CLSA's Caroline Levy bumped Q2 estimate for Boston Beer sales from 18% to 25% growth as "momentum at retail continues to exceed expectations," with Angry Orchard growth and Rebel IPA intro providing the biggest pops. That's well above SAM's guidance of 16-20% growth for 2014. Boston Beer up 33% for 12 weeks thru May 18 in IRI MULC, and factored in with "slower," smaller on premise channel, 25% seems "quite achievable," sez CLSA. Gotta note, Boston Beer slowed in most recent 4 weeks to "only" up 26% in IRI, and tuffer comps comin' up in the latter half of the yr (as Q1 report noted).

CLSA upgraded Boston Beer stock to outperform, and raised full yr estimates "to come in above the current consensus"; EPS from $6.30 to $6.48, and revs from 20.7% to 22.7%. As recently as last week SAM stock had declined to $212/share from a peak of nearly $265 and that "has created an attractive entry point," sez Levy. Since Thursday, SAM stock price up 4-5% to nearly $222/share, tho slightly down today. Twelve mo price target remains $250, now with an "18% upside to our target." Also worth noting, "SAM's strong relationships with wholesalers enable it to get new products distributed almost as quickly as BUD's," sez CLSA.

A&S "Very Strategic" Ventures in "Major Cities" and "Fastest-Growing" Styles; Traveler "More Than Doubling" Lots goin' for Alchemy & Science "incubator," tho not as easy to see from the scan data. CSLA is optimistic about "very strategic" ventures in big city markets such as LA, Miami, and NYC with Angel City, Concrete Beach and Coney Island Brewing, respectively, and fast growing styles with Just Beer (sessionable IPA's) and Traveler Beer Company (shandies). Concrete Beach Brewery set to come on in late 2014. And recall, "for 2014 SAM estimated investments of $5-7m in existing A&S brands," as well as additional $7-9 mil in capital investments.

Tho still relatively small in Boston Beer universe of brands, Traveler is reportedly up big in 2014. It's in about 26-27 states total, sales manager John Dorman told CBN at Traveler Beer Co event in NYC last night. Traveler has been experimenting with more flavors outside of traditional shandy styles too. Recently, co created a grapefruit based shandy (starting Apr 1) called Illusive Traveler that's already their #2 brand, noted John. And all of fall seasonal Pumpkin shandy shipped "in two weeks," last yr. Current seasonal, Time Traveler, is a strawberry shandy that plays a bit on the sweeter side, but "no mistaking that" strawberry smell and taste, A&S brewmaster told CBN. A winter seasonal will be intro'd this yr too that combines traditional winter beer spices with shandy, John hinted. Also, co showcased many different Traveler shandy-based cocktails at the event in NYC. Check out this list of different concoctions they've come up with thus far.  

On separate NCSLA panel, consultant Alex Heckathorn reminded that growlers go back to pre-Prohibition days when they were one of the more negative features of saloon culture, oft-picked up and delivered by kids, and never really disappeared from retail world. But they have recently exploded along with craft brewers. Now growler oppy growing in wine as well and there's potential for spirits growlers too. Net-net: the consumer likes them and producers, retailers and regulators are finding ways to accommodate consumers. Sometimes that's with new statutes, but per usual, regs and rules all over the place and vary widely state-by-state.

At federal level, TTB makes key distinction between "bottle" and a "glass." If container pre-filled before ordered by consumer then it's a bottle that has to be labeled like all other beer (or wine) bottles, including govt warning. If ordered and filled on spot by consumer, considered by TTB to be a "big glass" and fed labeling laws do not apply. (Separate rules for spirits make it much more difficult/impractical for off-premise sales of growlers). Per usual, especially for beer, individual state laws apply and those laws all over the place, including some bans that still exist, like Fla's continued prohibition on most popular 64-oz pkg. Fla follies this spring briefly rehashed by panel.

BA director Paul Gatza pointed to increasing popularity of growlers at brewpubs, tasting rooms, off-premise retail outlets and even growler "marketing sites" that inform local consumers what growlers are available where. For brewpubs/micros/taprooms "cash flow is critical"; growlers create significant cash flow and develop brand interest. Tuff to pin down actual growler sales - he guessed under 2% of craft volume - but clearly a part of craft's 18% growth last yr. (Recall BA economist Bart Watson talked about a 600K figure for brewpub/taproom/micro draft volume growth in 2013, tho small share of that was growlers.)

Difference of opinion among craft brewers re growlers, Paul reminded, especially regarding off-premise sales. Some "like the sales opportunity. Others have concerns about quality," including cleaning, filling, and pressure (also a potential safety concern). Many brewers "believe as soon as beer goes in a growler, quality degrades" tho it "may not be obvious" to consumers. Then too, after years of working draft lines, many craft brewers "concerned about wine on draft and beer running thru wine lines," as well as issues over who can sell growlers and consumer handling. BA recommends consumers open growler within 72 hours of purchase and consume within a few hours after that.

Regulator from Neb suggested that not all craft brewers on same page in his state, tho not too many in Neb. Paul again acknowledged BA members have different opinions on growlers based on their biz models, but state guilds should "come together and unify their position" before they go to legislature to change or pass laws.  

All 4 craft biz owners that spoke on a panel at Beer Insights Spring Conference last week are "very optimistic," as Wynne Odell said, about both their bizzes and beer industry in general. "I don't see that there's any downside of having people excited about the industry," Wynne continued. Ninkasi's Nikos Ridge, Allagash's Rob Tod and Devils Backbone's Steve Crandall joined Wynne on the panel moderated by consultant Bump Williams (see last issue for their comments on franchise). And when Bump asked them about the position of the "Big Two" (AB, MC) and if distribs "pressured" by major suppliers, the optimism didn't fade. AB branches in PacNW are "two of our top five wholesalers" in terms of volume, Nikos said, adding that he "certainly appreciate[s] the system that was built primarily through the growth of those brands." Devils Backbone has "signed on almost exclusively with AB distributors" in Va, Md and DC, Steve said, and "right now they're wrapping big tractor trailers" with DBB branding, 4 of them "that just came into the market."

When choosing distribs, Rob looks for "passion at the very top level of management," folks that are "genuinely engaged with craft," which he's seen become more common even at large houses. Meanwhile, distribs paying up front to get craft brands "hasn't really been super-effective as a strategy to sustain long term success," in Nikos' view. Steve too would "rather see that money invested in our brands." And route-to-market concerns didn't come up when Bump asked about possible "roadblocks" for craft. What did? "Supply of materials," Steve said, particularly the possibility of a "couple of bad years worldwide" for pertinent crops. Wynne pointed to quality, as growing number of bad beer stories "unnerves me." That could "benefit us," she added, seeing the potential for beer drinkers to "come back to safety" in established brands. But "quality is the foundation of craft beer's success." Rob took a different tack. It's "important to resist the temptation to grow too fast," in his view, and "take too much advantage of the opportunities that are out there."  

For most of its 25-yr existence, Odell has epitomized what founder Wynne Odell has called "managed growth," steady, solid low double digit growth (more like mid-teens last few yrs) without helter-skelter expansion. Yet so far this yr, in its 25th Anniversary yr, Odell has taken off. Odell up 29% thru May (had budgeted for 25%). Odell will be "very close" to 100,000 bbls by year-end, Wynne told Craft Brew News. Since Odell sold 78,500 bbls last yr, it would take approx. 27% growth to get to 100,000 bbls. Acknowledging that 100,000 bbls is a "significant marker" and "would be great," Wynne noted that Odell is unwilling to just roll out another state or intro a new brand to get some extra volume. "We don't throw stuff at the wall at all," Wynne said. "We're pretty calculating." Intro in Tex this yr is its first distribution expansion in a couple of yrs.

Texas is a "big deal for us" and it's "going great," said Wynne. Indeed, it's a big chunk of Odell growth so far in 2014. Recall, Odell went statewide with Ben E. Keith in Tex. Odell also has 3 salespeople in Tex and actually had 20 people there when it launched. With its intro into Tex this yr, Odell is now in 11 states. Yet 2/3 of its biz still in Colo, including 16% right in its home mkt of Fort Collins, where it self-distributes. And Odell still up strong in Colo mkt, including 28% growth in 1st qtr. Odell is getting extra shot of growth with AB network of distribs that it transitioned to outside of Denver 18 mos ago. "We still have a lot of opportunity to go deeper" in home mkt.

After completing its most recent expansion, Odell's impressive 130-bbl brewhouse capable of producing 300,000 bbls, if Odell installed fermentation tanks and a 2d lauter tun. So that should be enough for years to come. Its expanded taproom also has large outdoor area with music stage. In a fortuitous circumstance, an intl technology co named Woodward is relocating its corporate hq literally across the street. It's a pretty safe bet that some of Woodward's 1800 employees might occasionally venture to Odell after work. Ya think?

Recall that Odell and its much-larger neighbor New Belgium are located less than 1 mile from each other in what's "often called the Bermuda Triangle of Beer," per Wynne (Fort Collins Brewing forms the 3d leg of triangle). As of December, there were 232 breweries in Colo. Two more breweries are slated to open within that triangle alone. Yet both Odell and New Belgium are off to rip-roaring starts in 2014, their best in yrs. Go figure. And earlier this mo, Odell and New Belgium announced their first ever collaboration beer, called FOCOllaboration, a pale ale. "After working just down the street from each other for 23 years, it seemed the right time to brew something together," Wynne said in release. All these yrs later, craft beer in Colorado is still very much a growth biz, even for its biggest players.  

When was the last time you heard about a company taking a single brand's production facility from zero to well over 40K bbls in about 3 years? Trick question. You haven't. But that's exactly what's slated for Devils Backbone Brewing's Outpost production facility, founder Steve Crandall told CBN. Steve opened the original DBB brewpub on the edge of the Blue Ridge mountains in rural Virginia 6 yrs ago, laying the foundation for what's now the 5th largest craft brand in the state. When the co commissioned its Outpost facility about an hour from the brewpub in 2012, it shipped over 10K bbls by the end of the year. That jumped to almost 25K bbls in 2013 and is headed to the "mid-to-upper 40s" by the end of 2014, Steve said. Capacity came online for 60K bbls in April. By the end of May, the brewery was running at that pace. Steve just ordered a 120-bbl Rolec brewhouse to replace its current 30-bbl system and boost capacity into the 90K-bbl range when it's commissioned a year from now. His original plan called for just 30K bbls at the Outpost in year 10, he told the audience at our conference in Chicago last week. Now Steve and co "think that we can get to about 250,000 barrels" at its current site and that they can "get there by 2020." (!!!) Right now, the co remains focused on Va, Md and DC territory, where it's working mostly with AB network.

Opportunities to attain this growth "may not have been available five or ten years ago," Steve told us. The "focus from the distributors" that his brand has received, as far as Steve can tell, is relatively new, so it was "our good fortune to come in at the right time." Larger brewers "paved the way for guys like us to come in...and be successful," he said. Steve came from a "30-year career building high-end custom homes" in the mountains of Va, he said, and initially built the DBB brewpub as an anchor biz for a 100-acre plot of land he bought, sold and eventually re-bought at the base of Wintergreen ski resort. "It's been a wild ride," and it's just getting started. Steve sees "all these little plums out there that are ripe and ready to pick," but "we just can't go there" yet, he said. "Growth rates" on its brands have "just been astronomical," according to Steve. Lead brand Vienna lager (yes, a flagship amber lager, about 60% of sales) and Eight Point IPA behind it (20-25%) are growing in "triple digits, certainly." But that's an "unfair number to throw out there," Steve said, as both are "still getting a lot of adoption."

Almost all of DBB's growth so far has been on the back of draft (still about 60% of sales) and 6-packs. But "it's the twelve packs" that can really grow a brand, Steve said. "And we're not even really playing that game yet." Its packaging hall just fully came on line in March, including new 160 can/min canning line. So it missed "timelines for Spring sets" and is looking toward fall. Local Food Lion grocery chain already had DBB brands in 130 Va stores before 2014 and put it in the "Spring sets in all 160 stores in the state." He estimates the brand has about "50% saturation" at this point. Packaged sales in Va alone could be 30-35% of DBB's biz, Steve estimated. He's also seen success at big box stores like Costco and Walmart, where "they're not discounting the beer," he said in Chicago last week.

Devils Backbone fits into group of fast growing craft companies that started as brewpubs. Running a restaurant is "incredibly challenging," Steve said. "If you did the math you would probably not invest in our brewpub," as the "ROI is paltry" already and now "food costs are rising at an astronomical rate." But the pub, DBB's "Basecamp," has made money every year and "laid the foundation for us to build the production facility," Steve said, providing a "slingshot effect," in his view. Aiding traffic to the Basecamp: the Appalachian Trail, running 5 miles away, plus lots of ski-traffic in winter. But Nelson County, home of the Outpost and just about 14K residents, has "got something figured out with alcohol," Steve said. At least 4 breweries, a cidery, "a dozen wineries" and "several distilleries" operate in the county, all building traffic for each other.

Steve's interested in the "cross-pollination" available in making spirits too, so Devils Backbone will break ground on a distillery next to the brewpub in just a few weeks. After 6 months of planning, the distillery (Steve's "pretty sure" it'll be Devils Backbone branded) will take a year to build. So that investment will be on top of the "major financial infusion" made to build out DBB's beer capacity, which Steve calculated to be about $100K per week after hearing Jim Koch talk about the $3 mil/wk Boston Beer is spending on capital expenditure. Construction experience "gives me a leg up," he said, tho he's still sometimes "blindsided" by "all those ancillary items." But that's "what it takes to grow in this business," and it "makes life exciting."  

Common theme when industry meets with regulators at annual conference of state liquor admins (NCSLA) is whether fed/state trade practice laws need to be reformed, given modernization of biz practices and changes in power dynamics since post-Prohibition era. What may have been considered inappropriate in 1934 may not be considered so in 2014. And retailers are lots more powerful now than then and perhaps don't deserve "protected status" they enjoy under state/fed laws. That was context of NCSLA panel on trade practices when Beer Inst counsel Mary Jane Saunders pointed out that on "big brewer front," system "well-organized and monitored." But she voiced "some concerns about national activities by other, smaller entities," implying that some small brewers not always following (aware of?) the rules. Told anecdote of relative who took job as regional sales rep for small brewer but given "no instruction on what he could do or offer" retailers. "A lot of that is going on," Mary Jane suggested, and some players "not paying attention" to the laws and regs. Thus the "playing field is not as level as it should be." Many "assume big brewers are engaged in inappropriate activity when they're not, and that others in industry are acting reasonably when they may not be."  

Here's closer look at just how much Boston Beer portfolio has changed and how fast it is growing. Boston Beer $$ sales up a whoppin' 38% to $240 mil yr-to-date thru May 25 in IRI Multichannel+ Convenience. Total Angry Orchard portfolio up 161.5%, Sam portfolio up 17.5% and Twisted Tea up 15%. Sam Adams makes up just over half (52%) of total company sales in scans compared to 61% last yr at this time. Meanwhile Angry Orchard up to 28% of total co sales from 14.6% last yr. That leaves Twisted Tea at about 20% of co sales. Angry Orchard Crisp Apple has become Boston Beer's largest single brand, with $$ sales greater than largest craft brand, Sierra Pale Ale in this channel (see INSIGHTS Express vol 16, #72).

Angry Orchard is leading company growth again in 2014; it's 62% of total company growth compared to Sam Adams at 28% YTD. Three Angry Orchard brands and three Twisted Tea brands are now top-10 in the company in terms of dollars. Twisted Tea Original is #4 brand for the company ahead of Sam Variety Pk. And it's up low double digits thru May 25. Meanwhile, Rebel IPA launch is also going strong at $11 mil in sales. That amounted to 4.6% of co $$ sales, almost 17% of its total growth, over half its craft growth. Again, this picture of Boston growth just off-premise; mix on-premise certainly different.

Then too, more of Sam Adams sales growth comin' from a smaller number of brands nowadays; only 11 of 40 brands tracked in IRI this yr are actually growing (2 of them are intros) thru May 25 (gotta note, many of the declining brands are very small or next to non-existent in these channels). About 96% of all Sam Adams $$ sales growth came from just 4 brands (75% from just 2 brands) - Sam Seasonal (+29%), Boston Lager (+11%), Rebel IPA, and Rotating Seasonal (+142%). Both Rebel IPA (+$11 mil) and Sam Seasonal (+$9.4 mil) growth more than made up for all declining Sam Adams brands combined (- $8.5 mil). Yet as you'd expect, while Rebel IPA and Seasonals on a tear, lotsa other brands getting scaled back in the process. Each of Sam Adams other IPA products - Latitude 48 IPA (-42%), Whitewater IPA (-57%), IPA Hopology (-100%), Dark Depths IPA (-86%), Tasman Red IPA (-76%), Third Voyage IPA (-81%) are down a combined $3 mil. Also, Sam Variety Pk (-9.5%), Sam Adams Light (-32%), Cherry Wheat (-11%), Noble Pils (-60%), and Blackberry Witbier (-60%) are combined down another $4.7 mil.

All in, Sam Adams total sales are trending faster than they had all last yr, so narrowed focus on fewer brands seems to be paying off. Double Agent IPL (+39%), White Lantern Witbier (+78%), New World Tripel (+142%), and newer BRC Variety Pk make up majority of the rest of Sam Adams growth in scans this yr.  

Current brewery count in US is 2948, according to Brewers Assn count shared by director Paul Gatza at NCSLA conference yesterday (more below). Nice, round 3000 number could be hit by June 30, he said, and 3200-3350 by the end of the yr. Oh, and currently 1915 in planning. So by time of CBC in Portland next yr, count likely to be 3500.  

Tho not a volume play, there're plenty of examples from both large and small craft cos across the board making "beers infused with herbs, fruits and spices" as an alternative to hops, reported Bloomberg Pursuits Magazine. This is a throwback to the Middle Ages when "before hops rose to dominance (in the 16th century), brewers flavored beer with whatever grew around them: seasonal fruits and medicinal and sometimes hallucinogenic herbs," noted mag. Hops then "were difficult to come by."

"Trend is centered…in the San Francisco Bay Area," where a handful of micros - Moonlight Brewing, Almanac Brewing, Calicraft Brewing, and Fort Point Beer Co. - are leading the way. Examples include use of an herb called mugwort, redwood twigs, pluots ("a plum-apricot hybrid"), yerba santa ("a medicinal herb used to treat respiratory ailments"), "anise hyssop, lemon verbena, and Meyer lemon leaf," to name a few. But it's not just happenin' in San Fran' and some sizable brewers such as Sam, New Belgium, Dogfish and Odell all have brews in their portfolio using medieval (or even pre-dating medieval) recipes, Bloomberg noted.  

Two highly successful brewers, who are taking victory laps of sorts this summer sat down for interviews recently to share their views on direction of craft industry. Ken Grossman, founder of Sierra Nevada, is ready to enjoy his "Beer Camp Across America" to celebrate launch of its east coast brewery in Mills River, NC, and Keith Villa, founder/brewmaster of Blue Moon is enjoying its gradual growth into a global brand as Blue Moon exports to England, Ireland, Puerto Rico, Virgin Islands, Japan and Australia.

Ken on Beer Camp Tour, "Knock Off Products" Ken's "Beer Camp Across America" celebration coming to 7 different cities has "been amazingly difficult," and "really taxed everybody at a pretty high level," he told Men's Journal. Besides the "logistically-fraught festival," as mag called it, "it's been really hard developing 12 recipes, working with 12 brewers" and coming up with new artwork for the collaborative brews being made to mark occasion too, added Ken. He noted that back in the 80s, "I knew every single brewer in the country by first name," but now with 40 new brewers coming on each month there is no way to know 'em all or sample their beers. Asked with all this fast-paced growth if craft is still "really one big happy family," Ken noted, "the brewing industry has always been pretty competitive and challenging." Craft "is in a pretty heady place right now," said Ken, and that has brought in "hundreds and hundreds of people now who would love to call themselves brewers," and that has led to "a lot of fighting over shelf space and over tap handles and all those kinds of things." As competition intensifies, he told mag recipe theft is an issue too. "There's been a lot of that actually. It's happened over the years, pretty much from the biggest brewers - they have had knock off products and some of them really, really close to some of the craft beers over the years," said Ken.

Keith on Quality, IBU Bull From perspective of a larger brewer, "there is a quality problem," currently in craft industry, Keith told just-drinks.com. "There are a lot of inferior beers out there, but if you talk to the brewers that make them they think they are making the best beers in the world," said Keith. He said he doesn't hide fact that Blue Moon is owned by MillerCoors and noted "most craft brewers would love to have the facilities" he has access to. He noted at MillerCoors labs he has analyzed "numerous IPAs" and found "they often have a lot less" IBUs then they claim "because they are not legally obligated to verify that." While Blue Moon is not considered a craft by many, including the BA, which Keith doesn't follow since "they change the definition about every three or four years," he believes "Blue Moon is a craft beer," and "it comes down to the consumer" to decide. "It's like a work of art - you know it when you see it. We let our beer speak for itself," he added.

No Pot, Sez MillerCoors Keith continues to enjoy experimenting with new ingredients and gets inspiration from chefs. Besides beers with bacon, chocolate, a "wine-beer hybrid," he is also interested in working with marijuana. "Marijuana and hops are actually cousins as far as plants are concerned," noted Keith. "As a botanist you can graft a hop plant onto marijuana and it'll actually grow on the hop plant," he added. "We can do small experiments" in Colo, since its legal there, he told just-drinks. But MillerCoors in a separate statement made clear that it "has absolutely no intention of brewing or selling a marijuana beer," Blue Moon or otherwise. Two highly successful brewers, who are taking victory laps of sorts this summer sat down for interviews recently to share their views on direction of craft industry. Ken Grossman, founder of Sierra Nevada, is ready to enjoy his "Beer Camp Across America" to celebrate launch of its east coast brewery in Mills River, NC, and Keith Villa, founder/brewmaster of Blue Moon is enjoying its gradual growth into a global brand as Blue Moon exports to England, Ireland, Puerto Rico, Virgin Islands, Japan and Australia.

Ken on Beer Camp Tour, "Knock Off Products" Ken's "Beer Camp Across America" celebration coming to 7 different cities has "been amazingly difficult," and "really taxed everybody at a pretty high level," he told Men's Journal. Besides the "logistically-fraught festival," as mag called it, "it's been really hard developing 12 recipes, working with 12 brewers" and coming up with new artwork for the collaborative brews being made to mark occasion too, added Ken. He noted that back in the 80s, "I knew every single brewer in the country by first name," but now with 40 new brewers coming on each month there is no way to know 'em all or sample their beers. Asked with all this fast-paced growth if craft is still "really one big happy family," Ken noted, "the brewing industry has always been pretty competitive and challenging." Craft "is in a pretty heady place right now," said Ken, and that has brought in "hundreds and hundreds of people now who would love to call themselves brewers," and that has led to "a lot of fighting over shelf space and over tap handles and all those kinds of things." As competition intensifies, he told mag recipe theft is an issue too. "There's been a lot of that actually. It's happened over the years, pretty much from the biggest brewers - they have had knock off products and some of them really, really close to some of the craft beers over the years," said Ken.

Keith on Quality, IBU Bull From perspective of a larger brewer, "there is a quality problem," currently in craft industry, Keith told just-drinks.com. "There are a lot of inferior beers out there, but if you talk to the brewers that make them they think they are making the best beers in the world," said Keith. He said he doesn't hide fact that Blue Moon is owned by MillerCoors and noted "most craft brewers would love to have the facilities" he has access to. He noted at MillerCoors labs he has analyzed "numerous IPAs" and found "they often have a lot less" IBUs then they claim "because they are not legally obligated to verify that." While Blue Moon is not considered a craft by many, including the BA, which Keith doesn't follow since "they change the definition about every three or four years," he believes "Blue Moon is a craft beer," and "it comes down to the consumer" to decide. "It's like a work of art - you know it when you see it. We let our beer speak for itself," he added.

No Pot, Sez MillerCoors Keith continues to enjoy experimenting with new ingredients and gets inspiration from chefs. Besides beers with bacon, chocolate, a "wine-beer hybrid," he is also interested in working with marijuana. "Marijuana and hops are actually cousins as far as plants are concerned," noted Keith. "As a botanist you can graft a hop plant onto marijuana and it'll actually grow on the hop plant," he added. "We can do small experiments" in Colo, since its legal there, he told just-drinks. But MillerCoors in a separate statement made clear that it "has absolutely no intention of brewing or selling a marijuana beer," Blue Moon or otherwise.