Craft beer adds $68 billion to economy

Economic impact of craft beer

The craft brewing industry contributed $67.8 billion to the U.S. economy in 2016, providing 456,000 jobs.

“With a strong presence across the 50 states and the District of Columbia, craft breweries are a vibrant and flourishing economic force at the local, state and national level,” said Brewers Association economist Bart Watson. “As consumers continue to demand a wide range of high quality, full-flavored beers, small and independent craft brewers are meeting this growing demand with innovative offerings, creating high levels of economic value in the process.”

The BA used two national surveys and other government and market data measure the econmic impact. The methodology is available here.

California, which has more than 850 breweries had the greatest economic impact, $7.8 billion, followed by Pennsylvania, Texas, New York and Florida. Colorado breweries had the highest per capita impact, generating $764 for every legal drinking age consumer, followed by Vermont and Oregon.

More information.


Green Flash to begin brewing in Nebraska

Green Flash Brewing, which opened 15 years ago in San Diego and added a second larger brewery last year in Virginia, has announced it will operate another brewery in Lincoln, Neb.

A press release states the company has purchased a 10,000-square-foot production facility and tasting room with a restaurant in Lincoln. Ploughshare Brewing, which opened in November 2014, closed its doors July 3. “The new brewery was purchased intact, and Green Flash expects the tasting room, restaurant, and brewhouse to be open and operating by the end of this year,” according to the press release. “Upon opening, Green Flash will be able to offer fresh beer with regional prices in the Midwest, and will focus on the consumer connection in their Lincoln tasting room. The move reveals Green Flash’s long-term strategy to increase their strength as a national brand by establishing regional footholds in key cities across the United States.”

“We hope to become a local favorite in our new Nebraska home,” saids Green Flash co-founder Mike Hinkley.

The new brewery has a capacity of 10,000 barrels, much smaller than breweries in San Diego and Virginia Beach. It will produce both Green Flash and Alpine brand beers.


New Belgium, Magnolia, Cantwell, lambic

Write your own headline. The press release New Belgium Brewing issued this afternoon turned the process of picking a lead item into a multiple choice question.

The Colorado brewery will purchase Magnolia Brewing in San Francisco, the 20-year-old brewery that was in bankruptcy. A newly formed partnership, in which New Belgium is the majority shareholder, that includes Elysian Brewing co-founder Dick Cantwell and Belgian lambic producer Oud Beersel, will operate Magnolia. Cantwell will head up brewing operations, working along with Magnolia founder Dave McLean, who will be an employee of the partnership. Cantwell left Elysian in 2015, after the A-B InBev bought the company.

“I’m tremendously excited to be back in the beer business and looking forward to working with the team at Magnolia to develop new beers and new ideas,” Cantwell said in the press release. “This project is the natural evolution of a longstanding strategy of collaboration between myself, New Belgium and Oud Beersel.”

The release explains that Belgian lambic producer Oud Beersel joins the partnership as a contributing experimenter, with the goal of eventually shipping containers of its traditionally-produced and spontaneously fermented beers for blending with Magnolia-crafted beers. Installation of a coolship is planned, along with the wooden aging vessels for which both New Belgium and Oud Beersel are known. To be called lambic a beer must be produced in Belgium, and by shipping lambic to San Francisco, the partnership plans to establish the world’s first dedicated lambic blendery outside of Belgium.

New Belgium already did something similar with Transatlantique Kriek, a beer produced with Oud Beersel and Brouerij Boon, wherein beer was shipped from Belgium for blending with New Belgium wood-aged beers. New Belgium is also likely to ship beer to San Francisco for blending from its Fort Collins, Colorado brewery.

“We’ve been looking for ways to diversify our assets and expand our community,” said New Belgium co-founder and Executive Chair, Kim Jordan. “These two tap rooms are right in the heart of historic San Francisco neighborhoods, a place Dick (Cantwell) and I call home. Magnolia makes excellent beer and plays an important role in the community. We’re excited about the possibilities and look forward to continuing our journey while honoring Magnolia’s history and presence.”

McLean opened Magnolia Brewing in 1997 in San Francisco’s Haight-Ashbury district. Smokestack, a barbecue restaurant attached to a 30-barrel production brewery, followed in 2014. When its revenue did not meet expectations the company to file for Chapter 11 bankruptcy protection in November 2015.

“Magnolia has had quite a journey in San Francisco for nearly two decades, including some very challenging and difficult times in recent years,” Mclean said. “I’m incredibly grateful for this opportunity to see Magnolia start a new chapter and to be working with New Belgium, Dick Cantwell and Oud Beersel to preserve what we all love about Magnolia while embarking on some exciting new craft beer adventures together.”


Constellation Brands buys Funky Buddha

Constellation Brands has acquired as second craft brewery, today announcing it has bought Florida’s Funky Buddha Brewery. Constellation, which also imports popular Mexican brands such as Corona and Modelo, purchased Ballast Point two years ago.

Ballast Point cost Constellation $1 billion. The terms of the Funky Buddha deal have not been disclosed.

Funky Buddha, founded in 2010 and based in Oakland Park, is projected to produce 35,000 barrels of beer in 2017, up 29% from 27,000 barrels in 2016.

“Adding a fantastic regional brand such as Funky Buddha to our craft beer portfolio, along with Ballast Point, advances our strategy in continuing to lead the high-end beer segment,” Paul Hetterich, president of Constellation Brands’ beer division, said in a press release.

Funky Buddha is known for beers such as Hop Gun IPA and Floridian Hefeweizen, as well as its Maple Bacon Coffee Porter and Last Snow Coconut Coffee Porter.


Goat’s Milk Champion Beer of Britain

A Warwickshire brewery, originally located in an old coffin shop, has won the Campaign for Real Ale’s Champion Beer of Britain award on the opening day of the Great British Beer Festival.

Church End originally brewed the bitter as a one-off for a local festival at the Goat pub, thus the champion’s name, Goat’s Milk. Head brewer Carl Graves said the 3.8% beer has a simple recipe of Maris Otter pale malt with a touch of crystal malt and malted wheat and is hopped with American Cascade and Chinook hops.

Final judging for the competition was held at the festival in London, which will attract 50,000 drinkers to sample from more than 900 beers, ciders, perries and wines.

The results:

Gold-Church End Goats Milk
Silver-Bishop Nick Ridley’s Rite
Bronze-Tiny Rebel Cwtch

Gold-Rudgate Ruby Mild
Silver-West Berkshire Maggs Magnificent Mild
Bronze-Winter’s Mild

Gold-Church End Goats Milk
Silver-Bishop Nick Ridley’s Rite
Bronze-Triple fff Alton’s Pride and Sambrook’s Wandle Ale

Best Bitter
Gold-Tiny Rebel Cwtch
Silver-Blackedge Pike
Bronze-Surrey Hills Shere Drop and West Berkshire Good Old Boy

Golden Ale
Gold-Blue Monkey Infinity
Silver-Fyne Ales Jarl
Bronze-Oakham Citra and Ludlow Gold

Strong Bitter
Gold-Greytrees Afghan Pale Ale
Silver-Barngates Red Bull Terrier
Bronze-Salopian Automaton

Gold-Saltaire Triple Chocoholic
Silver-Blackedge Black Port Porter
Silver-Cromarty Red Rocker


Sapporo buys Anchor Brewing

Japan’s Sapporo Holdings has purchased Anchor Brewing, the San Francisco brewery credited with igniting the American craft beer renaissance. Sapporo reportedly paid $88 million for the brewery, considerably more than AB InBev spent ($38 million) to acquire Goose Island but much less than Constellation brands paid ($1 billion) for Ballast Point Brewing.

Sapporo’s statement announcing the deal describes Anchor in a most modest way:

“Anchor is a prominent and historic US beer producer founded in 1896 in San Francisco. ‘Anchor Steam Beer,’ its flagship brand, is said to be an icon that ignited the current craft beer boom in the US. Armed with its strong brand power primarily in San Francisco, where it is based, as well as other areas across the US, it has been enjoyed by countless beer lovers throughout the years.

“The addition of Anchor’s strong brand power and network to the Sapporo Group’s US beer business portfolio through the conclusion of this agreement is expected to accelerate its speed of growth in the US.”

Although Anchor was founded 121 years ago, American beer enthusiasts focus on its history since 1965, when Fritz Maytag took a stake in the struggling business. He took full control of the company in 1969, first reviving the “steam beer” style the brewery is best known for, but then many others not brewed in the United States. The brewery, and its beers, inspired a new wave of small breweries — that would later be called craft breweries — including Sierra Nevada Brewing.

The Griffin Group, an investment and consulting company headed by Keith Greggor and Tony Foglio, purchased Anchor in 2010. According to Greggor, the sale to Sapporo comes after a year during which the company spoke with “many, many” larger breweries all over the world to find the right fit. “When you take a brand like Anchor, its very soul exists in the heart of San Francisco,” Greggor said. “Of all the people we spoke to, (Sapporo) respected Anchor the most, what it stood for and the importance of its connection with San Francisco.”

SFGate asked Greggor what does the deal means for the future. Greggor replied that Sapporto agreed to keep using the Potrero Hill brew house — at least for the time being. “Sapporo committed to investing in the Potrero Hill brewery until we exceed capacity of that brewery, but I have no idea when that would be,” Greggor said. “We are currently running at about 55 to 60 percent of that capacity.” The deal also likely means that Anchor’s long-delayed Pier 48 expansion is likely to be dead in the water, though Anchor would not comment on the status of the project.


BA creates seal of independence

Brewers Association seal of independenceThe Brewers Association has made a new seal designed to help consumers identify independent breweries. The seal is available for use free of charge by any of the more than 5,300 small and independent American craft brewers that have a valid TTB Brewer’s Notice, meet the BA’s craft brewer definition, and sign a license agreement. It is available to both member and non-member breweries of the BA.

It features a beer bottle shape flipped upside down, signifying that craft brewers have upended beer.

“Independent craft brewers continue to turn the beer industry on its head by putting community over corporation and beer before the bottom line. They continue to better beer and our country by going beyond just making the beverage. These small businesses give back to their backyard communities and support thousands of cities and towns across the U.S.,” said Bob Pease, president & CEO, Brewers Association, in an association press release. “As Big Beer acquires former craft brands, beer drinkers have become increasingly confused about which brewers remain independent. Beer lovers are interested in transparency when it comes to brewery ownership. This seal is a simple way to provide that clarity—now they can know what’s been brewed small and certified independent.”

All 19 of the Brewers Association board members approved the initiative, Pease said, adding that each of the 16 brewery representatives committed to printing the seal on packaging. Boston Beer Company, the second-largest U.S. craft brewery, and Maine’s Allagash Brewing Company are among the initial breweries that have agreed to place the seal on their packaging.

“Craft brewers build communities and the spirit of independent ownership matters,” said Allagash founder Rob Tod, who is chair of the BA board. “When beer lovers buy independent craft beer, they are supporting American entrepreneurs and the risk takers who have long strived not just to be innovative and make truly great beer, but to also build culture and community in the process.”


Private equity firms buys majority stake in The Bruery

Massachussets-area private equity firm Castanea Partners has bought a majority share of The Bruery, a Southern California brewery known for its esoteric beers. In announcing the deal on its website the brewery stated it will “enable us to continue to grow in ways consistent with our ideals.”

“We chose to make Castanea a part of Famille Rue because of their talents and their appreciation and understanding of our vision, and because they want to contribute to our continuous improvement,” CEO Patrick Rue wrote. He and his father, Mike, started the The Bruery in 2008. The Rues expect to sell about 13,000 barrels in 2017, much of it directly to customers.

The brewery answered the question about why it would make the deal with a private equity firm this way: “The Bruery started out as a very small operation, and nine years later we’ve transformed into a proud leader in specialty craft beer. We’ve had plans for growth, some of which you have seen realized over the past couple of years, with the implementation of our more efficient brewhouse, our new packaging hall for our clean beer, and the extension of our sour and wild program into our Bruery Terreux brand and facility.”

The companies Castanea has invested in include Jeni’s Splendid Ice Cream, Urban Decay cosmetics, Essentia Water, and drybar.


New Belgium brewmaster has new venture

Longtime New Belgium Brewing brewmaster Peter Bouckaert had announced he will leave the Fort Collins brewery to form a new one, also in Fort Collins. He will team up with Zach and Laura Wilson, formerly of 1933 Brewing, to form Purpose Brewing and Cellars. Bouckaert will begin working with his new partners immediately, but no formal timeline has been established for when he will leave New Belgium. It likely won’t be before the end of the year.

“We believe that everything in life has a purpose. Our mission at Purpose Brewing and Cellars is to inspire creativity, promote craftsmanship, and support our local community,” Bouckaert and the Wilsons said in a press release.

Bouckaert, a native of Belgium who previously worked at Rodenbach Brewery, began at New Belgium in 1996. “I got to work for 21 years in the best company in the US, since Google does not create beer,” he said. “I got to work with people that realize daily their love and passion. I said from the get go that I wanted to stay as long as I can learn. Now I want to learn new things. It will be hard to leave all this passion but change is good for learning.”


Marston’s acquires Charles Wells business

English brewer Marston’s has agreed to a £55 million deal to buy the brewing arm of Charles Wells Group, which will enhance the pub chain’s presence in London. As part of the acquisition, the brewer will supply all beer, wine and spirits to the Charles Wells pubs estate.

Charles Wells has a portfolio of more than 30 brands, including Bombardier, Young’s and McEwan’s. The business also has UK distribution rights for the Estrella Damm lager brand and other beers under license including Kirin and Erdinger. In a press release, Marston’s stated the deal would, “increase our ale market share from 11% to 16%, this acquisition will also strengthen our representation in London and the South East, and present an opportunity through the McEwan’s brand to expand into Scotland.”

Martson’s CEO, Ralph Findlay, said: “The acquisition of Charles Wells Brewing and Beer Business builds on Marston’s established brewing prowess and is a further step in our objective to develop the leading premium beer business in the UK market. We have demonstrated our ability to acquire, integrate and develop beer brands evidenced by the success of brands such as Hobgoblin, Wainwright, and Lancaster Bomber.”


Speakeasy Ales sold, remains in San Francisco

Hunters Point Brewery has purchased San Francisco’s Speakeasy Ales & Lagers, both the company’s brewing equipment and the brands. Hunter Point is a new company founded by Ces Butner, former owner of Horizon Beverage Company in Oakland.

“I worked with Speakeasy Ales & Lagers for five to six years as a distributor,” said Butner. “We were one the first companies to expand their distribution beyond San Francisco. There was a tremendous amount of growth and interest in the Speakeasy brands. It was one of the best craft breweries we worked with and the beer quality is very high. I thought it would be a shame if the brand, and one of the few production breweries left in San Francisco, disappeared because of financial problems. Keeping Speakeasy’s San Francisco born and brewed tradition alive is very important to me.”

The brewery began in San Francisco in 1997, opened a taproom in 2011, and underwent a major upgrade in 2015 with the addition of a new 60-barrel brewhouse, malt handling system, fermentors, canning line, and more. The $7.5 million expansion lifted capacity from 15,000 barrels to 90,000 barrels, and the brewery reported sales of 32,500 in 2015.

It briefly ceased brewing in March because it failed to repay its primary creditor, Union Bank, and was forced to enter into an assignment for the benefit of creditors, an agreement that some companies pursue as an alternative to bankruptcy. Three days later, a Los Angeles court appointed a receiver to oversee the sale of the company. It then resumed operations with a skeleton crew of six employees.

Sam Cappione has been appointed vice president and general manager to oversee all aspects of company operations. The eight employees who remained at Speakeasy Ales & Lagers during the sale of company assets will continue working at the brewery. Additional staff will be hired in the next few weeks and months to fill key positions in operations, sales, packaging, the tap room, and brewing departments. The tap room will be opened as soon as possible.

There will be no changes to the Speakeasy beer lineup at this time.


A-B’s High End division acquires Wicked Weed Brewing

Anheuser-Busch’s The High End division is not done shopping.

The brewing giant’s business unit focused on its specialty brands announced this morning that it has acquired Wicked Weed Brewing. Founded in Asheville, N.C., in 2012 by Walt and Luke Dickinson and lifelong friends Ryan, Rick and Denise Guthy, Wicked Weed is one of the breweries that has made Asheville one of America’s best known brewing destinations.

“This is an exciting time for the entire brewing team,” said co-founder Walt Dickinson. “Our ability to create a wide range of really well executed beers that are focused on creativity, quality and drinkability is what makes Wicked Weed great. We have chosen to partner with The High End to position ourselves to make Wicked Weed what we imagined it could be when we first sat at a craft beer bar and talked about opening a brewery. As a brewer, giving our team more resources to continue innovating our portfolio and the ability to reach more craft drinkers, allows us to keep putting the beer and the people first.”

Wicked Weed Brewing owns and operates four facilities in Asheville: their original Downtown brewpub where they produce over 150 different beers a year, the “Funkatorium,” the first dedicated sour beer taproom and barrel house on the East Coast, a 50-barrel production brewery in West Asheville, and the “Funk House and company headquarters,” a custom-designed brewhouse and training facility.

“We are excited to welcome Walt, Luke, Ryan, Rick, Denise, and the entire Wicked Weed team into our High End family,” said Felipe Szpigel, president, The High End. “It’s clear to me Wicked Weed is redefining what sophistication in beer can mean, with their amazing offerings being relevant in a wide variety of occasions. Their ability to brew the highest quality beers, in a variety of styles, along with their exciting barrel program, leads me to be optimistic about what our futures hold together.”

Since A-B InBev acquired Chicago’s Goose Island Beer in 2011 it has continued to purchase other regionl breweries, eventually creating The High End as a separate division. It includes brands such as Stella Artois and Shock Top as well as Goose Island, Blue Point, 10 Barrel, Elysian, Golden Road, Virtue Cider, Four Peaks, Breckenridge Brewery, Devils Backbone, and Karbach Brewing Co.


Craft brewery production up 6%

The Brewers Association announced that craft breweries* produced 24.6 million barrels of beer in 2016, 6% more than in 2015. It was the smallest increase since 2008. Retail dollar sales grew 10% to $23.5 billion. Microbreweries and brewpubs delivered 90% of the growth.

“Small and independent brewers are operating in a new brewing reality still filled with opportunity, but within a much more competitive landscape,” BA economist Bart Watson said in a press release. “As the overall beer market remains static and the large global brewers lose volume, their strategy has been to focus on acquiring craft brewers. This has been a catalyst for slower growth for small and independent brewers and endangered consumer access to certain brands.”

Craft Brewery Growth 2017

Additionally, in 2016 the number of operating breweries in the U.S. grew 16.6%, totaling 5,301 breweries, broken down as follows: 3,132 microbreweries, 1,916 brewpubs, 186 regional craft breweries and 67 large or otherwise non-craft brewers. Small and independent breweries account for 99%t of the breweries in operation. Throughout the year, there were 826 new brewery openings and 97 closings. Combined with already existing and established breweries and brewpubs, craft brewers provided nearly 129,000 jobs, an increase of almost 7,000 from the previous year.

During on online press conference, Watson reminded reporters that 75% of the breweries in the country make less than 1,000 barrels annually. As the number of small breweries increases, he said, so does diversity of both business models and beers produced.

* The Brewers Association defines craft breweries as small, independent, and traditional. Some breweries once defined a craft no longer are, and the math behind the numbers can be complicated. Watson provides back ground in a post at the association website: Breaking down the craft beer numbers.