Beer News Around the Country

I've been sorta laying low this week, working with deadlines for reviews and what-not, but I still try to keep tabs on beer stories. Today was an odd day, to me at least, as there are three papers around the country (small papers) running stories on craft beer. Of course, this is addition to the WSJ piece mentioned below.

First Story | Charlotte Observer | Brewers Try Aging Beer in Whiskey Barrels

It seems one of the industry's spokesmen, Garrett Oliver, made an impression on the writer with his "Black Ops" beer. In addition to Oliver's creation, Townsend writes about some more local folks taking up the trendy notion of aging beer in barrels. Overall, a good introductory piece, appropriate for a newspaper. Good stuff.

Second Story | Daily Nebraskan | Microbrews Help Shed Low Class Image

This story has a bit more meat to it, as Alex Haueter and Michael Mason-D'Croz write about the challenges - or is it the challenging nature - craft brewers have today. Again, this is local piece and many of the brewers mentioned are brewers I'm not personally familiar with - I love it! Overall, I found this to be a great piece for a local paper.

Third Story | Contra Costa Times | Craft Beer Prices Jump on Hops, Barley Price Increases

OK, this one was printed today and is not currently available online. However, from the synopsis provided, it appears to be discussing the jump in beer prices many of us are already familiar with. I have to admit, I loved their opening line:

If you're a drinker of craft beer - that's the good stuff, the beer with the full flavor and unusual twists and turns, it's going to cost a bit more if not today, soon.

What's great about this? I love that each story has its own sort of 'homey' feel to them (OK, first two). I personally get tired of seeing reprints in papers, beer stories that seem to be printed from coast to coast. This is actually great stuff, big steps in "support your local brewers" and I hope people who are in the area send in a quick email or post comments to the stories letting the editors know you appreciated the coverage. What's funny about that, you may think nobody cares if you like a story so why bother sending in a comment or email. Well, your comments and emails most certainly are read, and for editors looking to make decisions on upcoming stories - they'll remember.

In the News: Lucky Lab Brewing

I found this in my Google Alerts today, a story on TV station KATU in Portland about Lucky Lab's green side. The story relays that Lucky Lab has installed solar panels used to help heat their water - even in Portland. It's not a long story and doesn't say a whole bunch, but it's always good to see the brewers on TV.

Beer Hunters Beware: The Younger is On Tap

Yes, that's right, Russian River's famed Pliny the Younger is on tap, as of today. This won't last too long, so if you can make it out there in the next couple of weeks, do so. For those who don't know, Younger is Vinnie's "Triple IPA", a hopped up super beer with more alcohol and flavor than you're used to.

Enjoy it if you can, knowing that it won't be long before Pliny the Elder (Double IPA) and Blind Pig (IPA) are available in 16oz bottles.

Speaking of Russian River... It appears assistant brewer Travis has set them up with a WordPress page. I don't know ANYTHING about this, but can only drool at the pictures here. It was only set up today, but the pictures here are stunning! 400+ barrel (wooden) capacity! It's a dream...

http://russianriverbrewing.com/wordpress/

Bigfoot's New Gigs: UPDATE

A few days ago I posted this picture with a few questions. It took a few days, but I did get a reply from Sierra Grossman. I'd asked whether or not this was a "one-time" thing, or if Sierra Nevada was moving forward with a new label. Sierra answered:

"Bigfoot - this is a onetime occurrence. We thought we would celebrate the 25th expedition of our Bigfoot Ale and do something a little bit different. It's a one-of-a-kind beer and we wanted to have a one-of-a-kind label to go with it!"

So, there you go - we can now rest a bit easier and appreciate the Bigfoot and its new get-up.

UPDATE: I clarified with Sierra Grossman that "one-of-a-kind" beer is not an allusion to a change in recipe. It was a general statement regarding the overall quality of the product. So, expect the same great beer in 2008 with a one-of-a-kind label.

Striking While the Iron is Hot

I read about this over at Brew Blog, although we've been hearing rumors about this for some time. A-B appears poised to follow Blue Moon (Coors) lead in the craft beer market with a Belgian White of their own - Shock Top. They don't mention when this beer will be released, but just judging by the label (right) I'd guess this is a late Spring to early Summer release.

So, that's the news portion for the morning. What follows is random musings about timing and the industry overall.

Is this the perfect time for A-B to do this? Yes. If you're a shareholder for the company, this is great news I would think. Beer prices are rising in the craft beer market, that's no shock. What's more, there are a ton of new (newish) labels out there. You see this every time you walk down a beer aisle in a grocery store. I can't help but imagine that with their strangle hold on distribution in the US, A-B is poised to put their crafts in every market. Your local bar with 4 Macros and 2 Micros... well, it isn't a stretch to think you'll lose one of the micro's in place A-B's product. Reps will push it, signage will be provided and the incentives overall to switch will speak loudly to bar owners.

I saw this a couple years ago in Northern California with Bare-Knuckle stout (another A-B craft). Bars in my area all of a sudden had this new stout nobody had heard of, posters were on the walls and glassware was provided for those willing to try this new beer. In one bar, in Auburn, the Bare Knuckle replaced a regional micro brewed stout. Who will they go after with Shock Top? I actually can't help but think they're going after Blue Moon, but I also can't help but think that more than a handful of publicans will drop regionals like Great White or even national brands like Widmer.

Will it work? I think it will, to a certain degree. I don't have the stats to back me up here, but I have a feeling that many of those buying craft beers don't have any sort of strong loyalty to micro brewers as a whole. I was talking with a beer buyer for a great store in Souther Oregon last week and he was amazed at how many 20-somethings were buying craft beer nowadays. What was more amazing to him was that a majority (his word) would walk up and buy a 22-ounce craft-beer and with the other hand buy a 12-pack of PBR. That doesn't mean much of anything, except that I believe such buying habits benefit A-B.

Will it hurt the Craft Beer Movement? No, I don't think so. If anything, I suppose shelf space in chain grocers and convenient stores will opt to carry the A-B products. Beyond that (and don't get me wrong, that's not a small thing) I think we'll still be able to support the movement in specialty stores and on-premise sales. This could potentially slow growth for budding brewers, but as a whole I see the industry continuing to grow in double digits this year.

So, in conclusion, here's a summary of what I was trying to say. I think this is good for A-B because:

- A plethora of brands exists, and A-B is a trusted name for most beer buyers. When I did business consulting I used to tell companies if they had more than 5 goals, they didn't have any goals. I think this works for choice too, with a whole lot of buyers. Overwhelmed with variety, not wanting to make the 'wrong' choice, it's just easier to buy from a name you trust.
- Rising prices in craft beer (and macros, but buy smaller margins) means something for so many people out there now, worried about employment, debt and interest rates...
- A-B understands more about buying habits than most of us care to admit.

Bigfoot's New Gigs

Enough said? I'll be looking for answers soon, but it appears this is not a 'one-time' deal celebrating 25 years, as the COLA application stipulates that the years can change. While the label looks nice and classy and all, I know I am not alone in lamenting the loss of the iconic label for one of my favorite beers.

Catching Up a Bit

I've been enjoying my time in Southern Oregon with family and old friends so much that I've pretty much neglected life 'on-line'. This morning I was able to catch up a bit, however, reading through several pieces I thought would be of some interest for you all.

First, a piece from the Atlanta Journal-Constitution which highlights a few struggles brewers in Georgia face with new proposed laws/restrictions.

Tasting tours are coming under scrutiny as state regulators revamp rules governing the production, distribution and sale of alcohol products. Under a new set of proposed rules being unveiled this week, visitors to Georgia's microbreweries may soon be limited to 24 ounces of beer, roughly half of the self-imposed amount brewers poured.

There's also an interesting quote from the man who runs the Dept of Revenue for the state, which oversees such things.

The next story I found through Hop Talk (another quality beer blog). They quote an article posted on the Knoxville News Sentinel that discusses the somewhat new trend of business savvy brewers and breweries around the US.

The biggest beneficiary of the emergence of the craft brewer as executive may wind up being the consumer as more companies use their new skills to secure distribution contracts that allow them to offer their brews to a wider audience.

The business know-how is also helping brewers negotiate supply contracts for ingredients - a necessity in a period of sharp price increases for commodities and packaging materials.

Overall, a good read.

The final piece I'll share with you all is about the decline in German beer consumption.

Per-capita consumption of beer in Germany, once the world's largest consumer of the drink, fell by 3.5 liters in 2007 to 112.5 liters -- the eighth decline in the last nine years.

Devil's in the Details

I read a whole hell of a lot every day; whether it's online, in print or even on TV, especially about the beer industry. I hope this blog helps pass on some info we all glean so that you don't have to read it all, as do other great beer bloggers online today. With that said, I read the Fitch Ratings for Anheuser-Busch in its entirety, something I suspect I wouldn't just volunteer to read had I a different job and passion. In this there's some pretty important and revealing information for those of us who enjoy our craft beer. I'll try to keep this short.

Domestically, BUD participates in a mature beer market and is facing growing competition from craft and imported beers as well as spirits and wine. In addition, rising energy and commodity costs have pressured margins recently. Price increases instituted in the United States late in 2006 and the beginning of 2007 and less promotional activity have produced a better than expected operating performance in 2007. BUD is again raising prices going into 2008, which should help to partially offset continuing rises in commodity costs, particularly agricultural ingredients. The pending SABMiller/Molson Coors joint venture, which could close in the second quarter of 2008, is expected to eventually result in additional competitive pressure on BUD's brands but may sustain an improved pricing environment.

Longer term, low domestic beer volume trends, limits on pricing actions, changing consumer tastes regarding craft and imported beers as well as other alcoholic beverages, and trading up to more premium products are concerns. Expected profit growth from international markets including equity investments, which accounted for 24.5% of net income in 2006 up from 14.2% in 2000, somewhat offsets potential weakness in domestic operations.

A few things I find important to note.

1. "facing growing competition from craft and imported beers..." No surprise here, right? Hooray for craft beer!
2. "rising energy and commodity costs have pressured margins recently." OK, pay attention to this. If there's ANY concern with margins and costs with energy and commodity prices for A-B, you can bet your shiny pennies that craft brewers are feeling the squeeze even more. Why? Well, it sorta says it when it talks about 'economies of scale' prior to this quote. A-B accounts for 48.4% of beer's total market share in the US today, which means they get the sweetest deals in terms of raw material and indirect costs... and not just by a little bit.
   
3. "BUD is again raising prices going into 2008..." Did that get your attention? If you missed the point of number 2, this is it folks. Price of beer is going up, and if there's an exponential savings afforded to A-B for their buying power and sheer size, you can assume an exponential nature in price increases for your favorite craft beers. Now, there is something we've got going for us, the vast majority of brewers in the country are private businesses owned by a few investors. It is more likely that these people won't demand equal compensation, like A-B's share holders, but they're business people too and won't sit back and just eat all the new/rising costs of materials. Remember this. Your beer will be more expensive in 2008, but you can rest assured this increase isn't making your favorite brewers rich. Tip well.
4. "... changing consumer tastes regarding craft and imported beers... and trading up to more premium products are concerns." Interesting, I think that's pretty self explanatory.
   

The report referenced was all supporting one thing, Anheuser-Busch is still a "stable" investment, regardless of the items mentioned here. Why? Seems largely due to their impressive cash flow and manageable debt. You can read that to also say, they can absorb the flux in material pricing experienced globally right now. Can the same be said for the craft brewers of the world? I suspect, for the most part, they can. I really don't think we'll see a horrific year of doom and gloom - I just don't see it happening. However, I suspect there are more than a few who don't have the cash-flow and perhaps lack the credit to get them through these price increases.

Hey, This Mayor Makes Sense

In the far northern region of California, in the heart of the Siskiyou Mountains, is a small town named Weed. I stop in Weed several times a year as I travel to my folks' place in Southern Oregon, the people are great and there's quite a nice 'homey' feel to the downtown area - this, by the way, is not a big city, it's barely a small town. Anyway, Weed is home to a nice little brewery, Mount Shasta Brewing Company, that recently was granted permits for an outdoor beer garden, a place for tourists and locals to enjoy a pint (or sampler) of beer when the weather is nice (and it can be down-right beautiful).

Not surprisingly a few town-folk got mad about this new development. After all, the brewery was 'near' a park and a public swimming pool where youngsters could be corrupted by the view of adults enjoying a beer. Petitions were filed and an appeal was made to revoke the license, for the kids' sake of course. Finally, the city council convened over the matter and a shocking clarity of opinion was expressed by none other than the Mayor of Weed. But first, let's get an idea of what the city was fighting here (this is from the Mt. Shasta Herald).

“Children use the swimming pool all the time,” said Gubetta, “this is too close to the park, it's not right.”

Well, that's almost logical, right? I mean, what if a kid accidentally mistakes the beer garden for the park and then gets his hands on a few pints of beer - don't you care about poor Johnny, you know he gets confused... and garden, park... they're so similar sounding. I may be a bit mean there, but come on.

The mayor had this to say in response.

“in regards to the park, people can go to the park with a keg of beer and cook, and get drunk. So, being next to the park, as far as I'm concerned, is a little insignificant.”

Whoa, seems the only logical thing to do now is ban alcohol in the park, lest the kids be forever endangered by the evils of beer.

In all seriousness, I am impressed with the logic expressed here by the mayor. I'm even more impressed with his next comment.

“I don't think some people understand what a beer garden is. It's not a bar or a party house, it's a place where people go to taste beer and have a sandwich or a hot dog. It's not a place where people typically go to get drunk and party, that's not what a microbrewery is.”

How do you like that? I couldn't agree more with this rational statement expressed in a meeting where it seemed some lacked reason. Wouldn't it be great if all city representatives had the same reasoning ability, to be able to look at the world around them and realize that it isn't black and white? I love that this mayor understands the business of his town, that he can distinguish a beer garden from a frat house. Score of for Mayor Sutton.

A-B Increases Ad Budget for 2008

As if we weren't already saturated with the goofy, often entertaining ads from Anheuser-Busch, it seems that 2008 will feature more Bud, more of the time.

A-B will spend about $70 million more than it has this year on advertisements for its top-selling beers, Bud Light and Budweiser, according to the Journal's online story. Also, its other two core brands, Michelob and Michelob Ultra, will receive about $30 million in ads focusing on the traditional way A-B brews the beer.

This story goes on to say that A-B paid $247 Million in the FIRST SIX MONTHS of 2007, which would suggest an annual budget of just under $500 Million! With about 60% of their ad budget highlighting their four core brands, it seems safe to say that we'll be seeing a lot more advertising from the company that only has a 48.4 market share in the US beer market. I suspect the 70 million extra dollars won't do a whole lot to get them to 48.5, if trends of the last several years continue (and there's no reason to think they won't).

The most intriguing part of this press-release looking story is the last paragraph where they tell us what A-B is.

St. Louis-based Anheuser-Busch Cos. Inc. (NYSE: BUD), the largest domestic brewer, manufactures and recycles aluminum cans and operates theme parks.

I know it's all true, but the manufacturer and recycling bit struck me as odd. I don't really know why yet.

Anyway, look forward to a few more Bud and Bud Light ads in 2008, it seems they'll be here whether you want them or not.

A-B Stocks: As Good as Their Beer?

No, this isn't a big surprise. If you're a craft beer enthusiast, you're likely familiar with the declining market share for this juggernaut brewery. However, it was interesting seeing this on MSNBC today.

Anheuser-Busch's recent weak stock performance reflects concerns surrounding the future for both the company and the overall beer market. While I don't see beer disappearing from our culture anytime soon, its sales growth has been anemic, while wine and spirits have become a more lucrative market. Within the domestic beer segment, consumer tastes are shifting away from mass-market brews, toward more flavorful craft beers and imports. The overall effect of these two trends has favored distillers like Diageo (NYSE: DEO) and Constellation Brands (NYSE: STZ) and smaller brewers like Boston Beer (NYSE: SAM).

Imagine that. Given the CHOICE, consumers seem to choose beers with flavor. Who would have figured that?

Oh, by the way, I don't want to appear to be mindlessly bashing A-B - I'm not. I think they're probably better for the craft beer industry than they get credit for. However, I don't really like that any company in any industry can have close to, or more than a 50% market share.

Also, if you're a big investor and want a good return on investment, check out what's going on in the craft beer market these days. If I had the means, I'd put my money in a VC to help a startup brewery with a good plan and an established brewer. There ya go, my financial tip of the year.

Grolsch Goes to SABMiller

I just ran across the news that Grolsch shareholders have accepted SAB Miller's bid to buy a controlling share of the Dutch brewery.  This story, on its own, doesn't mean all that much to most of us, but the impact of global brewing consolidation is getting more and more apparent.

The buying offer made by SAB Miller was 48.25 Euros per share, which seems to be about 8 Billion total.  The International Trader had a few interesting points on the logic behind this move, along with a few of the risks involved.  However, the thing that caught my eye was this is that Grolsch is called a high margin beer.  I take this to mean that Grolsch is relatively cheap to make and sells for a premium, with its iconic flip-top and green bottle.

The South African Times seems to think, and I would have to agree, that this move will spur A-B to pick up another major brand.  This piece also talks about the long-rumored joining of forces between A-B and InBev - only now they paint the picture to suggest that A-B needs InBev more than InBev needs A-B.  There's a few other good nuggets to be found here, suggest you take a look.

Now, according to the Times UK, the biggest loser in all this could well be Heineken - and this makes sense to me as I consider marketing and shelf space.  If, all of a sudden, we start seeing Grolsch pushed as the Heineken alternative, with a green bottle all its own, that could hurt them in the long run.  The Times also suggests that this move may not be the end of SAB Miller's quest to consolidate, with a potential target found in Scottish and Newcastle.

Something else caught my eye in all this, SAB Miller's offer wasn't for current value, but based instead on 'future profitability'.  In this market, that isn't a gamble I'd want to take.

Again, this is probably something that won't impact you in any immediate fashion (unless you happen to have stock in Grolsch), but eventually all this consolidation will bite craft beer enthusiasts everywhere.  Just a couple of weeks ago, on the Brewer's Assn harvest phone call (discussing hop and barley harvests for the year and what that all means) it was mentioned that with consolidation comes less excess in ingredients - fewer brewers with 'left-overs' that have been so common and so vital for smaller breweries.  As consolidation continues and barley availability becomes more scarce, there could be some very real issues in the coming years, with regards to global ingredients.

Sacramento Bee(r)

In today's Sacramento Bee, the mega newspaper of the Sacramento region, Mike Dunn, Food Editor, has put out FOUR stories on our region's craft beer scene. What's more, he's done a good job on these pieces too! Now, as much as I'd like to copy/paste these stories for your reading pleasure, you know I just can't do that. So, here are some excerpts for you, hopefully enough to tease you into looking up the stories in their entirety.From the Bee's "Hopping on the Bandwagon" piece:

"There's tremendous diversity in beers these days, among the small guys and the big guys alike. They're all looking for new openings," says Charles Bamforth, chair of the department of food science and technology at the University of California, Davis... Beers are being brewed with such exotic ingredients as chili peppers, wasabi and ginger. They're being aged in used wine barrels. They're being inoculated with a strain of yeast that gives them a pungent horsy or barnyard character, repulsive to some, savored by others. There are gluten-free beers and smoke-flavored beers.

From their "Where to Find a Fresh Pint" piece, which highlights nine or our city's breweries:

[Elk Grove Brewing's] Blonde, flavorful but light-style ale with 3.8 percent alcohol; Diamondback wheat (4.8 percent alcohol); and Otis ale, a German-style amber ale with 5.3 percent alcohol Most unusual: Freedom Double IPA, a strong summer ale brewed with three times as many hops as ordinarily used in beers, yielding a brew with 9.7 percent alcohol Summer beer: The light and mild Pony Express summer ale is brewed with a little rye malt to give it a delicate sweetness while preserving a dry finish. What sets it apart: The brewpub, in old-town Elk Grove, occupies a structure built in 1885 to house a harness shop and later a general store.

The Bee also has a "A linguistic guide for what ales you", doing a good job a defining several common beer styles, and the saddest piece of the bunch, which highlights only two of our region's beer fests.

I whole heartedly applaud any major newspaper, and the SacBee is just that, who dares to do new things, and for SacBee, covering beer so extensively is certainly a step in the right direction. I hope to see more in the future, would actually love to see a bi-weekly beer column - clearly, with 9 breweries in the region, this would seem sustainable.

If you want to read the stories, you may have to sign in. I think that's a relatively painless operation though. Thank you to Mike Dunne. If you like what you read, be sure to let Mike know - he's at mdunne -at- sacbee -dot- com

Updated: Link for Where to Find a Fresh Pint