Brew News

Brew Blog's picks of stories from the beer business and beyond.

Here’s coverage of Molson Coors Brewing Company’s first-quarter earnings from The Wall Street Journal and Bloomberg. Morgan Stanley and Credit Suisse weigh in as well.

Anheuser-Busch's Ascent 54 -- a beer now marketed only in Colorado -- goes national this fall as Michelob Dunkel Weisse, reports the Rocky Mountain News.

Beer Business Daily (subscription required), remarking on Coors’ success with packaging innovation, says: “Here's a prediction: A-B is fast-tracking some package innovations of its own.” Should be interesting to watch whether that develops.

The Greensboro (N.C.) News and Record has an interesting story about craft beer dinners hosted by Foothills Brewing in Winston-Salem.

Brew News

Brew Blog’s picks of news stories from the beer business and beyond.

Supermarket beer volume fell 0.4 percent during the four weeks ended April 26, according to beer sales statistics from Nielsen. Miller volume share fell 0.5 points while dollar share fell 0.3 points. Anheuser-Busch volume share declined 0.1 points and dollar share dropped 0.4 points. Coors volume and dollar share both increased by 0.8 points. Imports gained 0.1 points of volume share but dollar share slipped by 0.2 points. Craft volume share was up 0.3 points and dollar share was up 0.7 points.

The entry price for a Super Bowl commercial will be $3 million next year, the Wall Street Journal reports. But longtime buyers won’t necessarily have to pay that much. From the story: “Anheuser-Busch, for example, has locked in a rate of about $2 million for each of its spots, according to a person familiar with the matter.”

The St. Louis Post-Dispatch explores the potential impact of an economic slowdown on the beer business.

Sam Adams Flagship Slips in Supers

Seasonals roll.

Samuel Adams Boston Lager and Sam Adams Light have been lagging in supermarkets even as Sam Adams seasonals are on a roll.

Boston Beer’s share in supermarkets was flat during the four weeks ended April 19 as case volume increased by just shy of 9,000 cases, according to beer sales statistics from Nielsen.

That’s despite Sam Adams seasonals gaining 14,583 cases in volume over the year-earlier period, according to Nielsen. Sam Adams’ new Irish Red Ale added another 3,484 cases.

The problem: Sam Adams Boston Lager and Sam Adams Light together lost 14,224 cases in volume (Boston Lager down 10,357 cases, Sam Adams Light down 3,867).

Crafts Slowing in Supermarkets Part 2

High prices cutting into velocity.

Craft beers continue to gain share in supermarkets -- adding 0.4 points of share during the four weeks ended April 19 -- but some ominous trends lie below the surface.

Craft beers have been gaining share through expanded distribution and retailers adding more craft beer items. But the bottles already on shelves are moving slower than they were in the year-earlier period.

The slowdown is likely driven, at least in part, by a 6 percent increase in craft beer prices -- the result of higher input and fuel costs -- over the year-earlier period, according to beer sales statistics from Nielsen.

Three developments are hindering craft growth, based on Nielsen's beer market analysis.

Brew News

Brew Blog's picks of stories from the beer business and beyond.

Scott Barnum, the CEO of Pyramid, tells Beer Business Daily (subscription required), that the proposed merger of Magic Hat and Pyramid could be the prelude to further craft brewer consolidation. Says Barnum: “Yes, I suspect there will be additional consolidation and combinations and strategic moves as people look to the future and how best to compete in a competitively intensifying beer industry. A number of craft brewery owners are getting older, and are looking to the future from a legacy and liquidity standpoint. Some people will be more motivated to do things that they wouldn't be motivated to do in the past because of timing, the economy and the changes taking place in the beer market.”

Observes Mark Swartzberg, an analyst for Stifel Nicolaus: "We take the merger as another indication of rising input costs’ disproportionate effect on smaller brewers. Both companies believe the deal provides the potential for cost savings and strategic merit, including cross-selling and production."

With the price of hops increasing, the San Diego Tribune suggests that craft brewers might seek new ingredients for aroma and bitterness. Lemongrass, marjoram or dill, anyone?

Meanwhile, CNNMoney reports that the economy grew -- albeit barely -- during the first quarter.

On a likely related note, consumer confidence fell to a five-year low. Reuters.

Amid this news, Wal-Mart says its winning more "affluent" shoppers, according to the Associated Press.

Smaller Imports Driving Growth

Corona, Heineken families are flat.

After a long stretch of flat or declining performance in supermarkets, imports are showing signs of growth again.

No thanks, however, to the two megabrands -- Corona Extra and Heineken -- that have driven the groups’ growth for years.

Import sales in supermarkets increased by 0.2 points during the four weeks ended April 19, according to beer sales statistics from Nielsen. That translates to a 30,000 case increase over the year-earlier period.

During the four-week period, the Heineken franchise (Heineken and Heineken Premium Light) was up 1,000 cases, according to Nielsen’s beer market analysis. The Corona family was down 12,000 cases.

So where’d the growth come from? It came from these brands, all of which added 0.1 points of share:

1. Modelo Especial
2. Tecate
3. Stella Artois

Two Leading Craft Brewers Intend to Merge

Magic Hat, Pyramid announce plans.

Magic Hat Brewing Company & Performing Arts Center Inc. and Pyramid Breweries Inc. today announced a letter of intent under which Magic Hat will buy Pyramid in an all-cash offer for $2.75 a share.

The proposed transaction is subject to the negotiation and execution of a definitive merger agreement and other conditions.

The offer price was a 56 percent premium over Pyramid's closing price on Monday.

The board of directors of Pyramid has approved the transaction, according to the release. The closing is anticipated to take place by August 31.

Magic Hat, based in Burlington. Vt., is one of the largest craft brewers on the East Coast and has been growing at a rapid clip. Acquiring Pyramid, which posted a fourth quarter loss and announced plans to cut staff, would give it a presence on the West Coast.

Martin Kelly, CEO of Magic Hat said in the release: “We have a great deal of respect for Pyramid’s brand heritage, award-winning beers and its dedicated employees, and look forward to consummating this transaction, which provides both strategic and financial benefits both to Pyramid’s and Magic Hat’s stakeholders.”

Craft Beers Slowing in Supers

Slowest rate in a year.

Craft beers are still increasing their share in supermarkets. But at a slower rate than what we’ve seen recently.

Crafts gained 0.5 points of share for the four weeks ended April 12, according to beer sales statistics from Nielsen. That’s the smallest pickup since the April 4, 2007 period, when craft gained 0.5 points.

This slowdown in the growth rate has been expected. Crafts have been forced to raise prices to keep up with the skyrocketing costs of hops and other inputs. The average weighted price of a case of craft beer increased by 5.5 percent during the period, according to Nielsen’s beer market analysis. That’s more than twice the rate for the industry as a whole.

But the fact crafts have been able to maintain a healthy growth rate in face of these rising prices suggests crafts have legs.

Indeed, supermarkets are stocking more craft beers. The average supermarket stocked 27.6 craft items during the latest four-month period, up 4 units from the year-earlier period, according to Nielsen’s beer research.

Brew Magazine took an in-depth look at craft beer and its growth prospects in its August 2007. Here's that issue of Brew Magazine.

If you would like a subscription to the print version of Brew, drop a line with your email address here.

Why Is Heineken Doing Better than Corona?

Is it innovation?

Corona Extra, the largest import brand, continues to struggle in supermarkets.

Heineken, meanwhile, appears to have recovered from a price-induced slowdown.

Why?

The difference could be Heineken’s mini keg. That new package – along with Heineken Premium Light’s mini keg and slim can – has been a major source of incremental volume for the Heineken franchise for the 12 weeks ended April 12, according to beer sales statistics from Nielsen.

The new packages have allowed the brand to increase its presence in stores at a rate in excess of Corona. And these distribution gains have translated into increased volume.

Heineken’s success shows the power of innovation that connects with consumers.

For the four weeks ended April 12, Heineken’s case share in supermarkets was flat. Corona, meanwhile, was down 0.2 points.

The June 2007 issue of Brew Magazine took an in-depth look at innovation in the beer business. That issue can be seen here.

Canny Moves By Craft Brewers

New Belgium adding canning line.

Coming this summer: Fat Tire in a can.

New Belgium Brewing Co. is the latest craft brewer to start offering its flagship beer in a can. A big reason for doing so: Cans can go into places that bottles can’t. From New Belgium’s press release:

"Introducing cans was a natural choice given that they are outdoor-friendly, light for transport and readily recyclable," said Bryan Simpson, spokesperson for New Belgium. "In addition to the lighter carbon footprint, Fat Tire can now travel to places where glass is not an option."

As Beer Business Daily notes, "Canned craft beer has long been a controversy: does it hurt the brand equity or not?"

Miller Lite Brewers Collection Going National

Going into markets by September.

After exceeding expectations in test markets, Miller Lite Brewers Collection -- a trio of craft-style light beers -- is going nationwide.

“We are going to take Miller Lite Brewers Collection national and we’re going to do it by September,” Miller Brewing Company CEO Tom Long said from the stage on Tuesday at Miller’s distributor meeting in New Orleans.

In making the announcement, Long recalled last year’s conference when Miller announced it was accelerating the national rollout of Miller Chill. The result: It became the year’s biggest new product, generating $40 million of sales in supermarkets.

Tom Cardella, Miller’s executive vice president-sales and distribution, pointed out Miller Lite Brewer’s Collection’s strengths in its four test markets. Two big ones: It’s exceeded volume targets by 40 percent and it’s also exceeded distribution targets.

Miller Lite Brewers Collection went into four test markets -- Baltimore, Charlotte, N.C., Minneapolis, and San Diego -- in February.

The lineup includes a blonde ale, an amber and a wheat -- each with significantly fewer calories and carbs than typical beers of that style.

Miller Lite Brewers Collection is aimed at mainstream light beer drinkers and capitalizes on three beer industry trends: the popularity of light beer; consumers seeking more variety, including crafts; and people willing to pay more for brands that offer a unique experience.

Land Grab and Shakeout in Craft Beer?

Craft is growing but some struggle.

A “land grab” is taking place in craft beer as some brewers struggle with higher input prices and others -- at least for now -- manage robust growth.

That’s the observation of some leading leading beer industry trade magazines as they look at the impact of the rising costs of hops and other inputs on craft brewers and gauge what's happening on the ground. The growth of craft has been one of the hottest beer industry trends. Everyone’s trying to figure out what’s next.

An article in the latest orange sheet edition of Beer Marketer’s Insights recounts the great two year run by Boston Beer Company, which has led the growth of craft beer. And it points out that a “number of midsized regional craft brewers (between 50-100,000 bbls) report continued robust growth rates in early 08, several up 20% or more before price increases have fully kicked in.” This includes Bell’s Brewery Inc., Magic Hat Brewing Company, Long Trail Brewing Company and Brooklyn Brewery Company.

Says BMI:

To varying degrees, some growth comes from comes from mkt expansion. A land grab is definitely on. But exhilaration about expanded consumer taste for craft brews now also mixed with worry about costs, economy and intensified competition. Craft remains in sweet spot, but these challenges loom increasingly large.

Many Michelobs

Dunkel Weisse, others on tap.

Anheuser-Busch – which has stated previously it plans to slow down on new product introductions – appears poised to roll out no fewer than four new styles of Michelob

The brewer has received label approvals for four new Michelob line extensions: Michelob Brown Ale, Michelob Red Ale, Michelob Dunkel Weiss and Michelob Bohemian Pilsner.

The approvals were for kegs. It’s not clear whether A-B plans to roll out bottle versions of the brews.

The new brands appear to fit in with A-B’s effort to position Michelob as a craft-style brand (ad tagline: “Crafting a better beer”).

Leinie’s Expanding Summer Shandy Distribution

Hits store shelves next month.

The Jacob Leinenkugel Brewing Company is expanding distribution of its popular seasonal Summer Shandy.

Leinie's will be marketing Summer Shandy in 40 states this summer. Leinie's stuck mostly to its core Midwestern states for the brand's debut last summer.

Leinie's is expanding distribution due to Summer Shandy's success in its first year. It vastly exceeded sales expectations; established itself as one of the fastest growing brands in supermarkets despite its regional distribution; and helped drive share gains for the total Leinie’s portfolio.

Commenting last summer on the brand’s success, Dick Leinenkugel, vice president of marketing and sales for Leinie’s, said: “Crafts are hot … People are looking for differentiated styles of beers. We have been able to deliver that from Leinenkugel’s. Leinenkugel’s Summer Shandy is a unique flavor offering and incredibly refreshing during warm weather months.”

Summer Shandy goes into retail accounts next month.

Previous Brew Blog coverage on Summer Shandy can be seen here and here.

Craft Beers Hot … Everywhere

Jacksonville, Houston and Miami supermarkets stocking up.

The growth of craft beer is one of the hottest beer industry trends going. And one of the most striking things about it is how it’s truly a national, as opposed to regional, trend.

Supermarkets in 93 percent of all measured markets reported higher craft beer sales so far this year, according to beer industry analysis by Nielsen.

Indeed, even non-traditional markets such as Jackonville, Fla., Houston and Miami have seen big increases in the number of craft beer items on store shelves.

For example, the average Jacksonville supermarkets carries 18.6 craft beer items – 6.2 more items than a year ago, according to Nielsen’s beer market analysis. Houston supermarkets carry 26.8 items, an increase of 7.8 items. Miami stores carry 16.6 items, up 6.6 items.

As for what crafts sold the best: in Jacksonville the two top sellers were Blue Moon Belgian White Ale and Sam Adams Boston Lager; in Miami it was Sam Adams and Blue Moon; and in Houston it was Shiner Bock and Shiner Blond.

Jay Brookston, of the Brookston Beer Bulletin, recently noted the Southeast showed the greatest craft growth of any region. Read it here.

People Paying Up for Pricey Crafts

Gain share in supermarkets despite big increases.

Will consumers be willing to pay more for craft beer? has been the big question confronting craft brewers grappling with rising hops prices.

Recent beer sales trends in supermarkets suggest the answer is a tentative yes.

For the four weeks ended February, the national average weighted case price for craft beers increased by 4.9 percent, according to beer sales statistics from Nielsen. That’s more than the major brewers or the import category.

Good Reviews for Miller Lite Brewers Collection

Positive ratings from beer industry trade magazine.

Miller Lite Brewers Collection got positive reviews from a Modern Brewer Age consumer tasting panel.

The panel tried all three of the brews -- a blonde ale, an amber and a wheat -- that are now in test markets. And, while the panel had some criticisms of the packaging, it gave the brews positive reviews.

“Our panel sampled all three, and found them to be very drinkable, very light beers,” says the writeup in the February 18 issue of Modern Brewery Age Weekly (not yet online).

The blonde ale was considered the standout of the trio. “Beautiful in appearance, exquisitely balanced and highly attenuated, it is arguably one of the best light beers ever made,” the review says.

The blonde ale and the wheat both received a “five beer” rating from the magazine. That designation means a beer is “Superb in every respect. True to style, enjoyed by all.”

The amber received a “three beer” rating. That means: “Good beer. No flaws but garnered faint praise.”

The Modern Brewery Age home page can be seen here.

Costs Crunch Cali Crafts

Brewers bumping up prices to deal with costs of hops, other inputs.

The Contra Costa (Calif.) Times is the latest newspaper to report on how craft brewers are boosting prices to deal with the rising costs of inputs ranging from hops to bottles.

Some crafts have increased six-pack prices by as much as $1, the paper reports.

From the story:

Anderson Valley Brewing in Boonville last week raised the suggested retail price from $9.49 to $9.99 for a six pack of Hop Ottin' and all their other prizewinners. Stone Brewing of San Marcos raised the price of Arrogant Bastard and their other brands to a similar price. Firestone Walker did the same thing last month. Even Boston Beer, the maker of nationally distributed Sam Adams, is rolling out price increases.

"Right now, we have the perfect storm," said Boston Brewing's Michelle Sullivan. "So many things are happening at once: increases in the hop market, the barley market, the cost of energy for making glass. Even freight costs are up."

More Costco Beers?

Retailer receives approval for “German Style Lager.”

Brew Blog reported last week that Costco Wholesale Corp. has received label approvals for three private-label craft-style beers.

More could be on the way.

The retailer on January 30 received label approval from the Treasury Departments Alcohol and Tobacco Tax and Trade Bureau for German Style Lager. It carries Costco’s Kirkland Signature private-label logo.

According to the application, the beer would be brewed by California’s Gordon Biersch Brewing Company.

Costco to Sell Private Label Beer?

Received label approvals for three crafts.

In what could be a big shift, Costco Wholesale Corp. appears ready to market private-label beer under its Kirkland Signature line.

The big club retailer has received label application approvals from the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau for three craft-style beers: an amber ale, a hefeweizen and a pale ale.

Retailers of all stripes increasingly have emphasized private-label products for their higher margins. And while private label brands once may have been seen as seen as generic or downscale, that's no longer the case. Retailers have done such a good job branding them now that they can compete with premium or above-premium brands.

Costco has been selling Kirkland signature wines for a number of years and over the past year has filed label applications for some private-label spirits, including a single-malt scotch.

Coors Starts Advertising Blue Moon

Print and outdoor advertising begin.

Coors Brewing Company has nurtured Blue Moon Belgian White Ale into a hot seller through below-the-radar marketing efforts.

Now it’s taking a more conventional route: advertising.

Advertising Age this week reports that Coors recently has been running Blue Moon ads in local weeklies and national magazines, including Food & Wine and Men’s Fitness.

Outdoor advertising has appeared in some “key markets” as well, Ad Age reports.

The ad is an Impressionist-style Blue Moon product shot that includes a glass with an orange garnish. The tag: Artfully crafted.

Integer created the ads. No TV or radio executions are planned. Spending is estimated at the “mid-six-digit level,” Ad Age reports.

Ad Age suggests Coors is shifting strategies because the brand has reached a size where it needs at least some level of media support.

The story can be seen (scroll to bottom) here.

Bitter Times for Arizona Craft Brewers

Closures, changing styles in response to higher hops prices.

The Arizona Republic on Friday takes an up-close look at the impact rising hops and barley prices are having on the state’s craft beer community.

It tells the story of brewers scrambling to find hops, contemplating changing their styles and recipes and, at least in one case, closing down.

From the article:

“A global shortage of hops, combined with a run-up in barley prices, is sending a chill through Arizona's craft-beer industry.

“The hops shortage threatens to boost prices, cut into profits and close down brewpubs. It could change the taste and consistency of treasured local ales.

Miller CEO Cites Price Leadership

Miller also looking for new craft opportunities, Long tells BBD.

Miller Brewing Company led beer industry pricing in 2007 as it worked to transform its portfolio, Miller CEO Tom Long told Beer Business Daily in a wide-ranging interview.

Long told BBD in an interview Thursday that “the idea of transforming our portfolio has brought such a big swing in our economics.” Citing Nielsen supermarket data for the year 2007 through December 8, Long said:

"Miller Brewing average pricing was up 4%, including Chill, A-B was up 1.9%, and Coors was up 2.5%. When you take Chill out of the equation, Miller [Brewing] is still up 2.8%. So even without Chill, we are still leading pricing and mix up."

The Jacob Leinenkugel Brewing Company, which is owned by Miller, played a role in Miller’s improved performance in the higher end of the beer business. And while Leinie’s will remain Miller’s man craft play, Long said Miller is keeping its eyes open for other opportunities.

A-B to Push Crafts in C-Stores?

Advertising craft-style brands in trade media.

It’s not news that Anheuser-Busch has been losing share in convenience stores even as crafts gain space in that channel.

Is A-B trying to reclaim some of that space in the channel it dominates with its own craft-style brews?

That would appear to be the case, based on an ad buy in the trade magazine Convenience Store News.

The December 10, 2007 issue of CSN includes a full-page ad for Shock Top Belgian White Ale, a brand A-B appears poised to push as a Blue Moon fighter. (Shock Top began as a seasonal called Spring Heat Spiced Wheat).

The same issue also has a full-page ad for Stone Mill Pale Ale and Wild Hop Lager, two organic brews made by A-B under the Green Valley Brewing Company name.

A-B’s plans remain to be seen. But pushing craft style brews would make sense. A-B has more than 60 percent share in the channel. And crafts are increasingly popular.

Moreover, it’s widely expected that craft brewers will be forced to raise prices in the coming year due to higher commodity costs. That could benefit A-B.

The CSN web site can be seen here.

New Seasonal from A-B

Sun Dog for summer?

Anheuser-Busch appears poised to introduce a new summer craft-style seasonal.

A-B late last month filed a number of label applications for Sun Dog Amber Wheat ale. The brand’s label, which depicts a shorts- and shades-wearing dog clutching a Frisbee, is described as a “limited edition” and a “seasonal brew.”

Given the graphics and name it seems safe to assume the brand is a summer seasonal.

Assuming that’s the case, it’s unclear what the introduction would mean for current summer seasonal Beach Bum Blonde Ale.

A-B is morphing its spring seasonal Spring Heat Spiced Wheat into a year-round brew, Shock Top Belgian White, in an apparent effort to take on Coors Brewing Company’s Blue Moon Belgian White Ale.

UPDATE: In comments, a reader suggests Sun Dog might actually be a spring seasonal replacement for Spring Heat.

Brew Blog first noted Sun Dog here.

The label image can be seen here.

The label application is here.

Can Miller Lite Do Crafts?

“We expect the product to be phenomenal,” says one distributor.

Miller Brewing Company yesterday unveiled its plans to roll out Miller Lite Brewers Collection, a family of craft-style light beers that sell at above-premium pricing.

Beer Business Daily offered its take this morning:

“I think you’d be wise not to write this off. Miller is said to putting decent marketing dollars behind it -- digital, billboard, and yes, maybe even TV. And low-cal better beers have proven themselves to be a viable category at this point (HPL, Sam Light, Shiner Light, Skinny Dip, et al).”

A big question for BBD: Will the Miller Lite name confuse consumers or will it create a halo effect for the Miller Lite brand?

Brew Blog knows that internal research at Miller shows Miller Lite Brewers Collection does create more excitement around the Miller Lite brand. Also, recall that Miller Chill created positive buzz around the Miller trademark. So, while it’s too early to tell what the market will decide, evidence suggests Miller Lite Brewers Collection should create that halo effect BBD mentioned.

Miller Launching Craft-Style Light Beers

Miller Lite Brewers Collection goes into test in February.

Miller Brewing Company in early February will begin test-marketing Miller Lite Brewers Collection, a family of three craft-style light beers.

The lineup includes a blonde ale, an amber and a wheat -- each with significantly fewer calories and carbs than typical beers of that style.

Miller Lite Brewers Collection will go into test in four markets -- Baltimore, Charlotte, N.C.; Minneapolis; and San Diego.

Miller executives announced the test launch this afternoon at a distributor meeting in Chicago.

“With Miller Lite Brewers Collection, we’re seeking to establish a whole new category for the industry -- craft-style light,” says Miller Chief Marketing Officer Randy Ransom. “Miller Lite is the perfect beer to introduce this innovative product because only Miller Lite provides the ideal balance of real beer taste and refreshment. And so it makes sense that we use our expertise to brew a brand with great craft-style taste and the refreshment and drinkability American beer drinkers prefer.”

Blue Moon No. 2 Craft in Supers

Edges Sam Adams Boston Lager.

Blue Moon Belgian White Ale has staked its claim as the second-best-selling craft beer in supermarkets, according to beer sales statistics from Nielsen.

Blue Moon, from Coors Brewing Company, held 6.9 percent market share of the craft segment during the 13 weeks ended December 1, according to Nielsen. Blue Moon seasonals, meanwhile, held 2.2 percent share, up 1.3 points.

Blue Moon edged Samuel Adams Boston Lager for the No. 2 spot, according to Nielsen. While statistically tied at 6.9 percent share each, Blue Moon is slightly larger. And Sam Adams share of craft actually declined during the period, dropping by 0.6 points.

That said, Samuel Adams seasonal brews held the top slot among craft brands, commanding 7.8 percent share, up 0.9 points, according to Nielsen. So at least some of Sam Adams Boston Lager’s decline can be attributed to consumers picking up seasonals.

A-B Keeps Heat on Wheat

Receives label approval for “Sun Dog.”

Anheuser-Busch appears poised to roll out yet another new product with an eye toward capitalizing on the popularity of wheat-style beers.

A-B late last month received label approval for Sun Dog, described as an American amber wheat ale.

Wheat beers are one of the most popular styles of craft. Coors Brewing Company has enjoyed success with its Blue Moon Belgian White Ale. The Jacob Leinenkugel Brewing Company’s wheat brands—Sunset Wheat, Honey Weiss and Berry Weiss – also are popular and distribution has been expanded (Miller Brewing Company owns Leinie’s).

A-B appears more committed to tap into the niche. It is already moving ahead with Shock Top, a Belgian white ale that’s a renamed version of a seasonal.

Sun Dog would represent a continued push behind wheats.

Sun Dog has 5.3 percent alcohol by volume.

To see A-B’s application with the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, click here.

To see Brew Blog's original coverage of Shock Top, click here.

Big Thanksgiving for Crafts

Imports regress.

Craft brewers had plenty to be grateful for this past Thanksgiving.

Craft beers gained 0.9 points of volume share in supermarkets for week ended November 24, according to beer sales statistics by Nielsen. They also gained 1.4 dollar share points.

Sam Adams and Coors Brewing Company’s Blue Moon led the way during the holiday, gaining a combined 0.4 volume share points.

The Jacob Leinenkugel Brewing Company (owned by Miller Brewing Company) gained 0.1 points of case and dollar share.

Seasonals -- largely driven by Sam Adams and Blue Moon brands -- also were a big factor in craft growth, according to Nielsen’s beer market analysis.

Fully 87 percent of all measured markets recorded craft beer volume gains.

Variety Driving Craft Beer Growth

Supermarkets carrying 20 percent more craft items.

Craft beer has had a phenomenal year in supermarkets.

Indeed, craft share volume was up 0.8 percent during the four weeks ended November 10, according to beer sales statistics from Nielsen. Dollar share, meanwhile, was up 1.3 percent.

Part of the growth is driven by expanded distribution. The average supermarket carries 28 craft beer items, up from 23 a year ago. That’s a 22 percent jump.

That expanded presence -- and variety -- is helping fuel growth. The fragmentation of craft makes it easier for new brands to enter in many markets as the category keeps growing.

How fragmented is it? The top 25 craft brands represent 58.7 percent of total category volume. Meanwhile, the top 25 imports represent 87.2 percent of total import volume.

Widmer, Redhook Form No. 3 Craft Brewer

A-B affiliated crafts to combine in early 2008.

Two Anheuser-Busch-affiliated craft brewers are combining to create the country’s third-biggest craft brewer.

Redhook Ale Brewery and Widmer Brothers Brewing Company yesterday announced they will combine to form an entity called the Craft Brewers Alliance.

The deal, in which Redhook is paying about $50 million in stock for Widmer, has been expected for some time. The two Pacific Northwest brewers disclosed last January that they might merege.

A-B – which has significant minority interests in both brewers – was not driving the talks, the brewers said at the time.

Redhook and Widmer currently have a marketing and sales joint venture called the Craft Brands Alliance. That entity, in turn, has a distribution agreement with A-B. Recall that last year Redhook complained the Alliance was not doing a good job of selling its brands in the West.

Paul Shipman, CEO of Redhook, told the Seattle Post Intelligencer that the combination should allow the bigger craft brewer to better handle rising input costs. From the story:

"Craft brewers still face challenges, including soaring prices for barley malt and hops. In the third quarter, Redhook reported a loss of $289,000, or 3 cents a share, compared with a profit of $364,000, or 4 cents a share, in the year-ago period; sales rose 15 percent to $11.1 million. Shipman believes a larger, unified company will be in a better position to deal with that problem."

The Seattle Times reported that the new company would have annual shipments of about 600,000 barrels. This would make it the third-biggest craft brewer, after Sierra Nevada brewing Company.

From a Q&A Redhook filed in conjunction with the merger announcement:

"We expect that the CBA portfolio including Widmer, Redhook and our alliance brands of Kona and Goose Island will make the combined company the second or third largest craft brewer in the US."

Widmer shipped 269,000 barrels in 2006 and Redhook moved 168,000 that year, for a total of 467,000 barrels, according to figures from Beer Marketer’s Insights.

That total just edged New Belgium Brewing Company, maker of Fat Tire, which had 438,000 barrels shipped.

The Jacob Leinenkugel Brewing Company, which is owned by Miller Brewing Company, shipped 370,000 barrels that year.

The deal is expected to close in the first quarter of 2008.

The press release announcing the deal can be seen here.

The Seattle Times coverage can be seen here.

The Seattle Post-Intelligencer coverage can be seen here.

The blog Brookston Beer Bulletin discusses the deal here.

Are Big Imports Losing Cachet?

Small importer sees opportunity.

The latest issue of Brandweek takes note of the relatively soft performance of Corona Extra and Heineken and questions whether (as the headline says) “the party may be winding down for beer imports.”

The analysis points to a variety of possible explanations, including a price increase for Corona and the popularity of local crafts.

Another theory: The leading imports have become so big that they’ve lost the sense of specialness that drove their growth in the first place.

From the article:

"'It's remarkable that some of the imports are beginning to behave like the domestic brewers with their mass media campaigns and major investments in light beer,' said John Lennon, formerly president of Beck's North America.

"Now at the helm of International Beverage Holdings USA, New York, Lennon sees opportunity for smaller players like Chang beer—which IBH will promote through Thai restaurants in major markets—if the badge status of the dominant imports diminishes."

The story can be seen here.

Leinenkugel Rolls Out Russian Imperial Stout

Second in “Big Eddy” line.

The Jacob Leinenkugel Brewing Company is rolling out a Russian Imperial Stout as it continues to learn more about big beers.

Big Eddy Russian Imperial Stout, the second in the Big Eddy series, hits select markets in Michigan and Wisconsin within the week. In Wisconsin it will be available on draft at select accounts and in 4-pack bottles in the off-premise. It will be available only in the off-premise in Michigan.

The “Big Eddy” moniker is derived from the name of the spring that feeds the Leinie brewery in Chippewa Falls, Wis. Beginning in late February, Leinenkugel’s tested its first big ale, Big Eddy Imperial IPA.

Brendan Noonan, brand manager for Leinenkugel’s, said the 140-year-old brewer (which is owned by Miller Brewing Company) says while the “big beer” area (think brews such as double IPAs, Russian imperial stouts and barley wines) is relatively small, it’s an area of growing interest among craft beer enthusiasts.

“Some people are looking for something a little more special,” he says. “We do feel this is a growing part of the market.”

Dick Leinenkugel, vice president of marketing for Leinenkugel’s, said Big Eddy fits in with the brewer’s tradition of experimentation and of offering consumers a varied array of beers. Indeed, Leinenkugel has said, “What defines craft is having a variety of interesting styles of beer.”

“We’ve always enjoyed a spirit of innovation at Leinenkugel’s, whether it be combining apples and cinnamon in beer to come up with Leinenkugel’s Apple Spice, or being the first to launch a shandy into the United States,” he says. “We stay in touch with our markets and our consumers and noted the increasingly popularity of “big beers” especially with the aficionado drinker.”

Wisconsin markets slated for Big Eddy Russian Imperial Stout include Madison and Milwaukee. In Michigan the targeted markets are Detroit and Grand Rapids.

Big Eddy Imperial IPA ranked in the 99th percentile of double IPAs on ratebeer.com. To the see reviews, go here.

Will High Hop Prices Squeeze Crafts?

Will craft brewers raise prices?

The Wall Street Journal on Friday took a look at the implications of higher-priced hops and barley for craft beers.

From the story:

"Consumers could pay 50 cents to $1 per six pack more in the coming months for many small-batch "craft beers," as brewers pass on rising hops and barley costs from an unpalatable brew of poor harvests, the weak dollar and farmers' shift to more profitable crops. Other makers of craft beers, the fastest-growing segment of the U.S. brewing industry, say they may eat the higher ingredient costs, which will pare their profits."

The article quoted Boston Beer Company Chairman Jim Koch as saying that Boston might raise prices by 3 percent or more next year. Koch called the hop and barley increases “the largest we’ve ever faced.”

The article can be seen here.

Miller Chill Fastest Growing Beer of the Summer

Miller Lite also cracks top 10 list.

Miller Chill was the fastest-growing beer of the summer in supermarkets, according to beer sales statistics from Nielsen.

Miller Chill, which was launched in test markets in February and launched nationally over the course of the summer, moved 896,968 cases in supermarkets during the 13 weeks ended September 8, according to Nielsen.

That amount exceeds the incremental gain of No. 2 Smirnoff Ice by more than 100,000 cases (though there are caveats to Smirnoff Ice’s ranking; see below). Miller Chill’s volume exceeded Bud Light’s incremental gain by more than 370,000 cases, according to Nielsen.

Miller Lite was the 10th fastest growing brand of the summer, in order of incremental volume increase. Its case volume was up 0.9 percent.

Anheuser-Busch had three brands in the top 10: Bud Light at No. 3, Michelob Ultra at No. 4 and Bacardi Silver at No. 9.

Coors Brewing Company also had three brands in the top 10: Coors Light at No. 5, Keystone Light at No. 6, and Blue Moon Belgian White Ale at No. 8.

Femsa’s Tecate was the only import to crack the top 10 list. It came in seventh.

The second-fastest growing brand of the summer was Smirnoff Ice, but that was driven in part by re-issued UPCs and the renaming of some existing products.

A-B Creating a Blue Moon Fighter?

Files label application for “Shock Top.”

Anheuser-Busch appears to be preparing a beer that it could potentially pit against Coors Brewing Company’s Blue Moon Belgian White Ale.

A-B earlier this month filed a label application with the federal government for Shock Top Belgian White. It’s described on the label as a “Belgian style wheat ale brewed with spices.”

In other words, it sounds similar to Coors’ Blue Moon.

It’s understandable that A-B would want to tap into the success of Blue Moon. The brand, which has gained popularity through word-of-mouth and discovery, has been one of the hottest brands in the beer business.

Rolling out a Belgian white ale would fit in with A-B’s strategy of providing its restricted distributor network with brands in popular niches.

Interestingly, via its arrangement with InBev, A-B also markets the Belgian brew Hoegaarden, billed as the “original white ale.”

(The Jacob Leinenkugel Brewing Company markets Leinie’s Sunset Wheat, which, while not positioned as a Belgian-style ale, is a spiced wheat ale. Miller also markets Henry Weinhard's Summer Wheat, which is being rebranded as Belgian Wheat as it moves from a summer seasonal to a year-round brand, due to popularity of the wheat-beer category.)

The application with the Treasury Department's Alcohol and Tobacco Trade Bureau can be seen here.

Miller, Coors Boost Dollar Share During Labor Day

A-B share slides on weak Bud Light showing.

Miller Brewing Company and Coors Brewing Company both managed to gain dollar share in supermarkets during a two-week Labor Day holiday period that showed solid volume and pricing, according to beer sales statistics from Nielsen.

Anheuser-Busch lost more than a point of dollar share as Bud Light slipped, according to Nielsen.

Overall, the category performed well during the two-week period ended September 8. Volume during the period was up 1.9 percent and weighted average prices were up 4.9 percent, according to Nielsen.

Miller’s dollar share increased by 0.3 points during the period, according to Nielsen. That was driven by the rollout of Miller Chill -- which achieved 1 percent dollar share -- and a 0.2 point gain by the Leinenkugel’s franchise.

While Miller’s dollar share increased, case share dipped by 0.1 points. Miller Lite’s case share slipped by 0.2 points but its average weighted case pricing -- up 4 percent -- was the strongest of the leading domestic lights.

Coors, meanwhile, increased dollar share by 0.5 points during the period. Coors Light and Blue Moon each increased share by 0.2 points. Keystone Light increased share by 0.1 points.

Coors’ case share increased by 0.7 points. That was driven primarily by Coors Light, up 0.3 points.

A-B’s dollar share slid by 1.4 points, according to Nielsen. The Bud franchise slid by 1.4 points, with Budweiser down 0.8 points, Bud Light down 0.4 points, and Bud Select down 0.3 points.

The brewer’s case share slid by a full point, according to Nielsen.

Craft beer continued its run, with case share up 0.8 points and dollar share up by 1.1 points.

Imports showed renewed strength, with case share up 0.5 points and dollar share up 0.6 points.

Seasonal Crafts are Hot

Gaining volume, share at supersmarkets.

It’s the time of the seasonal crafts.

Seasonals, limited release brands with flavor profiles and names tied to a particular time of year, have been the fastest growing slice of the craft beer segment in supermarkets this summer, according to beer sales statistics from Nielsen.

For the 12 weeks ended August 25, seasonal crafts saw volume jump 58.5 percent, or by 278,871 cases. That’s almost twice as big as the incremental volume gain by any other craft segment.

Seasonal crafts have increased share as well, picking up 3.2 points of share in the craft segment.

What’s driving this?

Novelty, for one thing. Today’s consumer increasingly likes to experiment with new brands. Seasonals, with their limited availability and often distinctive flavors, fit perfectly with this consumer trend.

Suppliers also increasingly are paying attention to seasonals. Coors Brewing Company, for instance, has introduced seasonal varieties of its popular Blue Moon Belgian White Ale.

Retailers clearly see an opportunity: During the 12-week period, the average number of craft items stocked per store increased by 0.9 to 2.7.

The Jacob Leinenkugel Brewing Company managed to capitalize on this trend with it’s Leinenkugel’s Summer Shandy. The brand's sales tripled estimates and, despite limited distribution, carved out a 0.1 share within the national beer market.

Leinie’s Branching Out

Craft brewer has expanded geographic reach, portfolio.

The Jacob Leinenkugel Brewing Company has been well known in the Upper Midwest for decades.

Over the past year it’s started making a name for itself in markets across the country. It started this move with the broad launch of Leinie’s Sunset Wheat last year and is now eyeing wider distribution of its popular Honey Weiss and Berry Weiss brands.

Leinie’s had a hit on its hands this summer in its core markets with its Summer Shandy.

The latest issue of Brew, which looks at the rise of the craft beer segment, includes an interview with Dick Leinenkugel, Leinie’s vice president of marketing.

From the issue:

If the designation “craft brewer” demands you be under family management for 140 years, operate an actual brewery, and introduce one of the top-selling craft brands in 2006, the leading craft brewer is the Jacob Leinenkugel Brewing Company.

The Chippewa Falls, Wis., brewery’s heritage and connection to the North Woods is a story that grabs consumers, says Dick Leinenkugel, the vice president of marketing for the brewery. He’s the great-great-grandson of the brewery founder Jacob Leinenkugel.

“Once people hear the story, they are intrigued,” Leinenkugel says. “What that then leads to is a bigger conversation that makes them feel that they’re part of the family.”

Popular in the Upper Midwest for decades, Leinie’s – as its known to its enthusiasts – is now trying to win over consumers across the country. In response to distributor demand, Leinie’s rolled out its new Sunset Wheat to markets across the country. It’s now available in 42 states.

Despite a limited time in market, it was the third-fastest growing craft brand in volume and per-volume distribution last year in supermarkets.

Leinie’s is now in the midst of extending its Berry Weiss and Honey Weiss brands into new markets.

(The brewer’s ability to tap the Miller distribution network is one of the advantages of being owned by Miller Brewing Company. Miller bought Leinie’s in 1988. It’s operated as a separate company.)

These wheat varieties play in the fastest growing part of the craft category. But Leinie’s also makes its original lager and a variety of darker beers (Creamy Dark, Leinie’s Red and the seasonal Big Butt doppelbock).

Leinie’s also is experimenting with bold “big beers.” It recently rolled out its Big Eddy Imperial IPA (named after the spring that feeds the Chippewa Falls brewer, it has 71.41 bitterness units and 8.9 percent alcohol by volume) on draft in Milwaukee and Madison.

This new direction highlights Leinenkugel’s conviction that craft will continue to evolve – and become a bigger part of the overall beer category.

“People now more than ever want to try something that’s unique and more personal to them,” he says.

Indeed, this embrace of different styles of beer underlies Dick Leinenkugel’s thumbnail definition of a craft brewer.

“What defines craft is having a variety of interesting styles of beer,” he says.

To see the latest issue of Brew, click here.

To receive a free subscription to Brew, drop a line with your name and mailing address here.

Sam Adams Growth Leads Craft Pack

Boston dominating segment growth in supermarkets, BMI says.

The August 27 orange sheet edition of Beer Marketer’s Insights had an interesting story exploring how much of the growth in craft has been driven by Boston Beer.

BMI noted that Boston Beer accounted for 35 percent of craft segment growth as defined by the Brewers Association (this definition excludes Leinenkugel’s and Blue Moon Belgian White Ale, among others) during the first half of the year. But it only represented 24 percent of the segment.

BMI went on to say:

Boston Beer would undoubtedly dispute notion that it’s sucking oxygen out of segment. In fact, Boston Beer ad spending could be fueling category growth in less developed craft (markets), bringing new users in. But in supers, Boston dominates craft growth.

BMI then cites IRI figures showing Boston Beer was up 17 percent in supermarkets for the 13 weeks ended Aug. 12, while Sierra Nevada and New Belgium both were flat.

The BMI home page can be seen here.

Coors Planning More High-End Brands, Report Says

Creating a “brand incubation company.”

Coors Brewing Company is creating AC Golden Brewery a “brand incubation company” that will “introduce above-premium beers to the marketplace using a new approach,” Beer Marketer’s Insights Express reported yesterday.

The report says the incubator will roll out brands through a slow build -- i.e. similar to Coors’ experience with Blue Moon Belgian White Ale.

The move represents somewhat of a departure for Coors, which in recent years has been focused almost exclusively on three brands: Coors Light, Keystone Light and Blue Moon.

The report didn’t mention any specific brands Coors plans to bring to market through AC Golden.

But recall Brew Blog previously reported that Coors had filed a trademark application for Henry Joseph’s, a higher end beer Coors has introduced -- and yanked -- twice before.

Also, Brew Blog has reported that Coors filed trademark application for Pale Moon Light, speculating it may be light extensions of Blue Moon.

Herman Joseph’s coverage can be seen here.

Pale Moon Light coverage can be seen here.

The Beer Marketer's Insights home page is here.

Craft Beer: What's Different from the Bubble?

Stronger craft industry means repeat of 90s shakeout unlikely.

(NOTE: Due to a technical problem, a previously published installment of Brew Blog was mistakenly sent out earlier this afternoon. Brew Blog apologizes for the inconvenience. Now, onto the latest installment of our look at craft beer...)

The fast growth of craft beer calls to mind the segment’s rapid rise in the early 1990s.

Which begs the question: Could craft’s growth flatline the way it did in the mid-90s?

Most industry observers say no. While craft’s rate of growth likely will cool off in the years ahead -- a function of a bigger base, if nothing else -- history is unlikely to repeat itself for a variety of reasons. The players are different. The consumer is different.

The latest issue of Brew Magazine, which focuses on craft beer, examines this topic.

From the issue:

A specter is haunting craft brewers -- the specter of the late-1990s.

That’s when the craft beer category’s growth flatlined after years of eye-popping growth. The category was undermined by quality issues at some brewers, discounting activity that undermined its image and a sense of faddishness.

“Craft beer fad has faded,” said a typical Dow Jones headline from September 1996.

Sam Calagione, the president of Dogfish Head Craft Brewery, opened a production brewery separate from the brew pub in 1997 – “probably the absolute worst time to do that,” he says. Fortunately for him, profits from the Dogfish Head brewpub kept the business afloat.

“We would have gone bankrupt except my brewpub did well,” he says.

Could it happen again?

No one can predict the future. But plenty of indicators suggest craft beer’s run is more sustainable this time around. Here’s why:

1. Craft beers are generally of higher consistency and quality than they were in the 1990s.

2. The trading-up and customization trends are more broad-based now than it was then.

3. The operators are better. During the last runup, a lot of amateurs and speculators got into the business in hopes of making a quick fortune. That’s not the case this time – at least for now. They’ve also learned from the lessons of the 1990s.

“The companies that are here today are better than they were in the 1990s,” says Gary Fish, president of Deschutes Brewery.

Moreover, the growth this time is different. Back then, a lot of it was driven by hype. Now it’s more grassroots-based -- and more sustainable.

“It appears to be healthy growth this time,” says Maureen Ogle, author of “Ambitious Brew,” a history of the U.S. beer business.

To see the latest issue of Brew Magazine, click here.

To subscribe to Brew Magazine, drop a line with your name and mailing address here.

How Big Can Craft Beer Get?

Opportunities, challenges for growing segment.

How big can craft beer get?

It's one of the biggest questions in the beer business.

Flat for years, craft has been on a roll since 2002. And it appears it has a good run ahead.

That said, craft will bump into some challenges as it grows bigger.

The latest issue of Brew Magazine takes an in-depth look at the opportunities and challenges facing craft.

From the issue:

Craft’s share of the overall beer market was flat at around three percent from the mid-1990s until 2002 when it started inching up again, according to figures from Beer Marketer's Insights. It was at 3.8 percent last year.

And it’s likely to keep growing for a variety of reasons including:

1. The strength of craft brewers. After four decades, a number of strong national, near-national and regional players have established themselves. Operators are experienced and have learned from the mistakes of the past. And they make high-quality, consistent beers.

2. Consumer trends. People are willing to pay a premium for products that are different and perceived to be of value -- the so-called “trading up” trend. Indeed, some consumers actively seek out higher-priced products.

People also increasingly want to buy products that fit in with their personal tastes – and are more attuned to their sense of individuality. So people seek stronger flavors and customization (think Starbucks coffee). Or they want to buy local.

“I don’t think what’s happening in craft is unique to it,” says Jay Brooks, a beer writer who publishes a blog called Brookston Beer Bulletin. “It’s part of a larger movement.”

3. A new generation of legal-drinking-age consumers are embracing crafts. Craft beers once skewed older. But now more 21-to-27-year olds -- for whom crafts have always been a part of the landscape -- are picking them up.

Proprietary research by Miller Brewing Company demonstrates that since last year crafts have increased share with this group.

Distributors see this playing out at the street level.

“I think the craft growth is being driven by the younger consumer, 21-to-35-year-old, who has a different taste profile than the older beer consumer,” says Kevin Burke, President of Burke Beverage Inc.

That said, there are limits to how high crafts can go. Among the constraints:

1. Capacity. If consumers demand more craft beer, craft brewers will have to expand to meet demand. And that’s an expensive proposition.

2. Palate. While a growing number of people want stronger flavors, the vast majority of consumers prefer light American lagers. Light domestic brews represent half the beer sold in the U.S.

The craft brewers recognize this. Boston Beer Company and New Belgium Brewing Company, among others, have introduced light beers. Also, more craft brewers are creating pilsners or wheat-style beers with crossover appeal to mainstream beer drinkers.

3. Shelf space. Retailers and distributors can handle only so many brands. And retailers can get cold-blooded about slow-moving SKUs -- as seen in the massive rationalization of craft beers after their big run-up in the 1990s.

“The number of SKUs is an issue,” Burke says. “We just watch the performance of them and eliminate the slower moving ones twice a year to make room for newer ones.”

4. Size costs. As brands pass certain size thresholds they acquire added costs – distribution complexity, additional marketing channels and SKU proliferation. Craft beers also likely will encounter increased competition from leading domestic brewers intent on protecting their market share -- even as they seek to participate in craft’s growth.

Still, all observers expect that craft beer has a long run ahead.

Skeptics would do well to remember that as recently as 1989 experts were writing off imports, which then represented 5 percent of the business. At that time, one industry expert went so far as to say that “Corona was, from beginning to end, a fad.”

Oops.

Imports now represent more than 12 percent of the business and Corona Extra is the sixth biggest brand in the country, according to BMI.

“In the near term, 10 percent isn’t realistic,” says Benj Steinman, publisher of Beer Marketer’s Insights. “But it’s a vision.”

The rest of the issue can be seen here.

If you would like to receive a free subscription to Brew Magazine, please drop a line with your name and mailing address here.

Craft Crazy

Craft beer sales are taking off. How high can they go?

The numbers don’t lie. Craft beer is hot.

Once written off as a fad, craft’s on track for its third straight year of double-digit growth.

While still relatively small, craft’s playing an increasingly important part in the beer business. And a wide range of people in the business – from brewers to retailers to distributors – expect it to become more important.

Craft’s now roughly 4 percent of the business. Some predict it will hit 10 percent in the not-too-distant future.

Can it get there? The latest issue of Brew Magazine takes an in-depth look at the opportunities and challenges that lie ahead for craft.

From the issue:

Ken Grossman sold 950 barrels of beer when he started his craft brewery 26 years ago.

Now Sierra Nevada Brewing Company is the country’s second biggest craft brewer with 2006 shipments of 637,000 barrels, according to Beer Marketer’s Insights (BMI). And the brewery now has capacity to produce 1 million barrels – a thousand times its initial run.

Include Grossman among the people who are surprised at how far craft beer has come in a quarter century.

The vision back then was very different than it was today,” he says. “If you listened back then to the analysts, most of them thought what we were doing was crazy.”

That was then. Now the craft segment is the fastest-growing part of the American beer business. And while it’s still small – about 4 percent of U.S. beer shipments in 2006, according to figures from BMI – many say it’s poised to play a bigger role.

“I think 10 percent is inevitable,” says Sam Calagione, president of Delaware’s Dogfish Head Craft Brewery, who now is working on a book about beer and food pairings. “Do I think it’s going to happen by 2010? No. 2020? I can’t think it won’t happen by then.”

There’s reason for his optimism. Craft beer grew at a 14 percent clip last year, following double-digit growth in 2005, according to BMI (this includes Leinenkugel’s and Blue Moon). The craft beer segment is well established with a diverse range of players that make quality beers. Consumer trends favor the growth of craft. A new generation of legal-drinking-age consumers is hoisting crafts.

Importantly, distributors and retailers like crafts for their growth and their high margins.

We can all see the numbers,” said a category manager at a major retailer. “It continues to be a pretty strong subcategory. There’s significant potential.”

"Of course, extrapolating future growth from current trends is always dangerous. And craft will encounter some challenges. Retailers and distributors can carry only so many brands and stock-keeping units. The American consumer’s palate tends toward lighter beers. Capacity can be an issue. And as craft brewers grow, growth becomes more expensive.

Still, most industry executives predict craft has a good run ahead.

“I think craft’s going to continue to grow naturally,” says Gregg Christiansen, president and CEO of Columbia Distributing Company. The distributor serves two of the country’s biggest craft markets – Portland, Ore., and Seattle.

The rest of this story, and the issue, can be seen here.

If you would like to receive a free subscription to Brew Magazine, please drop a line with your name and mailing address here.

Craft Ramping up at Retail

Crafts gaining shelf space at supermarkets and other outlets.

The double-digit growth of craft beers, in volume and dollar sales, shouldn’t surprise anyone who’s paid attention to store shelves.

Craft has been gaining space for some time, and that trend is likely to continue.

The number of craft items carried by the average supermarket is up 33.5 percent from 2005 to 23.4 items, according to beer sales statistics from Nielsen.

But it’s not only supermarkets. Crafts are picking up shelf space at other retailers.

Convenience stores carry an average of 2.4 craft items, according to Nielsen (year-to-date through May 19). That may not sound like a lot, but it’s a 35 percent increase from two years ago.

Liquor stores stock 52 craft beer items, according to Nielsen (26 weeks ended May 19). That’s a 24 percent increase from 2005.

Retailers are paying more attention to crafts, which can enhance the image of a beer section and provide higher margins.

While they’re carrying more items, retailers and distributors also are monitoring stock keeping units to see which ones move. And which ones don’t.

Says Kevin Burke, president of Burke Beverage: “Shelf space is scarce and we need to get the most velocity as possible for each SKU.”

That said, craft beer is still dwarfed by premium beer. Craft beer’s penetration of households has jumped to 8 percent in 2007 from 5 percent in 1998, according to Nielsen. The total beer category’s penetration is around 45 percent.

To see the Brewers Association press release about craft beer’s performance during the first half of 2007, go here.

Beer Business Daily had an interesting discussion of craft’s growth on Friday. That can be seen here (subscription only).

Crafts Post Double-Digit Growth

Exceeds 5 percent of beer dollar share.

Craft beer volume increased by 11 percent during the first half of 2007 and dollar sales jumped even higher, according to figures released Wednesday by the Brewers Association.

Craft volume increased by 400,000 barrels during the period, to 3.8 million barrels, according to the trade association, which represents 1,400 craft brewers, ranging from brewpubs to bigger players such as Boston Beer Company. (The BA numbers do not include Coors Brewing Company's Blue Moon Belgian White Ale or the Jacob Leinenkugel Brewing Company, which is owned by Miller Brewing Company.)

Dollar growth increased by 14 percent during the period, BA reported. For the first time ever, craft's dollar share of total beer sales exceeded 5 percent.

"The 1,400 small, independent and traditional craft brewers in the U.S. have hit their stride," said Paul Gatza, director of the Brewer's Association. "United States craft brewers are making many of the world's best beers, and the marketplace is responding."

The release can be seen here.