Like Blue Moon and Leinie for MC, AB has had big growth with Shock Top, growing family to over 1 mil bbls, vast majority of that in last 4 yrs. Yet Shock Top family too has slowed in IRI this yr to mid-single digit gain. Up 5%, compared to gain in mid-teens last yr. That's even tho Shock Top Belgian White has returned to double digit growth in 2014 (after finishing 2013 with volume slightly down, $$ up only 2.6% in IRI). Why? Tuff Seasonal trends, even tuffer than for Blue Moon. Shock Top Seasonals down 58%, -193K cases thru Apr 20. Recently intro'd Honeycrisp Apple Wheat (+190K cases) nearly made up for Seasonals dropoff, however.

Then too, Goose Island growin' 60% plus in scans. Flagship 312 Urban Wheat has slowed slightly since last yr, tho still up over 39% YTD thru Apr 20. And nearly every other brand in scans up big; IPA and Variety Pk each doubling sales, and Seasonals up 87%. Newly acquired Blue Point Brewing has performed better in scans since acquisition too; $$ up 17.5% last time we checked, thru Mar 23. Blue Point only grew 6% in scans in all of 2013.  

Top 2 have made lotsa headway with their craft-like entries in recent yrs (without slowing down total craft trend at all), but that appears to be slowing in latest results from MillerCoors and in scan data. Total Tenth & Blake down mid-singles in Q1, MC reported today, even with Leinenkugel portfolio still up double-digits. Blue Moon's base Belgian White up low-singles, but Blue Moon seasonals down double-digits. Henry Weinhard, Killian's and Batch 19 also down double digits, co announced in its Q1 financial report. To some extent this appears to be shift in focus to Fortune, Redd's and other more FMB-like innovations with greater incremental growth potential. All in, MillerCoors above premium STRs up in high teens "outpacing" the industry, MC said, and continues to benefit from its growth in category. This is just a qtr, but gotta note these trends; they are departure from recent yrs. In last 4 yrs, Blue Moon and Leinenkugel doubled from 1.6 mil bbls to 3.2 mil bbls.

Tenth & Blake Flat in Scans; Blue Moon Slowdown, Leinie Still Kickin'; Big Weinhard Decline Tenth & Blake slowdown shows up in scans too; volume is flat, $$ sales up 2% in IRI multi-outlet + convenience (MULC) thru Apr 20. That's significantly slowed from total 2013 growth % in low-to-mid teens. So where's slowdown comin' from? Partly from Blue Moon family, which slowed to up 2%, $$ up 4% YTD thru Apr 20, compared to up 10% in total 2013. Both Seasonals and Variety Pk down double digits in 2014, and collectively down 113K cases thru Apr 20. Blue Moon Seasonals took 6-7% hit last yr, but Blue Moon Variety Pk was up 15% in 2013, before completely swinging around this yr. Interestingly, Blue Moon's flagship Belgian White continues to plug away with high single digit gains in scans in 2014. That's slightly slower than total 2013 trend, yet still healthy growth for brand more than 2X the volume of largest craft brand in scans, Sierra Pale.

No slip from Shandy. It's more than doubling sales in IRI MULC thru Apr 20; volume up 135%, $$ up 143%, even with all the new shandy competition. But Leiny's Seasonal volume down 16%. Most other Leinenkugel brands down in IRI with exception of Variety Pk, yet Shandy's continued growth has mostly offset that. Total Leinenkugel family up 27%, $$ up 32% YTD thru Apr 20.

Chunk of Tenth & Blake slowdown coming from Henry Weinhard's accelerated decline; brand family down 50% and has shed 160K cases in scans YTD. That's already nearly 100K cases more than it lost in all of 2013. Then too, Batch 19 down 29%, -24,000 cases thru Apr 20. Lastly, Third Shift is up double digits in yr 2, but brand was down 38% in most recent 4 weeks, going against rollout numbers.  

While Craft Brew Alliance shipments lagged depletions in 2013 by more than 3 pts, trend reversed radically in Q1 2014. Shipments of core brands jumped 16% to 172K bbls, while depletions up at half that pace, a still healthy 8%. Gaps especially wide for Kona -- shipments +23%, depletions +11% -- and Widmer, where shipments +12.5%, depletions -1%. At Redhook, depletions actually ahead of shipments +15% to +12%. Gain in Widmer shipments attributed to Omission and Upheaval IPA. Redhook gain mostly from KCCO Black Lager, Longhammer IPA and Game Changer. Kona grew via Longboard Lager and Big Wave Golden Ale. CBA still expects 7-11% depletions growth for the year.

Net sales +20%; CBA got about 2% rev per bbl increase, including modest contract biz (11K bbls in 2014). With cost of sales up 16%, gross profits up $3 mil, almost 1/3. So gross margin widened from 24.4 to 27.0, which CBA attributed to improved efficiencies and better capacity utilization. Indeed, latter jumped nearly 10 points to 68%. Selling, gen and admin expenses up only 2.6% in Q1, and fell as % of sales, but it's still a big number ($66/bbl). So CBA still in red on operating line, tho only $222K in Q1 this yr vs $2.8 mil loss last yr. More after tomorrow's conference call.  

Only a brief glimpse at coming attractions for Brooklyn Brewery appeared among plenty of laughs and interesting takes on hot industry topics during wide-ranging talk at Live from New York Public Library in celebration of Steve Hindy's new book late last week. "We will be announcing an Asia project within the next few weeks," Steve slipped into the discussion with no details other than it would be "something similar" to its project in Sweden with Carlsberg. Recall, exports were 28% of Brooklyn's volume in 2013 and it is clearly staking place as most international craft brewer so far. Discussion with Steve, New Belgium founder/ceo Kim Jordan and Brewers Assn prexy Charlie Papazian guided by Paul Holdengräber, whose broad intellectual viewpoint at times seemed to push these craft leaders into new ways of talking about topics that, for some industry members, may have already been talked to death. Like "craft vs crafty" and the definition of "craft beer."

Evolving Revolution; Definition Revelations Taking cues from Steve's book, "The Craft Beer Revolution," characterization of craft's growth as a "revolution" began early, in intro by Michael Kiser of Good Beer Hunting. "One generation's revolution is the next generation's empire," he said, highlighting different "waves" of craft brewers. But "is it really a 'revolution'?" Paul asked, "is the word well chosen?" "Yes!" Steve said, "it's a revolution in taste, not a violent revolution…. It's overturning a different order of beer." Yet "it will continue to evolve," Charlie said, implying slower change over many years. "There was a quick part of the initial phase," Kim added, but "I don't think it had enough powder to make an explosion." So Paul offered "revelation" as another option, but that "takes me back to Baptist church," Steve said. As Kim was "warming up to 'revelation'" because "I think that is more the energy of it," Steve told Paul to "write your own book." But Paul unsurprisingly couldn't pull Steve and Charlie (who, recall, used a long American Revolution metaphor in his CBC speech in 2013) off the word and the spirit it implies. Later, Paul picked up on Steve's comment that craft is "going against the giants." "Still?" Paul asked. "Oh yeah," Steve said, "it's in the DNA." Talk of what's big, what's small, what's craft included remnants of familiar comments about differentiation and truth in labelling. Using the word "craft" is "just like the cover of a book," Charlie said, "you try to differentiate it from all the other books." Yet Kim suggested that the term "craft brewer" was "largely a tool to use for a data set," used "behind the scenes" and "almost administratively." None of the panelists offered a definition of "craft beer," mostly insisting that that belongs in the minds of beer drinkers. Kim shared her "hope" that, while drinking, folks are thinking about "something other than 'is this a craft beer?'"

Could Consumer Suspicion Lead to More Names on Labels? "Why shouldn't we call Blue Moon a craft beer?" Paul asked, to which Steve replied "you can if you want" before reminding that "we think the brewer's name should be on the label." Paul noted his recent surprise about the origin of Blue Moon, Shock Top and others and recalled a recent talk with makers of the film "Fed Up." That discussion led him to wonder if "we should demonize the food industry the way we demonized the tobacco industry…. It's a very strange thing," he remarked, and "it's amazing how much we're fooled."

This could be shifting, Kim suggested, noting her assessment that "large corporate bodies get a little bit tone deaf to the emerging Zeitgeist." She believes more consumers are saying "now I'm suspicious of you" to these corporations and as such "I will not be surprised to see them decide to make that change" and put the parent company's name on the label. "Now they're playing hardball in our segment," Steve said of the large brewing companies, but it's "a real dilemma for them," as they lead more and more folks toward more flavorful beer.

Steve's Foreign Kinship; Charlie's Learning Curve Talk of Steve and Brooklyn's Brewery's work abroad led to Paul asking if the co is "exporting the revolution." "I think we're exporting the revelation," Steve quipped. But is partnering with Carlsberg like "sleeping with the enemy?" Paul asked. "I feel a kinship with Carlsberg," Steve said, before explaining that company's unique ownership structure. Carlsberg's founder decreed early on that 70% of the voting stocks of the company would be owned by a non-profit arts and sciences research foundation, Steve said. As such, it can never be fully purchased by a major brewing corporation.

When discussing quality in Q&A, Charlie argued that super-small brewers "need to understand what their limits are…. There's technology involved in creating beer that is stable enough to stand the rigors of transportation." Since many nano- or even microbrewers don't have access to that technology yet, he implied, perhaps they should not be working to send their beer very far from home. Indeed, knowledge of brewing, handling and selling beer is "constantly a learning curve," to Charlie. And a growing group of resources has appeared to chronicle that curve, including Steve's book, which is getting plenty of attention from multiple events like this one as well as lengthy reviews in publications like the Wall Street Journal. There seems to be no shortage of hunger for information about this beverage and this industry.  

There are 12 states that produce 2.5+ gallons of craft beer per capita, and produce 64% of craft while hosting 28% of US population, notes Brewers Association's chief economist, Bart Watson in latest blog post. This group of states, dubbed "Leaders," collectively grew 14% to just over 10 mil bbls in 2013. Meanwhile 30 states plus DC produce less than 1.5 gallons of craft per capita; only 18% of craft production among 54% of US population. These states are part of a group Bart refers to as "sleeping giants," that collectively grew 31% to about 3 mil bbls in 2013. Some of fastest state craft growth trends are coming from less developed craft states such as Alabama, North Dakota, and West Virginia (tho off much smaller base), points out Bart, and collective growth trend 17 percentage points higher in "sleeping giants" compared to "leaders." Remaining 8 states, dubbed "2nd Wave," were those who produce between 1.5-2.5 gallons of craft per capita. They produce same amount of craft (18%) as "sleeping giants," and host 19% of US population. "2nd Wave" shipments grew 19% in 2013. Gotta note, Bart "used 2012 production per capita….so (he) could compare it to 2013 growth."

So "how long will it take them to catch up (to 'leaders')?" poses Bart. "If sleeping giants can keep up that differential (31% vs 14% growth rates), they'll catch the leaders in absolute production by 2022, and per capita production by 2026." For those who think "growth is inevitably gonna slow," Bart lays out scenario where each group's growth rate slows 5% in coming yrs. End result would still be the same; "sleeping giants" would catch "leaders" in craft production. "Maybe none of this will occur," sez Bart, whether its due to "regulatory hurdles" that "hold small producers back," or craft-craze not catching on as heavily in "sleeping giants" states, etc. "This should not be interpreted as a prediction of what will happen," sez Bart. Bart will be on a panel at our upcoming Spring Conference, June 9-10 in Chicago, trading insights with Beer Inst economist Lester Jones. Click here for more info.  

The Widmer brothers, Kurt and Rob, who founded pioneering Pac NW craft brewer, took shots at BA definition which excludes them (because AB owns about 1/3), in lengthy interview with The Street. "We've made it pretty clear that even if they changed the definition, we wouldn't want to be a part of that organization because it's a political organization and that's not why we got into this," sez Kurt Widmer.

"It may be somewhat best that we are distanced," from BA, he added, referencing recent Craft Brewers Conference where "they purport to be promoting harmony, beer, good times and positive things, but then there are examples like creating dissent in the ranks by throwing us out," or "provoking" large brewers and wholesalers "unnecessarily." "The initiative" to exclude CBA from BA definition of a craft brewer "was Jim Koch," Kurt went on. "This was all his idea. He had his own explanations that were politically motivated and there was a sufficient majority of the board that went along with him….He (Jim) contorted the definition so that a bricks-and-mortar brewer doesn't exist, but a virtual brewer does." One BA member "stood up on our behalf and asked to put it to a popular vote." BA board did not do that, "but they would have lost. I guarantee that."

Separately asked about Widmer brand performance, Kurt responded "it's the poorest performer in the portfolio, quite frankly." "It's mainly Hefeweizen," sez Rob Widmer. "We were so eggs-in-one-basket about it, but we're going to get it straightened out." "Hefeweizen was about 80% of the Widmer portfolio and now it's like 30%, chimed Kurt. "We're confident that we're going to get the Widmer part of the portfolio clicking." "We've been delighted with the response to Upheaval," Kurt added.

Boston Beer's big-time volume growth so hot it hurts: slightly missing earnings expectations sent stock down about 7% to $229 at presstime (after dipping as much as 10% earlier in day). That's even as depletions zoomed +34% during first qtr! Shipments just behind, +32% to 835K bbls in Boston's smallest volume quarter (including tea and cider). Yr-to-date depletions thru April 19 still running up 33%. "YTD performance and full year guidance implies just ~13% shipment growth for the remainder of the year," which is "likely conservative," sez RBC's Nik Modi. Boston growth guidance is 16-20% in 2014.

In 1st qtr, net revs jumped to $183.9 mil, +35% with 2% avg price hikes. Even more rapid volume growth than 2013 (when Boston depletions up 23%) largely due to "significant one-off effects" of new spring seasonal Cold Snap, Rebel IPA and Twisted Lemonade launches and easier Angry Orchard comps than later in yr, prexy/ceo Martin Roper described on call. Breweries pushing to keep up, losing some efficiency, and advertising, promo and selling spend +41%, $17.8 mil, and gen and admin spend up $1.2 mil, so gross margin shaved a point to 49%. Boston execs left full-yr guidance untouched: gross margin expected between 51-53%.

"Well received" intro of Cold Snap, according to founder/chairman Jim Koch, and likelihood that new Rebel IPA "already among the top three selling IPAs" in off-premise scanner data cheered Boston execs. But growing those brands and others comes with cost. Boston still experiencing "some product mix issues," Martin said, due to "growth coming in liquids that have higher cost structures." Rebel particularly: "those hop notes are not cheap to deliver." But that's true of Angry Orchard too, as Boston seeks the "best juice that we can get." And "mix issues probably aren't gonna go away," Martin said, since Boston is "not gonna cheapen any ingredients in any shape or form." Tho he took out time to "commend our brewery employees," breakneck growth "creates some distractions from a focus on efficiency" and Martin "not happy with how the breweries are operating from an efficiency throughput perspective." Indeed, Martin wants "better progress" on efficiencies. So Boston "lowered the top-end" of planned annual capital expenditures (capex), now $160-200 mil, to provide a "little bit of a pause" so focus can return to efficiency.

Boston Bracing for Slowdown, Cloudy 2014 Outlook When pressed why the co didn't adjust full-yr expectations, Martin noted "a lot of uncertainty" for balance of 2014. Trial on Cold Snap helped Q1 volume, but Martin "not sure that will maintain its momentum" across remainder of seasonal program. There's also been a "little bit of cannibalization" from Rebel launch, and coming into Spring chain store resets - some done, some not - "distribution gains are not final yet." On cider-side, Angry Orchard "has had an unbelievable 12 months," but "as the year goes forward that gets much tougher." Also contributing to cloudy outlook on cider, Boston will face "2 or 3 major players pushing brands into the cider category or reinvesting into existing brands" and "it would be foolish of us to not anticipate" those brands getting "some trial and distribution." Further, Boston has "historically...been very reluctant to adjust full-year guidance after one quarter."

More Capacity Coming Soon, Not Expecting Need for New Brewery Volume gains pushed up freight costs, naturally, but Martin noted those "very significantly higher" due to what he perceived as a "tightening" of options leading to price increases. The co has also beefed up its sales team to "up around 400" as the "real work happens face to face with the account." Boston will also be finishing a number of capex projects thru the remainder of 2d qtr, with a bunch of tanks showing up over "literally the next few days," Martin said. If getting those tanks online goes as planned, capacity will "be in good shape," that is "based on what we think the growth is gonna be," he added. "If we maintain first quarter growth rates through the year, then we would be talking to you about" a new brewery, but Boston doesn't anticipate that.

A&S Expectations; Shelf Space Alchemy & Science projects expected to run Boston Beer between $11-16 mil in 2014, about $7-9 mil on capex. As always, "these estimates could change significantly," and "2014 volume from these brands is unlikely to cover these and other expenditures related to these projects that could be incurred," co said in release. Continued talk of shelf-space on call, including Jim's description of the "complex matrix" of account-types and how they're treating space for craft. Tho Jim has witnessed "continued increases in the shelf space devoted to craft beer," that could "slow" soon. He's also seeing "a little bit more warm shelf activity" for craft, even tho it's "less shopped and less desirable."

A Few Financial Analysts' Takes Goldman Sachs, CLSA, and RBC Capital each led off analysis pointing out Q1 earnings per share (EPS) fell below their/consensus estimates to $0.62, due to increased company spends and lower gross margins. GS's Judy Hong reiterated expectation for "depletion growth to slow during the balance of the year as….comparisons become more challenging" in 2nd half of 2014. And CLSA's Caroline Levy "remain(s) on the sidelines" due to increased "investment both in opex and capex that has been required to sustain" sales growth. Yet overall performance "did not disappoint," and was "well ahead" of estimates. Boston Beer hits guidance of 20% on shipments, co would reach 4.1 mil bbls at yr end, Judy estimates. Judy lowered price target slightly to $258, while Caroline upped to $250, and Nik stayed put at $244.  

Total beer $$ sales growing 5% in IRI multi outlet + c-store (MULC) data thru April 20 and craft segment over a quarter of that growth. Poised to crack 7 share of $$, craft +25% in MULC, up over 1 share to 6.95. Almost all major craft suppliers continuing healthy gains in latest data ranging from CBA +9% to Lagunitas +82% (only exception is mixed NAB portfolio, -7%). Group led by huge 41% jump by Boston Beer, up $50.7 mil. Over 40% of growth from Angry Orchard Crisp Apple, +157%. It's bigger than Sierra Pale, Lime-A-Rita, MGD, Rolling Rock as well as Sam Seasonal and Boston Lager.

Rebel IPA Already Top 100 Brand, #10 Craft YTD, #9 for 13 Wks; Just Feeding IPA Fire Launch of Rebel IPA boosting Boston's biz too, slipping in at #100 beer brand YTD thru 4/20. It's already #10 craft brand by $$ sales and #9 for latest 13- and 4-wk periods, overtaking New Belgium Ranger. But it ain't slowin' other IPAs. All IPAs +53% YTD (and over 23 share of craft $$ for 4 wks). Sierra Torpedo still jumpin' 20%, Lagunitas IPA +85% and NBB Ranger +40%. These 4 brands alone now 7 share of craft $$ and 31 share of craft IPAs (even bigger portions of growth). Don't forget 5 other IPA brands in MULC top 30: Redhook Longhammer +12%, Stone IPA +18%, Bell's Two Hearted +61%, Harpoon IPA +16%, Dogfish Head 60 Minute +34%.

Sierra Pale Healthy, Seasonals Less So; Fat Tire and Total New Belgium Killin' It; Top 30 -0.5 Share Sierra Nevada Pale remains biggest craft brand in IRI MULC data, $$ +8% YTD thru 4/20. Total Sierra sales +11% YTD and +15% for 4 wks. But Sierra's Seasonals -8% YTD. That's as Sam Seasonals +38% YTD, all thanks to Cold Snap intro (+9% for 4 wks, which should include beginning of Summer Ale), and New Belgium Seasonals +43%. Indeed, total NBB biz +45% YTD (+50% for 13 wks), rolling on the seat of Fat Tire, +34%, Ranger (above), and Variety Packs +65%. Only a couple brands in top 30 down YTD: Sierra Seasonals (above), Widmer Hefe (-1%) and Shiner Seasonals (-8%); Magic Hat #9 up just 0.5% YTD. Across all 30 top craft brands in MULC thru 4/20, half of brands gaining share, half of brands losing share. All in, top 30 shed 0.5 share of craft $$ to 48.4.  

Get all the craft data and analysis you need in one handy volume: Craft Brew Guide. This easy-to-use reference guide is both a primer on the dynamic craft brew biz and a deep dive into key numbers and issues. Craft Brew Guide gives you a 10-yr review of craft shipments and share trends, a 10-yr review of each of the top 30 craft players, on-premise and off-premise craft trends for top brewers and brands, with new in-depth cuts of the data in several major metro mkts. CBG also includes profiles of top craft brewers, key financial data of publicly available craft brewers, exclusive numbers on big brewers' efforts at selling in craft space, as well as an intriguing essay on the Long Tail (with more exclusive new numbers), and an analysis of craft M&A so far. Available digitally or in a portable 6"x9" volume, Craft Brew Guide gives you the best data and analysis on craft that you can find. It's published by Beer Marketer's INSIGHTS, the leading source for beer industry info and publisher of Craft Brew News. Click here for more information and to order this one-of-a-kind book.

Small Louisiana brewers seek combination of currently-separate licenses into just one, effectively allowing breweries to open restaurants on site and brewpubs to begin distributing to other retailers. Proposal does not include self-distribution options, but instead removes differences between current manufacturing breweries and brewpubs. Pair of editorials in support of proposal from The Advertiser staff and exec director of Louisiana Craft Brewers Guild note familiar arguments: perceived need to "level the playing field" to compete with surrounding states and "it seems ludicrous to allow an outdated and restrictive law to stifle business." Elsewhere, Ariz brewers sought increased annual production cap for microbrewery license from 20K to 40K bbls, but "got blown out of the water," Barrio Brewing/Gentle Ben's Brewing owner Dennis Arnold told the Arizona Star. Remaining under the cap allows retail sales at breweries too. The only request accepted by the state was allowing growlers to be made of material other than glass. Meanwhile, legislators in Pennsy seem ready to take up potential privatization of wine and liquor sales again, at least partially, including provisions that may make small quantities of beer more available, according to Penn Live. The issue is "clearly teed up for next week," current state Senate President Pro Tempore Joe Scarnati told the paper.