Good Beer Hunting

Changing Fortunes — Three Big Craft Brewers Show Industry’s Volatility



The week started with unrelated—but thematically connected—news for three of the country’s biggest craft players, a representation of the industry at-large and how fickle business can sometimes be. Changes for Sierra Nevada, Widmer Brothers, and Dogfish Head are coming, some more drastic than the others.

From California, Sierra laid out a plan to Brewbound that included a goal of 5% year-to-year growth for the brewery, an ambitious play after total sales “increased” just .2% in 2018. Data from bars and restaurants isn’t available, but according to IRI-tracked sales in grocery, convenience, and other stores, Sierra Nevada grew by 1.2% in volume in 2018 compared to 2017, the first time it's had year-to-year growth since 2015. Total volume declines 4.8% in 2016 and 5.8% in 2017. The company moved 523,000 barrels of packaged product in those IRI channels, representing around half of what is likely to be total volume for the year.

The sales goal was announced alongside a new appointment for current COO Jeff White, who will take over as CEO.

Widmer, which is part of the Craft Brew Alliance family of breweries, had changed its business plan from brewpub to taproom toward the end of 2017. Portland writer Jeff Alworth, who has a new book chronicling the company’s rise, called the news “a total surprise,” considering that recently announced brewpub was meant “to bring in young people and highlight the innovation brewery.”

He added: “Both seemed to be working. The beers coming out of Tom Bleigh’s 10-barrel brewhouse were interesting and excellent, and the median age of the customers dropped twenty years.” Five employees have been laid off and three will stay on as tour guides and retail associates, according to Brewbound.

On the other side of the country, news was a bit more exciting for Dogfish, which is doubling down on its use of the Brewers Association’s independence seal. In a blog post from founder Sam Calagione, the Delaware-based brewery said it would scale up the trade organization’s signature seal to take up even more space on the outside of packaging for flagship 60 Minute IPA. On six-packs of bottles, the logo will now encompass about a third of the cardboard package and around a quarter of canned 12-packs.

“Along with all of the goodness that comes with 7,000+ breweries making so many beautiful beers, also comes a concerning lack of transparency and authenticity in the ways certain large brewing mega-corps market the beers they own/make/control, but present as if they are still coming from small indie American breweries,” Calagione wrote, noting that 60 Minute will be the company’s “soapbox” to “amplify the dialogue” of transparency with ownership in beer. Dogfish sold a 15% stake in the company to private equity firm LNK Partners in 2015, but that minority sale doesn’t challenge its place as a “small and independent” member of the Brewers Association.


So, what the hell does it all mean, exactly? Well, it’s a sudden reminder at the start of 2019 of the plight that many of the largest companies in beer face. While 2018 figures won’t be released until this spring, the latest estimates by the Brewers Association showed that breweries making between 100,000 and 1,000,000 BBLs had a decline in IRI sales of about 1.5% halfway through 2018, with those making more than a million BBLs down roughly 2.5%. It was a continuation of 2017, which saw that 24 of the top-50 largest Brewers Association “craft” breweries had declining or flat sales that year.

Dogfish is fairing about as good as any of those top-50 members, but the business’ embracing of the BA’s independent seal doesn’t represent why it could be advantageous for so many others to place the sign on their packaging to gain some amount of market advantage, even if the effectiveness of independent identity in beer is yet to be definitively shown. According to latest numbers from the Brewers Association, 43 of those top-50 have adopted the seal in some capacity, with 30 of them placing it on their packaging.

Oddly enough, Sierra Nevada is one of those holdouts. Then again, who needs a BA boost with internal excitement of what 2019 might hold?

With Pale Ale (-7%) and Torpedo (-8.3%) both down in IRI volume sales from 2017-2018, most growth came from its Hazy Little Thing IPA, which sold about 46,000 BBLs in IRI stores last year, more than Stone Go To IPA or the entire family of Virginia's Port City Brewing's beers. Other significant gains came from Hop Bullet Double IPA and the company's variety packs, which have leaned heavily on its hop-forward roots and a "sampler" pack that features six different beers instead of a traditional four.

Its flagship Pale Ale is still selling five times as much as Hazy Little Thing in IRI channels, and Torpedo volume was double the New England-inspired IPA, but with additional push in 2019, the beer is poised to easily become Sierra's No. 3 product, passing seasonal brands. That’s buoyed by continued attention to the hazy, juicy style category, especially for larger breweries.

“When you look at the top craft players, it’s just really tough for everybody, and I don’t think anyone is having a really great time of it,” Sierra chief commercial officer Joe Whitney told Brewbound. “There’s a couple of folks that are seeing some nice growth from distribution gains, but when you look at growing brand velocity in a really competitive category, that’s just getting more and more crowded every day, it’s really tough sledding.”

Rectifying that will be a $10 million spend on digital and social media advertising focused on its declining lead brands of Pale Ale and Torpedo, and the launch of Sierraveza, a Mexican-style Lager. Whitney added to Brewbound that a “successful” launch of that brand would be about 50,000 BBLs, roughly what was lost last year by Gose-style Otra Vez. Perhaps fittingly, that’s also about the amount sold in IRI stores by Dogfish’s Flesh & Blood IPA.

But still, it’s hard to come away with the latest news from Widmer with a smile. As one of the OGs of U.S. craft beer, it only lost its “craft” status via the Brewers Association narrowing (and oddly enough, widening) definition, but its Hefeweizen is widely considered to have helped popularize the style in America.

Under Craft Brew Alliance, its brewpub, then taproom, was one of a few efforts by the company to focus on the benefit of own-premise sales. Cisco Brewers in New Hampshire and Redhook in Seattle are other such locations, although Redhook’s “Brewlab” is apparently ”not as profitable” as expected, according to executives quoted in Brewbound.

Still, the fortunes for Widmer and its sister Craft Brew Alliance companies could turn quickly, as 2019 is the final year of a sweetheart deal for Anheuser-Busch InBev to buy the company in its entirety. The multinational conglomerate already owns a touch under a third of CBA.

If anything could act as a metaphorical epitome of the industry, it’s certainly that, with fortunes turning on a dime. Or, at least, the millions of a buyout.

Words by Bryan Roth