What Does It Mean When Big Breweries Go ‘Small’?

For years, craft breweries have played off the myth and ethos of being small, whether a single person creating one-barrel batches at a time or a national powerhouse like Sam Adams. This has become more evident in recent weeks with the creation of the Brewers Association “independent” seal, meant to convey the ideals of the trade group in a literal way.

Non-AB InBev of Molson Coors breweries are now “small and independent,” two words tied together, not necessarily “craft.” But what some of these businesses are finding is that “small” in theme doesn’t mean the same in practice.

On Aug. 10, New Belgium bought California’s Magnolia Brewing along with minority investments from Belgium’s Oud Beersel and former Elysian co-owner Dick Cantwell. The move saved the business from closure after a series of financial issues.

This was replicated in a similar fashion just a week later when San Diego’s Green Flash, which already owns Alpine Beer Co. in addition to a production facility in Virginia Beach, announced it was opening another space – in Lincoln, Nebraska.

“Up to now, we sold about 40 percent of our beer in our home state, about a third of our beer on the East Coast — and that’s actually increasing faster and might be approaching 40 percent,” Green Flash co-founder Mike Hinkley told Brewbound. “But in all of the big, wide-open spaces of the Midwest, we’ve sold very little beer at all. This will help us to compete in those areas.”

The kicker here is how they’re doing it. Like New Belgium, Green Flash is entering the market through another distressed business in Ploughshare Brewing.

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Beer is Suffering from Seasonal Affective Disorder

Since 2009, Oregon’s Ninkasi Brewing has been producing Maiden the Shade, a “summer IPA” created to help celebrate an annual fair.

It recently received a new look, bringing it to my attention for the first time, thanks to East Coast selection bias and that peskiness of distribution. I can say nothing for the beer, having never had it, but the forethought of that brand sure caught my attention. In recent years, the prescience of the Pacific Northwest in regard to beer and love of all things hop seems like a future that had long been planned, but perhaps America’s love affair with IPA wasn’t always a guaranteed thing.

Either way, the idea of a “summer IPA” sounds pretty damned smart right about now.

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AB InBev is Coming for All Your Hops, Unless They Aren’t

If it’s not Wicked Weed, it’s something else, I suppose.

On the heels of a loud and wide outcry from industry professionals and drinkers over the purchase of Wicked Weed by AB InBev, the global conglomerate has offered another reason to pile on. Today, it was noted that AB InBev, post-merger with SABMiller, will use South Africa’s SAB Hop Farms with the goal, according to this memo, “to sell the hops internally to their acquired (former) craft breweries, even though they have not been able to sell all the hops as of yet.” To be clear, it seems this amount of hops is 20 metric tons, or roughly 44,100 pounds.

To put that in comparison, the US grew a reported 89 million pounds of hops in 2016.

But let’s go a step further. If I’m translating numbers correctly, the International Hop Growers Convention estimated the *entire* South African hop crop at 1.9 million pounds in 2016. It is projected to drop to 1.56 million pounds in 2017. There are 1,047 acres of hops expected to be harvested in South Africa this year, or a stone’s throw away than the acreage of *only* Cascade grown *just* in Oregon in 2016.

92% of all South African hops are set to be of the alpha variety, which we know is not as popular at the moment in the U.S., where aromatic and fruity hops reign supreme.

Is it unfortunate that American brewers won’t be able to get aroma hops like Southern Passion from South Africa or alpha hops like Southern Star? Sure. But these are varieties to play with, not with which you build a portfolio of brands.

Spoiler alert: those would be Citra, Amarillo, Mosaic and Simcoe.

The loss of South African hops is taking away a portion of the sandbox in which U.S. brewers play, but they can also log onto the Lupulin Exchange at any time to find a variety of hops for which they don’t have via contract. For further context, in a release, Willy Buholzer, global hops procurement director for AB InBev noted:

More than 90 percent of our South African-grown hops will be used in local brands Castle Lager and Castle Lite, beers we’ve committed to brewing with locally-grown ingredients. In support of the local industry, we additionally sell hops to South African craft breweries. This means that less than five percent can be allocated to other Anheuser-Busch InBev breweries outside of South Africa.

This comment carries extra weight when you consider the hoops AB InBev was forced to jump through by the South African government in order to gain approval for its merger with SAB Miller, which included a $69 million (U.S.) rand fund to support the local beer-making industry and supply chains in the country.

Yes, there is a story here in terms of new market fluctuations, but if you’re curious about the future of hop growth (and scarcity?) may I recommend giving a follow to the man who literally wrote the book on them (and his new newsletter) or poke through this collection of stories from last September.

Bryan Roth
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac

Drinkers Already Think Sam Adams Isn’t ‘Craft.’ What If It Won’t Be for Long?

A week from today, leadership overseeing the Boston Beer suite of brands – most notably Samuel Adams beer – will present their Q1 earnings report. If recent hints by founder Jim Koch are any indication, there’s reason to suspect (conspiratorially or not) that it may not be all sunshine and roses.

The last few years have been tough for Boston Beer. Declining interest across a variety of brands accounted for a 7% drop in dollar sales for the Sam Adams portfolio in 2016, sentiment that has only continued into this year.

Through nearly the first quarter of 2017, Boston Lager dollar sales dropped around 8% compared to the same timeframe last year. Rebel, the IPA that was supposed to reinvigorate interest in the brand, got remade to start this year. It’s down 20% in dollar sales so far in grocery, convenience and other bread-and-butter stores for the company.

I, like many others, see Sam Adams as the brand that launched a lifetime of beer geekdom. But things are changing rapidly for the company. For longtime devotees, it’s not much for better as it is worse.

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Saison isn’t the ‘Next IPA,’ but it’s Trending in the Right Direction

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Today is April 8, Saison Day, a fake holiday created for the beer community because if Hallmark can pull it off why can’t we?

I often poke fun of such occasions on Twitter, but with consideration, perhaps today *is* a good time to recognize the style, full of life in its effervescence and yeast-driven flavor. In many ways, saison is an ideal beer for where we currently find the American beer industry. Its malleability presents brewers with plenty of ways to approach its final product, creating something as simple and refreshing as a table beer or as hoppy as our beloved IPAs.

Which is why, in terms of “trends,” saison may be a fun one to watch.

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Do You Want Politics in Your Beer?

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This past weekend was a momentous one for the United States, signaling literal and figurative change throughout our government, prompting a variety of actions and reactions from passionate Americans across the political spectrum.

The presidency of Donald Trump has emboldened and impassioned all sorts, including those in beer.

Over the past year, I’ve written several times about the idea of “authenticity,” culminating in a recent post examining the role it plays in our perception of beer quality. A collection of research was shared in that piece, including the psychological connection between drinker and brewery.

Which poses an interesting question for those in the beer business: is it a good idea to go political?

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Making Snowflakes: An Exploration into Rarity, Beer Quality and Industry Authenticity

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We find ourselves in a unique time as beer lovers. Everything and anything is available to us. Whatever we want, whenever we want it.

With a record number of breweries nationwide, more than 5,000 businesses are creating a vast array of styles and flavor experiences, often near where we live. According to the Brewers Association, roughly three-quarters of drinking-age adults in the U.S. live within 10 miles of a brewery.

The flip side of this freedom of choice is the natural competition that comes with it. Keeping an IPA on tap is important to satiate American drinkers’ love for all things lupulin, but today’s brewery faces challenges presented by other entrants into the industry, roughly two a day. Finding a niche, or, at least, creating one, is a pivotal part of the business, whether it’s as a brewery as a whole or simply providing novel experiences every time someone walks through taproom doors.

Increasingly, the process of creating something “rare” is playing a larger role for brewers. This could be a celebrated one-off beer with limited quantities or a dedicated tap on-location that serves creations never to leave the premises. As businesses grow, evolve and consider how best to position themselves, the use of rarity in all its varieties has potential to impact breweries, industry tastemakers and drinkers.

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Trend Watching: 2016 Hop Production and the Rise of Citra

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What better kind of “end of year” review than one related to hops, the national treasure of our beer loving country?

Another annual report was released this week, this time from the USDA, providing updated statistics that further show glimpses into our ongoing love affair with whatever will give our IPAs that “juicy” flavor everyone is seeking these days. While last year’s darling might have been Mosaic, there’s no question who the belle of the ball is this time around.

2016 appears to be Citra’s year.

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How to Sell Beer in 2017

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It’s a tough time to be a “big” brewer.

AB InBev and MillerCoors continue to watch as flagship brands slowly decline in sales, but some legacy craft breweries are suffering as well. Sales of Sierra Nevada’s Pale Ale (2.8 percent) and Torpedo IPA (2.3 percent) are down. Sam Adams continues to face a free fall for Boston Lager, declining nearly 12 percent in 2016.

Diagnosing the problem points to a host of symptoms, from longtime brands going stale among consumers who always want something new to the rise in importance of what’s “local.”

“If [consumers] have two [beers] they feel are equal, and one’s local and one’s not local, that’s an important part to the decision for two-thirds of craft purchasers,” Brewers Association economist Bart Watson recently mentioned at a Brewbound Session in San Diego.

So what are these Big Boys of beer to do? Follow the lead of their smaller, more nimble competition.

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Addressing Diversity in Beer: A Q&A with Julia Herz

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In May, while attending the Craft Brewers Conference, I was able to ask members of the Brewers Association administration about the organization’s efforts to address issues related to diversity and inclusion.

Following their responses, I wrote this piece, pointing out the rapidly shifting conversation about gender and race and why the BA should take the opportunity to be a leader in the effort. It was recognized by the North American Guild of Beer Writers with an honorable mention award for “Best Beer Commentary or Criticism.”

In the months since, Julia Herz, craft beer program director at the Brewers Association, brainstormed and wrote the column, “Embracing Diversity in the Beer Biz,” pointing out what the BA currently knows, what it wants to know and what it’ll do in the coming year and beyond to better support and promote diversity in its many forms.

As a follow up to the coverage on this blog, I recently spoke to Julia Herz about her column and what she hopes it’ll do to advance efforts by the Brewers Association.

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