New York-metro should expect re-worked and re-focused Coney Island Brewing brands this month, new brand-owner, Boston Beer subsidiary Alchemy & Science announced this week. Focus will be on 2 brands: Mermaid Pilsner, a carry-over from Coney Island's past, and new Seas the Day India Pale Lager (IPL). Updated look for Coney Island hearkens back to previous imagery focused on NYC namesake location, with less freak-show emphasis. The brands will be produced in upstate NY at the still-new Shmaltz Brewing facility, until Coney Island sets up its own brewery on Coney Island later this year, Coney Island's "Ringleader" Mike Sheehan told CBN. Recall, A&S purchased brand from Shmaltz founder Jeremy Cowan late last yr, so Jeremy could focus on He'Brew line. Jeremy continues to consult with A&S on the brand and A&S has the option to contract at the Shmaltz facility if necessary even after its NYC brewery opens. The co is already looking for opportunities to get involved in Coney Island community, Mike said, and Coney Island will remain focused on these 2 brands plus a rotating-seasonal in NYC-metro mkt. First seasonal offering will be a watermelon wheat, coming after St. Patrick's Day.  

Deschutes Brewing plans to expand with new brewery, but even tho it gave "initial estimates" of around $50 mil, Oreg brewer "still undecided" on location for this project, founder Gary Fish told Bend Bulletin. "As our sales continue to grow on the East Coast, at what point is it going to make sense to produce it where it's being sold, or closer to where it's being sold?" he posed. "The brewery currently has a company looking at possible East Coast sites for development," noted paper, tho regardless of location, "water would be top priority when considering another brewing location," sez Gary.

Deschutes, "along with 10 Barrel and Epic Air" has pending application "for an enterprise zone incentive, which provides tax deferrals in exchange for job growth," Economic Development for Central Oregon (EDCO) mktg mgr Ruth Lindley told paper. It's "likely more expensive to expand in Bend," despite having no sales or business tax, compared to some other states that "may not charge Deschutes anything to develop and also offer the company incentives." Deschutes' application "calls for a $45 million project that would double its capacity," she added, and "could be the type of company" that can bring "discussion about trade-offs to the forefront." Since Bend now has max capacity of 460K bbls, Deschutes is looking at possible 900,000 bbls of capacity.

"The next limitation to our growth is going to be in packaging," sez Gary. Deschutes has gone through series of expansions that primarily added fermentation capacity at its current Bend location over past few yrs. Employees now own 8% of co after Deschutes made "its first contribution to an Employee Stock Ownership Program" last yr, noted paper. Deschutes plans to tack on 4 states in 2014 to their current 23 states, along with their increasing export biz where they've added Thailand, Singapore, Canada, and most recently Australia, New Zealand to their repertoire (see CBN vole 4, no 59). "Nothing could happen, or it all could happen," Gary said. "It could happen in a different place, at a different scale. Everything is variable at this point. We haven't locked down anything."  

While Founders Brewing, one of fastest growing mid-sized craft brewers in recent yrs, up 58% to 112,000 bbls in 2013 (see above), it's expecting even greater growth in 2014. "We're really bullish" about 2014, ceo Mike Stevens told CBN. Founders expects to hit 180,000 bbls in 2014, growth of 68K bbls, That would be another 61% gain, a growth rate more or less in line with past six yrs, when its CAGR (compound annual growth rate) "averaged 63%," Mike noted in yr-end review.

Major driver of growth is All Day IPA, up 569% last yr and representing 27% of co's total volume, with "expectations that it will reach upwards of 35%" in 2014. That would be over 60,000 bbls, more than a doubling, and about half of growth. Remember, last yr was first full yr that brand available, Mike told CBN and "we haven't yet taken that full throttle" so "we want to see how far it can go." Founders is ready to grow even faster if necessary. It has contracted for enuf hops to brew upwards of 95,000 bbls of All Day in 2014, Mike told CBN. One driver will be new fifteen-pack with suggested retail price of $17.99, same as 12-pack, the first craft value pack if you will. But Mike said: "This one's fun" as Founders passes along plant efficiencies to consumers. While its margins on 15-pack "reduced," it won't be "severe."

But Founders has also been about a wide variety of beers "designed by a bunch of beer geeks for beer geeks." So it's notable that while IPAs now near half its biz, with All Day at 27% and Centennial IPA (+16%) at 18%, its next 4 largest brands are mostly bigger beers that are still growing fast. And they remain a considerable portions of its volume: Dirty Bastard is 15% of volume and up 32%, Breakfast Stout is 10% of volume and up 42%, its Pale Ale 8% of volume and up 10%, and Porter 7% of volume and up 41%. Mike acknowledges that growth of both Centennial IPA and Pale Ale slowed in 2013 because of increased production and focus on All Day, tho both still growing double digits. Founders expects Porter to pass Pale Ale in 2014. While total Founders is 60/40 packaged/draft split, All Day is more like 2/3 to 1/3. All Day packaged beer is almost 1/3 in cans (only about 10,000 bbls).

Founders will continue to boost sales force in 2014 after growing "from 12 to 30," in 2013, he noted. Could be 40 by yrend, he told CBN. Founders "continue(s) to see very strong growth" in existing markets where volume up 43%, sez Mike, yet new mkts still a solid contributor to growth, consisting of 18% of total volume in 2013 and 32% of growth with entries into Florida, Texas, Nebraska, Kansas, and Maryland, as well as a small portion of volume exported internationally in 2013. This indicates "our brand can travel and has legs," said Mike And while Midwest sales up solid 34%, co grew fastest in Northeast (+89%) and Southeast (+101%) regions. In 2014, Founders will enter Calif and perhaps one other Western state, also Md and Tenn.  

As noted, New Belgium ended 2013 at 792,000 bbls, up 27,000 bbls, 3.5% (see above). But that encompassed many wildly varying trends within NBB's results and at different times of yr in a rapidly changing marketplace. First of all, the yr started slow but finished strong, "a tale of two halves," sez NBB co-founder Kim Jordan. In 2d half, NBB got plenty of growth in both new and existing mkts, she added. Early in yr, challenges with seasonals and on-premise showed where "we needed to focus our time."

Brand results all over the map. In all, flagship Fat Tire declined slightly in 2013, but it was up in 2d half, including a 9% off-premise gain and a 5% on-premise gain, said Kim. For the full yr, Fat Tire up 2% off-premise, which suggests its on-premise biz struggled like other big craft brands. Meanwhile, several other key New Belgium brands were up double digits: Ranger IPA up 13%, Folly Packs up 18% and Shift up 20%. And NBB's Rampant IPA was the #1 craft new product launch in scan data. And 2d half seasonals did much better than 1st half as well.

New Belgium entered many new states in 2013, including Fla, La, Del, Ut, Alas, and, in Dec, Oh, suggesting ongoing core mkt challenges. That's the most new states NBB entered in recent memory certainly. Oh off to "super strong" start, sez Kim. NBB sold 60,000 cases there in 1st 2 weeks (tho a source had suggested smaller displays there than in Mich or Fla). Kim wouldn't reveal further expansion plans, other than to say, "we will certainly be looking" and do "plan for potential" new states in 2014.

Recall, one reason NBB's sales results began to improve in late spring were its new tv ads. "That was really helpful," said Kim. But in 2014, NBB is "weighing whether the expense is worth the lift," i.e. the ROI. Plus there's "only so much" of that type of messaging that is right for NBB brand. So expect more emphasis on social media in 2014.

NBB's big new brand launch this yr will be Snapshot, but Kim hints there "may be another thing that we're not really talking about." Kim notes that she's questioning whether it's right to "devote gargantuan resources" chasing IPAs, since it's a "very crowded space," tho she's not excluding that possibility either.

"Pace of change" has really accelerated in craft segment, sez Kim. One "fundamental change in the marketplace" is the rise of "new smaller micro and nanobreweries that are blossoming in every community" and who "trade on the local phenomenon." Kim adds: "The way that happened was pretty damned fast." Another big change, according to Kim: the stepped up pace of expansion by regional brewers; lotsa folks opening new mkts at accelerated rate. Both of these developments change competitive dynamics and make the kind of "slow, measured" and "methodical" intros that NBB has done over yrs open to question. "I don't know if that's been to our benefit," said Kim. Tho NBB had much stronger 2d half, Kim notes that with mkt changing so rapidly, as soon as "you have the lay of the land, it changes again." Still, NBB revamped packaging, doubled its wood bbl capacity, invested more in cans, plus many more initiatives. NBB will "step up our game" in 2014.  

Final figures are in from vast majority of top 30 craft brewers and they tell lotsa varied, mostly successful, stories. First of course is overall craft segment health and expanding influence in US beer biz. While US biz shed about 3 mil bbls, 1.4% in 2013, craft up 1.85 mil bbls, 13% to approx 15.75 mil bbls, we estimate. And these figures could be tweaked when all industry numbers come in. Right now, looks like craft grabbed 7.6 share of shipments, up nearly 1 full share in 2013 alone. Five-yr trend is a knockout. Craft volume jumped 6.8 mil bbls, 77% while US biz lost 8.3 mil bbls, 4%. And craft gained 2.5 share since 2008. Not incidentally, top 2 brewers lost 17.6 mil bbls, 10% of their volume and 5.5 share during same period. Recall, 2008 was year AB InBev created and MillerCoors JV launched, as well as yr each of those brewers posted peak volumes in US.

Table below shows data we got from almost all of the top 30 craft brewers: every brewer that shipped at least 100K bbls in 2013. We estimated figures for public brewers Boston and Craft Brew Alliance (public co's that haven't disclosed data yet), as well as Anchor and Great Lakes. Our figures suggest that craft growth roughly split between these top 30 brewers (+884K bbls) and remaining 2700+ (966K bbls). But a pretty significant difference in % gains, natch, as top 30 +10% while long tail grew 19%. That meant share of craft held by top 30 dipped about 2 pts to 62.4.

Newbies to 100K- and 200K-Bbl Clubs Three brewers joined 100K-bbl club in 2013: two of hottest brewers in category - Oskar Blues (+35%); Founders (+58%) - plus Victory (+11%). As recently as 2010, just 20 brewers over 100K bbls; now there are 30. At same time, 4 craft brewers joined 200K-bbl club last yr: Brooklyn, Stone, Dogfish Head (each growin' faster than segment) and Harpoon (+6%). Indeed there's a volume jam-up with just 14K bbls separating 5 brewers from 202K bbls to 216K. Brooklyn grabbed braggin' rights of joining top 10, passing Stone (just barely) and Matt (which produces much of Brooklyn's beer), at least for now.

At the Top, Very Mixed Trends. After averaging just 4% in annual beer growth from 2009-2012, while segment posted average 12% gains, Boston Beer's craft beers up estimated 175K bbls, 8.1% in 2013. That teases out estimates for huge cider growth and continued tea gains. Boston overall shipments +23% for 9 mos and it guided to 21-24% growth for 2013 back in Nov; it hasn't reported yet. But Boston's top beer pkgs - Lager, Seasonals, Variety packs - all did well in scanner, as we reported all yr. Hard to believe that despite 8% or so gain, Boston share of craft dipped about half-point and slipped below 15. As recently as 2008, Boston still had 21 share of craft, we estimate. Still, Boston up healthy 24% since then.

Second-biggest gainer among top craft was Lagunitas, which zoomed from 235K bbls in 2012 to 400K in 2013, and was only top-10 brewer to increase share of craft. For 5 yrs, Lagunitas gain also 2d only to Boston's, up 343K bbls, over 600%. Yeah, Lagunitas septupled since 2008. Craft Brew Alliance and Shiner each up about same 8-9% as Boston in 2013; each lost a little share. But #2 and #3 craft brewers really slowed in 2013. Sierra, capacity-constrained all yr, up just 20K bbls, 2.1%, tho depletions trend was double that, as we reported earlier this month. And Sierra poised to take advantage of new eastern capacity in 2014. New Belgium's 27K-bbl, 3.5% growth even more of a surprise perhaps, since it added half-dozen mkts last yr, including Fla, tho it had much stronger 2d half (see below). Rounding out top 10, Bell's and Deschutes each matched category growth, as each added mkts as well. But Magic Hat/Pyramid took tuff loss: -39K bbls, -12%.

Below the Top 10, Ditto on Trends Only 1 other 100K+ bbl brewers down in 2013: Rogue. Otherwise, gain trends all over the lot, from +4% or so (Alaskan, Shipyard, Abita and Full Sail) to 30%+ at SweetWater, Oskar and Founders. Another traffic jam around 150K bbls, with 6 brewers between 143K and 151K, and 3 brewers tied at 146K. Only 1 top-30 craft brewer shipped less in 2013 than in 2008 (Magic Hat/Pyramid), but again trends range from 22% to lotsa doublings and a coupla exponential gains.

What Works? You Name It; Wisconsin-Only to Swedish Export Teams As striking as the numbers is the breadth of business models that have been so highly successful. Compare Brooklyn and New Glarus. Each significantly outperformed the category over the last 5 years. But New Glarus remains a single-state brewer, and proudly so, selling only in Wisconsin. On the other hand, fully 28% of Brooklyn's volume - 60,000 bbls - was exports. And a bunch of that goes to Sweden of all places, where Brooklyn about to open a small brewery. Can't get much different than that. But that's only a hint of how many different strategies are working these days. Then too, these 30 brewers operate or are building brewing facilities in 26 states that span every major region in US. On "stylistic" front, Lagunitas is really ridin' the IPA train, while only a small percentage of Boston's volume and barely any of Shiner's in IPAs. And Founders' is rockin' with some of its fastest growers in much less popular styles (porter and scotch ale), plus a low-ABV IPA. Some brewers are aggressively pursuing new markets, others adding much more deliberately. And there's a growing number of contract concepts as well (Brew Hub, Two Roads). Brooklyn's Eric Ottaway points out the many roads craft brewers now takin': higher price/low volume, cans-only to draft-only, national vs regional vs local, plus brewers as farmers, hoteliers, multiple outlet retailers, distribs, you name it. "We have a lot of creative people pursuing all kinds of interesting models and the bigger we get as an industry the more inventive we seem to be getting. The crazy thing is I feel like we're just getting started," Eric sez. And current combo of innovation and energy "is what's going to make this train impossible to stop."  

Loveland Distributing of Va, one of the distribs that got SweetWater in its recent announcement, is part of MillerCoors network, not ABI like the other 3 distribs, as we reported last issue.