnings guidance as it once again faces increased costs to maintain rapid growth, including 2019 guidance of $20-30 mil in incremental ad, promo and selling expenses, capital spending of between $100-120 mil and “increased usage of third party breweries” to capture volume growth oppys. “We remain prepared to forsake short-term earnings,” said Dave “as we invest to sustain longterm profitable growth.”

More brewers are dabbling with CBD and THC-infused products every time you look, but legality of CBD brews sold in general mkt remain gray area that’s drawing increasing attention from TTB. In Sarasota, FL, Naughty Monk Brewery debuted CBD-infused beer called Mindful Monk at local bar called Oak & Stone’s, according to Sarasota Magazine. Mindful Monk was a double IPA with 9% ABV and 15mg of CBD. However, TTB quickly issued cease and desist letter to Naughty Monk, paper notes. “We weren’t packaging this at all, so we did not think we needed recipe approval,” but “now, we can’t brew another batch until they know what ingredients we are using,” head brewer Curtis Dille told mag. Notably, two other brewers in South FL, Invasive Species.

Brewing and Devour Brewing, received same letter for their CBD brews planned to debut during 4/20, according to Sun Sentinel. Yet another FL brewer, LauderAle, didn’t receive letter from TTB, and planned to host “Project Terpene, a festival featuring four beers with cannabis terpene oils,” noted paper. And in Austin, TX, NXNW Brewing made watermelon-flavored CBD-infused IPA for 4/20 “holiday” as “super-limited cask” of 5 gallons available at co’s taproom, reported Austin 360. Similarly, Austin’s Independence Brewing (part owned by Lagunitas/Heineken) made a CBD “inspired” beer for 4/20, tho no actual CBD was used, according to local news site.

Then too, Oh Hi Beverages is a new line of THC-infused sparkling seltzers in CO, founded by Aaron Miles, Jonny Radding and Matt Vincent in Durango, CO earlier this yr, according to its website. Matt Vincent happens to be one of the owners of Ska Brewing, while Aaron and Jonny are co-owners of Durango Organics “farm-to-store medical and recreational marijuana dispensary” with 4 locations (2 in Durango, plus Cortez and Crested Butte, CO). Gotta note, both product and name are very similar to Lagunitas Hi-Fi Hops in CA. It comes in Lemon Lime, Grapefruit and Pomegranate flavors with 10mg of THC and Ginger Basil Limeade variant with 5mg CBD and 5mg THC. Oh Hi uses 5g sugar and has 20-25 calories per can. Currently it’s available in 18 dispensaries thruout CO and brand is sold for $8-10 per 12oz can, according to DGO.

 Angel City Cold Brewski; Ninkasi’s Hard Seltzer Innovation among craft brewers also continues to push boundaries beyond traditional beer, delving into everything from hard seltzers to other new experimental FMB styles. Notably, while Boston Beer focused most on Truly Spiked & Sparkling, plus new Tura hard kombucha and Wild Leaf hard tea, co also dabbling with “hard coffee” on smaller scale. LA-based Angel City just launched Cold Brewski, “a new gluten-free hard coffee” available in canned 4pks at the brewery and select accounts, co announced. Cold Brewski has 5% ABV and 110 calories, described as “a nitrogenated, cold-brewed hard coffee made from fermented cane sugar and coffee beans.” Recall, MC also plans to launch hard coffee brand in partnership with La Colombe dubbed La Colombe Hard Cold Brew Coffee (see Mar 15 INSIGHTS Express). That brand will test in Boston with Burke Dist, Denver with Coors Dist, and Tampa with JJ Taylor this summer.

Separately, Ninkasi launched new brand, Pacific Sparkling Craft Seltzer, available in Cucumber Mint and Cherry Blossom 6pks earlier this mo. Notably, Ninkasi launching an entirely separate brand line, and has several “craft” cues thruout its messaging: i.e. “natural flavors,” “small batches” and “made by hand, not machine.” Ninkasi joins a handful of established brewers and cideries in PacNW that jumped into hard seltzer space, including 2 Towns Seek Out, Two Beers Sound Craft Seltzer, Schooner Brewing’s San Juan Seltzer, and No-Li ‘s Day Fade, among others.

Hail Mary pass by small brewers in Texas caught yesterday, but not quite crossed into endzone yet. Bills to allow production breweries to sell up to 2 cases of beer for off-premise consumption at a time, backed by state brewers guild, supported by one of two powerful distrib groups (Beer Alliance of Texas), haven’t even gotten committee hearings on their own. Not in House. Not in Senate. Then this week, brewers started pushing option to get an amendment added to a must-pass bill that funds Texas Alc Bev Commission (so-called “sunset bill” required every 12 yrs). House Rep behind standalone beer-to-go bill proposed amendment before full House yesterday as “only remaining path forward for the long-overdue reform this session,” he told Austin 360. Vote was “a nail-biter,” Texas Tribune wrote, and looked at first like it was unsuccessful by slim “one-vote margin.” However, “verification vote” tossed out 8 votes, moving amendment forward, local KXAN reported. House cleared the bill with beer-to-go amendment during final vote this morning. So now onto next complication: getting Senate to agree. But some more confident about support in Senate. Indeed, the chair of Senate committee on sunset bills also author of standalone beer-to-go bill, KXAN notes. Don’t change that dial.

Small brewers can celebrate legislative successes elsewhere too. Compromise bill in North Carolina to allow brewers under 100K bbls to self distribute up to 50K bbls overwhelmingly passed the full House earlier this month (see March 24 issue for compromise details). Out in Idaho, the governor already signed a bill clearing small-scale contract production. Bill allows brewers under 30K bbls to contract brew for other brewers under 30K bbls without that production counting toward their total volume. Note that production outside ID does count toward volume cap for both “contractor” and “contractee.” Recall, CA-founded Mother Earth built larger production facility in ID a few yrs back and quickly became a top craft producer in the state.

Gov also signed a brewer-backed bill in North Dakota. That provision raises caps on brewpub and microbrewery production (10K and 25K bbls, respectively), also allowing them to transfer beer in bulk between up to 3 “affiliate” locations, which must also produce some beer (see Feb 2 issue for more bill details). However, bit of a “buzzkill” in neighboring Minnesota. Attempts to lift volume caps on brewers able to sell growlers failed, along with numerous other alcohol-focused proposals, according to extensive MinnPost article from early April. Lots of back and forth, amendments added then pulled. Though perhaps more notable was appearance of Teamsters as advocates for 3-tiers, pushing back against the small brewers there.

After Portland, OR’s Burnside Brewing went out of biz in early Feb (see Feb 12 issue), globally renowned Danish brewer Mikkeller swooped in to take over the space, at least temporarily. Mikkeller plans to re-open Burnside space as a pop-up beer bar and restaurant by June 1 and operate thru end of 2019, using space as “placeholder while the partnership explores the possibility of a permanent bar, restaurant and Mikkeller brewery at the site,” reported OregonLive. That would make 3 US brewery locations for Mikkeller, including San Diego brewery (acquired from AleSmith) and NYC brewery that operates alongside Mets’ Citi Field stadium. It operates restaurants/bars elsewhere too.

Mikkeller partnered with Portland restaurant group Chefstable for the project, as Chefstable “purchased Burnside assets and wiped out its debt,” owner and managing partner Kurt Huffman told paper. Yet there are still “significant” regulatory issues that “could take several months to sort out,” giving pause to more permanent plans for the time being. Recall, Burnside was reportedly locked out by its landlords for missing rent payments. For now, pop-up spot will feature “23 Mikkeller taps alongside a menu of Japanese noodles and rice dishes.”

Craft Brew Alliance has agreed in principle to settle on longstanding class action lawsuit in US District Ct of Northern Division of CA that claimed Kona was misleading consumers into believing all Kona brews were made in HI, co announced. While full terms and conditions of settlement not yet finalized, terms expected to require CBA to pay upwards of $4.7 mil “to make certain payments to class members and pay specified administrative fees and fees of the plaintiffs’ attorneys.” Tho it’s “reasonably possible that the total cost of settling the litigation will exceed current estimates,” co acknowledged. CBA operating income just over $5.7 mil in 2018, with net income just over $4.1 mil. So this settlement comes with a hefty price tag for co.

Suit was initially filed in early 2017, charging that ads and labels add up to misrepresentation, even as plaintiffs acknowledged Kona labels include various brewing locations by city, state (see Mar 1, 2017 – Vol 8, #18). Specifically, plaintiffs said CBA violated CA's false advertising, consumer legal remedy, unfair competition, express warranty, negligent misrepresentation and unjust enrichment statutes. CBA sought to dismiss claim in May 2017, with series of counter-arguments including: 1) co never marketed or labeled its beers as “made in Hawaii”; 2) product labels ID brewing locations; 3) imagery references shouldn’t “plausibly be interpreted as statements of objective fact” that Kona brewed “exclusively” in HI; 4) “similar” cases against Red Stripe, Sapporo and Fosters ultimately ended in favor of the brewers (see May 4, 2017 – Vol 8, #40). Yet judge opted not to dismiss case in Aug 2017, and 1.5 yrs later CBA ultimately settled for a good chunk of change.

Several striking comments from Brewers Assn economist Bart Watson in brief remarks at the Meeting of the Malts put on by Brewers of Pennsylvania yesterday in Hershey. “I would predict in 2 years there will be 10,000 brewers,” said Bart. Acknowledging “some people fear that,” Bart said “everybody needs to prepare” because “it’s coming.” Right now there are 7400 breweries or so, with about 3 opening a day. Most are tiny as median craft brewer only sells 400 bbls. That’s right, fully half of craft breweries below 400 bbls. And that’s where the growth is, Bart noted. Taking another look at how 1 mil bbls of craft growth was divvied up among 7K brewers in 2018, about 25% of that from 800-1000 breweries that just opened last yr and averaged sales of 250-300 bbls. Another 25% from breweries in their 2d yr that may have been all incremental for half the yr or more. And another big chunk from breweries that opened in last 4 yrs and are still expanding territories and/or in rapid growth mode. But at least craft growing overall and part of the growing high end, segments which are now collectively bigger than premium and premium light. The high end will still grow at least another 15-20 share, Bart also predicted, to get to closer to 2/3 of biz, where premium/premium light peaked.

“Age Into Beer Rather Than Out of Beer” Total beer ain’t growing and Bart laid out key reasons in very simple, rational economic terms. It’s because of “demographics” and “pricing.” “We’re getting older” as a society and older consumers drink less beer. Bart doesn’t see that changing. Then too, beer “taking a lot more price” than wine and spirits, Bart said, and “a certain percent of consumers are just substituting.” Bart doesn’t see “pricing decisions” of large brewers changing much either. So beer will have tuff time growing. But “craft can be a place to grow,” even if it’s “sliced up in more ways than we’ve ever seen.” And here’s one final interesting demographic stat to support that: while consumers 35-44 drink less than those younger, they don’t drink less craft. Craft and older drinkers are both more affluent on avg. So Bart’s hope is that consumers can “age into beer, rather than out of beer” and craft can be part of “beer’s return to health, now driven by the high end.”