Isaac Showaki, "who helped co-found 5 Rabbit Cerveceria in Chicago in 2011," before leaving in 2013 (after pretty public disagreements and lawsuit), "has announced plans for a $5 million brewery (Octopi Brewing) on Madison's (WI) Southeast side that will primarily make beer on contract for other beer companies," reported Wisconsin State Journal. Isaac plans to finance the project himself, and has submitted plans to the city "for a nearly 20,000-square-foot brewery," and tasting room. The brewery "would have 10 employees, the ability to make 50 barrels of beer per batch…and in its first year make about 10,000 barrels of beer, 90 percent of it under contract," he told paper. If approved, Isaac "would like to break ground this fall and open in the spring," pending approval. During his time at 5 Rabbit, Isaac was chief operating officer and "oversaw contracting brewing," among other things, noted paper.  

New Ol' Burro Brewery brand for Trader Joe's markets, produced by LA's Golden Road Brewery, will replace Mission St line once produced by Firestone Walker, according to the LA Times. Golden Road will produce 3 styles in the Ol' Burro line for Trader Joe's: a pale, a blonde and an IPA, priced at $5-7 for 4-packs of 16oz cans. Recall, Firestone discontinued its contract production of the Mission St brands as well as Nectar Ales, but also a couple of restaurant-specific brands, the Times wrote. Golden Road took over production of house beers for SoCal casual dining chain Lazy Dog Restaurants late last year.  

There's already been a good handful of new mkt entries and even a notable distrib change announced in 1st week of Jun. Dogfish Head switched distribs in Ariz to Golden Eagle. Colo's Ska Brewing announced it'll enter 1st new mkt in 5 yrs, SoCal, at the end of Jun with Stone Dist. Calif's Knee Deep Brewing entered Mich with Henry A. Fox Dist. Susquehanna Brewing (Pennsy) entered NJ with Banko Beverage and Warren Dist. DESTIHL Brewing (Ill) entered Northeastern Oh with House of LaRose, and also plans to enter 5 more states this summer: Fla, Wash, Oreg, Mo, and Pennsy. Almanac Beer (Calif) announced it will enter Colo with Crooked Stave Artisan Beer Project. And O'Fallon Brewing (Mo) started shipping its beers overseas to Italy.

Then too, in case you lost track of all the new markets craft brewers launched in the last month, we've put 'em all together for you again in one handy pdf. Organized by state, this list includes craft brewer distribution expansions with sales expected to begin by the end of May, 2014, as well as a handful of announced mkt entries coming soon. While it may not be comprehensive, this list includes announcements made by the largest craft brewers and many expansions by smaller players.  

Rumors swirling around Stone's East Coast brewery point to a short-list of about 10 cities, while once back-burnered European set-up could get green light soon, according to unconfirmed VEER Magazine piece out of Norfolk, VA. Prexy Steve Wagner and coo Patrick Tiernan visited a small local brewer in Norfolk, according to report, part of vetting process of potential locations in Norfolk and other eastern cities like Philly, Charlotte, Roanoke and Richmond. Meanwhile, Stone will apparently "soon sign paperwork" for a brewery outside of Berlin, Germany, a project in the works for many yrs now. But Stone remains mum publicly on either project, refusing to provide more information than slips into the rumor mill. Brace yourselves for plenty more such suspicions and hopes.  

Pay packages at 4th largest craft brewer summed to same amount in 2013 as in 2012: $2.347 mil, about 8% higher than 2011. Former CEO Terry Michaelson's compensation totaled $827 K last yr (-4.5%), with salary of $346K (+2.1%), bonus of $139K (-35%) and stock/option/other awards of $341K. Andy Thomas, named CEO in Jan, got salary of $306K in 2013 (+2.1%), bonus of $88K (-14.5%) and stock/other of $204K for total of $598K (+6.8%). CFO Mark Moreland got total package of $477K (-4.2%) and ex-operations veep Sebastian Pastore got $445K (+6.3%). Looking ahead to 2014, CBA execs can get bonuses ranging from 40%-65% of base salary subject to performance goals, which in 2014 limited to "corporate level goals, with 30% of the targeted bonuses tied to achievement of a specified EBITDA target, 30% to achievement of a specified sales revenue target and 40%" to gross margin target.

BREW's stock price, which jumped from $7.55 a yr ago up to peak of $17.78 late last Nov, has fallen back 41% to $10.50. AB still owns 32% of BREW shares, Healy Family Trust another 7.4% (which it got in exchange for its Kona shares back in 2010), and Widmer brothers Kurt and Rob and their spouses have another 11.6%.  

Broad attacks against beer policy generally and three-tier system specifically taken up by Mercatus Center research and op-ed from its authors in US News and World Report this week. These docs join damning op-ed from Generation Opportunity director Evan Feinberg we noted after its appearance in Charlotte Observer (see May 20 issue) and later printed with different state-specific stats by St. Louis Post-Dispatch, Orange County Register and likely others. Pittsburgh Tribune Review joined group this week. Head-scratcher headlines like "Set Southern California Brews Free!" quickly attract social media savvy craft lovers, generally supportive of anything that gets them closer to specialty beers. Sponsored Facebook posts from GO urging states to lower the drinking age to 18 fill in another piece of what seems a broad, concerted effort to participate in debates about beer policy by largely Koch-funded conservative think tanks. No, not either of the Kochs running craft breweries. Both Mercatus Center and Generation Opportunity are heavily funded by groups linked to conservative-backing billionaires Charles and David H. Koch. Charles Koch continues to sit as chairman of Mercatus Center board. Right-leaning GO, which bills itself as a "youth-advocacy organization," is "almost wholly funded" by nonprofits linked to the Koch brothers, according to Center for Responsive Politics.

Big "Barriers to Entry" for Small Brewers? Not So Sez BA's Gatza That's some big money coming to the rescue of small brewers. But it's not clear those brewers or many other industry members would get behind some of the policy suggestions offered by these groups. Small brewers face "formidable barriers to entry," claims Mercatus report titled "Bottling Up Innovation in Craft Brewing: A Review of the Current Barriers and Challenges." Those barriers "limit competition and innovation, reducing consumer welfare," authors Matthew Mitchell and Christopher Koopman argue. Yet these authors don't support "targeted assistance for small or new craft brewers" like those seen in New York, North Carolina and other states, which "create their own set of inequities and inefficiencies." Instead, "policymakers should focus on more direct, effective and less problematic solutions" like "eliminating regulatory burdens for all firms," the authors advocate.

That's not exactly the tack taken by state brewers guilds or the Brewers Assn, which have largely supported such carve outs. Further, "the barriers of entry are not too high," BA director Paul Gatza told CBN. There are a lot of regulations, "but they're not discouraging people from opening breweries," as we've seen. "People are getting a chance to make their spot," Paul continued, concluding that "anyone can do it that's legal." Then too, Mercatus and GO ignore fact that despite alleged barriers, craft biz has exploded, benefitting thousands of entrepreneurs and millions of drinkers.

"Tragedy of Anticommons," "Bootlegger and Baptist" Arguments The report makes a couple intriguing comparisons to economic models of regulation, one ironically depending on a comparison that's truly archaic, a word thrown around a lot in these debates, referring to 3-tier. "Relatively novel" concept of a "tragedy of anticommons," in the authors' view, explains both "robber barons" of Middle Ages and current regulatory bodies with various jurisdictions that "have the ability to exclude access to the craft brewing market through taxation and regulation." Concept applies when multiple bodies prevent or limit access to same resource in different ways. Resulting "tragedy" is an "underutilization of the resource or underdevelopment of the market," especially as none of those bodies "is incentivized to account for the cumulative effect."

The report also calls up familiar "Bootlegger and Baptist" argument arising from reading of blue law debates, wherein "two distinct groups" support "regulations for vastly different purposes." Support of the 3-tier system works similarly, the report argues: "While initially justified on public interest grounds," it "has created an entrenched interest (distributors) that now has a financial stake in seeing that these policies persist." And those distribs "claim a considerable share of economic benefit that would otherwise flow to the brewer or consumer."

Allies But Not Aligned; TTB Cuts Some Tape; Noise The sentiment that new small business owners can easily get tangled in current web of regulations may well resonate with some craft brewers. But the Mercatus Center and Generation Opportunity make for strange allies for many small brewers as well. And while the think tanks makes some similar critiques of 3-tier as small brew leaders, far from all small brewers concur. Indeed, "Distribution system is key to craft brewers' success," read title of letter-to-the-editor from Mother's Brewing founder Jeff Schrag and Premium Beverage veep Brian Gelner in response to GO op-ed printed in St Louis Post-Dispatch.

Furthermore, industry members and various government agencies have already recognized value in amending regulatory framework to cater to small brewers. In fact, the TTB issued a ruling that cuts thru some of red tape referred to by Mercatus report, adding to list of exemptions from formula approvals, just yesterday. The agency states that the ruling is just "part of an ongoing analysis of ways in which TTB can reduce regulatory burdens on industry members and increase administrative efficiencies." The ruling comes over 8 years after the BA initially petitioned the TTB for these exemptions, now given to beers aged in wood and those that use many fruits, spices and other now-common additions.

But the US News and World Report and other media attention on the Mercatus report continues to be shared thru #craftbeer supporters on social media. As we've seen in recent state-level debates, these craft fanatics can make quite a ruckus. That noise and their support could be just the simplest answer to why these well-funded organizations have waded into beer policy (particularly if such craft supporters would otherwise steer clear of supporting those groups). Can that noise distract from the overtly political agenda, or perhaps another less obvious one, embedded in these pieces?  

Following just 3% growth in 2013, New Belgium sales on a tear so far in 2014. You've seen it in scan, where #3 craft brewer NBB up an eye-poppin' 45%, $21.7 mil in latest IRI multi-channel + convenience (MULC) thru May 25. That's more $$ and cases than anyone else in craft. Just how strong are NBB's total mkt sales? Total all-channel depletions are up 33% thru May 23d, with 7 of its top 8 brands up double digits, the co sez. And it's up 9% yr-to-date in existing mkts, with gains in all but 2 states. "All of our top 17 states are up," noted NBB's Bryan Simpson. Those states represent over 3/4 of sales. The return to that kinda growth has gotta be gratifying, but creates its own set of problems, principally capacity constraints.

"We've had an incredible year," said ceo and co-founder Kim Jordan, where all the "foundation bricks" the company placed last yr, in mktg, sales infrastructure and capital expenditures are "starting to come together." This year is "more fun," she added. "Last year we didn't have the kind of year we'd like to have had." But from here expansions are going to be harder to come by for awhile, at least thru much of next yr. Why? Simple math problem. Recall, NBB has previously said capacity is at 900,000 bbls. Turns out "at a peak," said Kim, NBB can brew at higher rate than that, perhaps 950,000 bbls. That's less than 20% above 2013 total. With STRs up 33% thru late May, doesn't leave a lotta room for expansion. In fact, already implies slowdown in 2d half of this yr and not much growth next yr. New Belgium is in "record level territory everyday, including shipping" and sometimes "can't get enough trucks," said Kim. While New Belgium hasn't seen such "velocity and capacity constraints" in awhile, they have certainly known them through the years. They call such challenges "the gauntlet of swinging knives," said Kim.

"Anything we do this year is going to be very limited," Kim said regarding further expansions and responding to question about whether it would enter Pennsy officially later this yr after it went to Philly Beer Week. Same is true of next yr, at least until Asheville comes on. Its 2d brewery in Asheville seemingly can't come soon enough. Recall, New Belgium recently broke ground on its 2d brewery, but it's not scheduled to come on stream until late 2015. Still, "we're not going to take our foot off the gas," said Kim. NBB is "committed to keeping our portfolio dynamic" and "we intend to launch a new beer next year" (unspecified). After NBB internally asked: "Is this crazy," the company came to conclusion that "we don't want to go dormant." So it will be "pulling every rabbit out of every hat" to keep beer flowing, said Kim without "compromising quality or safety." Tho beer biz often seems like a "marathon," said Kim, "right now it feels like we're sprinting."

Nationally, NBB is firing on most cylinders, tho talkin' to a number of distribs, it is still soft in some existing mkts, while growing in others. New Belgium has 4 of top 20 craft brands in IRI (that are 84% of its biz) and all of 'em are flying. Flagship Fat Tire is a little less than half its biz (47%) and up 34%. Ranger IPA, 16% of NBB biz, is the #9 craft (tho Rebel IPA is close behind) and it's up 40%. NBB's Seasonals are resurgent; up 39% so far this yr. And its variety pack is flying, up 71% YTD. On top of that, Rampant Imperial IPA, largest selling new craft brand of 2013, still almost all incremental. And Snapshot Wheat is 2d biggest new craft product launch this yr (behind Rebel). Those brands add extra shot of growth.  

The Beer INSIGHTS Spring Conference is coming up next week, June 9-10 at the Ritz Carlton in Chicago. Don't miss the top-notch program including Boston Beer chairman Jim Koch, consultant Mike Mazzoni, Lagunitas founder Tony Magee, a panel with Rob Tod (Allagash), Wynne Odell (Odell), Nikos Ridge (Ninkasi) and Steve Crandall (Devils Backbone) led by Bump Williams. Just a few seats remain. Check out the agenda and register now.  

The so-called "Stone Bill" passed by the South Carolina legislature last week and signed by governor this morning amended regulations for brewery licenses, not brewpub licenses. It provides no production cap for breweries, which can operate on-site restaurants. Beer and wine from other suppliers sold at those restaurants must go through a distributor.  

Homebrew supply shops collectively grew gross revs about 10% in 2013, according to results of American Homebrewers Assn survey (recall, AHA is hobby-focused arm of Brewers Assn). That's about half the growth rate of previous surveys, but participation this time around jumped almost 50%, so "lots of moving parts," AHA director Gary Glass reminded CBN. Notably, percent of respondents reporting new shops opening in their area continues to hover around 60%, so availability of homebrew supplies and visibility of the hobby likely still on the rise. Indeed, a larger group of shops reported homebrew supplies as supplemental part of biz than usual, rather than focus, which "greatly increases the exposure to the general public," Gary noted. And tho large portion of all shops' gross revs from online retailers, still less than half of shops participating in online sales.

Over 80% of customers purchasing beginner homebrewing kits fall in 25-39 age range, but this survey showed an uptick in older buyers and a slight decline in those under 25 purchasing beginner kits. It also showed continued decline in percent of homebrew ingredient purchases that include malt extract, a popular place to begin hobby, as well as greater portion of shops seeing decline in beginner equipment kits. Gary's witnessed increases in both all-grain brewing (typically seen as more advanced) but also smaller batches (perhaps 1 gal or 2.5 gal, rather than once-standard 5 gal). These are just a couple ways homebrewing entrepreneurs are making the hobby more accessible to newcomers (particularly as smaller batches can require less new equipment), but these shifts would also lead to lower revs for shops, Gary explained. Though women remain less than 15% of customers for 80% of stores, Gary pointed back to AHA survey of homebrewers (not supply shops), of which 94% of respondents were male, but 30% said they brew with a spouse/partner. There could be "much broader participation" of women in the hobby than this survey captures. While macro factors, like a generally healthier economy and higher employments rates could be affecting homebrew shop revs, Gary also noted big increases in the number of breweries. Recall many current brewery-owners say they picked up hobby due to their inability to find beers they enjoyed. Seems likely folks turning to the hobby now out of passion for beer rather than lack of availability.