Tensions between traditional on-premise operators and alc bev manufacturers operating tasting rooms remain high in Alaska. It’s one of the few states where those tensions have turned into action by state regulators. At end of Aug, Alaska Alcohol & Marijuana Control Office issued proposed new rule adding more specific limitations on “recreational or gaming opportunities” available to breweries, wineries and distilleries. Such licensees currently barred from offering an array of activities to tasting room visitors. New rule extends that to “1) festivals; 2) games and competitions; 3) classes; 4) parties, except for private parties limited to specific invited guests; 5) presentations or performances; 6) other types of organized social gatherings that are advertised to the general public.” AMCO currently accepting comments on the proposed rule for the next month.

Existing rules “already outlaw pool tables, dancing, darts and other games,” as Anchorage Daily News points out. And some local brewery owners shared concerns that, if enacted, this new rule “could hinder business, potentially threatening everything from informal group gatherings to tours of their operations,” the paper wrote. But recall, bar owners in the state have been particularly vocal in their opposition to alc bev manufacturer tasting rooms looking and operating more like bars. Recall, in late 2017, early 2018 some bar owners started pushing back against tasting rooms having seating of any kind (see CBN vol 9, no 13). At that time, AMCO director sought specific interpretation of state law that bars “other recreational and gaming opportunities.” This proposed rule does just that and also seems to take that director’s suggestion to bar tasting rooms from offering “active events,” specifically incorporating a number of the types listed then, like “festivals, classes” and “competitions.”

The Alaska Cabaret, Hotel, Restaurant and Retailers Assn (CHARR) is particularly troubled by alc bev manufacturers solely selling thru tasting rooms without interest in distribution, ADN underscores. The org’s decision to back laws allowing taprooms in 1988 and then 2004 has “kind of come back to bite retailers because they weren’t foreseeing that manufacturers would cut out the other two tiers entirely,” the org’s director (and former regulator) Sarah Oates told the paper. Breweries are also already limited to serving 36oz of beer to a patron and must close at 8pm, beyond “recreational” limitations (including playing music, by the way) and only selling beer made on site.

Echoes of New Jersey Ruling, But What of Recent Supreme Court Ruling? In case a state regulator using the rulemaking process (and not, say, new legislation) to put additional restrictions on the kinds of activities permitted at brewery tasting rooms sounds familiar, New Jersey has been following a fairly parallel path to Alaska in this department. The states differ in many obvious ways, beyond being clear across the country from each other. But they share one very important alc bev regulatory scheme: a population-based liquor license quota.

Furthermore, these restrictions on brewery taprooms may need to be looked at thru a new lens: that of this yr’s Supreme Court ruling that struck down Tennessee’s residency requirement for off-premise alc bev retailers. That’s at least according to atty Andrew Linden of Norris McLaughlin, P.A., who penned an essay specifically questioning the impact of that ruling on NJ’s laws, posted to JDSupra in early Aug. (Our sibling pubs Beer Marketer’s Insights and Insights Express covered the Supreme Ct ruling extensively; reach out if interested in that coverage.) The Supreme Ct struck down TN’s residency requirement as a “protectionist measure...clothed as a police power,” as Andrew summarized. To oversimplify, alc bev laws should be closely tied to a state’s interest in protecting its residents’ health/safety to stand up to a Commerce Clause challenge, the justices found.

Andrew broadened his analysis beyond an interstate Commerce Clause challenge. But considering NJ’s prohibition on breweries offering food and its tour requirement for serving visitors a pint, “what is the rational basis” for either, the NJ-based atty questioned. “It is hard to see any health or safety basis for the prohibition on food,” he argues, especially considering many states require food to be offered alongside alcohol. And “if education is a critical component for on-site consumption (but not offsite sales?) why don’t restaurants have” similar requirements? “Is the tour requirement truly designed to promote health and safety or is it really an impediment to breweries included in the statute to placate other interests?” Notably, it is no secret that pushback from bar, restaurant, casino and other on-premise operators has driven NJ regulators to add new restrictions on breweries, just like in Alaska. Andrew goes on to question other aspects of NJ’s special ruling that added requirements and restrictions on small brewery taprooms, questioning the “legitimate government interest” behind them and concluding that, without legislative action, legal challenges may emerge.

On Sunday, Sep 1, smack dab in the middle of Labor Day Weekend, new Texas law took effect allowing small breweries to sell up to 1 case of their own beer directly to consumers to go. For the first time, breweries in all 50 states could legally sell at least some beer for off-premise consumption. And local press came out in droves to cover the milestone. TV news stations in particular checked in on breweries across the state, showing stocked coolers ready to be emptied just in time for the holiday, Monday. But how big an impact could the change have on the state’s beer sales?

At-the-brewery sales have been notoriously difficult to pinpoint precisely for a number of reasons, not least of all are the TTB’s backlog of monthly reporting on national beer volumes, differences in brewery biz model creating differences in reporting on-site sales volumes and wide variances in how states track this volume, if they do at all. Nationally, craft brewery direct sales were around 1.5 share of total US beer volume, we estimate based on some of these sources and Brewers Assn economist Bart Watson’s analysis. But in large states that represent an outsized portion of beer volume, like Texas, it seems to be a bit less.

California tracks volume “for use at tavern” and state reports pegged that volume at about 250K bbls last yr or just over 1 share of CA’s near 23-mil-bbl beer market. That’s across all breweries, but does not include all brewery taproom sales (again, depending on how breweries operate taprooms or adjacent restaurants, this volume would be counted elsewhere). Total direct brewery volume likely falls closer to 1.5 share, then. But California now has 1,000 breweries. And brewers below the top-5 had over 22 share of total shipments in CA last yr. Texas? Right around 300 breweries and small brewers had just 9 share. In that way, TX is more similar to Florida, which is also nearing 300 breweries and where “All Other” suppliers (below the top-5) had 11 share in 2018. Florida reports peg the combo of brewpub and brewery taproom volume at around 0.8 share of total FL beer volume, or almost 110K bbls of the over 13.5-mil-bbl market.

Now that Texas breweries have a full-suite of own-premise sales available to them, hitting 0.8, 1 or even 1.5 share of the state’s beer market may finally be within reach. That’s 160K, 200K and 300K bbls, respectively (assuming a constant 20-mil-bbl total mkt, a rather generous assumption). But that’s on a full-year basis, not just 4 months of 2019. And considering the attention and numerous celebrations hosted by breweries over this holiday weekend, it’s safe to say that sales so far represent an exception, not a new rule. It remains to be seen how many Texas breweries will make significant changes to their biz model to take advantage of off-premise at-the-brewery sales, like starting limited-release can drops (especially of hazy IPAs), made popular by so many other small (and often, very small) breweries across the US. That said, the additional boost these sales offer probably couldn’t come at a better time for a number of breweries, perhaps alleviating some of the pressure that’s built up for many craft brewers over the last couple yrs.

After terminating Hop & Wine a little over a mo ago, Bell’s brands were officially picked up by Sheehan Family Cos’ Legends Dist of DC effective Aug 30, co announced last week. Recall ongoing saga in VA after Bell’s pulled out of state entirely following Reyes acquisition of Loveland in Richmond last Dec. Bell’s sold as much as 150K cases between 2 Hop & Wine locations (see Jul 25 issue). Gotta note, Bell’s is already with Sheehan Family Cos thruout most of Sheehan’s network including all of NY, NJ, VT, NH, ME, WI and KY, as well as parts of MA, all of SoCal and now DC.

There are several familiar names among top growth cos in Oregon state data thru first 6 mos of 2019. But one OR-based co is seeing a resurgence this yr, leading in-state growth among local suppliers.

Ninkasi +25% in OR; Cans, Innovation and Distribution Focus; 2 Share of OR After a couple yrs of low-single-digit growth in its home state Ninkasi suddenly spurted 25% to nearly 29K bbls in-state for 6 mos thru Jun 2019, according to OR Liquor Control Commission data. Recall, Ninkasi grew 3% to just over 50K bbls in-state last year, tho co declined overall due to tuffer trends out-of-state. This yr, Ninkasi is “seeing strong can growth in Oregon, and saw some good seasonal trends with new beers out this year,” co-founder and CEO Nikos Ridge told CBN. Co’s focused on “distribution fundamentals” and “opportunities to innovate.” Plus, “we also just installed a new larger can line which allows us some new flexibility,” and just broke ground on coming Tumwater, WA location, he added. Unstated, but Ninkasi’s new hard seltzer likely factors into OR boost a bit as well. Gotta note, Ninkasi hit 2 share of OR shipments YTD, not far behind Deschutes (2.1 share, down 0.4), which continues to slip here.

2 Towns Cider and Pelican Now 6th and 7th Largest In-State; pFriem Up 50% & More 2 Towns cidery and Pelican Brewing continue to grow strong double-digits, up 32% and 25% respectively thru first 6 mos. Both at ~15K bbls and 1 share of total OR beer/cider shipments. Gotta note, 2 Towns leapt past several cos since last yr, including Pelican, to become #6 OR supplier in terms of volume. Its hard seltzer brand, SeekOut, factoring into continued growth as well, among top regional hard seltzers in scans so far (see Aug 20 issue). Then too, pFriem has accelerated since announcing sizable brewery expansion plans earlier this yr (see Feb 13 issue). pFriem is up 50% to 9K bbls in OR thru first 6 mos of 2019, just behind FIFCO’s Pyramid/Portland Brewing and Full Sail, each down tuff double-digits YTD. Fort George grew 14% to 10K bbls for 6 mos thru Jun 2019, passing Breakside to become #9 in-state supplier by volume. Breakside flat YTD, potentially capacity-constrained as co searches for new land to build another production brewery. And Buoy Beer (+33%), Ecliptic (+33%) and Sunriver (+16%) each keepin’ up double-digit growth as well, albeit at slower paces than in 2018.

Several Decliners Too; Tuffer Environment All told, several OR suppliers are keepin’ up growth in their home state. Yet an increasing number of cos saw volume slip amid tuffer competitive environment. There’s still plenty of time left in the year for things to change, but a number of smaller brewers that had been growing over the last few years are currently among decliners. Established brands like Deschutes, Full Sail and Pyramid continue to struggle. And both Hop Valley and 10 Barrel are slowin’ down in OR this yr, according to this data (tho unclear how much production for each of those brewers shifted to out-of-state facilities vs last yr). Total OR beer shipments are down 0.8% thru Jun, according to Beer Institute state data and estimates.

Add big-time sponsorships with major league sports teams to the bevvy of resources available to craft brewers acquired by largest US (and global) beer biz. But focusing solely on the NFL team-branded beers released by a set of AB’s craft players misses quite a bit of slow encroachment of craft into the previously big-brand dominated world of beer/sports tie-ups. Numerous craft brewers figure out how to play in their own ways, working around the exclusive sponsorships struck by the biggest brewers with the major leagues.

That increasingly involves connecting with college athletics departments, including at some big, notable schools (with avid alumni networks), as we’ve reported numerous times before (see New Belgium’s work with CSU and NC State, Avery’s partnership with Univ of Colo and more). While large brands like Coors Light and Dos Equis keep placing big bets on college football, smaller brewers are also finding openings. This week, Yuengling struck a deal with Univ of Central Florida to become “the Official Domestic Beer of the UCF Knights,” the co and the college announced. The brewer already has sponsorship deals with Univ of South Florida and FSU. Recall, we don’t track Yuengling with our craft volume stats, but the brewer has increasingly made more craft-like moves and remains a top US craft brewer by the Brewers Assn’s count. Separately, at same time the Univ of Arkansas announced broader availability of beer within its stadium, it announced local Core Brewing and Distilling as its “Official Craft Brewery of the Arkansas Razorbacks” at end of Aug. Core beers will be available during football games this fall and co also sponsoring a trio of the school’s radio networks, for football, men’s basketball and baseball.

Then too, plenty of less formal plays from craft brewers too, not to mention increasing inclusion of craft brands at growing number of college stadiums that serve beer. Take addition of Goodwood beers at the Univ of Louisville stadium this fall, as the Courier-Journal pointed out. Then there’s the collab between Baton Rouge-based Tin Roof Brewing and Austin Beer Garden Brewing, a cream ale launching specifically for this weekend’s LSU vs. U of T game with a release party at ABGB tomorrow, per The Advocate. The Great Dane Pub & Brewing Co created Home and Away mixed 6-pks sporting the colors of Wisc Badgers jerseys and Big Lake Brewing launched pair of specialty tribute beers to honor MSU and UMich teams.

But riffing on local team names, mascots, players and chants can involve more formal deals too. Back in Louisiana, “Who Dat” sits in a unique space as being indelibly tied to the NFL’s Saints without being owned by the team. That opened the door for New Orleans-based Urban South Brewing to strike licensing deal with “Who Dat” trademark owner Steve Monistere, who’d been looking for a local brewery partner to make a Who Dat beer for years, according to NOLA.com. Urban South’s golden ale with the well-known moniker launched last weekend and a handful of the 3-yr old brewery’s beers will be available in the city’s Superdome this fall.

5 Separate AB-NFL Craft Partnerships for 2019 When Four Peaks announced official tie-up with Arizona Cardinals a couple weeks back, that marked 5th partnership with an NFL team AB forged for one of its craft partners. Four Peaks Red Bird Lager joins cadre of AB craft brands sporting official team logos and colors, typically available in stadiums and elsewhere in home markets (at least) and almost always formulated to be “easy-drinking.” See also: Golden Road Whose House?! Blonde Ale with Los Angeles Rams, Elysian The Noise with Seattle Seahawks, pair of Devils Backbone #ATTR brands with Washington Redskins and Breckenridge United in Orange with Denver Broncos, as a sports-focused Forbes contributor rounded-up this week. Note too that the fact all these brands part of the AB universe somehow escaped that writer’s attention (coincidentally on the same day the NY Times omitted Blue Point’s ownership when pointing to coming Brooklyn brewpub). That fact didn’t escape Washington Beer Blog, which took no mercy in its version of the round-up, revealing both no great love for AB and a deep fanaticism for the Seahawks. (Then too, recall AB’s Karbach and its Crawford Bock with the Houston Astros, already a big deal in TX in year-one, see last issue.)

Local Craft Hits it Off with Minor League Baseball As football season starts, that sport dominates recent stories. But craft brewers have successfully teamed up with franchises and leagues in plenty of other sports, perhaps in even greater numbers. Indeed, Major League Soccer is rife with craft sponsorships. (See also our story in the Aug 8 issue, including Deschutes sponsorship of American Ultimate Disc League.) And connections between craft brewers and Minor League Baseball are deep and sometimes years old, as Front Desk Sports highlighted in mid-Aug. The reasons are clear: “the size of the smaller markets match better with the marketing budgets of Minor League Baseball,” BA economist Bart Watson told the outlet. “It makes sense from a marketing perspective since teams are always trying to find a deeper local connection and the same goes for breweries.” Along these lines, there’s the Hillsboro, OR Hops, which had deal with BridgePort for time before switching to partnerships with Deschutes, Crux and Migration; the Wisconsin Timber Rattlers and its longtime work with Fox River Brewing; and of course R&D Brewing’s small brewery in the Durham Bulls park.

Kona’s up and down momentum has been captured in scan data snapshots thruout this yr as lead brand Big Wave and total CBA trends continue to fluctuate. Recall, CBA started off the year in tuff hole; $$ down 9% and volume down 14% thru Feb 24 in IRI multi-outlet + convenience data. Big Wave volume was down 3% at that time going up against tuff comps from big promotion at Publix in Fla, co then acknowledged (see Feb 8 issue). Kona Big Wave went on to rebound big time, in lock-step with its natl marketing campaign, as volume grew 21%, 59%, 44% and 30% in the following 4 wk periods thru Mar 24, Apr 21, May 19 and Jun 16. Total CBA improved to volume down just 1% YTD thru Jun 16. Then Kona Big Wave volume suddenly slipped 2% for next 4 wks thru Jul 14 and CBA fell 11% for period. But Kona and total CBA rebounded again in following 4 wks, as Big Wave volume jumped 43% and total CBA volume improved to 13% (see Aug 23 issue).

Each bump in sales for Big Wave was driven in part by lower pricing, data suggests. Kona Big Wave avg price dropped $3/case to $32.69 for 4 wks thru Apr 21 in IRI MULC, during its biggest growth spurt. Prices were down $2.34/case and $1.51/case for the following 4 wk periods as Big Wave continued to grow double-digits, tho growth rate sequentially slowed. Then Big Wave prices suddenly rose $1.29/case for 4 wks thru Jul 14 and brand slipped back into decline. As Big Wave surged back to growth for 4 wks thru Aug 11, avg price dropped $3.34/case to $31.91. Similarly, Kona Longboard Lager regained spot as top-30 craft brand in IRI foodstores, as volume spurted +40% with $$ up just 22% for 4 wks thru Aug 11. Longboard avg price dropped more than $6/case to $28.50 for period.

Craft Brew Alliance lowered its depletions and shipments guidance from lofty goal of +5-8% to somwhere between flat and +3% in anticipation of co’s off-cycle conference call held earlier today following ABI decision not to buy rest of co. CBA again pointed to “significant retailer out-of-stock issues in key markets” on Kona (which CEO Andy Thomas referenced on Q2 conference call – see Aug 8 issue) as well as “lower-than-planned” contract brewing volumes having negative impact on trends, in rationale for lowering guidance to between flat and +3%. “Since identifying out-of-stock issue in early June, we’ve been actively focused on addressing the situation with positive results,” but “that impact, coupled with increasing pressure from the expanding hard seltzer category, led us to lower our shipments and depletions guidance for the full year,” chief financial and strategy officer Christine Perich explained in statement. Co currently addressing out-of-stock issues with “pilot programs” in Calif, and could “roll out those pilot programs more broadly” if all goes accordingly, said Andy on conference call. And while co initially forecasted 33K bbls of contract volume, that’s now expected to be cut in half, chief strategy and financial officer Christine Perich acknowledged.

Gotta note, it seemed like a stretch goal when CBA first announced initial guidance of +5-8% on both shipments and depletions for 2019. Just last qtr, CBA had positive quarterly depletions trend (+1%) for the first time since 2016. And shipments have declined each yr since peak of 790,500 bbls in 2014; down to 719,400 bbls in 2018. When CBA set initial guidance in Mar, it listed “significant increase in commercial investments and insights from our consumer research” as key reasons for the lift. On top of not fully capitalizing on Kona oppy in Q2, seems pH experiment brands are taking longer to pick up steam than initially forecasted as well. All other aspects of CBA’s initial guidance remain the same, co emphasized. It’s maintaining avg price increase of +1-2%, gross margin rate of 34.5-36.5%, SG&A range between $75-79 mil, cap-ex range between $13-17 mil, and effective tax rate of 25%.

CBA is Playing With Blocks to Unlock Value; Looking at Everything; “Status Quo” Not Acceptable CBA is putting everything on the table while seeking best possible path forward for co and its shareholders, CEO Andy Thomas reiterated to investors on conference call. That includes everything from alternative strategic partners, divestiture of brands, “go-it-alone scenario,” stock buy-backs, and much more. “There’s a belief out there” that CBA is “so intertwined” with AB that it “could never extract CBA, or Kona” from AB system. That’s “not a narrative I agree with,” yet that doesn’t mean CBA is “going to go and sell Kona” either, said Andy. But one thing’s for certain: “status quo” is “not an acceptable outcome,” he stated. “Everything is on the table…not because everything’s fine.” Progress “updates” could be made as soon as “in coming weeks.”

This is a particularly “challenging situation,” Andy acknowledged, agreeing with one analyst who called it “one of the most challenging situations I’ve seen.” Stock price plummeted to single-digits since Aug 23, currently down near 6% to ~$9.20/share today at presstime. That raises the stakes for CBA needing to make some kind of move ASAP. ABI still has say in what happens going forward, with 31% stake, and while ABI interests aligned with other shareholder interests in Andy’s view, CBA timeline to make strategic decision(s) is much more pressing and “urgent.” And at same time, CBA lowered guidance on shipments and depletions for full yr.

Yet investors should still be excited about several aspects of CBA’s biz, sez Andy. The “building blocks” that co has are “still really good blocks,” he said. Kona brand still undervalued by the street (among others) as it approaches 500K bbls, growing high-singles/low-double-digits. And Wynwood La Rubia’s potential could even rival Kona’s globally, in his view. Then too, management has “demonstrated” that “we’re willing to put blocks together differently” and are considering everything from “get rid of or change some of the blocks,” i.e. “divestiture of some brands,” to “total restructure of G&A” spend and more. In the “go-it-alone” scenario, CBA’s G&A would “basically be blown up and rebuilt,” looking to bolster topline growth most of all. ABI has “indicated their intent to be constructive moving forward” as CBA “currently talking to them” to ensure “we don’t have restrictions” on how “blocks are put together.” CBA has some “leverage” with ABI since it accounts for more than $50 mil in gross profit for its distrib network as a whole, Andy added (tho CBA clearly derives a big chunk of its own value from its relationship with ABI, BREW stock price clearly reflects). And lastly, CBA is “actively engaged in talks” regarding all possibilities. Plus, it now has additional $20 mil in the bank that will “stay in cash” for the “short term,” while “keeping our powder dry” and ready for use, chief strategy and financial officer Christine Perich and Andy noted. All in, co is “optimistic” and “confident” it can “put [blocks] together in a way that unlock[s] value,” sez Andy.

Lookin’ for clues as to where craft players see oppys to expand their bizzes these days, just follow the money. Consumers’ money, that is, and the way it continues to rain down on novel on-premise locations that offer alcohol plus a little (or lotta) something else. Brewery taprooms and satellite brewpubs fit that bill and plenty more new locations from breweries announced recently, including homecomings for Highland and ’Gansett, for example. But some on-premise operators are also now turning to the brewpub model in notable locations, while real estate developers see small breweries as valuable amenities and owners of other unique brewing bizzes eye further expansion (with little to none of it likely to appear in tracked retail data, by the by).

Flix Brewhouse Opens 8th Location in El Paso, Announced 10th in OK Development Austin-based Flix Brewhouse doesn’t produce a huge amount of beer, but it told the El Paso Times recently. Up from $45.7 mil in 2018 (see Aug 16 issue). The combo movie theater/microbrewery that opened its 1st location outside Austin in 2011 just opened its 8th location and 5th in Texas in El Paso this month. It sold around 3600 bbls across all its locations in 2018, the Brewers Assn estimates. Each theater aims at annual sales of $7-10 mil and a thousand bbls, Allan told the paper (tho BA estimates suggest at least outlets outside TX don’t quite hit that volume). Newer Flix theaters sit up to 950 guests and serve 6 core concept-wide beers plus a handful of rotating specialties to each location. And Flix ain’t stoppin’ there, announcing its 10th location in Oklahoma City as 1st tenant of coming The Half development, The Oklahoman reported. Count the developers behind The Half, who hope to “connect the city by bringing people together to share experiences and make memories,” the paper quoted, among the many real estate execs who see value in adding a small brewery to much larger plans that often also include living, working, dining/drinking and recreational spaces.

Developers Eye Closing Malls for New (Mulit-)Uses, Including “Microbreweries” Homebrewers are no longer the only folks with microbreweries in their dreams. Town officials and developers considering turning the Voorhees Town Center mall in NJ into an “indoor sports center” think its food court “could be transformed into a modern hangout, complete with microbreweries, widescreen TVs and finger food,” the Philly Inquirer wrote last week. The township’s economic development director wants to “make it more of a Dave & Buster’s type of environment.” Adult recreation; “experiential”; alcohol-plus. This is the broader on-premise disruption of which breweries are just a small piece. The NJ developers are far from alone, as numerous plans for mixed-use development projects that include breweries have shown over the past few years.

And the Inquirer also has some other startling stats about the state of retail. Major retailers have announced shuttering 7,500 outlets so far in 2019, the paper cited stats from Coresight Research. That’s compared to just over 5,500 stores thru all of 2018. Apparel stores are suffering most, according to Coresight, representing over 1/3 of yr-to-date closings. Major retailers have also opened over 3,000 stores so far this yr, likely to surpass the 3,083 stores that opened across 2018. Most of those openings were one of a trio of “general merchandise” concepts with “Dollar” in their names. Meanwhile, mega-malls and high-end/luxury stores have fared better. So a bifurcation at retail to the high-end operators or discount dealers. Sound familiar?

Highland, Narragansett Announce Homecoming Locations; Indeed’s Milwaukee Spot Opens; More Plenty of breweries announcing plans for small 2nd (or 3rd…) taproom/brewpub locations in core markets still too, natch. Tho those sometimes also connected to broader development plans. Take just-announced project from Highland Brewing to open a downtown Asheville taproom in redeveloped historic building. The 90+-yr old S&W Cafeteria building is being spruced up by local entrepreneurs with family ties to the building’s Art Deco designer and then reopened as S&W Market, including food hall that will feature Highland’s first off-site taproom. “I’ve never had an interest in opening a second taproom,” prexy Leah Wong Ashburn said in release, “but this confluence was powerful.” Her father opened Highland in downtown Asheville in 1994, so “we’re returning to where we started,” she acknowledged. Location should open next Spring.

At same time, up in Providence, RI, Narragansett officially announced its planned brewpub in town after closing on the property (see our Jun 28 issue). Co still hopes to get part of location open by late next spring, using this location with smaller brewing system to make specialty/one-off batches. Minnesota-based Indeed Brewing recently opened its Milwaukee outpost, announced late last yr (see Nov 13, 2018 issue of CBN). And in Oregon, Pelican Brewing announced plans for its 4th location, this time in Lincoln City on Siletz Bay, the News Guard reported. The co will redevelop an existing restaurant space with plans to break ground early next year and open in 2021. Pelican operates a production facility and taproom in Tillamook and two coastal brewpubs in Pacific City and Cannon Beach. Inland, in Portland, the city’s Gigantic Brewing announced plans to open satellite taproom in the Northeast quadrant of the city, 7 yrs after opening its small Southeast brewery. It too will be part of a larger real estate development including a small array of residential spaces.

Separately, Orange County, CA-based Gunwhale Ales just moved into larger 9,000 sq-ft space with potential to eventually brew 12K bbls or more on site, the LA Times wrote. Jacksonville, FL’s Main & Six Brewing is doubling its current location 2 yrs after opening, building out into neighboring building with production space, rooftop bar and event space, First Coast News reported. And Arvon Brewing based in the suburbs of Grand Rapids, MI is closing its current location to move into the city by yr-end, shifting focus from production only to a more taproom-centric model (tho it won’t end distribution either), according to Grand Rapids Magazine.

Retailers Turning to Brewing, Too But it ain’t just breweries eyeing on-premise oppys, either. For example, small San Diego-based restaurant chain Puesto Mexican Artisan Kitchen & Bar announced its 7th CA outlet (3rd in San Diego) will be in recently-closed Gordon Biersch brewpub location in Mission Valley. And it isn’t just taking over the place, it’s hiring prior head brewer for that spot, Doug Hasker, so location will be Puesto’s first brewpub, according to NBC San Diego. And out on the opposite side of the country, Portsmouth, NH-based beer bar Whym Craft Beer Cafe closed 6 mos ago to reopen in a larger space outside of town in Hampton, where co is building out a small brewery and going by the name Whym Craft Pub & Brewery, per Seacoast Online.

Cannabiniers/Two Roots officially made its Midwest move, acquiring MI’s Rochester Mills Production Brewery, co announced (see Aug 27 issue). Deal paves way for Two Roots infused THC beers to expand into Midwest, east coast and Canadian mkts, with up to 60K bbls of annual production capacity available, sez co. “As the popularity of Two Roots Brewing Co and Two Roots continues to grow, it has become essential to keep up with demand,” and Rochester Mills “location is key,” stated parent co Lighthouse Strategies COO Tim Walters.

Turns out, one of Lighthouse Strategies’ partners also is an investor in Rochester Mills, so connection was “a bit of good luck in some respects,” Lighthouse CEO Michael Hayford told CBN. Lighthouse already attained proper licensing and pre approval on the cannabis side in MI and had “friendly interest” in aligning missions” on beer side. Rochester Mills Production Brewery sold just 6,500 bbls in 2018, down slightly, with vast majority of its biz in MI, according to Brewers Assn and state level data. So Two Roots will have plenty of room to implement itself and fill capacity within the 46K sq-ft, 60K bbl/yr brewery, expandable to 100K bbls/yr, according to website. Two Roots production outta Rochester Mills expected to be ready to go by early 2020, just as MI recreational cannabis mkt slated to come on line and ahead of IL launch, along with oppy to ship north of the border “in bulk” as well. (Two Roots brews de-alcoholized product at its breweries and ships to separate facility for cannabis infusion).

Rochester Mills Production Brewery opened in 2012 and biz was sold to Cannabiniers separately from the original Rochester Mills Beer Co brewpub, which will “continue to operate as a separate business,” per release. And Rochester Mills Production beers will “remain the same” for now, according to MLive. Tho keep in mind, Two Roots already opted to rebrand one of its other acquired brewer locations, Helm, into a Two Roots brewery & taproom.

“Step Back” on M&A as Cannabis Mkt Sorts Out; Potential Big Brewer Partner This is Cannabiniers 3d brewery acquisition and counting, on top of CA’s Helm, CO’s Dad & Dudes, plus contract brewing agreement for additional 50K bbls/yr with Green Flash. It now has “excess of 150,000” sq-ft of real estate “under management.” Yet with “turbulence” of legal cannabis mkt from capital and valuation side, Lighthouse/ Cannabiniers expects to “take a little bit of a step back in our aggressiveness” on the strategic side in the near term, Michael shared. At same time, there’s “strong interest from multi-state operators” as Two Roots looks to expand into new mkts. And large global brewers are expressing interest in “parallel strategic opportunities” with Two Roots/Cannabiniers as well that ultimately “could create an opportunity to access a system that has residual capacity” and eliminate need for further beer M&A, he noted.

Two Roots Top-4 Brands in NV; CA Could Ramp Up Soon; Total Bev Approach Two Roots is currently sold in roughly 70 dispensary locations thruout NV and CA currently, according to its website. It consistently has each of the top-4 THC beverage brands sold in NV, according to Headset data, and has made inroads in CA mkt since launching earlier this yr. In NV, co’s “continually probing the market” to find different styles, and recently found new hit with Planet Pilsner, made in collab with its biggest retail partner Planet 13 dispensary in Vegas. Calif admittedly moving “a little slower than anticipated” for Two Roots, Michael acknowledged. But with latest BevMo deal for non-alc, non-infused Two Roots beers (see Aug 27 issue), recent partnership with Jetty Extracts for terpene flavored brew, and more, co could see Calif sales ramp up in next 6 mos, Michael added. When all’s said and done, Cannabiniers expects to look more like Boston Beer with a total bev approach. It’s rolling out THC-infused teas (Just Society) and sparkling waters (Creative Waters), while continuing to innovate on beer styles, and constantly “probing” for new oppys. Distribs across the country are showing interest in Two Roots NA beers as well, which serve as “terrific tool to build the brand,” he said. Net-net, “we really are ahead of the curve” and it’s “not easy being that far in front.” But should be “an interesting couple years ahead of us” and “super promising.”

Worcester, MA-based Wormtown Brewery may be the most “under-the-radar thirty-thousand-barrel brewery that’s growing 30%” out there, that doesn’t appear on lists of notable, fast-growing MA breweries, but “maybe it should be.” That’s according to Scott Metzger, founder/once-CEO of TX-based Freetail Brewing who will start as Wormtown’s genl mgr later this month, co announced this morn. Scott spent yrs as one of leaders of Tex Craft Brewers Guild, helping negotiate expansion of brewery privileges at state level while building Freetail’s biz from brewpub to biggest brewery in San Antonio. And Wormtown’s been on a tear, eyeing shipments in range of 31-33K bbls this yr, up well ahead of initial forecasts, just slightly below +30%, managing partner David Fields shared with Craft Brew News. Wormtown brewed about a tenth of that much beer just 4 yrs ago. David and co have built out organization to some 30 employees in that time. “Scott has been hired to maintain the culture that our team has created here while helping to inspire new and exciting ideas,” he said in statement.

Some of most notable stats about Wormtown’s recent growth, including what’s driving its strong gain this yr, were among key reasons that attracted Scott to the company, he explained to CBN. Take flagship Be Hoppy IPA, still over 80% of the co’s biz, both David and Scott told us. That’s down from over 90% last yr thanks to intro of 2 new brands, one smaller and one larger. Masshole Light Lager delivered “a couple thousand barrels for us,” David said. But Don’t Worry, backing up Be Hoppy flagship as a “lower-ABV, lower-IBU, more tropical and a bit hazy” IPA, “greatly exceeded our expectations.” And importantly, “every month” after that tag-along brand to its flagship was in market, “Be Hoppy has grown faster than the month before,” David said. That suggests it’s “not cannibalizing” and is “incremental volume” that’s helping build the flagship. A unique feat in 2019 craft. And that points to further growth, in Scott’s view. David and Wormtown built an “amazing springboard to start some portfolio expansion,” he said. And that springboard “opens up a lot of opportunities for growth when you add on that ‘flagship B’ type of product.”

Wormtown’s biz also still mostly on-premise, north of 75%, according to David. That’s “impressive at that volume,” according to Scott. And all of its beer sold in fairly tight distribution footprint, too. Wormtown opened “one new market” in 2019, launching a couple of counties in Connecticut this May. This was first full-yr in all of New Hampshire and its brands launched in nearby Rhode Island for just a couple yrs. So co’s “really focused on home growth,” David said, but sees “home as being all of New England,” which it hasn’t even filled out yet.

One way the co hopes to go deeper at home: name recognition it’ll get after opening 7-bbl pub/tasting room in Patriot Place, community adjacent to Gillette Stadium, where New England Patriots play (see June 4 issue). That location hopefully on schedule to open early Oct, ideally before Oct 10 home-game against the Giants, David commented. But in meantime, he’s hoping to get permission from town to operate pop-up beer gardens in the area for each Fri and Sat night over next 3-4 wks, before permanent location opens, he shared. Could get the greenlight next week. Patriot Place sees some 6 mil visitors per yr, David understands, bigger than just Patriots game attendance as MLS team New England Revolution also plays there, plus HS soccer and lacrosse tournaments. So location “allows us to introduce our beer throughout New England,” plus to “people who would never have opportunity” to drink Wormtown beer in their home markets, staying in pair of busy Patriot Place hotels to support visiting teams, for instance.

Scott on Transition, Staying in Beer Scott left brewery he founded, Freetail, last Nov and took some time for himself and the family before launching into search for his next step late this spring, early summer, he explained. He “wanted to stay in beer,” but considered other CPG (consumer product goods) cos and “had interest in the cannabis space,” as so many do these days. But the cannabiz “really lacked what I found is special about beer, and not just craft beer,” which is “the stories that brands are able to tell.” In cannabis, company origin stories often revolve around a couple of guys who saw an “investment opportunity,” Scott thought, which is “totally counter to the way the beer industry is and what I love about it.” He found the Wormtown oppy appealing because he “wasn’t interested” in being “viewed as a savior or someone who turned a ship around.” Instead, he sought “a company that had some stability, but also [showed] great growth potential and had a great existing culture that I could be a part of.” Scott found that in Wormtown, plus his wife is from New England, so once she and their kids join Scott in MA, they’ll still be near family.