Michigan’s local brewers continue to collectively grow and gain share of total MI beer. Total MI brewers grew 5% to 639,856 bbls in-state while total MI beer shipments declined 0.3% to 6,005,337 bbls, according to stats published in annual MI Beer Guide by Rex Halfpenny referenced by several local news outlets. Notably, both leading brewers, Bell’s and Founders, continued to grow and gain share in their home state as well. (Editor’s note: an earlier version of MI data from the Michigan Licensing and Regulatory Affairs showed both cos declining in-state, but that has seemingly been revised upward in MI Beer Guide.) Bell’s grew 2% to 192,012 bbls, gaining 0.1 share to 3.2 of total MI beer volume last year. And Founders grew 12% to 115,178 bbls, gaining 0.2 share to 1.9 of total MI beer. Even as Bell’s represents slightly lower % of total MI brewer volume, these two cos still combined for 48% of all MI-brewed beer sold in-state.

Other top MI cos kept up growth in-state last year as well, including 9 of top-10. Only New Holland was down for the year in this group, -9% to 15K bbls. Short’s grew 12% to nearly 41K bbls and Atwater +8% to 22K bbls. Perrin and Griffin Claw stabilized after tuffer trends in 2017; Perrin down just 0.1% to 17,375 bbls in MI and Griffin Claw grew 7% to 12,756 bbls. But Old Nation growth stands out most of all in this group (see above). It grew more than 120% to 17K bbls in MI last year, leaping to 6th largest MI brewer in-state, just behind Perrin. Rounding out top-10 MI brewers in-state, Keweenaw grew solid 8%, and Blackrocks (new to the list) grew 14% to 7,500 bbls. (Gotta note, Dark Horse volume sharply fell in-state, losing its top-10 spot.)

Net-net, there were 386 MI brewery locations including 296 microbreweries, 84 brewpubs and 3 locations each for Bell’s and Founders (with multiple locations from same co counted as individual breweries), according to MI Beer Guide. Microbreweries (all other cos besides Bell’s and Founders in-state, as defined by MI Beer Guide) collectively grew 6.5% to 311,472 bbls, while MI brewpubs collectively declined 9% to 21,194 bbls.

Old Nation came outta the blue in a hazy blaze last yr, up 168% to over 20K bbls, largely fueled by its M-43 hazy IPA and almost all sold in MI. But co is seeking more “manageable” growth in 2019 and beyond, “to allow ourselves to see where the ceiling was on a natural float on volume for M-43,” founder Travis Pitts told CBN. It’s up nearly 25% this yr “on purpose,” said Travis. M-43 IPA was 90-95% of total Old Nation sales at one point. But co intentionally brought that to 82% last yr and aims for ~75% this yr as it looks to add new brands and styles while not over-extending its flagship too quickly either. Idea is to “hang back” and not overinvest in equipment and capacity, since co didn’t know “how much gas was left in the tank without any real marketing push.” This way Old Nation can “see its natural peak” without getting over the tips of its skis, he added.

Saying “Yes” to Distribs That Reach Out; 20 More Mkts This Yr in Small Doses At same time, Old Nation is notably expanding its distribution footprint this yr. Co already added IL, ME, Atlanta, Denver and even parts of Europe among others. And it’s looking to add as many as 20 “discrete markets” this yr too, “some contiguous and some not.” It’s mainly signing on with craft-focused “boutique” indie distribs thus far, such as Modern Hop in Atlanta, Heartland in Chicago, Crooked Stave in Denver. This “hyper focused” and “hyper vigilant” model fits with Old Nation’s out-of-state strategy in many ways, Travis expressed. But in general, distribs are reaching out and showing “some interest and motivation on their part,” and Old Nation wanted to “come from a place of ‘yes’ when a distributor calls,” he said. “That’s how we grew all out-of-state distribution” thus far. Granted, co will “slow that down after this coming quarter” and is currently taking on “all that we can handle” this summer with “out of stocks” in “a number of markets.” But co willing to “see what works, what doesn’t.”

After partnering with Brew Detroit for an alternate proprietorship earlier this yr, Old Nation added some extra flexibility production-wise, but it’s still not using Brew Detroit “as efficiently” and “can turn up the heat once we do,” when and where needed, said Travis. Plus, out-of-state mkts are only receiving very small amounts of volume from time to time. MI still represents vast majority of its sales. “We don’t want to go in to those places and blow up the spot…or spend a great deal of money” on marketing and selling at this point, Travis noted. “If you don’t have a budget for marketing…your best bet is small amounts of beer put into the market” that can “excite” distribs, retailers and consumers.

Hazies Not Just “Flash in the Pan”; M-43 Seems Like the “Real Thing,” But Don’t Wanna Be Pigeon-Holed Hazy IPAs, and specifically M-43 IPA, singlehandedly changed the trajectory of Old Nation in short order. Recall, Old Nation was struggling to get off the ground in its first year before Travis developed M-43 IPA with input from local fan base, and sales took off from there, constantly out of stock and rising to chain authorizations and sports stadium sales across Michigan. M-43 “seems like it’s the real thing.” So does the hazy IPA style in general, in Travis’ view. This yr co “accepted” that “the flagship is the flagship” and “it’s not hard to accept.” But co also doesn’t want to be overly reliant on one brand. Boss Tweed double IPA is “kind of like M-43” in that “nobody knows how much we need to be making but it doesn’t matter cause we can’t make that much anyways.” But Travis was also “really proud of” Helles Lager brewed this summer; 2K cases “sold immediately.”

Craft “Hasn’t Decided What It Is” In This Next Phase; “We Choose to Be Conservative” Old Nation is not alone in plans to “hang back” and seek “manageable” growth following explosive growth in yrs prior. Many of the fastest growing regional craft brewers have expressed similar plans, looking at enhanced competition with an added layer of caution. Right now “the market is very volatile” and “hasn’t decided what it is” in this next phase of craft, as Travis put it. So “we choose to be conservative.” While building out more capacity seems like the logical solution for Old Nation, and Travis acknowledges that’s certainly on their minds down the road, Travis and co “not sure that cap-ex is a great idea right now.” And that’s even as “folks at banks have told me ‘if it’s ok for anybody [it’s ok for you].’” Travis is “terrified of debt” and currently Old Nation is profitable and in the fortunate position to be “able to do whatever…it is we want.” Co’s betting that “the strength of this brand supersedes” its “ability to slow down or speed up” growth. As a 20-year vet in the beer biz, “we know the guys who never f***d up that bad are the guys [most] concerned about the beers.”

Heineken “craft and variety” brands grew low-single-digits globally for 6 mos thru Jun 2019, led by Lagunitas now in “more than 25 markets” and Belgian brand Affligem up double-digits, co shared in its 1st half 2019 results. “In the US, we see Lagunitas still working well,” CFO Laurence Debroux noted on the conference call, tho she acknowledged more challenging environment particularly for “large craft.” Recall, Lagunitas improved in latest US scan data heading into 2d half as lead brands Lagunitas IPA and Little Sumpin’ each returned to growth for 4 wks thru Jul 14 (see last issue). Yet total Lagunitas $$ up just 0.7%, volume up 1.4% in IRI multi-outlet + convenience data YTD thru Jul 14.

Globally, craft and specialty is “a bit of a mixed picture,” said Laurence. “It is still a rather small part of our business,” added CEO Jean-Francois van Boxmeer. “In one geography we can have a very big success, and in some it absolutely doesn’t work. So we have very contrasted results,” with “a very contrasted picture between brands, geographies and propositions.” Heineken continues to work within 3 “pillars” in this space: 1) “line extensions of existing, most of the time lager brands that we extend into crafty line extensions”; 2) “international crafts like Lagunitas and Affligem, a few brands that travel”; and 3) “local craft” including various acquisitions in the Netherlands, UK, Spain, Italy and South Africa among others. Notably, “two years ago it was rather the line extensions who were the winners” within Heineken’s portfolio, but “in the first half the very local ones were the winning formula,” said Jean-Francois. “So we keep working around these 3 lines of business in craft and variety because it might change who the winner is. Right now we are winning, but there is still a lot of trial and error in that area, I have to say.”

Comin’ off a tuff Q2 and news of its CEO change (see sibling pub INSIGHTS Express), Molson Coors didn’t have too much craft-related news to share, tho did offer a few notable updates on Blue Moon, Leinenkugel and Saint Archer Gold during yesterday’s conference call. Blue Moon Belgian White “had its best quarterly volume performance since the 4th quarter of 2017, holding industry share” in the US, CFO Tracey Joubert stated. Recall, Blue Moon Belgian White returned to growth in scan data recently as well, including volume up 5%, $$ up 4% for latest 4 wks thru Jul 20 in Nielsen all outlet data. Total Blue Moon franchise grew 1-2% for period. Yet Blue Moon Belgian White and total franchise are still declining YTD in Nielsen data, down 0.2% and -3% respectively. Blue Moon also driving Molson Coors’ international growth, outgoing CEO Mark Hunter shared separately, now available “in more than 20 international markets.”

Then too, Saint Archer Gold has had “encouraging test market performance,” said Mark. It’s “shown great potential” since launching 4 test mkts in Apr, added Gavin Hattersley, current MillerCoors CEO and just-named replacement as Molson Coors CEO. Saint Archer Gold reached $675K in incremental sales YTD thru Jul 14 in IRI mutli-outlet + convenience data, becoming Saint Archer’s 3d largest brand YTD and 2d largest brand for latest 12 wks only behind Saint Archer IPA. Gotta note, virtually every other pre-existing Saint Archer brand besides IPA (+10%) is declining double-digits for latest 12 wks thru Jul 14 in IRI, including Blonde (-26%), Variety Pk (-22%), White (-58%), Seasonal (-56%), Pale Ale (-59%) and Mosaic IPA (-14%). Yet total Saint Archer still accelerated to +40% for period driven by Gold and Hazy IPA launches.

Lastly, while MC has several above premium initiatives that grew thru Q2, including Peroni, Sol Chelada, Arnold Palmer Spiked and Henry’s Hard Sparkling, as well as new Cape Line and acquired craft cos (unmentioned), Leinenkugel and Redd’s declines “more than offset” above premium gains, said Tracey. Total Leinenkugel portfolio $$ and volume declined 17% YTD in IRI MULC.

Several established breweries (and even one craft beer bar chain) are fine-tuning their on-site capabilities and offerings in latest round of brewery news clips. Some are adding new spaces and/or drinks to the menu while others are either substituting or removing things entirely as cos try to determine right own-premise balance.

IN’s Sun King Snags Defunct Thr3e Wise Men Indy Location IN’s Sun King Brewing acquired defunct Thr3e Wise Men location in Indianapolis after the chain filed for bankruptcy late last yr and assets recently went up for auction, co announced and IndyStar reported among others. The space is expected to re-open this fall as Sun King’s 5th location, selling its beer, spirits and even “adult” and non-alc slushies. Sun King is also in midst of celebrating its 10th anniversary, and co-founders Clay Robinson and Dave Colt recently marveled over growth of IN craft beer scene in latest blog post. There are now over 150 breweries in-state including 50 in Indianapolis, that collectively make up 3% of total IN beer sales, and total craft beer now “command[s]” 10% mkt share of IN, they wrote.

CBA’s Appalachian Mtn Won’t Renew Cidery Lease, Lookin’ for New Space CBA’s Appalachian Mtn will not renew its lease for separate 6K sq-ft cidery in Boone, NC, reported Watauga Democrat. But change is mainly due to the need for a larger facility, it seems. “We were only given the opportunity to renew that property for a five-year lease and we need a lot less than that to get what we’re trying to get done,” co-founder and brewmaster Nathan Kelischek told paper. “We need to be operating in a 10,000- to 15,000-square-foot facility, and it has not come to fruition yet,” he added. The cidery lease officially ends May 2020. Yet co’s brewery in Boone remains intact as App Mtn produced “more than 4,000 barrels of beer in 2018,” according to paper. Recall, CBA fully acquired App Mtn in late 2018 after initially striking strategic partnership without stake in 2015.

Green Flash Changing Up Nebraska Offerings, Hours Green Flash is tweaking both hours of operation and additional offerings aside from beer at its brewery and taproom in Lincoln, NE, reported Journal Star. It stopped serving food last mo, instead opting for a Lincoln-based coffee co called Rebelbean to open inside Green Flash facility. It’s also now closed on Mondays and Tuesdays.

HopCat Scraps Own Brews at Grand Rapids Locale; Still Owns Grand Rapids Brewing BarFly Ventures LLC, the parent co of craft beer chain HopCat, has “discontinue[d] brewing operations at the downtown HopCat location” in Grand Rapids, MI, MiBiz reported. HopCat will sell off its 3.5-barrel brewhouse plus other brewing equipment and instead shift focus toward “bringing on some of those local breweries we haven’t had the opportunity to work with before,” BarFly director of marketing Joe Sonheim told paper. “About 25% of taplines were dedicated to in-house beers,” now freed up for added local brews. And 200 sq-ft brewing area will be converted into extra seating area that doubles as a private event space. Co brewed 214.5 bbls in 2018, up from 117 bbls in 2017, paper added, citing MI Liquor Control Commission stats. Yet BarFly Ventures remains the owner of Grand Rapids Brewing Co, a historic brand that was revived in 2012. And HopCat remains a sprawling Midwest craft beer chain with 17 locations total, including 8 in MI as well as Indianapolis, IN, Kansas City and St Louis, MO, Lexington and Louisville, KY, Lincoln, NE, Madison, WI, Minneapolis, MN and even Port St. Lucie, FL.

WY’s Snake River Adds Non-Alc Hoppy Seltzer WY’s oldest brewery, Snake River, is the latest brewer to try out non-alc hoppy seltzer with Snake River Seltzer: Sparkling Hop Water. Product will be canned and available in 12pks online and/or 6pks at Snake River and various WY retailers, co announced. Recall, Lagunitas rapidly expanded production of its Hoppy Sparkling Water within the last yr, planning to make it nationally and even internationally available. MO’s Urban Chestnut also launched a similar product earlier this yr, among others.

Growing thru distribution and building out a thriving on-site brewery retail business can sometimes be seen as opposing beer forces these days, but NY’s Captain Lawrence Brewing debunks that false dichotomy. Based in the north NYC suburb of Elmsford in Westchester County, Captain Lawrence shipped 26-27K bbls in 2018, currently has about 40K bbls of capacity and expects to finish 2019 with volume up slightly and revs up solidly. Having seen some ups and downs in local craft biz since opening in 2006, founder Scott Vaccao isn’t betting on big expansions or fast growth. “Just because I’m doing great this year, doesn’t mean” it’ll continue and co “coud be down next year,” he told Craft Brew News. “I’ll take single-digit-growth for the next 20 years over doubling tomorrow,” he commented.

But he is betting on incremental changes to improve Captain Lawrence’s operations across multiple avenues. Newer construction at the brewery includes a rejiggering of its retail space for on- and off-site consumption, founder Scott explained to Craft Brew News during a recent visit. But that followed a major investment in its canning capabilities. As a result, its can biz is growing quickly at home and farther afield, its off-premise biz in Westchester is up double digits “thirteen years later,” and “retail has just been exploding for us,” Scott said.

Hazy Days at Home as Cans Come On, But Bottled Flagship Still Commands NY Biz Captain Lawrence still sells about 55% of its volume in the NY metro area. Close-in, in Westchester, “cans continue to grow in a positive way,” including Orbital Tilt, an IPA with a hop profile that rotates quarterly. It’s grown to be the co’s #1 12oz can pack overall and its #1 brand outside of NY Metro, where it only sells beer in cans. And a trio of NEIPAs in 16oz cans, each brewed and dropped once per qtr, “have obviously been a huge success” for Captain Lawrence (like so many other small brewers). Those and some other hazy 16oz 4-pks now represent some 75% of the brewery’s take-home biz from its on-site Brew Shop.

However, it still sells lots of glass. And all of it goes thru Manhattan Beer, the co’s sole distrib in the 14 southernmost counties of NY, including NYC, Long Island and the northern suburbs. NYC itself may be “a bottomless pit,” a “monster” that remains difficult to tackle. (Scott quipped: one good account there can sell thru as much beer as all of tiny Rockland County, across the Hudson, where CBN publisher Beer Marketer’s Insights is based.) But Captain Lawrence is navigating its broader home territory with a combo of newer brands/packs and old school favorites. Despite Orbital Tilt’s growth, the co’s lead brand remains (crystal clear) Hop Commander IPA, available in both 12oz cans and bottles. In fact, well north of 10% of the co’s biz (and something like a quarter of its home-mkt volume) remains Hop Commander glass 6-pks in Manhattan Beer’s territory. Overall, bottles likely to slip below 50% of its biz this yr, down from about 60% last yr and 80% the yr before that, Scott estimated.

Can-Only Outside Home, Growing Just About Everywhere Beyond its homebase, Captain Lawrence distributes up and down the eastern seabord, from Mass to Fla (excluding DE, GA, WV and in PA, only in Philly and surrounding suburbs). And right now, all but one of those markets is growing. The co’s having its “best year ever down in the Philly metro,” Scott said, especially with 16oz cans, but also Orbital Tilt and its Kolsch. When the co’s CT/MA sales rep decided to move to Fla, Scott asked him to stay on and the co launched sales there this Jan. Now he’s “crushing it,” Scott said, selling thru lots of those hazy 16oz cans (especially anything fruited). But even “draft is doing better than I anticipated,” Scott said, “for being so far from home.” It’s a testament to how important “getting the right person” is, Scott said. A subpar rep “can break you” as they’re an “embodiment of the brewery.” So far this yr, the only outside mkt that isn’t growing is CT/MA, Scott shared, where a newish rep is just getting going. Then too, like bigger NY brewery Brooklyn, exports to Sweden have been “such a bright spot” for Captain Lawrence, especially after placement of fruited session IPA, Grapefruit Effortless (which beat out Ballast Point for its placement in 400 stores there) and flagship Hop Commander.

Adding On-Site Capabilities Keep Customers Longer; Spirits Line Currently in Works Captain Lawrence’s 9 sales folks are among a total of about 40 employees now, including part-time on-site staff and 12 in production, Scott told us. Last summer, the co moved its entrance and set up a new Brew Shop for off-premise sales, growler fills and merch as well as a larger Beer Hall. Over the years, food options evolved slowly, Scott explained, starting with food trucks before offering a small in-house menu and growing to what is now a full-service kitchen serving personal pizzas, sandwiches and snacks. “Lighter beers,” like the co’s 6th Borough Pilsner, Kolsch and others, “and our IPAs tend to be our biggest sellers” in the Beer Hall, Scott said, with the lighter offerings “usually our number one.” Its on-site biz has grown considerably by “adding in food and giving the customer the ability to hang out longer.” In turn, that’s led to “more retail take-home sales.” The Beer Hall just started opening for Friday lunch this summer. The co worked toward installing AC in the space on the day of our visit.

Also being installed during CBN’s visit: key equipment for co’s new venture, Current Spirits. That’s name of coming distillery the co will open next door, with window from tasting room showing off the shiny new high-end still. Paperwork in hand, Scott’s “hoping to be distilling in the next three months.” The co’s “goin’ for it,” he said, with plan for a line of canned cocktails, distilling beer bases aged in off-site barrels and eventually opening a “tricked out” speakeasy-style tasting room upstairs.

For 1st 4-wk period in quite some time, short-term craft trends better than yr-to-date in Nielsen off-premise scans. But $$ growth remains sluggish, volume still soft and seltzers keep gettin’ all the glory. Craft $$ up 0.9% for 4 wks thru 7/27 in broad all outlet data from Nielsen, a touch better than 0.7% gain YTD. Short-term volume also better but still negative, -0.1% for 4 wks vs -0.6% YTD. Despite much greater availability of large pack sizes in craft, often at lower (in some cases, much lower) price/case, average craft prices still up 35 cents/case, about 1% for 4 wks.

Improvement in July driven by better trends for a couple of larger brands. Over a 9-pt spread between Sierra Nevada’s 4-wk and YTD volume trends, with cases up 6.9% for 4 wks but still off over 2% YTD. It’s been in the black for each 4-wk period since early June. New Belgium also keepin’ up strong off-prem trends, volume +8.4% for 4 wks, now up over 6% YTD. Sam Adams remains a drag on craft growth, but now off high single-digits last few periods vs double-digit declines earlier in yr. All 3 brand families were down or down more sharply at this time last yr. Also improving this summer, Blue Moon franchise, driven by 7% volume gain for flagship Belgian White for 4 wks. Leinie Shandy decline cut in half over last month, still off 11% for 4 wks. No change for Shock Top, down 30%. So those 3 brands, included in Nielsen off-premise craft data, down a combined 7.5%. Pull out all 6 large brand fams and rest of segment up 1.7% for 4 wks.

Even with some brighter spots in last month, craft can’t slow the seltzer train. Nielsen-defined craft lost 0.5 share of beer $$ for the last 4 wks, as a 40% gain for the FMB segment pushed total beer $$ trend to +5.6%. FMBs picked up over 3.7 mil new cases in just 4 wks thru 7/27, gained over 3.3 share of beer $$ to 12.9, almost 2 pts bigger than craft. Up almost 2 share of $$ YTD, now less than 2 pts behind craft.

Not much has changed for indie craft brewers’ collective growth trend so far this yr, according to the Brewers Assn. BA-defined craft brewers collectively grew 4% for 6 mos thru Jun 2019, BA chief economist Bart Watson estimates based on midyear survey results. “Growth continues to follow a similar pattern we have seen in the past few years, with steady rates in the low-to-mid-single digits,” Bart stated. Recall, BA craft grew 4% in calendar 2018 as well, to an estimated 25.9 mil bbls (see Apr 10 issue) including up ~5% thru first 6 mos. Suggests BA craft on pace for another 1 mil-bbl gain to nearly 27 mil bbls in 2019. Total US beer shipments (including FMBs and cider) were down an estimated 0.8% for 6 mos thru Jun 2019, we estimate based on taxpaid shipments and Beer Inst data.

Regionals “Slight Decline” vs Microbreweries and Brewpubs Accelerating “The majority of growth continues to come from microbreweries, taprooms, and brewpubs whereas the distribution landscape remains more challenging for regional brewers,” Bart noted. Indeed, BA regional craft brewers (15K bbls and above) were flattish in 2018 and Bart expects them “to see a slight decline” in 2019, he added in blog post “analyzing midyear craft brewing growth.” Yet microbreweries and brewpubs are accelerating a bit, based on those that responded to midyear survey (collectively growing 2.5 pts faster than last year, even when eliminating brewers under 1K bbls). This yr, BA craft volume was only up 1.7% thru 1st half 2019 in natl IRI multi-outlet + convenience data (see Jul 18 issue), suggesting another 2 pts of BA craft growth came from combo of indie channels, taproom/own-premise sales and traditional on-prem. Bart’s assuming “similar” volume growth of “at-the-brewery-sales” in 2019 (+13%, 400K bbls to 3.5 mil bbls total), he detailed further via blog post.

7,480 Active Breweries Thru Jun 2019; 2500-3000 More In Planning Then too, pace of new brewery openings hasn’t slowed either and continues to factor into BA craft growth as well. There were 7,480 active craft breweries as of Jun 30, up from 6,464 year prior. And between 2,500 and 3,000 breweries are “in planning,” sez Bart, based on TTB brewery license stats. While these industry dynamics make it difficult for an increasing number of US craft brewers to find growth, BA seems to think this is likely how craft landscape will lay out in next phase. “Overall demand for beers from small and independent brewers continues to increase, but at levels that make it difficult for all breweries to grow simultaneously,” he noted. “This is a sign of a maturing market that will likely continue in the coming years.”

After opening in 2015 and quickly building a portfolio of several local TX beer, wine and non-alc bev suppliers, San Antonio-based Hops and Vines Distributing sold to an Austin-based investment co, Fountain Square Industries, which already owns TX wine distrib Ambiente, San Antonio Current reported. Hops and Vines CEO and founder Tristan Maldonado “will remain with the company” and Hops and Vines will join forces with Ambiente. “We look forward to enhancing their growth through our collective infrastructure, technology and distribution footprint,” Ambiente CEO Joseph Thomas told paper. Hops and Vines lists nearly 20 local brewery partners on its site including Freetail, Celis (recently bankrupt), Pedernales (not selling much product for distribution currently since most of its outside production was happening at Celis) and Hop and Sting (upstart co that acquired Grapevine Brewing last yr) among others, as well as 5 wine brands, 2 non-alcs.

Meanwhile, Fountain Square Industries sez it “was created to invest in platform companies, with the plan of operating the business for the long term and making additional, add-on acquisitions across adjacent products or services,” on its website. It acquired Ambiente Wine of Austin in Nov 2016 and has since made multiple deals thruout TX, including La Cigale Wines of Fort Worth (Jun 2017), Noble Wine Imports of Austin (Feb 2019), Jeroboam Fine Wine & Spirits of Dallas (Mar 2019) and now Hops and Vines Dist (Aug 2019). These are the only investments listed on firm’s website.

After 2+ yr hiatus, AB is back in the biz of buyin’ US craft brewers. The latest: Cleveland, OH-based Platform Beer Co, a fast-rising regional star since opening in 2014 (as sibling pub INSIGHTS Express reported earlier today). Platform more than tripled to 20K bbls in 2017, grew to 27K bbls in 2018 and expects to sell north of 30K bbls in 2019, co-founder Paul Benner told CBN (shy of its initial expectation to reach 40K bbls, as detailed in Crain’s earlier this yr, tho still up solid double-digits). Since opening, Platform expanded into 4 facilities across OH (another two coming soon, including one in Pittsburgh, PA), while brewing a wide variety of beer styles and bev offerings across the map including all types of “unique” lagers and ales, barrel-aged and sour brews, as well as coffee, cider, and even hard seltzer launched earlier this yr. So Paul and co-founder Justin Carson will continue “to lead day-to-day operations,” utilizing access to AB “resources” while keeping “autonomy to bring our vision for Platform Beer to life,” per release. As it integrates into AB, Platform now positioned for another growth spurt.

90% of Sales in OH; Moving from Self-Distribution In many ways, this deal is about adding strength in OH, acknowledged AB Brewers Collective prexy Mika Michaelis, who called the deal “a great fit.” Platform sells 90% of its volume in its home state, all of which is self-distributed or sold on-site at its various breweries in Cleveland, Columbus and Cincy, Paul shared. Gotta note, AB lost about 1/4 of its volume in OH since 2008; down from 5 mil bbls to 3.8 mil bbls in 2018. So Platform will be a welcome addition to AB’s OH distrib network once that transition is made. Mika also touted Platform’s branding and design that “stood out” in the mkt. And “we are inspired by their experiential mindset,” said Mika in released statement. AB was “looking for” this kind of oppy, he added to CBN. Platform’s 20-person sales team in OH alone will be freed up to allocate more time toward actual selling vs taking orders, he added. There are some distrib footprint issues elsewhere, including in NY, NJ, IN among other states. But it’s such small volume elsewhere that perhaps it’s mostly a non-issue.

“Experiential Mindset” Will Continue “Absolutely,” retail will continue to be big part of Platform’s growth strategy going forward, said Paul. Platform currently operates small breweries/tasting rooms in Cleveland, Columbus and Cincy (LOCOBA coffee barrel-aging brewery), as well as its 120K sq-ft, 60-bbl brewhouse production facility in Cleveland. Its Phunkenship sour facility is expected to open within 60-90 days in Cleveland as well, and Pittsburgh, PA pilot brewery and taproom now expected to open in Q1 of 2020, Paul shared. And Platform positioned to continue adding retail when/where it chooses as co adds new mkts thru distribution in tandem thru AB network. Tho distribution sales still represent majority of co’s revs vs on-site sales, said Paul. Platform’s growth has been “testament to our model,” he added. Having local presence, being an “early adopter” of trends, “try[ing] new things,” utilizing data “to make decisions,” including everything from scan trends to taproom sales, and looking to bring in trending styles from elsewhere into core mkts are key factors.

AB Acquired Craft $$ Up 17.5%, Vol Up 21% in IRI Thru Jul 14 AB’s acquired craft brewers are already collectively the #1 craft player in IRI collectively (excluding Blue Moon, Leinie, Shock Top). And they’re far-outperforming the segment as a whole. Volume up 21%, $$ up 17.5% yr-to-date thru Jul 14 in IRI multioutlet + convenience, even tho largest member Goose Island down 2% by volume and almost 6% by $$ (similarly, Blue Point volume down 1%, $$ down 6% YTD). Elysian is keeping up 20% plus growth rate YTD, pulling away as AB’s largest craft brewer by $$ in scans (over 1/4 of total $$). Fastest growth comin’ from Wicked Weed ($$ up 190%), Breckenridge (+67%), Golden Road craft (+57% excluding Agua Frescas which boost trend over 25 pts YTD). And Karbach (+20%) and Devils Backbone (+15%) each putting up solid double-digit growth in scans as well. 10 Barrel volume still up double-digits but $$ slowed to +5-6% YTD, even including incremental gain from Soft Core Hard Apple Cider. But overall picture in scans is a position of strength in craft, and Platform only adds to the platform.

11th US Craft Brewer; 15th US Deal Since 2011 (Excluding Non-Alcs and Other Zx Deals) This marks AB’s first US craft deal since Wicked Weed deal announced in May 2017, as AB M&A turned to adjacent bev categories and other international mkt oppys in between. Platform is AB’s 11th US craft brewer and 15th US deal since 2011 including Virtue Cider, Spiked Seltzer, Cutwater Spirits and rest of Babe Wine earlier this yr (not even including non-alc partnerships/deals with Teavana, Hiball and other alc bevs such as Kombrewcha, Owl’s, and Drinkworks). AB execs had previously said that co was “pretty much good” with craft partners in the US. And AB did not comment on any further plans for M&A. But gotta wonder if AB’s suddenly back in the mix as a more active M&A player in beer again, or whether this is more of a one-off. While timing of Platform deal could impact decision to buy rest of CBA at this time (see above), perhaps co still willing and able to look for deals elsewhere in craftland. And while lofty sale of ABI’s Australia biz for $11 bil doesn’t factor in until later, that certainly doesn’t hurt AB’s potential flexibility to deal going forward.