With the Great American Beer Festival starting tonight, Denver Post ran long searching article with the headline above this afternoon.  GABF has 49,000 attendees, sampling over 3100 beers from 624 brewers on the floor.  The GABF beer competition has 4875 entries from 745 breweries, tasted by 204 judges.  And it sold out in a record 20 minutes.  There was a “lengthy wait list” for brewers “accustomed to registering at their leisure,” noted Post.  Growth of the festival “mirrors the growth of independent craft brewing,” it added, and “organizers are seeking new ways to balance inviting as many people to the party as possible while keeping things manageable.”  The good news: “Relief is coming.”  GABF will get 30% more space at the Colo Convention Center, starting next yr thru 2020, “allowing them to sell more tickets and squeeze in more breweries,” wrote Post.  Next yr, GABF will expand to 380,000 sq ft in 4 exhibit halls, instead of 290,000 in 3 exhibit halls.  “We’re victims of our own success,” said Strange Brewing co-owner Tim Myers.  “All the new breweries, all the growth in the number of drinkers…this was inevitable.”  While “making changes” to GABF “is a little like turning a battleship,” as mktg and sales director Barbara Fusco said, starting next yr “we’ll be able to get more people in and more brewers in.”  Watch for our GABF coverage in future issues.  

They’ve been evangelizing for good beer in NY for years. Now several of the highest-profile craft-forward publicans in city are getting ready to brew their own, figuring they’ve got finger closest to pulse of customers’ tastes.  And they’re reaching to ranks of city’s talented home brewers to develop their styles.  Here are mini-profiles of trio of brewing projects under way by operators of Bierkraft, Brouwerij Lane and Alewife. 

Bierkraft, in Brooklyn’s elegant brownstone nabe of Park Slope, started out as bottle shop, added taps for growler fills, food operation in adjoining space, then beer garden out back, to point where it now sells 1,000 different bottles, manages 14 taps, and has won rep for cheese and charcuterie selection.  All the while, owners were brewing small batches out back for their own edification.  When 1-bbl system became available from Barrier Brewing as Long Island nano upgraded, they shoehorned it into bottle shop and started brewing for keeps – initially, until required licenses come in, offering the beers free to patrons as tasters at growler bar.  Cellar mgr Joe Tracy acknowledged a few quirks that come of being a retailer – say, need to retrofit Barrier system to run on electricity, not gas, because of fire hazard. The fun will come when the bar starts inviting some of its favorite brewers to collaborate – “the Barrier guys for sure” – and even other NY bars.

Over in funkier Greenpoint section of Bklyn, early Brooklyn Brewing exec Ed Raven has established import biz Raven Imports, which brings in European beers like Gaffel and Jever, and compact bottle shop, tasting room and beer garden with old-fashioned Dutch front called Brouwerij Lane (that’s Dutch spelling).  Now he’s going big, and bold, with imminent opening of brewery called Grain Terminal nested with 240-seat restaurant called Dirck the Norseman (reputedly the first settler of Greenpoint).  Tho sunset views over Manhattan should be undeniable draw, beer will be central focus of both sides of biz.

Raven’s basic motivation was that he needed bigger place to entertain – and to accommodate 50+ German beer garden tables he splurged on a year ago.  “Showcasing our import brands was the initial idea, but I realized I had access to quite a few great home brewers,” Ed said.  “It was an easy decision.”  So he’s installing 5-bbl system and will initially keg everything, tho champagne bottling system is anticipated down line. Chris Prout, a home brewer who works at Brouwerij Lane, has been given marching orders “to complement the types of beer we import now” with big flavorful American-style IPAs, tripels, sours, saisons brewed from the most expensive ingredients for maximum bold flavor, Raven told CBN.  “Depending how well the restaurant portion does, then we will know how much we can release to the trade,” he said.

Meanwhile, at Alewife NYC, in burgeoning Long Island City nabe of Queens, Patrick Donagher will launch 1-bbl system this holiday season, with view to moving to 7-bbl brewhouse and 15-bbl fermenters if idea proves viable.  Donagher, who co-founded midtown Manhattan mecca Rattle N Hum a few years ago, figures that after early flurry of NYC brewpubs starting in 1990s failed to prove viable, market has matured enough to be worth another try.  He’s brought aboard as brewer Charlie Wildman, perennial winner at Alewife’s homebrew fests, whom he’d helped set up with Brooklyn nano called Bed-Stuy Brewery.  Wildman’s being urged to create sessionable IPA and bitters, porters and other beers based on favorites served at Alewife.  “There need to be more local brewpubs in New York,” declared Donagher, who’ll serve as Wildman’s brewing asst. “This time they’ll be here to stay.”

A difficult couple of years transitioning between 2 new ownerships ain’t getting any easier for the Pyramid brands.  Its Berkeley, Calif brewery is currently “offline” after parent co North American Breweries “identified a quality issue,” an NAB rep told local station KTVU.  But the reporter hadn’t called in response to just the shutdown.  The 15 employees at the plant (not the attached restaurant, which remains open), say they have been laid off and “told not to come back unless they were called,” and claim the action is in “retaliation for trying to unionize” in August, according to KTVU.  Workers told the station that “cleanup would take only a week,” but now they’re “wondering if they will make beer for Pyramid ever again.”  NAB provided no comment to KTVU on the labor dispute.  Meanwhile, workers say “that morale had declined after a change in management”; one 12-yr employee claims he hadn’t gotten a raise in 4-5 yrs, while another said “I never had a full 30-minute lunch-break in a year and a half.”  When running, the plant produced “more than 3 million bottles of beer and 20,000 kegs,” according to the article.  A video component says new union workers will meet with NAB this week.  We’re reminded that one of the previous times that Pyramid was for sale (it has changed hands 3 times in 5 years), a prospective suitor told us that the downtown Berkeley brewpub sat on really valuable real estate.  We have no knowledge that this is in any way related to the current labor strife, but it is interesting background.   

While we know all about the fast growth of many brewers, Inc magazines’ Fast 5000 has pointed those outside the industry to some players’ impressive growth.  The list ranks US companies with over $2 mil in revs by 3-yr revenue growth trends.  The 2013 list varies from 3-yr growth rates of +34% to +42,148% for companies with revs between $2 mil and $10.1 bil.  And this yr, 5 brewing companies made the cut, tho many more may have had they applied to be on the list.  Oskar Blues ranks highest at 1910, its 4th time on the list, revs +198% over 3 yrs to $33.7 mil.  OBB added 46 employees across 3 yrs to 220 at the end of 2012.  And while not BA-defined “craft,” Narragansett, which has been intro-ing plenty of craft-aligned brands, hit at 2437 on Inc’s list, also for the 4th time.  The RI co grew 148% over 3 yrs and topped $7 mil in revs in 2012.  Stone Brewing’s $103.4 mil in revs in 2012 was 114% over 2009.  It added 220 employees since then (and more this yr, as we’ve written) and has made the list 8 other times in 2002, 2003 and every year since 2007.  New Glarus has also made the list every yr since 2007 and came in ranked at 3979 this yr.  Its revs are up 68% since 2009 to $31.4 mil.  The largest brewer on the list rounds it out: New Belgium +41% over 3 yrs to $179.6 mil in revs.  NBB employed 457 at the end of last yr, 122 more than it did in 2009, according to Inc.  

Food and Beverage companies on the Fast 5000 grew revs about 82% collectively over 3 yrs.  Environmental Services and Energy companies grew the fastest all in, +240% and 209% respectively.  Of those food and bev-focused co’s that made the list, at least a few are popular restaurant chains known for their interest in craft.  Take SmashBurger and Twin Peaks, each +250-255% for 3 yrs.  These chains have been ramping up outlets quickly and more are on the way.  About 70% of the combined 2500 jobs at both chains didn’t exist in 2009.  The list is rife with words like “organic,” “healthier,” “local,” and, ironically, “small.”  About a quarter of companies on the list earned between $2 mil and $5 mil in revs, while just less than half earned $2-10 mil.  NY, DC, LA, Chicago and Atlanta are homes to the largest number of companies, in that order.  There are only 158 Hispanic founders represented on the list (3.2%) and just 82 black founders (1.6%).  Twenty of the 5000 companies went public in the last yr.  

Less than 3 yrs after Neb closed loophole in state law and barred brewery branches, craft brewers seek “loosening” of state’s distribution laws, reports Omaha World-Herald.  Several spoke at committee hearing last week for bill that would call for “interim study” of craft brew biz in state.  Caleb Pollard of brand-new Scratchtown Brewing said his kegs would have to come from 65 miles away to a bar 3 doors down from his brewery.  Newbie Ploughshare Brewing complained that distribs add margin of 25-35% “which the brewery ends up eating,” paper reported.  Nebraska Brewing Co’s Kim Kavulak asked for excise tax break on craft beer.

Recall that in May 2011, Neb Gov signed bill that banned branches in state; craft brewer cap is 20K bbls in Neb.  Branch ban closed loophole in state law that had allowed long-closed, in-state brewer Storz to self-distribute.  Subsequently, Storz label now being revived and its brewer interested in self-distribution.  Neb law had passed with support of distribs, MillerCoors and state liquor control director Hobert Rupe (not AB, natch).  Hobert was “only person to raise concerns” about interim study bill last week, Herald reports.  He said breweries can already sell to customers in their tasting rooms and technically ship that keg around the corner if distrib does paperwork.  He also has issue with “legality of taxing big brewers and little ones at different rates.”  

Though Category Captains enjoy “a central and growing role” that provides clear value for retailer chains, the Brewers Assn’s most recent BA Insider suggests objectivity is a “challenge inherent in this model” and argues that “most” retailers “leave significant money on the table” by using said model.  Instead, “great potential exists” for retailers “by investing in their own analysts” or at least “vetting” Category Captains’ findings.  Furthermore, it behooves “ABI and MC to work harder to ensure” current Category Captains “act in an empirically objective manner.”  That’s because, in the BA’s view, “if the current trends” in CatMan “continue” or “become even less objective,” it “would augment arguments that this constitutes unfair trade practices and would invite regulatory intervention.”

That’s some strong language to conclude the column’s appendix, following much discussion of the current state of Category Captaincy, an in-depth case study of one hypothetical reset at one San Diego outlet and plenty of recommendations for retailers.  Gotta note that AB and MC would certainly disagree with much of this analysis and indeed have repeatedly presented counterarguments.  Meanwhile, this BA report cites that ABI is Category Captain in “100% ACV of all big box stores, 80% ACV of drug store chains, 65% ACV of grocery retailers, and 45% of liquor store chains,” according to consultant Bump Williams, and MC controls “the remaining balance” with “few exceptions.”  (Separately, MC has said it is CatCapt in more than 45% of its volume.)  Bump also estimates 250 people fill these roles for the 100 largest beer retailers.  As such, “many breweries must operate knowing that a person employed by a direct competitor will substantially or entirely” decide their fates at these retailers.  Large brewers and thus many current CatCapts argue that craft is given too much space at retail, the column reminds, but the BA has “strong evidence” to the contrary.  

This column builds on previous work presented by the BA’s Market Development Committee.  Recall the deep dive into shelf space and associated profit last year (see CBN vol 3 #55).  This report reiterates that “less popular packaging formats” from CatCapts and Validators add less “to retailers’ bottom lines” than craft SKUs do “in comparable shelf sets.”  To demonstrate the possibilities, authors worked on a hypothetical reset for 1 San Diego retailer.  The original set was recommended by CatCapt ABI and Validator MC.  The reset replaced 17 of 141 units (16 of 124 unique SKUs, due to case-stacking in the wells).  The new set, according to the study, would have earned the retailer $13,784 more than the original set per location across 7 months thru July 14, based on IRI scanner data.  

Five of the 16 brands removed from the set were ABI, 6 MC and 5 craft.  Specific targets included Goose Island brands, which “cannot muster the historical sales data” in the SoCal mkt “to justify five placements” in this set.  Most “new entrants” must “prove themselves” with just 1 package before getting more placements, the report argues, so in this reset 3 Goose brands were swapped out.  Henry Weinhard’s also gets hit since “even in the brand’s Pacific Northwest home market, it is experiencing double-digit sales declines” over 26-weeks, with “similar sales declines” in NorCal, the brand’s #2 mkt.  Leinenkugel Sunset Wheat, -20% YTD thru Jul 14 according to the data, gets swapped out for an unnamed craft 6-pack that’s more than $2 less expensive per case, but up 227% YTD.  

Indeed, only one brand removed from the set (a craft 12-pack, by the way) had a positive trend thru Jul 14: +179%.  Five of the 16 SKUs removed in this reset did not make the top 500 packages in the market, so no data was available for them (authors do not include or use data for 5 brands that replace these, to maintain an accurate comparison).  An additional 5 removed brands have no sales trends compared to yr-ago, implying that none of the 5 was available, at least in SoCal, a yr ago.  Only 1 of the brands chosen to replace them has no reported trend.  One craft 6-pack of cans was just up 4% YTD, another 6-pack was up 80% and the remaining 11 SKUs all had triple-digit $$ trends.  

This BA Insider provides plenty of recommendations for retailers too.  First, remember the difference between a “power brand” and a “power SKU.”  This is another recapitulation of the familiar argument from craft brewers that not every package size for each major brand should be included in each shelf set.  “In many cases,” the BA argues, “alternate SKUs would perform better than superfluous package formats or line extensions strategically created by the big brewers to monopolize shelf space.”  Further, craft brands perform better across a slew of metrics, including “profit per case, market basket value and drawing power,” as well as all-important “incremental profit,” according to the report.  So authors recommend that retailers “should be sure to hold all of its brewer suppliers to the same objective performance standards,” “carefully vet” CatCapt and Validator work, “look out for their own interests,” and make sure CatCapts and Validators do not “team up to unfairly push their own brands ahead of more profitable and attractive craft brands.”  Indeed, retailers may find that using their own people to make these decisions, instead of Category Captains, could “pay for itself many times over.”  

Xyience Xenergy has kicked off Ronda Rousey Vegas Getaway promo that offers consumers chances at tickets for 2 to Ultimate Fighting Championship bout on Dec 28 that features Rousey facing off vs Miesha Tate as co-main event.  Winner and guest get chance to meet UFC women’s bantamweight champ during open workouts.  Vegas-based energy brand has been workin’ its Rousey connection hard, as 26-year-old’s visibility rises via such activities as co-starring role on reality TV series on Fox Sports 1 and role in Sly Stallone vehicle Expendables 3.  Rousey’s image appears on special Xenergy can showcased at recent NACS c-store expo. 

Influential Northeast Independent Distributors Assn has just added its 30th member, Duchess Beer Distributors of Kingston, NY, primarily a Bud house operating in 4-county area in Hudson Valley area north of NYC.  That brings total # of distributors in influential network to 30 and fills out territory, at least as envisioned currently, noted exec dir Ken Sadowsky.  Details on group at NIDAonline.org. 

After seeing promising results during initial launch via handful of DSD houses in Northeast, Sunny Delight Beverages said Dr Pepper Snapple Group has picked up its new Sparkling Fruit2O line on national basis as key play in booming zero-calorie segment created by Talking Rain’s Sparkling Ice brand.  As reported, Fruit2O launched in Raspberry Lemon, Grape, Mixed Berry and Strawberry flavors (BBI, Aug 28), under trademark that deserves credit for pioneering flavored-water segment that Vitaminwater fully exploited.  “Consumers want simplicity.  They are seeking a trusted brand that can deliver the great tasting, zero-calorie flavors and bubbles they want without all the hype.  By meeting this consumer need, we plan to help grow the entire flavored water segment,” declared Sunny D associate marketing dir Ed Klene.     

Starbucks offered another strong qtr, with Q4 net revenues rising 13% to record $3.8 bil and operating income soaring 29% to $669 mil.  For full year, net revs rose 12% to $14.9 bil and operating inc grew by 23% to $2.5 bil, for “by far the best year in Starbucks’ 42-year-history,” exulted chmn/ceo Howard Schultz.  SBUX opened 1,701 net new stores in year, leaving year-end total at 19,767 units globally.

For qtr, Americas biz was driven “stunning” 8% surge in same-store sales compounded of 5% traffic gain, 3% register ring gain, chmn/ceo Howard Schultz noted.  It made for 15th consecutive qtr of US comp growth higher than 7%.  At same time, troubled European biz looks to be on verge of turnaround, SBUX execs suggested. 

Among highlights cited by SBUX execs on conf call Wed eve was opening of Teavana café on NY’s Upper East Side, along with high ambitions to use brand to elevate tea presence within core Starbucks stores, and continued expansion of La Boulange baked goods line thru network.  SF baker, acquired last year, offered chance to resolve co’s longstanding underperformance on food side, and should be ensconced in half of Starbucks’ 7K US stores by end of year, with key markets like NY having just come on.  Further, La Boulange is testing lunch concepts in some SF stores, as way to boost performance in sometimes-slow daypart for stores, with rollout envisioned for next year.  Food added 2 points of growth in lunch/bakery even with La Boulange in just 15% of N Amer stores so far, noted cfo Troy Alstead. (Note that, if history is guide, greater emphasis on selling meals in Starbucks stores could alienate delis and other food rivals from carrying Starbucks-branded RTD items in their stores.) 

Personalized CSDs Could Offer Afternoon/Evening Sales Boost   SBUX brass shed no light on RTD brands such as Frappuccino, Doubleshot or Refreshers, tho all are believed to be performing well.  Nor did they indicate whether ascendant Teavana tea brand may eclipse Tazo as premium RTD play down road, as some observers expect.  Execs did voice continued enthusiasm for in-store test of personalized carbonated sodas in stores in Austin, Atlanta, Japan and Singapore.   “Carbonation, that is a new category for us,” said Schultz.  With test results “very encouraging,” it seems “there’s a significant opportunity, and again, we learned a lot over the last few years with our refreshment category that we have other than coffee and the opportunity in coffee, we have an opportunity to provide a need state in the afternoon and evening around refreshment.  And we’ve learned in the carbonation test itself that there’s a significant food attachment to the carbonation beverages.  So this works hand in hand with our opportunity and I think we're going to create more incrementality.”  “Stay tuned” in coming months, he advised investors.