The html-monkeys thwarted us again: two-thirds of Great Lakes Brewing's biz is pkged vs a third draft; a question-mark appeared in our last issue instead of the fraction.  

New York brewers have a pretty powerful friend in Albany. With alc bev industry-focused Summits, farm-producer bills, consumer-facing promotional events already in the bag, NYS Gov. Cuomo announced a "NY Craft Brewer Workgroup" this week to build on those efforts and further support "growth of the state's craft beer industry." The group, with members from agriculture and academia plus Brooklyn Brewery co-founder Steve Hindy, Empire Brewing founder/state guild prexy Dave Katleski and others, Chris will work towards the gov's goal of developing "a single point of government contact for assistance" with regs, licenses, taxes, etc.  

Can't reporters get anything right? A pair of pieces posted to industry blogs recently respond in somewhat exasperated tones at times to constantly recurring, less-than-totally-accurate themes of mass media reports of small brewer growth. For goodness sakes, local news reporters, stop asking Brewers Assn chief economist Bart Watson about any supposed impending bubble burst due to the growing number of breweries. That's the underlying sentiment of post this week, but Bart calmly works towards "dispelling the notion that reaching 3,000 breweries means the country simply can't take any more." The key: "most breweries are small and locally focused." Bart breaks out breweries in Calif and Oreg (about 20% of total US breweries, by the way) based on bbls sold during 1st qtr of the yr. About 30% of Calif breweries and 45% of Oreg breweries sold less than 100 bbls in the first 3 mos of 2014. Another 54% of Calif breweries and 44% of Oreg breweries sold less than 1000 bbls. So about 85-90% of breweries in each state are on pace to sell less than 4000 bbls this yr and averaged about 200 bbls sold during the 1st qtr. "Just for fun," Bart notes that even if the US got to 10K breweries at an avg 800 bbls/yr, the group would still have just 4 share of a 200-mil bbl beer market. Further, 88.5% of Calif breweries sold all of the beer they produced in-state in 2013, Bart showed in follow-up graph shared on Twitter. An additional 3.8% sold over 90% of production in Calif.

Separately, the folks over at hop merchant 47 Hops noticed "a lot of talk lately in the media about crazy hop prices and the end of Craft Beer in the United States." So they've taken to the co's blog "to show how absurd the hype is about hop prices killing the craft trend," per a post earlier in the month. After asserting in that post that the growth of craft and current craft pricing will be able to absorb increases in hop prices likely to come, the 47 Hops blog digs into limited availability of proprietary varieties this week. This is part of the hop story CNBC touched on in recent, much-recirculated piece that presented both viewpoints: frustration from those having trouble accessing certain varieties and opinion that rising prices due to these proprietary varieties is "a little bit of mischaracterization." The latter is not the opinion of 47 Hops, which is asking folks to "#freethehops" in its post this week. Pros and cons of opening up varieties like Citra and Mosaic to bigger group of growers can get touchy in the fairly insular hop community, as evidenced by this post. But seeking more voices to join in the conversation, as the hop merchant hopes will happen, implies a need for more accurate information shared thru broader channels. Taken together, these posts recognize an odd but persistent tinge of fear present in some coverage that craft trends will all of the sudden turn irreversibly south regardless of how well the category continually performs.  

It's not just ex-brewer execs who are playing in craft these days. We got to looking at some recent beer clips and notes and realized a trio of ex-beer distribs, who each sold lots of mainstream beer in their respective times, are making a name for themselves on craft brewer side of the biz these days. In the news over the last few weeks were the Pearlstine family, which sold its 6-mil-case AB house in Charleston, SC in Dec 2012 and are now investors in Palmetto Brewing, and the Crowley family in Conn, which sold its interest in Dichello Dist (6-7 mil cases) and now part of Stony Creek Brewery ownership.

But the inspiration for this article came from a note we got from Wormtown Brewing's managing partner David Fields pointing out the tiny Worcester, Mass brewery took the top position in The US Open Beer Championship. David sold his interest in Consolidated Bevs - a 3.2 mil case AB house in Auburn, MA - to Quality Bevs (already a part owner) in Sep last yr. David invested in Wormtown day before his contract ran out with Quality at the end of the year, joining founding partners, restaurateur Tom Oliveri and brewer Ben Roesch. We'd never heard of Wormtown; it sold 2,476 bbls in 2013, is trending over 3K this yr and is about to open a brand new brewery. Turns out folks at US Open never heard of 'em either. Dow Scoggins, who runs competition, told David when Wormtown won its first gold medal this yr that his first reaction was he wasn't aware of Wormtown. Dow made "mental note" to look 'em up after the 2d gold and then realized after the 3d gold that this could be first time overall winner was a brewery he'd never heard of, David told us. In the end, Wormtown beat out some pretty well-known and highly regarded competition. Stone and Deschutes tied for 2d. Also in top 10: Blue Point, Sprecher, Rahr & Sons and another Mass craft brewer named Boston Beer.

As managing partner, David is "overseeing the growth" of the biz, helping manage construction of new brewery about to open in next 4-7 weeks, meeting with distribs and customers. So what's the biggest difference between running a 3.2-mil-case distributorship and working with a 3000-bbl craft brewer? Colonial had 85 employees; Wormtown has 4, David told CBN. Consolidated was one of first AB houses in New England to break AB exclusivity (with Magic Hat and Sierra Nevada in 2006) and had grown from 2 mil cases in 1985 when David's dad bought it and Bud Light about to take off. But the "blocking and tackling, the nuts and bolts, are the same, with one exception." Macro brewers have taken over most of the "local decision making" in beer, David sez. A lot of the local "creativity," once determined by distribs, now decided by the brewer with very specific targets, goals, executions and acronyms. Wormtown "can be much more nimble. We can make it up as we go," with three guys deciding on the beers, the packaging and more: "We don't go thru a lot of hoops or hurdles."

David started with Consolidated back in 1996, was named equity manager in 1999. Although his dad (who started with Narragansett in 1971) said he wished David was around when "[the beer business] was a lot fun," David, who's got friends in banking, insurance, etc, sez beer is "still a lot of fun. A lot of good things can happen on a bar stool." About half of Wormtown's biz is with its Be Hoppy IPA and almost all is in draft. But new brewery, with 30-bbl brewhouse, will be packaging from day one, have 6000-bbl capacity initially, expandable to 30K. Wormtown sells in most of Mass with 4 AB houses (2 Quality distribs, Girardi and Williams), one MillerCoors (Burke), now selling about the same volume in Springfield as in home mkt of Worcester, where it does "very limited" self-distribution. Needs to fill in North and South shores of Boston and will likely open RI when it does, but "we like to go deeper than wider."

What's the ultimate goal for the 43-yr-old ex-distrib? "Have a lot fun over the next 15 years and then turn over the business to my partners and employees." David's been looking at the ESOPs in craft beer, most recently involving much larger Mass competitor Harpoon, and tho no decision made, "my hope is that in 15 years to turn it over to people who have worked so hard for us."  

 Confirming what most folks already know or think about craft, results of recent Mintel Research survey show big upsides for craft brands from suppliers of all sizes. Total 2014 craft sales could hit $20 bil, "including craft-style offerings," (likely brands like Blue Moon, Shock Top), Mintel reported today. Recall, Brewers Assn pegged craft sales at under $15 bil in 2013; Mintel's expectations represent 110% growth over 5 yrs, the co reports. Interestingly, 55% of those surveyed said they'd be willing to pay more "for craft beer" and that "crafty beer" represents "avenue for considerable growth" for big brewers. Overall, 23% of those over age 22 drink craft, compared to 30% "who drink non-craft beer only." Percent of folks drinking craft lowest in the South, tho still 16% said so.

Importance of beer style growing along with craft: 66% of 25-34 yr olds told Mintel that style "says a lot about you," only slightly lower than 70% who reported brand-choice related to individual's image. Respondents in Western states were more likely to say that beer choice "says a lot about you" than in other regions; 47% of folks there said trying many kinds of beer is "a source of pride." Just over half of craft drinkers use style to make choices, while just less than half look to brands (compared to 56% of non-craft drinkers that find brand important). Midwesterners reported more loyalty to specific breweries than folks in other regions. Only 8% of craft drinkers find label/pkg design important, just less than 13% who choose products that "look cool when the kind of beer they typically drink is not available." "Craft beer is not only a beverage choice," Mintel analyst Beth Bloom said, "it appears to be a lifestyle choice."

Following up on changing craft pricing, those 1.5L magnums of to-be brewed collaborations at Stone's planned Berlin brewery can now be pre-purchased for $30 instead of $50 via the co's IndieGoGo campaign. Stone adjusted a few other perks and has already "made it right" for those that got in early, per ceo Greg Koch's note to fans. A fourth collab beer has already been added to the mix and the campaign has jumped to well over $150K.

Speaking of crowd-funding campaigns, recall home draft beer-dispenser startup Synek looked to gain some early traction via Kickstarter earlier this summer. It raised almost $650K thru the campaign, ended this week, with almost 2200 backers, according to St Louis Biz Journal. It's already piqued the interest of 1000+ brewers worldwide, with "about 75 percent of the top 50 largest brewers already on board," co-founder told the paper.  

After leaving post as sales veep for Firestone Walker, Steve Almaraz to fill new craft-focused position for Reyes Bev Group, indicating continued investments in category from the major US megadistrib. Starting mid-August as Craft Category Development Dir, Steve will work on "improving the company's capabilities against craft beer sales," per RBG, with initial support for brewers handled by RBG Calif operations (Allied, Crest, Gate City, Harbor, and new Unique Craft Solutions). RBG looking for Steve to "advance our current educational programs for both our California sales team and retailers while providing greater momentum to build the craft brands in our portfolio," new ceo Ray Guerin said in statement. Steve started at Firestone Walker in 1999 after time with Wine Warehouse, Shamrock Imports and Shields Brewing.  

Here's a closer look at pricing picture yr-todate. While avg price for a case-equivalent of beer up 55 cents, 2.6% to $21.72 yr-to-date thru Jul 13 across channels, reports IRI, that's mostly driven by trade up, not price hikes, including craft segment. Premium prices up just 15 cents/case, less than 1%, to $20.16. Import prices up 2% to avg $28.16. But craft prices up 3% to just below $35/case, significantly widening gaps with mainstream. Avg craft price up $1/case, so about 20 cents per 6-pk more than premium prices rose, about a dime per 6-pk more than imports.

Gaps are important. Recall that Constellation Brands Beer Div prexy Bill Hackett attributed slowdown in Corona from 2007-2009 to widening price gaps vs domestic premium. And avg price gap between Corona and Bud Light (in supers) went from $9.89 in 2004 to $11.34 in 2007 (07 was first yr of Corona decline). Over next 3 yrs that gap narrowed back about 15% to $9.50-$9.60. Corona volume steadied. Gap ticked back up in 2012 but was still $9.64 last yr when Corona had its best trend since 2006. But with 69-cent avg price hike this yr, gap widened again to just below $10/case. So far that hasn't hurt Corona: it's up nearly 7% YTD in IRI scans.

What about craft-premium price gaps? Craft trends did not suffer as avg price gap in supers widened from $11.50/case in 2007 to $15.30/case last yr, almost a buck/6-pack. That gap opened up another 60 cents/case in supers so far this yr. But while avg craft prices up about 3% this yr, not many big craft brands getting those kinds of hikes. (For many qtrs, top Boston Beer execs have been cautious about pricing guidance, citing competitive factors.) Indeed, Sam Adams Seasonals/Variety Pack prices up about 60 cents/case this yr, vs almost $1 for avg craft hike. Sierra Nevada Pale Ale up 31 cents. Lagunitas IPA avg price down 83 cents, tho still $1.85 higher than Sam Lager. Only handful of top craft brands got that $1/case avg increase, and only 2 in top 20. And while avg craft prices increased about $3.50/case for craft over last 5 yrs, gap between Boston Lager and Bud Light widened by less than 70 cents/case. So it's trade up within craft that's really driving the healthier pricing in the segment as well.  

Craft trends fluctuated slightly over last few mos, but $$ sales still screamin' +23.3% yr-to-date thru Jul 13 in IRI multi- channel + convenience (MULC). That's even while many top craft cos and brands slowed in latest 4 wks compared to yr-to-date trends, including 9 of top 13. Most notable slowdown was Lagunitas: up 55% in latest 4 wks vs 71% YTD thru Jul 13. Not that anyone's complaining about 55% growth, but top brands Lagunitas IPA and Lil Sumpin' growth rates each slowed by over 20 pts in latest 4 wks compared to YTD. Lagunitas still picked up 1.1 share of craft $$ YTD thru Jul 13. Total Boston Beer sales (including cider & tea) up 29% in 4 weeks, 35% yr-to-date. Its top craft brands slowed down too: Sam Seasonal (+11%), and Boston Lager (-2%) each trending 5-10 pts slower than YTD in most recent 4 wks. Sam Variety Pk slightly improved to -7% for 4 weeks, tho down nearly 9% YTD. However, Rebel IPA incremental growth continues to boost Boston. Rebel sold nearly 100,000 cases in latest 4 wks, now over half-mil cases YTD, #9 craft brand in scans. Also up less for 4 wks than YTD: Sierra, New Belgium, Gambrinus, CBA, Deschutes, Bells and Dogfish Head.

SweetWater & Stone Prices Dip, $$ Jump; New Glarus Becomes #25 Craft Vendor Stone and SweetWater were main exceptions in latest period, each up about 10 pts higher for 4 wks than yr-to-date; up 44.8% and 47.3% respectively for 4 wks. Gotta note, SweetWater 420 Pale Ale avg price per case down nearly 4% to $34.79, compared to just 1% drop yr-to-date. Stone IPA avg price down 2% in latest 4 wks; it's been consistently down 1%+ all yr and still has one of highest avg case prices, over $44. Another co that accelerated growth (slightly) in latest period was New Glarus. It became a top-25 overall beer vendor (top-13 craft vendor) in scans despite selling in single state. New Glarus up 22% in latest 4 wks, +20% YTD. Harpoon previously held that #25 spot for all of 2014, and had been growing at consistent 20% clip all yr until it slowed in May. Gotta keep in mind tho that IRI has never been great indicator of Harpoon trends. Rest of top craft cos $$ trends up double-digits YTD aside from Craft Brew Alliance (+8%): Sierra Nevada (+11%), New Belgium (+43%), Gambrinus (+10%), Deschutes (+13%), Stone (+33%), Bells (+40%), SweetWater (+39%), Long Trail (+14%), Dogfish Head (+31%).

10th IPA Enters Top-30 Brands: Ninkasi Total Domination IPA Then too, Ninkasi Total Domination IPA (+27%) managed to sneak into the top-30 craft brands for 1st time despite slower trend in latest 4 weeks, marking the 10th IPA in the top-30 list. It knocked Lagunitas Seasonal off the list, which recall, actually was down low double-digits for 4 weeks thru Jun 15 (still up 37% YTD). Ninkasi Total Domination prices also dipped in 2014, down 3% YTD thru July 13. Only other top-30 craft brand with lower price in scans YTD is Lagunitas IPA; $$ sales +57% in latest 4 wks tho still up 72% for 13 wks, 78% YTD.  

Was Discovery Channel's Brewmasters series headed by Dogfish Head founder Sam Calagione simply ahead of its time? Perhaps so, as History Channel will begin airing Dark Horse Nation on the 29th, focusing on Mich's Dark Horse Brewing, according to local Fox station. It joins Brew Dogs from Esquire Network, which follows American travels of BrewDog founders.