Allagash to Pull Out of Texas, Washington

April 4, 2011

Allagash to Pull Out of Texas, Washington

Dear Client:

In what promises to be a bigger story as the year trollops on (Paul Gatza revealed at CBC that a whopping 94% of regional breweries are up), Allagash’s Rob Tod told CBD that they’re pulling out of Texas and Washington in the next couple of months. Rob says sales projections for the year were in the 30%-over range, but depletions out of wholesaler warehouses have been exceeding 50% the last couple of months.

“We’re looking for every option to be able to keep up in some of the core markets we’ve been in for the longest. Those [Texas and Washington] are a couple of our more recently opened markets … it comes down to logistics,” said Rob, who also expressed his affinity for Ben E. Keith and Click Wholesale in those respective markets. He says they’ll return to those distributors when they eventually re-enter.

GOOSE ISLAND’S JOHN HALL DEFENDS THE BIG SALE

“If my local brewery in Chicago one day told me, ‘We’re selling out,’ I’d feel worse than I felt when Macy’s bought Marshall Field’s.”

So begins Goose Island founder John Hall’s op-ed in the Chicago Tribune this weekend, defending the decision to sell Goose to Anheuser-Busch in a deal with $38.8 million. John contends that A-B “didn’t buy us to change us. It bought us because we can do things its people can’t. They’re megabig, so it’s harder to get people who sell huge brands to really push new products. As in a lot of industries, it’s the small guys who are really creative, because they have to be creative. That’s what’s made us what we are,” he writes.

CAPACITY ISSUES. John then writes of a truth that many in the craft beer industry are struggling with lately: “( …) We’re in a capital-intensive business, and it takes an awful lot of money. Not counting our two brewpubs, we’ve up to 115 to 120 regular employees, having added about 20 people just last year.” It’s going to take a lot of money to build out capacity to fill what many believe will be a doubling of the craft beer industry in the next five years or so. “I’d like Goose Island to be part of that: for craft-beer drinkers, for what we’ve created and for Chicago. We now sell about 1 percent of the beer sold in Chicago. If we don’t continue to grow, we disappear.”

GROWING PAINS. The problem with growth, is it takes a lot of stainless steel, and stainless ain’t cheap these days. “My dream is to build a nice, world-class brewery here in Chicago that will continue the legacy of Goose Island,” writes John. “But few of us in the craft-beer business are wealthy. Maybe someone like Anchor Steam’s Fritz Maytag could write a check, but the only way I’d be able to finance it myself is if I won the Mega Millions lottery. I had to go out and raise money.”

JOHN GETS THE CALL. After mulling several options, including investors and brewers, John got a call in early winter from execs at Anheuser-Busch. Having had a relationship with them, they agreed to talk but under certain conditions; those conditions being: “Goose Island had to remain an independent company, with me in charge, with brewing centered here in Chicago and with sales and marketing reporting up through me. And I would report to just one person in St. Louis.” That person being A-B chief Dave Peacock.

REACTIONS. “I’ve heard from all around the country,” writes John. “This deal has highlighted how visible craft beer has become in a lot of people’s minds, and we’re proud that we’ve been part of that. People are worried that this investment by Anheuser-Busch is going to have a negative impact on us and on craft beers. Quite frankly, I think it’s just the opposite.”

OUR TAKE. If A-B keeps its promise to let John and his team make great beer – and great beer is what it’s all about – then expanding brewing capacity and distribution so more people can enjoy Goose beers is a good thing, right? Competitors are worried, naturally, that A-B will push the brand aggressively in chains using price, and expand nationally while brewing Goose brands more cheaply in A-B breweries. If that happens, the consumer will catch on eventually. If A-B is smart, they’ll grow just like indie craft brewers grow: organically, one account at a time, expanding slowly. It will be interesting to see how it plays out. CBD, like a good ABC agent, will always be watching.

APRIL FOOLS RUN AMOK: “MILLER-COORS” BUYS BROOKLYN?

Friday, April 1, we were flooded with obvious-but-funny press releases. We were privy to many fake debuts, from Stone’s pocket-friendly “BastardSHOTZ Gel Pakz” for the “discriminating” beer-gel drinker to Allagash’s foray into the PAB market with 24-oz. cans of CoolshipMax sporting flavors like Maine Blueberry and ABVs of “18.2%.”

But one hoax was a little less obvious. Brew York, New York (and untold other blogs) ran a story Friday with the headline, “Brooklyn Brewery to be acquired by Miller-Coors.” That dash, along with planned products like “Brooklyn Genuine Draft,” a “crisp, fizzy American Adjust Lager” and Garrett Oliver’s supposed plan to “ride off into the sunset” was obvious to us, but Brooklyn chief Steve Hindy said the brewery nonetheless got a few alarmed calls on the matter.

“To tell you the truth, I thought it was pretty funny,” Steve told BBD. “I was on the road, doing a beer dinner for 100 Marine Corps officers at Camp Lejeune, NC. Then I started getting calls from distributors, saying, ‘Say it ain’t so.’ Apparently a lot of people didn’t read it all the way through and the rumor mill started churning.”

The end of the entry disclaimed the story as an April Fools’ joke, but we’ve heard the NY Post even ran it for awhile. Apparently the gravity got back to the rumor’s likely source, the Brew York blog, as the following quasi-retraction was published later Friday:

“Okay, okay. We’ve had our April Fools’ Day fun and unleashed a prank that may have – admittedly – sounded a bit too real to get a laugh out of everyone. And honestly, the fact that people took the prank so seriously goes to show you that we in the craft beer community have some real concerns about the future of the industry. The Goose Island news was a little too close for comfort.”

MORE FROM CBA: NEW ROTATOR IPA SERIES

Widmer has just started rolling out a Rotator IPA series, a “seasonal with no season to it,” according to CBA chief Terry Michaelson. Four different IPAs will cycle through the new SKU package throughout the year, marked by experimental malt and hop profiles. The first in the series is in the process of reaching all Widmer’s markets.

Though labels and names have already been splayed across the Internet for the series, in a burgeoning market of IPA variety packs (Flying Dog) and rotating IPA seasonals (Magic Hat), CBA campers say they’ll be as excited as everyone else to figure out what the next few titles will be, as the brewers are still experimenting. Terry says each titles’ longevity will not be determined by hard-and-fast seasonal rollout dates but by consumer demand and availability of finite ingredients like American aroma hops.

BEER BRIEFS:

MAUI BREWING CO. has signed with Ben E. Keith to enter the Texas market, with sales slated to start next week. The staples – Big Swell IPA, Bikini Blonde, Coconut Porter and Mana Wheat – are first, with seasonals to arrive soon.

SWEETWATER JUST HAD ITS BEST MONTH EVER, per Steve Farace – 8,087 barrels, 28% over March 2010, and 34.3% over YTD sales for 2010.

BREWPIC OF THE DAY: Stone’s April Fool’s joke, although I think some distributors tried to order some. BastardSHOTZ, take Arrogant Bastard with you wherever you go.

Until tomorrow, Jenn

“True eloquence consists in saying all that is necessary, and nothing but what is necessary.
– Heinrich Heine

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