Leading into this weekend's 4th annual Utah Beer Festival, Salt Lake City News detailed "how lucky" residents were to have a "strong community of local brewers, especially given our oft-maligned liquor laws." Today in Utah, "you can find locally made beer in almost every restaurant and bar in the state," touted City News. This year alone, 4 craft brewers have opened or are about to, joining group that was started by Wasatch Brewing back in 1986. Among newbies is Avenues Proper Restaurant & Publick House that opened in late April. Besides offering its own beers brewed with its 5-bbl system, gm/co-owner Andrew Tendick also "provides a curated selection of some of Utah's best beers," in both bottles and on tap. Bonneville Brewery, a 10-barrel which just opened in Mar is hoping to increase capacity and add a bottling line soon. Then there is soon-to-be opened Vernal Brewing Co, in Vernal City, which has cut through red tape with city board to become Uintah County's first brewery. Co-owners Ginger and Eric Bowden decided to take the plunge as brewers after owning a home-brewing supply store the past 3 yrs. They plan on offering 5 flagship beers to start.

There's plenty going on at Utah's established brewers too, with many expanding their operations and offerings. Wasatch Brewery (opened in 1986) was merged with Squatters (opened in 1989) via Fireman Capital Partners buyout just under a year ago. The two brewers, nicknamed "Squasatch" by Utah beer blogger Mike Reidel, are benefitting from $35 mil investment from Boston-based firm. Wasatch "plans to open breweries in other states," and is planning on canning in Utah while Squatters expanded production in May and again this month with new tanks and added new packaging equipment too. "Fireman Capital Partners was a good fit for Squatters because they love that we keep it local, and they want to keep it that way," said Dan Burick, dir of brewing oper. Meanwhile, Uinta Brewing Co, largest craft in state has been thinking beyond Utah borders for a good while and continuing to expand. Uinta "is now in Phase 3 of an expansion that will triple" its capacity, noted City Weekly. Uinta is avail in 26 states and while no new mkts were added in 2012, expansion was necessary since existing accts "simply wanted more of it." To read City Weekly's full roundup of Utah craft news click here.

Share Shift in Utah Beer Mkt Utah still has the lowest per capita beer consumption in US at 20.4 gals in 2012, but there is a definite shift towards beers from smaller brewers. While AB still holds 45.4 share of Utah mkt, it lost 8.5 share over last 4 yrs while "All Others" which includes craft, has grown from 11.8 to 19.3 share from 2008-12. While MillerCoors (+0.4) and Pabst (+2.0) added share over last 4 yrs, top importers Crown and Heineken lost 1.5 share combined during that period.

Ubiquitous beer weeks around US getting momentum and media galore. DC's City Paper ran full Beer Issue anticipating events in nation's capital this mo, with feature on DC's singular distribution law, plus deep dives into revival of Heurich brand and cask ales and review of numerous collabs celebrating DC Beer Week.

DC has permit system that allows retailers to get beer from local and out-of-state brewers direct, skipping middle tier completely. Just have to fill out "one-page importation permit" and pay 5-buck fee and tax on each shipment. Some retailers simply drive out of district and buy beer direct. Paper cited example of Pizzeria Paradiso proprietor who picked up a Portland, Me cider on recent trip to make his bar "look like a premiere place to go drink beer." Same system allows not only DC brewers to self-distribute, but "even breweries from other states that are too small to distribute through wholesalers or want more personal control over distribution, like Virginia's Mad Fox Brewing Compnay and Maryland's Franklin Brewery, take advantage of DC's unique 'gray laws' to make their products available exclusively in their home state and here, where they often have a better chance of gaining buzz." Of course, there is an assn of DC distribs and of course it's been trying to amend law, but so far unsuccessfully. Yet even that assn mostly focused on wine. Just a tiny percentage of beer sold in DC eludes distribs - 200 bbls vs over 37K that went thru wholesalers in June - City Paper reported. In fact, sales mgr from beer distrib Legends (an L. Knife entity) likes permit system, calling it a "blessing." Why? "It helps people stay excited. No one is going to make a living from buying beers off the shelves in other states and importing them." Indeed, in follow up article, City Paper pointed out that some of the beer bought in other states and brought to DC has actually gone thru 3-tier system. On other hand, more like 1 of 6 bottles of wine come into DC via permit system, according the distrib assn, and it's more focused on changing that. With on-premise scene so competitive in DC and more bars "reaching out to smaller and smaller breweries further and further away just for the novelty of it," it will be interesting to watch whether current system stays in place and/or possibly spreads.

Some licensed festival organizers and retailers are risking their licenses by inviting unlicensed beer suppliers to slip through the cracks. Last Saturday, a Fla homebrewer took "over the taps once again" at a Miami bar for a "donation-based event" to help the hopeful "brewing company" purchase a bottling line, according to the bar's Facebook page. The event was picked up in advance by a Miami News-Times blog that hoped to attract locals to the bar, noting that the co expects to be licensed soon and up and running by early next year. It wasn't the first time the not-yet Brewing Company's been written up by the paper's online bloggers.

Across the country, last week the California Craft Brewers Assn put a note in their monthly newsletter alerting readers that homebrewers have been "'donating' their beer and participating in beer festivals and other events." CCBA director Tom McCormick explained to CBN that he's been "seeing a lot of activity in the marketplace by individuals who are not licensed," including having a booth at a festival with a branded "Brewing Company" name, Facebook page, merchandise, etc, next to licensed companies. A talented homebrewer can "look and feel and taste like a brewing company," but isn't one.

In these cases, Tom reminds that it's the "license holder," the festival organizer, who's "not doing their due-diligence." Similarly, American Homebrewers Assn director Gary Glass, when asked about the Miami case above, expressed surprise that the retailer would put his "license at risk." Is the draw of having the hottest, newest, perhaps best beer available, even if it's unlicensed, worth losing a license? Gary suggests that, at least as far as the homebrewers themselves are concerned, most "are not trying to break the law." Indeed, the AHA posts homebrewing laws for each state on its website; however, since the growth of the hobby has been "so rapid," there's been a "lag…on the enforcement side" from state agencies.

Take beer-loving Oregon, which had a homebrew law "dating back to the repeal of Prohibition," Gary explained, that only provided "for consumption in the home." But the Oregon State Fair had run a homebrew competition for 22 years before it was "shut down." A more "comprehensive homebrew bill" was intro'd and "sailed through the legislature" to allow for the competition, but similar stories repeated in Wisconsin, Illinois and California when festival organizers sought more information from state agencies, who turned around and said no to sharing homebrew entirely. Tom explained that Calif's homebrew laws were particularly "restrictive" before the law change: homebrewed beer could not leave the home in which it was brewed for any reason. Now, as in Wisc and Ill, laws were revised to allow for competitions and festivals, which Gary noted "happened for years before there was any kind of enforcement." In that time, homebrewers have used those events as ways to gain visibility in the community, connect with beer lovers, gain brewing experience and test out brands and recipes before launching successful brewing bizzes. With increasing craft excitement, these activities are bound to continue, but they're also likely to receive greater scrutiny.

The danger, Tom notes, is that if these unlicensed brewers "do something wrong, policy can change very very quickly, in a kneejerk reaction." His assn's "greatest concern" is that an unlicensed company is "perceived to be a legitimate brewing company," as the CCBA's primary role is to protect its membership. While "part of our mission is to help people start breweries," Tom says, he's got enough work with the state's burgeoning licensed brewers, without worrying about the unlicensed ones. As such, Tom and his team are "starting an outreach program" to homebrewing clubs around Calif, to help them keep members in-line with state regs. Gary "would love to see more laws on the books" like those passed in Oregon and Wisconsin, which "allow for a vibrant homebrewing community" with less risk of unlicensed activity. The AHA, of course, is a branch of the Brewers Assn, so Gary and others are deeply invested in working to "foster those homebrewers that are going to go on to…starting their own breweries." But he also doesn't "think there needs to be tolerance for illegal behavior." It's safe to say though that more homebrew laws are low on the priority lists of many state legislatures, so in the meantime, it's up to local beer communities to keep their eyes open for risky behavior and work to correct it before that "one incident" that, as Tom says, could "change policy dramatically."

More upheaval on Chi distribution scene as much-in-demand cult brewer Three Floyds recently terminated local distrib Louis Glunz, tho not for cause. Under Ill law, supplier can move brands for FMV if under 10% of volume. "We're very disappointed," gen mgr Jerry Glunz told CBN. "We helped them from day one, when they were down and out" and Glunz steadily grew Three Floyds. "There's no loyalty," added Jerry. Word on street is that Three Floyds will be going to Windy City, the craft centric distrib purchased at the end of last yr by Reyes Bev Group, nation's largest beer distrib.

Recall, Glunz is about a 1.6 mil-case distrib with big craft/import book. Within the last 12 mos, it lost both Dogfish Head and Revolution. Each brand went to Chi cluster of MC distribs; Dogfish Head after attempted termination and brief, nasty legal battle and Revolution, settled for fair market value without litigation. Three Floyds is a bit less than 150,000 cases, CBN hears.

Glunz has lost several key pieces of its portfolio in last 12 mos. And now it is competing against both an awakened MC network that is determined to get more active in craft and a winning Windy City that has deep pockets of RBG behind it. Another RBG co, Chi Bev Systems, which is part of MC Chi cluster, has also just this week added 2 more up-and-coming local crafts, DESTIHL and BrickStone Brewery. CBS competes against Windy City up and down the street for craft tap handles. This is first time that Reyes Bev Group is competing against itself as well as going outside its MC territorial footprint (with Windy City) and competing against its MC brethren.

For those and many other reasons, Windy City bears watching. Recall, RBG paid in neighborhood of $70 mil for this craft centric distrib that was a little over 900,000 cases in 2012. It is reportedly up somewhere in the neighborhood of 40% this yr, led by Lagunitas, which is basically doubling. And that's before Lagunitas opens its Chi brewery, still slated for late this yr. With the addition of Three Floyds, if that's where the brands go, Windy City would be pushing close to 1.5 mil cases at end of yr 1. And have a solid shot at doubling in 2 yrs.

But that is only one of key threads in Chi mkt that is exploding with craft beer action. Recall too that Deschutes, Ballast Point and other brands recently entered the mkt and went with Wirtz Bevs, a leading local wine and spirits distrib. Wirtz has also significantly ramped up its investment in craft. And of course lead local craft Goose Island was purchased by AB only a little more than 2 yrs ago. Goose seeks to maintain its local relevance even as it expands rapidly around US. AB initially stated bold natl ambition of taking Goose to 1 mil bbls in 3 yrs. Chi craft scene is developing at warp speed with all kinds of distribution fallout.

Some still have a chip on their shoulder about beer, including some larger craft execs on the lookout for signs of a shakeout and some mainstream sources that picked up on last week's Gallup poll, which illustrated declines in beer's popularity over the last two decades. But lots (and lots and lots) of others are still happy to share satisfactual expansion stories far and wide. For example, Abita shared plans for what it'll be brewing up with the 200-bbl system it'll install in early 2014 with Nola.com. The La brewer will debut 2 new seasonals (summer and fall), move Lemon Wheat to its Harvest series along with a new Grapefruit IPA (replacing Satsuma Wheat), and plenty of new "Select" releases. In Fort Collins, Colo, Odell is in the midst of a major buildout that'll triple capacity up to 300K bbls by next yr, tho the co told the Coloradoan that it doesn't expect to fill it as quickly. Instead, co-founder Wynne Odell said they expect to hit about 78K bbls by the end of 2013 (about 16% over 2012's 67K bbls). A full 70% of Odell's beer stays in Colo; the rest is shipped to 9 other states (and some to the UK), soon to be 10 with the addition of Texas. Elsewhere, Stone Brewing is prepping more new additions to its growing San Diego beer empire in the form of 2 airport restaurant locations, according to the San Diego Daily Transcript.

$14 Mil Third Street Upgrade Takes Cold Spring to Craftdom Go-to Minn contracter Cold Spring has implemented some huge and some subtle changes over the last year, detailed in a deep dive by the MinnPost this week. Cold Spring finished a yr-long expansion into an 80K sq-ft, $14-mil brewhouse last year. Aims to get away from making "mediocre" or "crappy beer," per VP/GM Doug DeGeest's blunt description of some earlier Cold Spring products, and improve its reputation. Nonalc contract production is still over 60% of the facility's total production (much of that for Monster brands), and contract work is about 75% of beer production. But Cold Spring expects to grow its beer output from 75K bbls last yr to 140K bbls next yr, a growing portion of that is its proprietary Third Street brands. It's now putting that moniker on much on its craft contracts, like 21st Amendment packages, which it's produced since 2009. Then, 21A paid $388K for the contact; "last year, it forked over nearly $3 million" and will head towards 65K bbls. Don't expect to see too many more new contracts tho, as Cold Spring hits packaging capacity and "routinely rejects" new beer and nonalc contracts.

Crowded Craft Markets Keep Expanding to Make Room: SW Mich, Sacramento, Portland, OR Folks keep looking for signs of saturation, still mostly elusive in the most crowded craft markets. The Michigan craft market continues to see big changes and new entrants, according to a Michigan Biz report. Bell's is in the middle of its $12-mil expansion, not far from Arcadia Ale's new $6.5-mil Kalamazoo location, expected to come online early next year. That'll enable Arcadia to pump out closer to 30K bbls and expandable up to 60K and hire 3 new sales people. Also in Kalamazoo, BiggDogg Brewery plans to open its $1.5-mil facility in Oct and Boatyard Brewing is working towards opening its 40K sq-ft facility to brew thru a planned 25-bbl system. The Sacramento Bee reported a 56% increase in IPA sales in IRI data for the Calif capital city during the first 6 mos of 2013 recently. Nearby Knee Deep Brewing is embarking on a $1-mil expansion. Rubicon Brewing "opened a new brewing facility in West Sacramento" in July to help brew another 4K bbls/yr, according to the paper. As further proof of the city's craft-love, the article notes local distrib V. Santoni & Co's 1800 beer brands now compared to 300 just 5 yrs ago as well as a local liquor store's change from 4 coolers of "large domestic brands" to 2. As Santoni is "trying to go ahead and take some risks and pick these guys up while they're new," the liquor store owner "has to turn down requests to stock a new beer 'almost every day.'" Just a little further north in that craft haven Oregon, half of the beer brewed in state stays there, according to a Portland Business Journal report. Rogue prexy Brett Joyce's insistence "that Rogue has no discernible growth strategies" is set next to Ninkasi's $20-mil expansion that will "increase its potential output from 100K to 275K bbls a year."

Satellite Bizzes Grow Craft Too: "Ninkasi Effect," Yeast Labs, and Farmers Growth for craft breweries also means opportunities for related bizzes that support craft culture. And in Eugene, Oreg, home of Ninkasi Brewing and a number of other smaller brewers, local t-shirt and merchandise vendors, printing firms, and others and seeing notable lifts in the bizzes due to craft beer's success there, wrote the Register-Guard. In Texas, the new Alamo Yeast Labs is teaming up with San Antonio Cerveceros "Craft Beer Community" to create Brewatory, a combo tap-room, laboratory, homebrew classroom in San Antonio, according to Bionews Texas. More and more North Carolina farmers are getting started growing raw materials to support the state's growing brewers, according to local radio NCNN.

More New Breweries in Queens and NW NY, KC, and SD Joining the many other NYC breweries and adding to the boro-named Brooklyn and Bronx Breweries, Queens Brewery has started contracting up in Saratoga, NY as it searches for a space to brew within NYC limits, wrote DNAinfo New York. On the other side of the state, seven new breweries are in the works in the greater Buffalo area, according to a Buffalo News report. A mix of nano, farm-breweries and brewpubs, at least two breweries will open in the area before the end of the year, another four are expected in 2014 and a third is already planning on a 2015 opening. Four more breweries are "scheduled to open soon" in Kansas City, the city's Star reported this week, following in the footsteps of local leader Boulevard Brewing, in addition to "several others" in earlier planning stages. Of the four soon-to-open projects, plans range from 2- to 30-bbl systems. Up in South Dakota's Sioux Falls, a tiny nano looks to tap into local homebrewers for constantly rotating recipes, according to the Argus Leader. While the state has largely lagged more general craft growth, local craft bar Monks serves "40 kinds of craft beer on tap and more than 200 craft and imported bottles behind the bar."

Major tv network Fox picked up an unnamed comedy series based on Dogfish Head founding couple Sam and Mariah Calagione, according to Deadline Hollywood. Not much detail yet, but the show will be written and acted by another married couple (and longtime friends of the Calagiones), Ken Marino and Erica Oyama who "know the rewards and challenges that come with being a couple that works together and plays together," Sam wrote in a note to his "Dogfish co-workers," which he shared with CBN. The show and the fictional brewery featured in it won't be branded Dogfish in any way, Sam reminded, tho his relationship with Ken (which dates back to Sam's homebrewing days in NYC when the two were roommates) will allow him "to work on the show as the brewing/story consultant." Sam wrote to his DFH team that the show will be "mostly about a boot-strapping mom and pop couple and company," while Deadline explained the show's focus as "a couple who are working on their American Dream" as they "build a company from the ground up and blend their employees and children into one big happy family."

Longtime Shipyard head brewer and co-founder Alan Pugsley will only work in an advisory role for the brewing company going forward and will sell back his 20% stake in the co, according to the Portland Press Herald. Alan will spend more time consulting with new breweries, like the Davidson Brothers new brewery in upstate NY, as well as lead some brewery tours in the UK with Virgin Vacations.

While Congress continues to mull over the two already-intro'd beer excise tax bills (the Small BREW and BEER Acts), they'll now also be dealing with a bill that the growing US cider industry hopes will "ensure that ciders are taxed consistently." The US Assn of Cider Makers announced the intro of the CIDER Act, which would adjust rules affecting cider's taxation, currently based on carbonation and alcohol content and only applicable to apple-based ciders. The bill extends cider-tax rates to pear products and increases allowable carbonation before tax-rates typically applied to champagne kick in. The bill "really is about updating the tax law to reflect the realities in today's cider marketplace," USACM prexy Mike Beck explains in the release. That's akin to arguments some small brewers have made while urging legislators to adjust "antiquated" laws to match today's beer market. The bill's chances of passage are unclear, tho it does have the support of important Ways and Means Committee-members, wrote Bloomberg. That publication misstates some tax rates (cider is taxed at the same rate as small brewers, $7/bbl or almost 23 cents/gal; the large brewer rate is about 58 cents/gal) but also notes that "Capitol Hill jockeying over comprehensive tax reform has clouded prospects of special-interest tax bills."

Craft shipments continue to outperform in Missouri, up 7%, 7300 bbls Jan-Jun while total shipments were down 5.5%, 122,500 bbls. Craft has picked up 0.6 share YTD to reach 5.3 in Mo. Top craft brewer in Mo, Boulevard is off 1.4%, 450 bbls while next largest Schlafly and Boston Beer gained 4% and 1.3% respectively. New Belgium in #4 spot, gained 9%, 670 bbls and rounding out top 5, Mothers Brewing jumped 72%, 1550 bbls Jan-Jun. Urban Chestnut is hot too, more than doubling with a 1400-bbl gain. Deschutes up 24% but O'Fallon (-16%) and Sierra Nevada (-13%) were down double-digits YTD. Others of note: Bell's flat while Lagunitas up 59%, 400 bbls and 4 Hands Brewing jumped 170%, 760 bbls thru June. AB (-6%) and MillerCoors (-6.6%) down mid-single digits but still held 85.7 share combined in Mo.

Still more shoes to drop in lawsuit brought by distrib Garal vs a handful of brewers (Abita, Belfast Bay, Flying Dog, Shipyard) and 3 distribs after brewers terminated Garal and moved brands earlier this yr. (See CBN #20 for details). Recall that brewers terminated based on Small Brewer Amendment to NY law 55-c that allows brands to move if brewer is under 300,0000 bbls and brands are less than 3% of distrib volume. Garal sold off 70% of its total biz (Pabst brands) to NY distrib in Dec 2012. Brewers terminated after that, assuming the 3% applied to 12-mo period. Garal sez limit applied to share of biz at time of termination, when those brewers were over 3%. Most of brewers and distribs have yet to respond to lawsuit. But Total Bev Solution, agent for Southampton, also sued by Garal, recently asked court to stay lawsuit and compel arbitration. How's that? Turns out that even before Garal filed lawsuit, it filed arbitration demand to determine fair mkt value of Southampton brands. Total had sent check for $150K which it considered FMV, on Jan 31, along with termination notice. Promised to add $50K if Garal provided customer list, sales report and agreed to accept $200K as "full compensation under the Small Brewers Bill and sign a release of all claims related to the terminated Distribution Rights."

Garal responded that Total did not have the right to terminate since it was an agent/broker not a brewer itself and any termination would violate NY law. Garal filed for arbitration of that $150K figure, claiming the Southampton brands were worth "at least" $525K. Distrib also filed the lawsuit to stop termination and regain the brands. "In other words," Total argues before state court, "in the Arbitration, Garal seeks a monetary award from Total to compensate Garal for losing the Southampton brands, and in this action, it seeks an injunction requiring Total to return those very brands back to Garal." But once Garal filed arbitration, Total argues, "it waived its right to litigate in this Court all claims arising out of the Termination." So the court should stay Garal's lawsuit and "compel the completion of the arbitration" that Garal started.

But Garal insists its issues are "separate and distinct claims" -- determining the legality of the termination and the fair mkt value -- and that Garal "may seek relief in different forums." Total should have sought a stay of the arbitration of FMV pending outcome of the termination case, Garal suggests, adding that one of the brewers (Abita) did just that. Garal also argues that arbitration provision in NY law applies only to FMV, not the termination in the 1st place. Total counters that "when the claims arise, as here from the same operative facts, the courts allow only one forum." Operative fact here is the termination; Garal started with the arbitration demand and "Garal should be held" to that choice, sez Total.