Tho group has taken uncommonly low-key approach, it seems that ambitious contract-brewing operation is taking root in Detroit that sports 100-bbl brewing system under Brew Detroit LLC moniker. Operation has been receiving equipment from Germany's BrauKon since last Aug, per import documents, for placement in 75K-sq-ft factory bldg in city's Corktown nabe. Source who's viewed photo of setup describes "huge" space equipped with stainless steel brewhouse. Brew Detroit reportedly helmed by Keith Sirois, known locally for role running 120-unit Big Boy burger chain (iconic chain featured in Austin Powers movies), with apparent involvement from a couple of folks currently or previously associated with city's Atwater Brewing. Given scale, odd that there's been little to no coverage, local or otherwise. While Sirois hasn't returned message left for him by CBN, he did offer a few details back in Nov on Liberty Express digital radio show directed at restaurant operators. At time, he described production as imminent from fully automated 100-bbl system that had already received 500K cases in production commitments, mainly "very significant" contract from individual who didn't want to be identified but who'd insisted co be located in Detroit.

Of course, Mich has proved hotbed of fast-growing craft operators who might be seeking outside capacity, tho Sirois indicated he'd be looking nationally for biz. Tho Detroit's problems are all too well known, and city boasts only handful of brewers, from Atwater and Motor City to nano in Corktown called Batch Brewing, it's been garnering some buzz for its developing urban farming and artisanal food movement, which Brew Detroit could fit right into. Also, recall famously Detroit-loving Kid Rock sought a new Mich contract partner for his American Badass Beer Co, when Michigan Brewing closed shop in 2012. Pointing to latest attempted renaissance there, Keith assured host, "It's a great time to be in Detroit." He seems to be putting his money where his mouth is.  

NBB is seemingly on high speed timetable for expansion with announcements this week that it will be going to Ky and HI, plus distrib details in Miss. Recall, NBB just started selling in Ala this week too and only started in OH in mid-Dec. Including OH, that means in 2014, NBB will enter states that sell over 17 mil bbls of beer, 8+% of US biz. So far.

In Miss, NBB going with blend of MC/AB wholesalers for expected Mar 3 launch. Capital City, F.E.B., Stokes and Magnolia, all MC distribs, will handle the brand, as will Mitchell and A&B of the AB network. No details yet on Ky and Hawaii launches, other than "looking like Spring" media director Bryan Simpson told CBN. Recall, last yr NBB entered at least 6 new states. Miss will be NBB's 37th state. The co has also secured space for a 100K sq-ft distribution center, 8 miles from the site of its coming Asheville, NC brewery this week, according to the co's blog. Another 40K sq-ft could be added later.  

Craft got 30% share of beer $$ sales in Buffalo Wild Wings during 2013, said Buffalo Wild Wings director of bev innovation at Beer Business Daily's Beer Summit earlier this week. Domestic at 52 share, imports 14, cider at 3 (editor's note: that adds to 99 share, so must be some rounding). "Every single category grew by double digits," in BWW outlets, he noted, but that's because it opened so many new restaurants. In same store sales, domestic and imports down, and "craft is the name of the game."

Even within craft, lotsa variation. "Blue Moon is a top 4 brand for us" and Tenth and Blake has "done an amazing job." Blue Moon "continues to grow." At the same time "some of the mature craft brands are really taking a hit" with "many down double digits." Somewhat surprisingly, Patrick named names of some decliners in BWW, including NAB, Yuengling, Summit, New Belgium, Boulevard, but even hi-fliers like Left Hand. Another interesting data point: at Starwood hotels, craft getting close to 50%, said Starwood's director of food and beverage Mac Gregory. Only 3 yrs ago it was 30%. (This article also appeared in INSIGHTS Express.)  

Summit Brewing had a busy yr in 2013, when it finished +8.8% to 123K bbls. The co worked thru ongoing construction and purchase of adjacent land in St Paul, plus dealt with added complication of a branding and packaging overhaul, founder/prexy Mark Stutrud told CBN last week. The folks at Summit "always look at 9, 10% growth," Mark said, and for the most part, they've hit that target for "many years running." Summit's grown 50% since 2008, +41K bbls. And they're very strong in their Twin Cities home: still over 70% of its biz remains in Minneapolis/St Paul metro; nearly 90% stays in Minnesota. The metro area "outpaced our overall growth," Mark told us, depletions +12% in 2013. "Beer-centric bars are still kind of the minority" at home, where Mark estimates craft (including Schell's, CBA and other non-indie brands) could have in the range of 15-20 share in the Twin Cities. Last he checked with state stats, Summit alone had 3-share of all Minn beer sales. He's seeing craft opportunities pop up from "newer entrepreneurs in the restaurant business," who tend to be a "little more focused on trends in beer," but also from "classic, established institutions" in town, "supper clubs, older taverns," seeing the need to add at least one craft option.

Most of the remaining 10% of Summit's biz is still centralized around Minn: ND and Wisc are each another 3% or so, then add Iowa and Chicagoland and that's "almost 98%," Mark said. The remaining 12 states Summit distributes to are "trickling out 2% of our sales," Mark said. And they're moving into Ark next month with Ark Craft Distributors, White River Bev, Three Rivers Distributing and Three Lakes Distributing, beginning with draft and adding bottles in March. "Iowa is growing at a very rapid rate," Mark added, after a "major change in our relationships" a couple yrs ago. Summit is "doing the same thing" in Mich and Ind too, "rearranging things to the best of our ability." He admits Summit has "gotta work harder in the out of state territories," ie: "go into Wisconsin and tease ?em more frequently." The co's sales force is 18-strong, with "6 people, soon to be 7 people in outside markets." Mark considers addition of a full-time social media person "a big kick and a hell of a lot of fun," but also integral to building excitement away from home. Folks in Ark have already been reaching out, so it's been "pretty gratifying" and "really pretty cool" for social media to build on "traditional sales staff," for Mark.

In just 2 full yrs, Summit's Saga IPA has become its 2nd biggest brand, quintupling in 2013 to almost 16% of the co's production. That's still well behind "work horse" Extra Pale Ale, about 60% of production last yr. All in, the co's seasonals (a fifth, Frost Line Rye was just added to fit in between Winter Ale and spring's Maibock) comprise another 20% of Summit's biz, according to Mark. Flagship EPA, Saga and Summer Ale, "coming to be a real anchor" in seasonals program, will be first canned entries, launching in March or April.

Canning became an option for Summit thanks to major additions to its St Paul brewery that doubled its physical footprint and its capacity to 240K bbls, with room to expand that out to 360K bbls. The addition of new cellar space, now just 50% full, was a plan that "goes back to 1995," before the co even fully moved into its current brewery. The co "closed on purchased property next door" the 1st wk of Oct and the existing warehouse on that 3.5+ acres, ideal for packaging, is already ¾ full. Before the purchase, Summit had been "really aggressively paying down our mortgage," and may have gotten to zero-debt; but when the stone/tile biz next door offered to sell the land to Summit, Mark had to jump at the "fortuitous situation." And "in the midst of all the other growth and construction and dust, we decided to add some other chaos on another plane," Mark told us, working with Joe Duffy and Partners on a complete packaging overhaul, with new graphics and a new logo. Summit hadn't switched up its image since 1998 and "one of the opportunities we were missing was to be able to tell a story graphically," Mark said.

Taxes, Sunday Sales On Slate for Minn Lege Session As a veteran of the Minnesota beer scene, Mark also touched on the legislative landscape there, noting that proposals "to increase excise taxes on beer" are "a perennial experience for us." There's "always a bill in the House," he said, that's "primarily linked to the fact that there are several lawmakers that believe the beer industry and alcohol industry should pay for the social ills that we've created." The proposed hikes range in size and Mark's not "seen it be less than 300%," tho last yr's proposed 700% tax hike was one of the biggest. It's an election yr in Minn, so Mark expects the legislative session to "be a little bit quieter." He's already heard of a "bottle deposit bill that was getting some traction" but seems to have fizzled. Instead, he's paying closer attention to research the state Dept of Revenue has been doing into taxable vs non-taxable space at production facilities. It started as a look into structures used by the ethanol industry, but "small brewers have been dragged into this fight" and are now "carefully defining" structures as "process-oriented," he said. "So far, I think we'll be okay," Mark told us, but it's important because with "the amount of money that's invested in processing equipment, that would be a huge tax bill" and "county assessors cannot be experts" on the ins and outs of brewery equipment. Meanwhile, some smaller brewers have jumped into a debate mostly between retailers in the state over whether or not to allow Sunday sales; some of the state's smallest brewers wish to sell growlers on Sunday too. For his and Summit's part, Mark is staying out of that debate: in his view it's an issue "retailers need to work out by themselves."  

Indianapolis "local market largely missed the nation's first craft-beer boom," in the mid 90's, but it's caught on to the craft wave this time around, concludes Indy Star in lengthy article on Indy craft scene. Indianapolis metro area has "at least 13" new breweries planning to open this yr, more than a 50% lift from the current 23, and the most new breweries it's gained in one year on record, reported paper. Including rest of the state, Indiana could well reach over 100 breweries in 2014. Largest brewer in the metro area (2nd largest in the state behind Three Floyds), Sun King Brewery now produces over 15K bbls and employs 47 full-time workers and 50 part-time workers, noted paper. But some signs of "troubled waters" have shown up, with 3 different brewers forced to close in 2013: Bee Creek Brewery, Wilbur Brewing, and most recently Four Horsemen. "I hate to say it but the over-saturation of the craft category began over a year ago in Indiana, and this is only going to continue to get worse," former Four Horseman owner, Ben Roule told Indy Star. But "compared to nationally, we are not even scratching the surface yet," Mike DeWeese of upcoming Tow Yard Brewing countered. "The only concern we have is the continual battle for tap space…but the upside is that restaurants that didn't used to go for craft taps are changing their minds," he said. "Leading craft beer states" and leading craft beer cities with lower populations such as Grand Rapids, MI have seen extensive success with craft beer, "which has about double the number of breweries as the Indy region in a metro area - with about half the population," paper noted.

Then too, many new brewers are "targeting niches" in order to stand out, sez Indy Star. Flix Brewhouse, based in Round Rock, TX, "will open a craft brewery in a first-run movie theater this fall" in downtown Indy. Another, Book & Brews is based "in the back of a used-book store," where they'll brew small batches of beer and host "live music and food, and, of course, places to sit and read." Two breweries are separating themselves from the pack by allowing customers to help brew the beer: Wabash Brewing "will allow customers to design, purchase and take home small batches" and Cartel Brewing "plans to set aside one tank to allow the customers to design one house beer per month - chosen by consensus through a survey." And a hand full of others looking to differentiate in a more traditional sense, through new flavors and new locations.  

Much of Midwest may not be known as craft hotbed yet, but a 5.7 share's no slouch, just a coupla points behind natl average. And that's what craft grabbed in Mo in 2013 as volume up 11%, 25K bbls while total beer biz declined 133K bbls, 3%. Mo is mostly a mainstream domestic mkt: AB and MC still have near 86 share there, tho AB down 0.9 share in 2013, off nearly 4 share since 2008. But imports never got much traction there: Crown at just 2 share (vs natl avg of over 6) and HUSA just 1.2 (vs 4). Indeed, #1 craft brewer in state, Boulevard, almost 1/3 bigger than HUSA. Shipped 68K of its total 185K bbls in Mo last yr. That was up 6% and accounted for 28 share of total craft in state.

Number 2 craft player is St Louis Brewery (Schlafly), at 39K bbls in 2013, up 9.5%. Boston put up similar gain (+9.6%) on similar volume (35K bbls), but that included cider. Big dropoff to next biggest craft player, New Belgium at 15K bbls, up 8% last yr. And Mothers Brewing just half NBB's volume, tho jumped 50%. Urban Chestnut more than doubled to 5800 bbls. Deschutes up 22% on small volume, but O'Fallon and Sierra each down about 13%, tho less than 1K-bbl loss for each. Gambrinus off slightly. Big group of Others, below top 10, about a quarter of craft, up 8500 bbls, 19%.  

New Belgium announced today appointment of Andrew Lemley as its own in-house gov't affairs rep, just a month after Boston Beer became first craft brewer with internal lobbyist. Andrew will focus on advocating for many of NBB's pet issues, including ESOPs, "sensible environmental policy and smart transportation solutions." Gotta assume he'll also be working to protect rights of small brewers on state and federal level. Andrew came up thru ranks at NBB, most recently managing its Fort Collins tasting room and in-house event teams.  

Top craft cos 11-100 were collectively up 25%, grabbing additional 1.58 share of craft $$ to 33.6 in IRI multi-outlet + c-store data for 52 weeks thru Jan 5. Among that group, 12 cos saw sales double or more. Actually 5 of top 100 cos tripled $$ sales in scans for 52 weeks thru Jan 5. And one, Revolution Brewing (+659.5%) more than septupled sales, and octupled volume (+765%). Meanwhile, top 10 craft cos $$ sales in scans were collectively up 14.5%, accounting for 60.5 share of $$. Yet share was down 2.4 from 2012, almost all shed by top 5 craft cos, as we reported earlier this mo (see CBN vol 5 no 5).

Ballast Point had highest $$ sales among cos that doubled or more, up 115%. It finished as 43rd largest craft co (in sales), ahead of Big Sky, Blue Point, 21st Amendment, Highland, and not too far behind Mendocino, Real Ale, and Elysian in scans. 10 Barrel (+208%) finished yr as 49th largest craft co in scans, making it the only co of top 50 that tripled its sales. Devil's Backbone (+128%), Foothills (+222%), and Switchback (+234%), were next largest cos up 100% plus, finishing yr 53rd, 58th, and 59th largest in sales. The rest, in order of highest total sales, were: Cigar City (+128%), Speakeasy Ales (+176%), Karbach (+230%), Fremont (+184%), Revolution (+659%), Coronado (+105%), and SanTan (+207%). All in, these 12 cos make up 2 share of total craft $$, and collectively gained 1.1 share in 2013. Two Brothers (+95%), Hopworks (+98%), and Atwater (99%) just barely missed doubling their sales for the yr, and another 11 cos in top 100 were up over 50%.

However, 10 of the top 100 cos saw scan sales dip in 2013. That's the most craft cos down for full yr in recent memory. North American Breweries craft portfolio (Magic Hat and Pyramid) saw $$ sales drop 7% for 52 weeks thru Jan 5. Long Trail finished down about 4%, tho finished final 13 weeks up 10%. Full Sail (-2.5%), FX Matt (-1.4%) and Natty Greenes (-1.7%) saw modest drops in sales, but for first time, 5 craft cos of top 100 were down double digits: Lost Coast (-15%), Mendocino (-13%), Gordon Biersch (-19%), Mad River (-28%), and O'Fallon's (-12%). What's more, 100 of top 500 cos saw scan sales drop in 2013. That's actually an improvement compared to last time we looked in early Oct, when 134 brewers were down in scans (see CBN vol 4 no 60). Gotta note, IRI data is not a full depiction of cos' sales, especially for smaller cos that do more biz in independent mom n' pops opposed to more chains, however still provides a useful snapshot of insight into how cos are faring in the mkt.  

There are more craft beer drinkers than there used to be, according to results of Scarborough Research surveys of 21+ yr-old beer drinkers in 10 largest US metro areas. Across all 10 mkts, 14.5% of beer drinkers said they drank "any microbrew/craft," +2.6 pts, in 30 days prior to surveys administered between Aug 2012 and Sep 2013. Note that Scarborough previously only asked about "any microbrew," and added "craft" to the question in the last yr, tho it's not clear if that change alone led to increase. The percent of beer drinkers choosing any craft increased substantially in 6 of these 10 markets, and dropped no more than a point in the remaining 4. San Francisco saw largest increase to highest portion of beer drinkers that chose a craft recently, up 8 pts to 24%. Washington DC is only other city with over 20% of beer drinkers choosing craft, +3.6 pts to 20.6%. But Chicago (+5.2 pts to 19.9%) and Boston (+4.2 pts to 19.7%) close. The percent of beer drinkers that said they had any craft increased 4-5 pts in both Philly (17.8%) and LA (14.3%).

Differences between the percent of beer drinkers claiming to have had any craft and naming specific craft brands in remaining 4 markets highlights potential confusion about which brands these drinkers consider part of the segment. In NYC, largest mkt, just 8.7% of drinkers say they had any craft, but 17.9% remembered drinking a Sam Adams in the last month. In Atlanta, almost 11% of beer drinkers had a craft while 14.2% of beer drinkers named SweetWater and 11.4% named Sam Adams. In Dallas/Fort Worth, 7.2% had "any" craft and in Houston 7.5% said so. But 18.8% and 21% said they had a Shiner Bock in each of those cities, respectively. Interestingly, those Shiner stats are each down 2.8 points from previous survey.

Shiner wasn't only craft brand that was reported by a smaller percent of beer drinkers near its hometown. Most notably, Sierra Nevada was named by 15.7% of beer drinkers in SF, -5.5 pts, dropping it from #2 brand to #6 brand on SF's top 10. But in same city, Anchor Steam named by 12.2% of beer drinkers, +2 pts and 2 spots to #8. Sam Adams falls in between the two, +3 pts to 13.6%. At home, Sam Adams still #2 brand in Boston, reported by 31.7% of beer drinkers, but that's down 2 pts and Sam Adams Light didn't make top 10 brands list as it did in prior yrs. But Sam Adams gained ground in DC where it's #3 brand, named by near 20% of drinkers, +2 pts. Sam Adams Light also debuted on that list at #8, named by just 3.6% of drinkers, indicating wide spread of brand preferences in that mkt.

Yuengling made a coupla big debuts this yr, after Scarborough provided brand as an option on survey forms in more mkts in 2013 than it had previously. It's still top dog in Philly, where it increased its lead slightly, reported by 32.1% of drinkers, +0.3. It debuted at #2 on Atlanta list and #1 on DC list, named by about 21% of beer drinkers in each market. Blue Moon still on top 10 brands list in 9 of 10 mkts after dropping off of Atlanta list. Further, it placed higher in top 10 or was reported by a higher percent of beer drinkers in all other mkts, save DFW. In NYC, LA, Chi, SF, Philly and DC, 16-20% of beer drinkers said they had a Blue Moon in the month before the survey. Not bad for a brand with less than 1 share of total volume.  

As Craft Brew Alliance announced some preliminary data for 2013 and looks ahead for 2014 today, attention grabber was this: "We will be expanding our brewing footprint in the Southeast mid-year." That's interesting; CBA's capacity utilization for 9 mos was about 71%. Didn't say how or with whom, but "new partnership will help to improve gross margin by bringing brewing capability closer to growing markets while alleviating emerging capacity constraints" driven by growth in East and in international mkts.

Here are some highlights for full yr 2013:

• Depletions up 11%; shipments up 8%, so shipments did not catch up. (We had estimated shipments up nearly 9%, so looks like total shipments more like 725-730K bbls than 735K.)
• Net sales +6%.
• Gross margins shaved by 1.5 pts to 28.1, due to "product mix and distribution costs" and lower margin from restaurant biz.
• Earnings per share dipped to a dime vs 13 cents.
• Selling, gen & admin costs up 3.5% to $46.5 mil.
• Capex of $8.8 mil.

Describing this mixed bag of results, chief exec Andy Thomas said he was "extremely proud" but added "we can do much better" and cited commitment to "improving our bottom line." Looking ahead, CBA will continue to drive portfolio approach across Widmer, Kona, Redhook families, plus innovation in "adjacent categories like cider and cross-brand packaging." Specific expectations for 2014 include: depletion growth of 7-11%, average price increase of 1-2% (recall Boston seeking 2-3% price hike); significant increase in contract brew revenue of 25-50% (contract revs took 40% hit in 2013); returning gross margin to between 28.5 and 30.5; increase in selling, gen admin expenses of 12-16% to $52-$54 mil range; capex of $15-$20 mil. That's pretty ambitious and CBA will clearly need significant topline growth to improve bottom line.