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Plant-based trends continue to thrive in beverage innovations BEER MARKET REPORT REPORT An annual review

Plant-based trends

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BEER MARKET

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Sierra Nevada uses brewing expertise to help wildfire victims

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March 2019 40 Features 14 46 66 6 Beverage Beat 8 Industry Issues 14 Category
March 2019 40 Features 14 46 66 6 Beverage Beat 8 Industry Issues 14 Category
March 2019 40 Features 14 46 66 6 Beverage Beat 8 Industry Issues 14 Category
March 2019 40 Features 14 46 66 6 Beverage Beat 8 Industry Issues 14 Category

March 2019

40
40

Features

14
14
46
46
66
66

6

Beverage Beat

8

Industry Issues

14 Category Focus

Kombucha shakes up RTD tea category.

18

New Products

23

Special Report

2019 Beer Market Report

40 Cover Story

Sierra Nevada Brewing uses expertise to help wildfire victims.

46 Up Close With…

Shmaltz Brewing Co.

48 Channel Strategies

Drug stores offer personalized product sets.

50 Between Drinks

54 Packaging

Packaging trends drive innovation for case packing and wrapping equipment.

60 Beverage R&D

Sweetening solutions gain momentum in reducing sugar content and improving taste.

66 Ingredient Spotlight

Grains and nuts power plant-based beverage formulations.

68 Distribution

CDL driver recruitment and retainment challenges beverage delivery.

70 Operations

Technology spurs customization of processing automation.

Assessing beverage processing patterns leads to supply chain improvement.

74 Market Insights

Technology streamlines ordering while reducing potential errors.

76

Supplier’s Marketplace

89

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Beverage Beat VOLUME 110, NUMBER 3

Beverage Beat

Beverage Beat VOLUME 110, NUMBER 3
Beverage Beat VOLUME 110, NUMBER 3
Beverage Beat VOLUME 110, NUMBER 3

VOLUME 110, NUMBER 3

The invasion of cannabis infusions

VOLUME 110, NUMBER 3 The invasion of cannabis infusions IN MY HOME STATE OF ILLINOIS, TALKS

IN MY HOME STATE OF ILLINOIS, TALKS OF RECREATIONAL

marijuana have increased since the election of our latest governor, J.B. Pritzker. Although the Illinois voters, legislature and governor will determine whether this becomes a reality, the states that already have legalized recreational marijuana are seeing the plant pop up in more food and beverage products.

In an October 2018 Business Insider feature titled “The market for marijuana-infused beverages could explode to $600 million in the next four years,” the business news outlet highlights the potential for this market. Citing a note from Canaccord Genuity, the article says that the financial firm is predicting that cannabidiol (CBD) beverages will become a $260 million market by 2022 and that tetrahydrocannabinol (THC) beverages will become a $340 million market by 2022. Beverage-makers in states where recreational marijuana is legalized are wasting no time helping this prediction become a reality. High Style Brewing Co. released Coastal Haze, an alcohol removed, cannabis-infused craft beer. Inspired by pale ale recipes, Coastal Haze is brewed using Cascade and Amarillo hops, it says. Each 12-ounce bottle also is infused with 10 mg of THC extract, the key psychoactive ingredient in cannabis, it adds. “Selection of our THC extract was very important,” said Lyden Henderson, chief operating officer of High Style, in a statement. “A one- to two-hour delay from consumption to onset of effects was unacceptable to us. We believe that our consumers deserve a ‘self- regulating’ product, where they know by the time they finish their first High Style whether or not their individual tolerance will allow them to responsibly have another.” High Style also plans to bring a version of Coastal Haze with 5 mg of THC and 5 mg of CBD (a non-psychoactive component of the cannabis plant) this quarter, it says. Beer manufacturers also are looking at another market to further cannabis infusions:

medicinal. Flying Dog Brewery partnered with Green Leaf Medical Cannabis to release a THC- infused beer. The non-alcohol IPA named Hop Chronic will serve as a medical delivery system to provide Maryland medical cannabis patients with therapeutic cannabinoids including CBD, CBG and THC without the patient having to smoke or vape the cannabis, it says. Subject to regulatory and legal approvals, the product will be released at dispensaries throughout Maryland. “We see a lot of interest in cannabis from the craft beer community, and we jumped at the opportunity to partner with Green Leaf on a product that captures the passion and energy you see in fans of both craft beer and cannabis,” said Flying Dog Chief Marketing Officer Ben Savage, in a statement. “There are definitely similarities between the natural flavor profiles we extract from hops and the terpenes and cannabinoids found in cannabis.” In the spirits category, Humboldt Distillery was an early adopter of cannabis infusion. In 2016, the microdistillery announced the release of Humboldt’s Finest, a vodka infused with cannabis sativa. The THC-free spirit has found success in Northern California and recently expanded to more than 100 Von, Pavilion and Albertson stores in Southern California. Whether its CBD or THC, it seems clear that cannabis infusions have found a home in the beverage market.

JESSICA JACOBSEN, Editor
JESSICA JACOBSEN, Editor
a home in the beverage market. JESSICA JACOBSEN, Editor Visit us online Go to BEVINDUSTRY.COM for

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Go to BEVINDUSTRY.COM for archived articles, to conduct keyword searches, and to print or download articles. For high-quality reprints of articles or advertisements, contact JILL DEVRIES: TEL.: 248/244-1726, EMAIL: devriesj@bnpmedia.com.

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Industry Issues Atlanta-based The Coca-Cola Co. announced Lisa Chang

Industry Issues

Industry Issues Atlanta-based The Coca-Cola Co. announced Lisa Chang
Industry Issues Atlanta-based The Coca-Cola Co. announced Lisa Chang
Industry Issues Atlanta-based The Coca-Cola Co. announced Lisa Chang

Atlanta-based The Coca-Cola Co. announced Lisa Chang

PepsiCo releases 2018 results

P epsiCo Inc., Purchase, N.Y., reported results for the fourth quarter and full year 2018. “We are pleased with our results for the

fourth quarter and the full year 2018. For the year, we met or exceeded each of the financial objectives we set out at the beginning of the year. Frito-Lay North America and each of our international sectors performed very well, and our North America Beverages sector made progress throughout the year,” said Chairman and Chief Executive Officer Ramon Laguarta, in a statement. “While adverse foreign exchange translation negatively impacted reported net revenue performance, our underlying organic revenue growth accelerated in the second half, and we ended the year with 4.6 percent organic revenue growth in the fourth quarter. Furthermore, we are excited about the outlook for our business. We are well-positioned in large, growing categories and have developed strong and relevant capabilities over the years. In 2019, we aim to capitalize on the momentum we have as we enter the year, and to continue to invest in the capabilities that will better position us for success for years to come. “For 2019, we expect 4 percent organic revenue growth and approximately 1 percent decline in core constant currency [earnings per share] (EPS),” he continued. “Our 2019 EPS performance is expected to be impacted by incremental investments that are intended to further strengthen the business, lapping a number of 2018 strategic asset sale and refranchising gains and an increased core effective tax rate in 2019. Importantly, we expect to return to high-single-digit core constant currency EPS growth in 2020.” For the fourth quarter, reported net revenue was even with the prior year. Foreign exchange translation had a 4-percentage point unfavorable impact on reported net revenue performance and

acquisitions, and divestitures had an unfavorable impact of 1 percentage point. Organic revenue, which excludes the impacts of foreign exchange translation, acquisitions, divestitures, structural and other changes, grew 4.6 percent, it says. For the North America Beverages (NAB) division, operating profit declined 12 percent, reflecting certain operating cost increases, including increased transportation costs, a 9-percentage point impact of higher commodity costs, and higher advertising and marketing expenses. These impacts were partially offset by net revenue growth, productivity savings and a 4-percentage point impact of prior-year hurricane-related costs, it says. For the full year, reported net revenue increased 2 percent. Foreign exchange translation and acquisitions and divestitures each had an unfavorable impact of 1 percentage point. Organic revenue, which excludes the impacts of foreign exchange translation, acquisitions, divestitures, structural and other changes, grew 4 percent. For NAB, operating profit decreased 16 percent, reflecting certain operating cost increases, including increased transportation costs, a 7-percentage point impact of higher commodity costs and higher advertising and marketing expenses. These impacts were partially offset by productivity savings and net revenue growth. Higher gains on asset sales positively contributed 1.5-percentage points to operating profit performance. A bonus extended to certain U.S. employees in connection with the Tax Cuts and Jobs Act of 2017 negatively impacted operating profit performance by 1.5-percentage points and was partially offset by prior-year costs related to hurricanes, which positively contributed 1 percentage point to operating profit performance. BI

as

its new chief people officer. Chang replaced Jennifer Mann, who now serves as president of global ventures. Previously, Chang served as senior vice president and chief human resources officer for AMB Group, the investment management and share services arm of The Blank Family of Businesses.

Trinchero Family Estates (TFE), St. Helena, Calif., has expanded its luxury import portfolio by partnering with Spanish producers Finca Allende, Finca Nueva, Quinta Sardonia and Terras Gauda as its exclusive importer, distribution and marketing representative in the United States, the company says. The addition of the four Spanish estates to the TFE imports portfolio will help the wine- maker meet the needs of U.S. consumers as the size of the Spanish still wine category in the United States now is worth more than $200 million, it adds.

Boulder, Colo.-based The Brewers Association (BA) announced its 2019 Board of Directors, adding three new representatives to the 19-person board. Eric Wallace, co-founder and president of Left Hand Brewing Co., continues as board chair for a second term. Newly elected brewpub representative Leah Cheston, co-owner of Right Proper Brewing Co., joined re-elected packaging brewery representatives Leslie Henderson, Lazy Magnolia Brewing Co.; and Garrett Marrero of Maui Brewing Co. New board member Jill Marilley was appointed by the American Homebrewers Association (AHA) governing committee to fill the second of two AHA board seats, previously held by term-limited director Chris Frey. New board member Kevin Blodger, co-founder and head brewer at Union Craft Brewing; and Larry Chase were appointed by the BA Board of Directors as at-large representatives. They replace outgoing board members Jim Koch, The Boston Beer Co.; and Tom McCormick, California Craft Brewers Association.

Sierra Nevada Brewing Co., Chico, Calif., announced “Pope of Foam” Charlie Bamforth as its new senior quality advisor. Bamforth will evaluate all areas of production and provide input to the brewery’s “highest quality” mission, the company says. He also will provide employee training focused on beer quality, it adds.

Sierra Nevada acquires Sufferfest

S ufferfest Beer Co., San Francisco, will join Sierra

Nevada Brewing Co., Chico, Calif., and Mills

River, N.C., the breweries announced. Sierra

Nevada will acquire 100 percent of Sufferfest, which is the company’s first-ever acquisition. The breweries stated shared values, commitment to innovation and common goals as the root of the partnership, they added. “While still in its infancy, Sufferfest is at the front of the wave of ‘functional’ alcoholic beverages,” said Sierra Nevada President and Chief Executive Officer Jeff White, in a statement. “By joining with Sierra Nevada, Sufferfest will be better positioned to grow and continue to lead the way in a rapidly growing and highly competitive space.” Sufferfest, which launched in 2016, is known for its gluten-removed line of beers like its 95-calorie Kölsch brewed with bee pollen and its FKT (Fastest Known Time) Pale Ale brewed with salt and black currant.

“The complementary nature of our offerings and their position at the cusp of this emerging category are not the only reasons Sufferfest made sense,” White said. “From the moment we met, it was clear that our

two companies are deeply aligned in our values and our commitment to do the right thing.” Sufferfest is a Certified B Corp. and a values-driven company. Founder and Chief Executive Officer Caitlin Landesberg, a long-distance trail runner, started the company with a vision to create the post-sweat beer. “I’ve always craved a beer after a race, but when I couldn’t find a beer that agreed with my dietary and performance needs, it left a genuine void in the post-race social experience,” Landesberg said. “The finish line is where we get to celebrate the ail, anguish and suffering we’ve all been through together. I so wanted to continue to be part of this occasion, but didn’t want to keep compromising on taste or ingredients. “Sierra Nevada is the perfect fit,” Landesberg added. “If it were any other company, this would not be a consideration for us. Sierra Nevada is a family owned and operated business that isn’t driven by shareholder pressure to meet quarterly numbers. I’ve always been so impressed by their commitment to the communities they serve. They are really driven by their own North Star.” BI

Brooklyn, N.Y.-based Q Mixers announced the appointment of Mike Atkins as its new executive vice president of retail. Atkins will oversee all of Q Mixers’ sales at retail locations, the company says.

Drizly, Boston, announced a partnership with Concord, Calif.-based BevMo!, a specialty beverage retailer on the West Coast, to bring Drizly’s on-demand delivery platform to 45 BevMo! stores throughout California, the company says. The partnership gives BevMo! retailers and customers access to the Drizly platform throughout the Bay Area and Silicon Valley, as well as Southern California from Los Angeles to San Diego, it adds.

Washington, D.C.-based Jos. A. Magnus & Co. announced details of its new national growth strategy. Key initiatives for the distiller include an expanded and experienced leadership team, broadened national distribution and barrel warehousing capabilities, and the launch of several Magnus special releases in 2019, the company says. In addition, Magnus revealed plans to temporarily close and refurbish its Washington, D.C., cocktail room, which is expected to reopen this spring.

Report details trends impacting on-premise A dult beverages play a huge part in attracting customers

Report details trends impacting on-premise

A dult beverages play a huge part in attracting customers and the on-premise channel is vital to an alcohol brand’s success,

according to Chicago-based Technomic. Technomic’s “On-Premise Intelligence Report,” developed with New York-based Beverage Marketing Corporation, examines trends in the on-premise market as consumers’ demands for quality, variety and authenticity increase and their flavor preferences shift. The report acts as a guide for on-premise operators and adult beverage brand marketers to better understand consumer attitudes, behaviors and usage, it says. The following are highlights from the report:

Slow to Grow: Identifying growth brands, categories and sub-segments, as well as targeting key

consumer groups and occasions, is crucial as alcohol sales growth continues to lag behind total food and beverage growth in the channel.

Margaritas Waning?: With cocktail innovation

accelerating, Margaritas face stiff competition for

drink menu space from restaurant originals and unique specialty drinks.

Italian Imports: Challenges remain for wine, but

imports from Italy have traction, with Italian wine

varietals among the fastest-growing red wines on menus last year and Prosecco also gained menu placement.

Properly Briefed Bartenders: Consumers’

knowledge of drink selections and quality is expanding along with their expectations of bartenders’ expertise. BI

Boston Beer net revenue up for year

T he Boston Beer Co. Inc., Boston, reported

fourth quarter 2018 net revenue of $225.2

million, an increase of $18.9 million or 9.2

percent from the fourth quarter of 2017, mainly due to an increase in shipments of 6.3 percent. Net income for the fourth quarter was $21.8 million, or $1.86 per diluted share, a decrease of $8.7 million or $0.71 per diluted share from the fourth quarter of 2017. This decrease was primarily due to a fourth quarter 2017 favorable one-time tax benefit of $1.72 per diluted share related to the Tax Cuts and Jobs Act of 2017. Operating income for the fourth quarter was $28.8 million, an increase of $14 million or 94 percent, primarily due to increases in net revenue and decreased advertising, promotional and selling expenses, partially offset by lower gross margins. Earnings per diluted share for the 52-week period ending Dec. 29, 2018, were $7.82, a decrease of $0.27 from the comparable 52-week period in 2017. Net revenue for the 52-week period ending Dec. 29, 2018, was $995.7 million. “We are proud to report depletions growth of 11 percent for the quarter and 13 percent for the full year,” said Jim Koch, chairman and founder of the company, in a statement. “We are thankful to our outstanding employees, distributors, retailers and drinkers, all of whom helped return the company to double-digit volume growth. We believe that our depletions growth is attributable to our key innovations, the quality of our products and our strong brands, as well as sales execution and support from our distributors. We are still seeing challenges across the industry, including a general softening of the craft beer category and retail shelves that offer an increasing number of options to drinkers. We continue to work hard on our Samuel Adams brand messaging, focusing on communicating our artisanal care in the brewing of Samuel Adams Boston Lager. “While it’s still early, it appears that our new advertising campaign has noticeably improved Boston Lager’s trends,” he continued. “We plan to continue to invest in this campaign in the coming months, with the goal of further improving trends and returning Samuel Adams to growth. We are confident in our

ability to innovate and build strong brands and we are planning to launch three new brands in 2019 that we believe will complement our current portfolio and help support our mission of long-term profitable growth.” Dave Burwick, the company’s president and chief executive officer, added: “Our depletions growth in the fourth quarter was the result of increases in our Truly Hard Seltzer, Twisted Tea and Angry Orchard brands that were only partially offset by decreases in our Samuel Adams brand. Truly continues to grow beyond our expectations and we continue to work hard

to grow distribution across all channels while building

a strong brand. We are committed to maintaining and

improving our position as a leader in the emerging segment of hard seltzer as more competitors enter.

Twisted Tea is growing in both distribution and velocity while generating consistent double-digit volume growth. Angry Orchard’s growth is led by Angry Orchard Rosé, which was introduced in early 2018. “We are excited about our brand investment plans for Angry Orchard in 2019, which include expanding our packaging formats to reach more drinkers,” he continued. “Our overall plans for 2019 include significant investments in the second year of our successful 2018 innovations, which include Angry Orchard Rosé, Truly Berry Variety Pack, Truly Wild Berry, Sam’76 and Samuel Adams New England IPA. These five new innovations in 2018 are within the top product introductions in their combined categories. In 2019, we plan to build upon these successful innovations with three additional brands that address important health-and-wellness opportunities in our categories. These brands include 26.2 Brew from our wholly owned affiliate Marathon Brewing Co.,

a thirst-quenching gose beer made with sea salt to

fit runners’ active lifestyles; Wild Leaf Hard Tea, a craft hard tea with lower calories and sugar, and Tura Alcoholic Kombucha, an organic, light and refreshing shelf-stable alcoholic kombucha with live probiotics and real fruit. We are now in the very early stages of our national launch of both 26.2 Brew and Wild Leaf and we will launch Tura later in the quarter on a more limited geographic basis.” BI

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From our perspective at O-I, craft beer continues to be a dynamic and exciting segment and a core focus of our business. We have been a proud supporter and partner of craft brewers from the early beginnings of the movement through the boom of the last several years, and we are committed to the future. At O-I, we pride ourselves in keeping our customers at the center of all we do and are committed to staying on top of market changes that may aect the business needs of our partners.

We see craft beer opportunities on multiple fronts. With over 2,500 new U.S. breweries in planning, the number of small and emerging operational breweries should continue to increase, meaning continued growth in craft beer volume. We also see the popularity of the U.S. craft beer segment positively inuencing category dynamics across the globe, in markets like Brazil, Australia, and the U.K. Thanks to the rise of the craft beer industry, beer drinkers have a new appreciation for rich avors, quality ingredients, and the creativity and expertise behind their brew. They are part of a new generation of knowledgeable beer consumers who consider every part of the drinking experience, including how the packaging enhances their enjoyment.

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At O-I, we have deep and rich experience putting the many benets of glass to work for craft beer brands, and we continue to enhance our capabilities to support craft brewers. We combine global expertise and knowledge on trends with the appeal of domestic manufacturing here in the U.S. and Canada. We have a world class New Product Development team that works directly with customers to create bottles that tell stories and bring products to life, delivering designs that are beautiful, memorable and iconic. We are also excited to be launching a new capability in the U.S. in 2020. O-I: Expressions will oer extreme exibility for fast, brand-building customization on smaller volumes. Whether brewers want to create limited editions, personalized packaging or special artwork, O-I: Expressions allows them to magnify their brand directly on glass through unlimited colors, high resolution photos, and tactile eects for a multi-sensory experience. Simply put, O-I : Expressions allows for game-changing dierentiation and storytelling with speed and ease.

If custom glass design isn’t what a brewer is looking for, O-I has an extensive oering of containers in a variety of shapes, sizes and colors. We oer a range of dierentiated stock bottles – from growlers that allow beer fans to take fresh, local craft beer home with them, to the Artisan Collection, a series of distinct product families that are designed with craft in mind. We also provide the exibility that craft brewers need, with low minimum order quantities, printed cases and secondary packaging options, and credit card payment options. O-I also has partners in a network of distributors, mobile bottlers and decorators to assist customers in nding the total package solution that ts the needs of their brand. Regardless of the need, in choosing to work with O-I, breweries are getting access to a dedicated service team, industry- leading consistently high quality, and exibility in going to market.

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Industry Issues

Industry Issues

Industry Issues
Industry Issues
Industry Issues
Industry Issues

CBC heads to Denver for annual tradeshow, expo

P resented by the Boulder, Colo.-based Brewers Association, the Craft Brewers Conference (CBC) offers concentrated brewing education

and idea sharing to improve brewery quality and performance, it says. The conference brings together 13,000 brewing industry professionals for more than

70 different educational seminars led by the top minds

in the beer world and access to BrewExpo America, the largest brewing trade show in the U.S. featuring more than 700 vendors. For 2019, the annual tradeshow and expo will take place April 8-11 at the Colorado Convention Center in Denver. As small and independent craft brewers face unique opportunities and challenges in the marketplace, the CBC allows them to connect with their colleagues and comrades to share ideas and learn about relevant topics ranging from brewery operations to

sustainability and government affairs, while shopping for the products and services they need to run their breweries, the association says. The event will feature 84 educational seminars and attendees can choose from 12 educational tracks to personalize their schedules. Attendees also will get a chance to hear from keynote speaker Bruce Dickinson. Dickinson is the lead singer of Iron Maiden, a commercial pilot, brewmaster, entrepreneur and creative business thinker. He was a pilot and marketing director for Astraeus Airlines, a company that leased aircraft to other carriers, and is the chairman and founder of Cardiff Aviation, which specializes in heavy maintenance of Airbus and Boeing commercial aircraft. Dickinson will share the parallels between his music and business careers, and the lessons you can take away from both success and failure, it says. BI

Essentia Water posts another year of strong retail sales

E ssentia Water, Bothell, Wash., announced that it continued to generate accelerated growth at retail during the final quarter of 2018, marking

a strong conclusion to the brand’s most successful

year-to-date, it says. Total all channel sales increased

71 percent for period 13 for the week ending Dec. 30,

2018. Essentia’s sales momentum was particularly evident in the convenience channel, which was up 137 percent, it adds. “Our goal heading into the year was to remain focused and committed to our brand mission, and thanks to our talented and dedicated team of overachievers, we succeeded in making 2018 another notable year for Essentia,” said Ken Uptain, chief

executive officer and founder of Essentia Water, in a statement. “With the rise in popularity and demand in the premium bottled water category, it’s easy to get excited about what’s on the horizon for 2019 as we continue to grow our brand visibility amongst a national audience.” In 2018, Essentia generated nearly $196 million in measured retail sales, growing at 59 percent over 2017, it reports. The brand captured an 8.3 percent share of the premium water market and continuously outpaced growth in the premium bottled water category — a category that generated more than $2.4 billion for the year, it says, citing data from Chicago-based Information Resources Inc. BI

Coca-Cola releases financial results

T he Coca-Cola Co., Atlanta, reported another

quarter of solid operating performance,

capping off strong financial results for the

year, it says. While reported net revenues declined because of refranchising and currency headwinds,

the company delivered organic revenue (non-GAAP) growth within its long-term target for the sixth

consecutive quarter, while also gaining value share globally, it said. “I am pleased with our strong organic revenue and earnings growth in 2018. Our results demonstrate progress in our transformation as a consumer- centric, total beverage company and the power of

a more strategically aligned system,” said James

Quincey, chief executive officer of The Coca-Cola Co., in a statement. “Coca-Cola has established a strong foundation to capitalize on long-term growth opportunities and drive sustained shareowner value.” Net revenues declined 6 percent to $7.1 billion for the quarter and declined 10 percent to $31.9 billion for the year. Fourth quarter and full year results were impacted by headwinds of 13 percent and 17 percent, respectively, from the combined impact of currency

and the refranchising of company-owned bottling operations, it says. The company continued to strengthen its sparkling soft drinks portfolio and build consumption rituals through innovation, premiumization and revenue growth management initiatives, it adds. In North America, innovation in the Diet Coke brand, along with the continued success of Coca-Cola Zero Sugar,

led to an 8-point acceleration in retail value growth for the no-calorie sparkling soft drinks portfolio for the year. The company’s increased speed and agility, coupled with the strength of its distribution system, helped launch approximately 500 products across multiple markets through the lift, shift and scale strategy while also accelerating the elimination of underperforming SKUs during the year. The company also announced several key acquisitions in 2018, including Costa Limited, which provides

a platform to build a global coffee business, and

a strategic partnership with BODYARMOR, one

of the fastest-growing beverage trademarks in the

United States. BI

>> > >

Category Focus By Taylor Karg

Category Focus

Category Focus By Taylor Karg
Category Focus By Taylor Karg
Category Focus By Taylor Karg

By Taylor Karg

Health in a glass

Kombucha shakes up RTD tea category

The kombucha category has evolved from a

The kombucha category has evolved from a

WestWest CoastCoast healthfoodhealthfood phenomenonphenomenon toto aa broaderbroader audience of everyday people looking
WestWest CoastCoast healthfoodhealthfood phenomenonphenomenon toto aa broaderbroader
audience of everyday people looking for a health
audience of everyday people looking for a health

edge, BMC’s Roger Dilworth says. (Image courtesy

of GT’s Living Foods)

AS CONSUMERS CONTINUOUSLY BECOME WARY OF SUGARY BEVERAGES,

they are seeking out healthier substitutes. For many, ready-to-drink (RTD) teas have become the answer. One sub-segment of RTD teas that seems to be appealing to the masses is kombucha — a tea that has been fermented with bacteria and yeast, and is rich with probiotics, antioxidants, amino acids and enzymes. Known for its healthy-halo mantra, kombucha is moving away from a niche product to one of the fastest growing categories in the beverage market.

A December 2018 Insights from New York-based Nielsen confirms this fact. In its report, “Tops of 2018:

Organic” the research firm notes that the kombucha category reached more than $412 million in sales in 2018, marking a 42 percent increase compared with the previous year. “Known only to a niche audience a few years ago, today this probiotic and functional beverage is winning the hearts of consumers across America,” the Insights says.

MAINSTREAM AWARENESS

The better-for-you (BFY) beverage trend prominently is driving growth within the category, experts say. “[T]he strong 18 percent growth in the refrigerated tea segment contributed to the [overall tea] market’s bottom-line success,” Chicago-based Mintel’s September 2018 “Tea and RTD Tea – US” report

explains. “Rapid BFY innovation, kombuchas in particular, and premium positioning continue to align refrigerated teas with consumer interest in fresher products driving consumers to refrigerated products.” Mintel references Purchase, N.Y.-based PepsiCo’s 2016 acquisition of KeVita as a likely contributor to the mainstream awareness of kombucha among consumers. Roger Dilworth, senior analyst at New York-based Beverage Marketing Corporation (BMC), also points to

the th mainstream status of kombucha as a contributing factor fa to its success. “The
the th mainstream status of kombucha as a contributing
factor fa to its success. “The meta-trend of kombucha
becoming be more mainstream continues,” he says. “It has
evolved ev from a West Coast health food phenomenon

to to a broader audience of ‘regular’ people looking for a

health he edge.”
health he edge.”

The “health edge” of kombucha also can be

attributed at to its growing success in the market.

“[P]roducts “[ like some high-antioxidant green tea beverages be and kombucha have been designed to
“[P]roducts “[ like some high-antioxidant green tea
beverages be and kombucha have been designed to
specifically sp attract health-conscious customers; as a
result, re these products introduce RTD beverages into

markets m where they may not have been prominent

before, be such as health food stores,” says Los Angeles- based ba IBISWorld in its
before, be such as health food stores,” says Los Angeles-
based ba IBISWorld in its December 2018 “RTD Tea
Production Pr in the US” report.

“This simultaneous and synergistic development of

product pr lines and new markets contributes to the [tea] industry’s in overall growth,” it
product pr lines and new markets contributes to the [tea]
industry’s in overall growth,” it adds.

Holly Lyman, queen bee at Cottonwood, Ariz.-based Wild Tonic, also notes the healthy-halo

draw of kombucha. “The conventional soda as well as the craft beer categories continue to lose shelf space to these new ‘better-for-you’ categories, such as traditional kombucha and hard kombucha,” she says. “The acceptance and placement of kombucha in the conventional grocery channel has brought it into the spotlight as people seek healthier beverage alternatives,” she continues. Several other factors including label redesigns, line extensions and new flavor introductions have helped the category proliferate, according to Basil Beshkov, director of business development; Rick Mochulsky, category manager; and Amelia Winslow, director of nutrition at Torrance, Calif.-based Health-Ade Kombucha. The market has seen a number of label redesigns from leading brands like Revive, Brew Dr. and Health- Ade, introductions of new product lines from GT's Living Foods, as well as the continued proliferation of new flavors, Beshkov, Mochulsky and Winslow say. “The expansion of product offerings and the refinement of labels shows the category is continuing to grow and get more competitive,” they say. “The emergence of new entrepreneurs and businesses shows that kombucha has become an established category, and that interest in it is a global trend.” The success of the RTD tea and kombucha category not only comes from the rise in health-aware consumers, but also from an increase in disposable income, according to IBISWorld’s report. “[A]s discretionary income increased steadily, it also boosted industry revenue at a balanced pace,” it says. “As industry revenue grows, new companies are rapidly entering the industry.” Health-Ade’s Beshkov, Mochulsky and Winslow also highlight how increased consumer income has affected the category. “Fermented beverages carry a higher dollar ring than other beverages and have been growing where other categories have declined,” they say. “This is great for retailers, who have dramatically expanded their kombucha sets, and for consumers, who have more and better healthy beverage options.” The rapid proliferation of kombucha has disrupted the RTD beverage category. “With the exception of bottled and sparkling water, many large beverage categories have seen long-term declines, whereas kombucha has grown by more than 30 percent for each year for the past decade,” Beshkov, Mochulsky and Winslow say.

continued on page 16

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Category Focus

Category Focus

Category Focus
Category Focus
Category Focus
Category Focus
>> Category Focus Wild Tonic offers a 7.6 percent alcohol-by-volume Hard Jun Kombucha in three varietals:

Wild Tonic offers a 7.6 percent alcohol-by-volume

Hard Jun Kombucha in three varietals: Dancing Naked, Mind Spank and Wild Love. (Image courtesy of Good Omen Bottling LLC)

TEA OF THE FUTURE

When it comes to whose drinking the fermented teas, consumption largely can be attributed to younger generations, experts say. “Millennials consume

a tremendous amount of kombucha, as well as

Generation Z, who are both looking for products that are healthier and contain less alcohol,” says Wild Tonic’s Lyman. “The idea of ‘social drinking’ has given way to a younger generation who prefers to be plugged into social media, instead of going out for a drink,” she adds. Health-Ade’s Beshkov, Mochulsky and Winslow also put kombucha consumers into a similar profile, noting they are healthy-engaged consumers. They also are college-educated, have disposable income, live in cities, and work in jobs in new industries. It is a group that includes both men and women (slightly more female), largely in the age range of 24-40, they add. However, kombucha has the potential to reach

a wider audience, according to Mintel. “Forging associations between teas [like kombucha] and specific functions and even occasions, will resonate with a growing group of consumers who actively seek out means to manage their well-being, both emotional and physical,” the report states. As consumers seek out healthier non-alcohol RTD beverage alternatives, they likely are exploring similar options in the alcohol category. The trend toward

healthier alcohol-based drinks and even alcohol substitutes that can be consumed in an adult setting likely will make this a trend, BMC’s Dilworth notes. “Alcohol kombucha is the new ‘go-to’ beverage for the younger generations and so it will be a lot like craft beer or wine in America when those sectors blossomed and came into their own,” Wild Tonic’s Lyman says. For example, in fall of 2018, Wild Tonic released three varietals of its Hard Jun Kombucha: Wild Love, Dancing Naked and Mind Spank. Each variety features a 7.6 percent alcohol-by-volume content and is fermented with certified organic fruit, herbs and botanicals, the company says. Health-Ade’s Beshkov, Mochulsky and Winslow also see the budding potential for alcohol kombucha. “The products are good, play on the same healthy trends as kombucha, and touch an untapped alcohol consumption occasion that regular kombucha (with just a trace amount of alcohol from fermentation) isn’t particularly well-suited for,” they say. “Within a few years, you may be able to walk into your favorite bar and find a handful of alcoholic kombucha options, like you see with craft beer now,” they add. Looking to the future, experts predict that consumers will find more kombucha innovation, expanded flavor offerings and distinctive packaging that will help brands stand out on store shelves. BI

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3RD GEAR BOURBON OLD FASHIONED Yahara Bay Distillers, Fitchburg, Wis. Telephone: 608/275-1050 Internet:
3RD GEAR BOURBON OLD FASHIONED
Yahara Bay Distillers, Fitchburg, Wis.
Telephone: 608/275-1050
Internet: facebook.com/3rdgearoldfashioned
Distribution: Select markets
YÖNALÉ BIRCH WATER
Yönalé, Hoboken, N.J.
Telephone: 651/ 414-1740
Internet: yonale.com
Distribution: National
PUT IT IN GEAR
SUSTAINABLY
SOURCED HYDRATION
Yahara Bay Distillers offers 3rd Gear, a blended and
bottled ready-to-drink (RTD) cocktail designed
to be similar to an old-fashioned cocktail.
3rd Gear yields a shimmery copper color with
orange peel aromas, the company says. The
bourbon is nuanced with notes of Door County
cherries, toasted with walnuts, aromatic spices
and botanicals, it adds. The 750-ml alcohol is
bottled at 30 percent alcohol by volume and
has a suggested retail price of $19.99.
Yönalé launched its self-titled line of fresh birch water,
offering consumers a clean, plant-based beverage
designed to boost the immune system, it says.
Sustainably sourced from the forests of the Finnish
archipelago, Yönalé Birch Water is USDA certified
organic, non-GMO, and keto- and paleo-friendly, it adds.
Packaged in 11.2-ounce Tetra Pak cartons, the plant-
based beverage contains 3 grams of sugar. Available
nationwide in Original and Bilberry, Yönalé Birch Water
has a suggested retail price of $3.99 for a carton.
VITACUP INFUSED FUNCTIONAL COFFEE
VitaCup Inc., San Diego
Telephone: 888/857-8482
Internet: vitacup.com
Distribution: National
A DAILY DOSE
VitaCup Inc. launched its self-titled line of vitamin-infused single-serve coffee pods in five blends: Slim
Blend, Probiotic Blend, Beauty Blend, Genius Blend and Green Tea. VitaCup uses premium quality
coffee beans and tea leaves to create blends infused with high-quality vitamins and superfoods
designed to boost a consumer’s day, the company says. Each blend contains B and D vitamins, and
antioxidants to naturally boost energy, metabolism and mood, it adds. Available nationwide, VitaCup
is packaged in 10-count boxes for a suggested retail price range of $9.99-$12.99.
SURFRIDER RUM
Surf City Still Works, Huntington Beach, Calif.
Telephone: 714/718-7157
Internet: surfcitystillworks.com
Distribution: Select markets
KOIA KETO
Koia, Los Angeles
Internet: drinkkoia.com
Distribution: Select markets and online
RIDE THE WAVE
KETO-INSPIRED
Surf City Still Works introduced its latest spirit:
Surfrider Rum. Distilled from Jamaican sugar
cane, Surfrider Rum features notes of banana,
pineapple, papaya, mango and coconut, the
company says. The 750-ml bottle features a
42.5 percent alcohol-by-volume content and is
available in select markets. Surfrider Rum has
a suggested retail price of $30.
DESSERT
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Koia unveiled Koia Keto, a new line of
100 percent plant-based protein beverages
in three flavors: Chocolate Brownie, Cake
Batter and Caramel Crème. The dessert-inspired line offers a convenient
indulgence to complement consumers’ ketogenic diets, the company says.
Koia Keto is made with nutrient-dense ingredients such as coconut milk and
MCT oil to provide sustained energy and deliver the desired ketosis ratio of
74 percent fat, 18 percent protein and 8 percent net carbohydrates that help
accelerate the process, it adds. Each flavor contains 12 grams of protein
with no added sugar. The beverages exclusively are available at Whole Foods
Market stores and at drinkkoia.com for a suggested retail price of $4.99.
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HORIZON ORGANIC HIGH PROTEIN MILK Horizon Organic, Broomfield, Colo. Telephone: 888/494-3020 Internet: horizon.com
HORIZON ORGANIC HIGH PROTEIN MILK
Horizon Organic, Broomfield, Colo.
Telephone: 888/494-3020
Internet: horizon.com
Distribution: National
GOT MILK?

Horizon Organic, a division of Danone North America, launched its latest milk product:

Horizon Organic High Protein. Available in three flavors, Reduced Fat Chocolate, Reduced Fat Plain and Vitamin D, Horizon Organic High Protein contains 12 grams of protein in each 8-ounce serving, the company says. The milks also are high in vitamin D, calcium, riboflavin, vitamin B12 and phosphorus, it adds. Available nationwide, Horizon Organic High Protein are USDA organic, non- GMO and have a suggested retail price of $5.99 for each 64-ounce carton.

a suggested retail price of $5.99 for each 64-ounce carton. FEEL THE VIBE MindFull Inc. introduced
a suggested retail price of $5.99 for each 64-ounce carton. FEEL THE VIBE MindFull Inc. introduced

FEEL THE VIBE

MindFull Inc. introduced Vibe, a ready-to-drink organic electrolyte tea. Vibe is made with artesian spring water containing naturally occurring electrolytes and minerals, the company says. It also contains 48 mg of naturally occurring caffeine from USDA-certified organic black tea, 1 gram of sugar and 20 calories in each 500-ml serving. Packaged in 500-ml Tetra Pak cartons, Vibe is available in four flavors: Mint, Lemon, Peach and Pomegranate.

in four flavors: Mint, Lemon, Peach and Pomegranate. RABBLE ROUSER RYE WHISKY Catoctin Creek Distilling Co.,

RABBLE ROUSER RYE WHISKY Catoctin Creek Distilling Co., Purcellville, Va. Telephone: 540/751-8404 Internet: catoctincreekdistilling.com Distribution: Select markets

catoctincreekdistilling.com Distribution: Select markets SHOOT YOUR WHISKY SHOT To celebrate its 10th anniversary,

SHOOT YOUR WHISKY SHOT

To celebrate its 10th anniversary, Catoctin Creek Distilling Co. launched its latest “Bottled in Bond” spirit: four-year-old Rabble Rouser Rye Whisky. Rabble Rouser Rye features a flavor profile of clover honey, uncured bacon, earthy spice, sandalwood, white peaches, nectarines, peanuts and a hint of mesquite, the company says. The 50 percent alcohol- by-volume whisky is available for purchase at the distillery and at select retailers across the distillery’s distribution footprint, it says. Rabble Rouser has a suggested retail price of $95.99 for a 750-ml bottle.

VIBE ORGANIC ELECTROLYTE BLACK TEA MindFull Inc., Boulder, Colo. Internet: mindfull.com Distribution: National
VIBE ORGANIC ELECTROLYTE BLACK TEA
MindFull Inc., Boulder, Colo.
Internet: mindfull.com
Distribution: National
Colo. Internet: mindfull.com Distribution: National SMOOTHIES-TO-GO Big Easy Blends extended its ready-to-drink

SMOOTHIES-TO-GO

Big Easy Blends extended its ready-to-drink (RTD) pouches in new Welch’s Smoothies. The 6-ounce individually packaged frozen smoothies are available in three flavors: Peach Mango, Strawberry Banana and Mixed Berry. All flavors are dairy free, contain 8 grams of protein and 3 grams of fiber, the company says. Available in select markets, Welch’s Smoothie Pouches have a suggested retail price of $2.79 for an individual pouch.

a suggested retail price of $2.79 for an individual pouch. WELCH’S SMOOTHIE POUCHES Big Easy Blends,
WELCH’S SMOOTHIE POUCHES Big Easy Blends, New Orleans Telephone: 504/467-1606 Internet: bigeasyblends.com
WELCH’S SMOOTHIE POUCHES
Big Easy Blends, New Orleans
Telephone: 504/467-1606
Internet: bigeasyblends.com
Distribution: Select markets
SPRITE LYMONADE
The Coca-Cola Co., Atlanta
Telephone: 800/643-8151
Internet: sprite.com
Distribution: National
THE PERFECT COMBO
Sprite, a brand of The Coca-Cola Co., introduced Sprite
Lymonade, which is made with 1 percent real juice
and blends original Sprite flavors with a splash of
lemonade, the company says. Available nationwide,
Sprite Lymonade is available in 20-ounce PET
bottles and is line-priced with other Sprite products.
Swe e g e n . co m

Swe e g e n . co m

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Reducing sugar in alcoholic beverages Today’s consumers are more closely eyeing the sugar content not
Reducing sugar in alcoholic beverages
Today’s consumers are more closely eyeing the sugar content not only in their favorite soda
oorr yyoogguurrtt bbuutt aallssoo iinn tthheeiirr ffaavvoorriittee aafftteerr hhoouurrss ddrriinnkk AAccccoorrddiinngg ttoo tthhee TTTTBB ((AAllccoohhooll aanndd TToobbaacc-
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at fat, carbohydrates and sugar content, but also searching for healthier-for-you ingredients with a functional purpose.

Craft brewers are at the forefront of such innovation when it comes to craft brew products whether alcoholic or non-alcoholic. They are typically first adopters of new ingredients and new technologies, and incorporate them into their marketing and the mystique of their new products. With a much faster product development cycle, craft brewers are usually able to launch new products within a minimal timespan, using this advantage to become first movers, setting industry trends.

As the craft brewing industry is producing alcoholic and non-alcoholic beverages, they are competing in different fields of the industry, with different players. However, no matter what industry, they are always competing for the best tasting product with benefits that meet consumer expectation.

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Next generation stevia sweeteners, such as Reb M and Reb D have generated a great interest in the alcohol industry in general, and the craft brewers’ industry specifically. Their ability to reduce the amount of added sugar and calories is coupled with the ability to maintain the well-loved sweet taste. Sweegen’s non-GMO stevia sweeteners help to supplement the sweetness preferred by consumers, as brewmasters innovate in delivering brewing bases that incorporate natural sugars from the brewing process.

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A growing initiative for beer

WITH DOLLAR SALES REACHING APPROXIMATELY $112 BILLION, THE U.S. BEER

market continues to be one of the top categories based on dollar sales in the overall beverage industry, according to Chicago-based Mintel. However, although dollar sales have seen slight increases, volume sales have been challenged in recent years.

Domestics’ dominance remains despite declines

“The beverage alcohol market continues to evolve with beer losing share to both spirits and wine,” says Brian Sudano, managing partner for New York- based Beverage Marketing Corporation (BMC). “The continued splintering of consumer’s considered brand

set that includes spirits and wine in more occasions will continue to put pressure on beer per caps.” Because of this splintering, members of the beer community are looking to tackle these challenges through a group effort. At its 81st Convention, the National Beer Wholesalers Association unveiled the Beer Growth Initiative (BGI), an industry-wide effort to improve the category health of the beer industry. In partnership with the Brewers Association and the Beer Institute, the effort is designed to identify opportunities to grow the beer category while bringing together large brewers, small brewers, distributors and industry experts to

address beer’s steady decline during the past few years, the association says. This initiative comes as the off- premise U.S. beer market decreased

Domestic super-premium brands like

Michelob Ultra have positively impacted the domestic beer market. (Image courtesy of Anheuser-Busch InBev)

Top domestic premium beers

 

(Brand family)

 

DOLLAR

%

CHANGE VS.

 

%

CHANGE VS.

SALES

PRIOR YEAR

CASE SALES

PRIOR YEAR

Bud

$7,320,205,119

 

-5.3

342,680,493

 

-6.2

Coors

$2,513,932,983

 

-3.8

119,658,166

 

-4.8

Miller Lite

$2,010,961,224

 

-1.2

96,762,133

 

-2

Yuengling

$388,688,707

 

1.3

16,638,184

 

-1

Rolling Rock

$129,803,897

 

-9

7,855,367

 

-7.9

Total sales*

$12,601,135,426

 

-4.2

595,819,788

 

-5.1

*Includes brands not listed.

Source: Information Resources Inc. (IRI), Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending Dec. 30, 2018.

Top domestic super-premium beers

 

(Brand family)

 

DOLLAR

%

CHANGE VS.

 

%

CHANGE VS.

SALES

PRIOR YEAR

CASE SALES

PRIOR YEAR

Michelob

$2,121,572,436

 

18.8

78,938,379

 

15.9

Bud Specialty

$707,501,836

 

3

23,022,054

 

0.3

Landshark

$45,870,518

 

-1.2

1,681,516

 

-1.1

Budweiser

$36,493,453

       

Reserve Collection

 

703.8

1,170,489

711.8

George Killian's

$12,945,080

 

-13.8

485,717

 

-14.1

Total sales*

$2,943,102,055

 

15.2

106,292,688

 

12.9

*Includes brands not listed.

Source: Information Resources Inc. (IRI), Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending Dec. 30, 2018.

0.3 percent in terms of

volume sales in 2018 while being up

1.8 percent in dollar

sales for that same time period, says Patrick Livingston, director of client insights of beer, wine and spirits for Chicago-based Information Resources Inc. (IRI),

citing the market research rm’s sales

data across total multi-

outlets including the convenience channel sector. Analyzing this performance, Livingston notes that a number of factors are contributing to the beer market’s relatively at

performance in 2018. “There are fewer households that purchased the beer category in 2018 compared to 2017, so there’s a decrease in household penetration — just about four-tenths of a percent, which is small,” he says. “However, there is a decrease in penetration.”

COSTS OF PREMIUMIZATION

As the beer market looks to increase volume growth, many experts note the impact that the mass market domestic beer segment will have on that goal. “Many argue that the beer category cannot return to health in the short term without a healthy premium core,” Livingston says. “… This segment, premium beer, makes up 40.5 percent of the beer category.” He adds that when adding the sub-premium domestic beer segment, these two segments make up approximately two-thirds of beer market share. “These are very large segments and they’re very important to the health of the beer category,” Livingston says. However, premium beer declined 5.1 percent in volume for the 52 weeks ending Dec. 30, 2108, according to IRI data.

Among the current trends impacting the domestic premium beer market, BMC’s Sudano notes that premiumization continues to be at the forefront. “The long-term trend is to trade up,” he says. “Recently the majors have gotten aggressive on price within the value segment making beer more competitive to price- sensitive consumers. This has resulted in improved value beer trends but worsening of the premium domestic beer segment. Overall, this is negative for domestic dollar sales.” IRI’s Livingston also details the impact of premiumization. “We think that consumers are choosing more premium beer options,” he says. “We also think they are increasing their consumption of spirits and reducing consumption of some beer products. These are longer term trends; they’ve been around for a while, we call it the premiumization of

the alcohol category. It might be a positive for beverage alcohol in total, but it specically places a strain on the premium beer segment.” Supporting this assessment, Livingston points out that household penetration of premium beer was 18.9 percent in 2018 compared with nearly 20 percent in 2017. However, he notes that the dollars that each household is spending on premium beer each year is at, highlighting again the penetration impact. Nonetheless, not all domestic segments were down for 2018. The domestic super-premium beer segment was up 12.9 percent in terms of volume for 2018, based on IRI data. BI

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Special Report By Jessica Jacobsen

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By Jessica Jacobsen

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Claiming its share

Import beers continue to gain ground

IN RECENT YEARS, THE IMPORTED BEER MARKET HAS OUTPACED THE OVERALL

beer market in dollar and case sales. Based on recent insights, the segment’s performance continued throughout 2018 and experts forecast a positive impact on the market in 2019.

“Our data suggests imported beer is growing quicker than the domestic beer category and this trend is expected to continue over the next ve years, especially [because] Mexican brands are performing very strongly,” says Chris Lombardo, lead industry analyst for Los Angeles-based IBISWorld. Patrick Livingston, director of client insights of beer, wine and spirits for Chicago-based Information Resources Inc. (IRI), highlights how the popularity of import beer in the United States helped it post strong gains last year. “The import growth is largely driven by Mexican imports,” he says. “Mexican imports make up 72.3 percent of all import sales, and imports themselves are a very important segment. They make up a 20 share of the beer category based on dollars and imports are up 1.1 share point in 2018. Actually, imports was the largest gaining segment in 2018, so it’s very much a growing segment and very important.” For the 52 weeks ending Dec. 30, 2018, import beer dollar sales were up 7.4 percent while case sales increased 5.2 percent in total U.S. multi-outlets, including convenience stores, based on IRI data. Unlike other beverage segments, import beer has not derived its growth from new brands, but instead from the prominence of established Mexican beer brands, Livingston adds. Brian Sudano, managing partner for New York-based Beverage Marketing Corporation (BMC), also details the importance that Mexican imports have had on the

industry, accounting for more than 65 percent of industry imports,” he says. “This is partially due to its proximity to the United States and the North American Free Trade Agreement, which makes importing from the country relatively easier than other destinations.” In 2018, Corona, a brand of Victor, N.Y.-based Constellation Brands Inc., expanded consumers Mexican beer options with the national release of Corona Premier, the rst innovation for the brand in 29 years. “Corona is a brand that consumers have loved for more than three decades in America, and we’re excited to add a new brand to our family,” said John Alvarado, vice president of marketing for Corona, in a statement at the time of the roll out. “Corona Premier offers the light beer experience men 35-plus have been waiting for. These guys have upgraded just about every brand in their life since college — now it’s time to upgrade their beer, too.” The light beer was designed for the mature, sophisticated beer consumer looking for better-for- you light options, the company says. However, research shows that light options is not the only product attribute that consumers want from Mexican beers. Last fall, Dos Equis, a brand of White Plains, N.Y.-based HEINEKEN USA, announced the brand was debuting Dos Equis Mexican Pale Ale (MPA), a traditional Pale Ale with a Mexican twist that is fuller bodied and delivers a subtle kick of heat. The sessionable Mexican Pale Ale was available on draft nationally at sports bars and at Buffalo Wild Wings (BWW) as part of the restaurant’s Brew Series from September through early November. Following its successful run on- premise, HEINEKEN USA announced that MPA now is available off-premise in Texas with plans to expand to other Sun Belt states. HEINEKEN USA also recently launched Tecate Titanium, a higher alcohol-by-volume (ABV) spinoff from its Mexican import Tecate brand. Tecate Titanium boasts a 7.5 percent ABV content packaged in a 24-ounce can. When looking at country of origin, IRI’s Livingston highlights that Mexican imports were up 2.8 percent in dollar sales, but all others are declining. “Among imports, the only country of origin that is growing is the Mexican imports,” he says. “I nd that beers from Holland, Belgium, Canada, U.K., Ireland, Germany, Australia, Asia, Latin America, which are the top import sub-segments, are all declining to some degree in 2018.” BI

Mexican beer sales are outpacing the

imported beer segment as they were up nearly 3 percent in 2018, IRI’s Patrick Livingston states. (Image courtesy of Constellations Brands Inc.)

Top imported beers

 

(Brand family)

 
 

DOLLAR

% CHANGE VS. PRIOR YEAR

 

% CHANGE VS. PRIOR YEAR

SALES

CASE SALES

Corona

$2,370,454,072

11.6

72,203,831

 

9.5

Modelo

$1,974,795,285

17.9

63,641,365

 

15.4

Heineken

$794,783,627

-1.5

24,557,531

 

-3.1

Dos Equis XX

$382,850,606

-1.8

11,947,589

 

-2.5

Stella Artois

$367,756,681

-0.8

10,267,589

 

-0.9

Tecate

$202,315,496

-11.4

9,913,670

 

-11.7

Labatt

$152,248,823

-6.8

8,135,666

 

-7.3

Guinness

$144,027,893

0.9

3,876,073

 

-1.3

Pacifico

$125,180,970

8.4

3,969,427

 

6.3

Foster's

$75,048,784

0.7

2,860,860

 

-0.6

Total sales*

$7,059,725,796

7.4

226,620,942

 

5.2

*Includes brands not listed.

 

Source: Information Resources Inc. (IRI), Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending Dec. 30, 2018.

beer segment. “Mexican imports have been outpacing market,” he says. “We expect this trend to continue as brands have hit signicant scale, which commands more shelf space. Recent innovation and market activation has also drove incremental volume and driven sales.” According to IBISWorld’s Lombardo, Mexican beer imports account for nearly two-thirds of the U.S. import beer market. “Currently, Mexico accounts for the highest share of imports in the breweries

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Special Report By Jessica Jacobsen

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By Jessica Jacobsen

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A sense of style

Emerging beer styles, flavors help craft segment

IN THE TRAILER LEADING UP THE SEASON 17 PREMIERE OF BRAVO TV’S

“Project Runway,” host Karlie Kloss details how the fashion industry has changed and the new season will reflect that evolution. Just as styles have evolved during the past 20 years in fashion, so have the styles in the craft beer market.

Sour beer styles are up nearly

40 percent in sales, IRI’s Patrick

Livingston says. (Image courtesy of Upslope Brewing Co.)

“New beer styles are becoming popular largely due to younger consumers’ interest in diversifying their beverage consumption,” says Chris Lombardo, lead industry analyst for Los Angeles-based IBISWorld. “This provides brand owners with the opportunity to try new and differing styles of beers without as much of a risk alienating their key markets as in the past.” Among the styles that are experiencing measureable growth are sour beers. Patrick Livingston, director of client insights of beer, wine and spirits for Chicago- based Information Resources Inc. (IRI), notes that the beer style’s sales are up nearly 40 percent. “I think that craft brewers are looking to introduce new styles to continue to keep the segment fresh for the marketplace,” he says. “Craft beer consumers are interested in choice and a unique taste portfolio that will allow them to experience new beers and share that experience with their friends. “I think the idea of sour growing is largely because sour is very well differentiated from the other craft beer styles in terms of its taste prole,” Livingston continues. “Thus, it helps add to the craft beer drinker’s portfolio, if you will, and allow them to have more taste experiences as they are trying new craft

beers and new styles.” Livingston adds that style innovation is a key component to success of the craft beer segment. For example, he calls attention to craft brewers that have developed hazy IPAs, a lighter version of the traditional IPA; lagers; and brewing

Top craft beers

 

(Brand family)

 

DOLLAR

% CHANGE VS. PRIOR YEAR

 

% CHANGE VS. PRIOR YEAR

SALES

CASE SALES

Blue Moon

$334,297,713

-1.9

9,907,721

 

-3.4

Samuel Adams

$256,654,585

-7.2

7,607,906

 

-8.1

Sierra Nevada

$252,064,642

3.2

7,171,843

 

1.2

New Belgium

$201,593,640

-3.3

5,521,410

 

-7.9

Lagunitas

$182,753,832

0.7

4,748,144

 

1.6

Leinenkugel

$151,680,816

-16

4,791,078

-16.9

 

Specialty

Shiner

$132,941,774

-2.6

3,969,444

 

-3

Founders

$108,183,412

32.4

3,387,061

 

37.8

Shock Top

$92,058,148

-17.2

3,147,277

-13.8

 

Stone

$79,823,404

16.9

1,753,380

 

10.8

Total sales*

$4,209,673,166

2.5

111,921,039

 

1.2

*Includes brands not listed.

Source: Information Resources Inc. (IRI), Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending Dec. 30, 2018.

with coffee ingredients. Brian Sudano, managing partner for New York-based Beverage Marketing Corporation (BMC), echoes similar sentiments about the opportunities that beer style differentiation can offer to craft brewers. “As craft brewers try to penetrate mainstream consumers that seek easier-to-drink beers, other styles will become more prevalent to include sours and lagers,” he says. “[They] broaden the consumer base by attracting beer consumers that reject more complex beer

styles and therefore do not participate in the craft category.” In its October 2018 report titled “Beer and Craft Beer – US,” Chicago-based Mintel details the importance of “style” when beer consumers are selecting products. “Style is the second most important factor inuencing beer choice, and ‘better selection of styles’ is the leading reason driving increased consumption among those who have increased their consumption in the past year,” the report states. “Open-end responses included in our custom consumer survey indicate consumers may feel increasingly knowledgeable about beer and, thus, are growing more comfortable in the category. Engaged beer drinkers (including younger consumers and craft drinkers) place a signicantly higher-than-average level of importance on style, suggesting that messaging that gets specic about the beer style and its components’ impact on the avor and drinking experience may nd appeal.” Although varying styles can offer more opportunities for craft beer, the top style remains IPAs, which account for a 31.5 percent share of the craft beer segment, IRI’s Livingston says. Additionally, sales of the beer were up 12.5 percent, he notes. Like any emerging beverage segment, craft beer caught the attention of larger players that sought to realize the benets. “While the number of craft breweries continues to expand at substantial rates, many older players in the segment are being acquired by global breweries,” IBISWorld’s Lombardo says. “For instance, Magic Hat Brewing Co., Ballast Point Brewing Co. and Lagunitas Brewing Co. were once considered signicant players in the segment. Now, these breweries are owned by major beer brands and are no longer classied as craft breweries.” Although some craft brewers have joined forces with global brewers, local craft breweries remain in vogue to help ll consumers’ thirst for new beers and styles. “We also see there is continued growth in smaller craft brewers,” IRI’s Livingston says. “I believe that there is a large local piece to that, meaning that the smaller craft brewers tend to cater to a local market. They are very strong. Any craft beer looking to expand to a broader distribution faces the fact that they will be launching their product in new markets that are not local home turf and therefore they tend to have difculty in maintaining high sales rates and velocities as they expand into new markets. I think that is why smaller craft brewers are doing well. Because it’s a little bit easier to maintain higher sales rates and velocity on your home turf.” BI

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Special Report By Jessica Jacobsen

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By Jessica Jacobsen

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A spiked revolution

Hard seltzers fuel FMB segment

CALORIE-COUNTING FANATICS OFTEN CAN BE HEARD TELLING NEW RECRUITS

not to forget alcohol when adding up their daily calorie consumption. As beverage alcohol manufacturers seek out ways to provide a low-calorie solution, it seems as though the latest craze to hit the flavored malt beverage (FMB) segment is fulfilling that need state.

“Hard seltzers are raising the bar around perceived health and wellness and attracting much of the dollars spent in the space,” says Brian Sudano, managing partner for New York-based Beverage Marketing Corporation (BMC). Sudano adds that the perception of lower calories and the “better-for-you” halo have been driving innovation in the segment. Tracking FMBs as part of the ready-to-drink (RTD) mixed spirit production market, Chris Lombardo, lead industry analyst for Los Angeles-based IBISWorld, details the impact that health and wellness is having on these products. “RTD spirits are a close substitute for beer and wine; therefore, industry demand is linked to the uctuating popularity of other types of beverages,” he says. “Although research has been published suggesting the potential cardiac benets of moderate wine consumption, RTD spirits do not show any potential health benets. However, the industry has gradually increased its appeals to the health-conscious consumer by making lower-calorie drinks, cocktail blends and recipes.” When it comes to success within the FMB segment,

Patrick Livingston, director of client insights of beer, wine and spirits for Chicago-based Information Resources Inc. (IRI),

achieved a 2 point share in the U.S. beer category in 2018, based on IRI-measured channels. “That actually surpassed the cider segment, which has 1.8 share points using the same share point,” he says. “Hard seltzers also make up a third of total FMB sales, so we believe that hard seltzers are having a major impact on the FMB segment, and we also believe, as we are watching these products very closely, these products are beginning to form what appears to be a distinct segment. “Hard seltzers are bringing avor into the better- for-you space, which is an important cross section [that] we are nding today,” Livingston continues. “Consumers are demanding products that are better for them, fewer calories, fewer carbs, better ingredients and they’re also looking for avor. With hard seltzers, we do believe that this segment and these brands are delivering on this cross section, which is products that are slightly better for you but also products that are bringing you avor and taste that can be enjoyed as well.” Within hard seltzers, three brands posted triple- digit growth for the 52 weeks ending Dec. 30, 2018, in total U.S. multi-outlets with convenience stores. Those brands are White Claw, a brand of Mark Anthony Brands Inc., with 251.5 percent volume growth; Truly Spiked & Sparkling, a brand of The Boston Beer Co., which grew nearly 200 percent in volume; and Spiked Seltzer, a brand of Anheuser- Busch InBev, which posted a case sales increase of more than 145 percent. Hard seltzers also seem to benet from its broad appeal since the sub-segment shows roughly a 50-50 share when it comes to male versus female consumers, Livingston says. “It may drive back to the socialization of the ability to appeal to a mixed group and more social occasions where there is a mixed group involved,” he explains. “Therefore, creating an opportunity for both male and females to enjoy the product.” Although hard seltzers have been a growth driver for FMBs, Livingston notes that it is not the only sub- segment helping the market. “If we remove hard seltzers from FMBs, the segment is still growing without hard seltzer, which is good to know,” he says. BMC’s Sudano also highlights the numerous attributes contributing to the FMB market’s success. “[The] amount of innovation in [the] category continues to accelerate; better product line segmentation from major players like Diageo; improved control over SKU management at retail; [and] higher alcohol alternative in FMB format as offered by Four Loko,” he says. BI

Hard seltzers have surpassed hard ciders in terms

of share of the beer category. Based on IRI data, hard seltzers now account for a 2 point share of the beer market, IRI’s Patrick Livingston says. (Image courtesy of Braxton Brewing Co.)

Top flavored malt beverages

 

(Brand family)

 

DOLLAR

% CHANGE VS. PRIOR YEAR

 

% CHANGE VS. PRIOR YEAR

SALES

CASE SALES

Smirnoff

$341,279,205

14.8

9,674,574

 

16.3

Twisted Tea

$323,631,885

21.8

10,087,575

 

19.8

Mike's Harder

$303,274,280

11

9,040,109

 

9.7

Mike's Hard

$265,205,086

-3.1

7,361,188

 

-4.9

Bud Light

$252,532,954

-15.2

7,726,731

 

-10.6

Lime PAB

Redd's

$230,745,912

-18.7

7,023,993

 

-20

White Claw

$194,505,683

       

Hard Seltzer

241.7

5,846,976

251.5

Four Loko

$145,348,604

-5.4

4,149,862

 

-7

Truly Spiked

$131,439,528

178.8

4,144,246

 

199.8

& Sparkling

Steel Reserve

$70,708,453

18.2

3,090,397

 

18.9

Total sales*

$2,555,899,775

10.7

76,352,763

 

12.2

*Includes brands not listed.

Source: Information Resources Inc. (IRI), Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending Dec. 30, 2018.

highlights four main product attributes. “We see that lightly avored products do very well. We nd that products with lower calories do very well; also lower sugar; and brands that

are social or create a social opportunity,” he explains. “Generally lighter products that are more social-able tend to be doing very well in the avored malt beverage segment. I think that we can group a lot of those products together into what we’re calling the hard seltzer sub- segment.” Livingston explains that hard seltzers

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By Jessica Jacobsen

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Finding favor with flavor

Hard ciders benefit from diverse profile

IN THE UNITED STATES, THE HARD CIDER MARKET HAS EXPERIENCED ITS

shares of ups and downs. “IBISWorld estimates that the cider production industry has experienced robust growth over the past five years, as renewed interest in the beverage has encouraged a slew of new operators to enter the industry,” says Chris Lombardo, lead industry analyst for Los Angeles-based IBISWorld. “Still much of this growth occurred at the beginning of the five-year period, with the later years becoming more volatile. Many cider operators have mirrored the craft brewery model, offering ancillary services along with a variety of cider options. Moreover, as the consumers continue to diversify their alcoholic beverage consumption, ciders have experienced heightened demand.”

According to Chicago-based Information Resources Inc. (IRI), the hard cider market was up 7.4 percent in case sales and 10.1 percent in dollar sales for the 52 weeks ending Dec. 30, 2018, in total U.S. multi- outlets, including convenience stores. This marks a notable change for the market, which was down 6.1 percent in volume and down 3.1 percent in dollar sales during the same time period in 2017. Brian Sudano, managing partner for New York-based Beverage Marketing Corporation (BMC), highlights that hard ciders performance tends to be tied to other markets that it plays against as well as its new innovations. “Hard cider interacts heavily with the alternative beverage alcohol segment — [avored malt beverages] (FMBs) are part of this segment,” he says. “When cider had a lot of avor innovation and heavy investment behind the category, it grew rapidly. However, as innovation shifted to other segments — most recently Spiked Seltzer — the category has struggled.” Sudano suggests that focus directed toward avor proles were responsible for previous growth within hard ciders. “Flavored hard cider has changed the category dynamics and

what drove its last leg of growth,” he says. “Before Angry Orchard pursued the avor strategy, hard cider was slow growing and under 8 million cases. The expansion into avors, among other things, drove the category to near 30 million cases. However, it also moved the category from being an apple-based drink in traditional format to more toward the FMB space.” Now that the segment has returned to growth,

Angry Orchard Rosé had the largest

incremental impact on the hard cider segment, IRI’s Patrick Livingston says. (Image courtesy of The Boston Beer Co.)

Top hard ciders

 

(Brand family)

 

DOLLAR

% CHANGE VS. PRIOR YEAR

 

% CHANGE VS. PRIOR YEAR

SALES

CASE SALES

Angry Orchard

$245,553,013

13.4

6,721,459

 

11.1

Bold Rock

$25,766,388

30.8

683,743

 

30.1

Strongbow

$22,682,857

-15.4

603,482

-16.4

 

Stella Artois Cidre

$15,575,985

-14.5

446,562

 

-15.3

2 Towns

$12,177,572

49.6

189,491

 

55.3

Austin Eastciders

$11,215,656

68.8

264,017

 

73.1

Ace

$10,356,258

37.6

249,986

 

37.2

Smith and Forge

$8,491,167

-38

254,204

-38.9

 

Crispin

$7,984,783

26.2

189,580

 

28.8

Woodchuck

$7,432,184

-35.6

190,754

-38.8

 

Total sales*

$433,459,271

10.1

11,145,006

 

7.4

*Includes brands not listed.

Source: Information Resources Inc. (IRI), Chicago. Total U.S. supermarkets, drug stores, gas and convenience stores, mass merchandisers, military commissaries, and select club and dollar retail chains for the 52 weeks ending Dec. 30, 2018.

industry analysts are pointing to a number of factors that have helped hard ciders to be in the black. “If I look at the cider vendors, I see that 11 of the Top 15 cider vendors saw growth in 2018, so cider still does seem to be very healthy and most of the cider vendors do continue to show growth and health,” IRI’s Livingston says. Last year also saw numerous cider producers develop rosé varietals, including Crispin Cider Co., Woodchuck Hard Cider, Strongbow Hard Cider, Angry Orchard and Bold Rock. As an extension of that, Livingston says that Angry Orchard Rosé had the largest incremental impact on the hard cider segment. However, Rosé hard cider releases are not the only way that producers are tapping into avor innovations, analysts note. “Cider producers are continually experimenting with new cider avors with pear becoming a major substitute for apples,” IBISWorld’s Lombardo says. “Still, apple ciders account for the highest share of revenue.” Outside of the apple ciders, 2 Towns Ciderhouse released Pearadise, a limited-edition hard cider that features Washington-grown Anjou pears, Oregon- grown Muscat grapes and fresh-pressed 100 percent Northwest apples, the company says. The 8.6 percent alcohol-by-volume Pearadise contains a full bodied, ripe pear character and a touch of oral notes, it adds. Another positive for the hard cider space has been the performance of “micro” cideries. “Some the local more craft-oriented hard ciders are growing,” BMC’s Sudano says. “As there are more craft like providers of hard cider, this portion of the category is less impacted by FMB trends but it is very small.” For instance, Bold Rock Hard Cider and 2 Towns posted volume gains of 30 percent and 55 percent, respectively, based on IRI data. Brand owners also are turning to new packaging formats to expand occasions for hard ciders. Strongbow Hard Ciders, a brand of White Plains, N.Y.-based HEINEKEN USA Inc., announced the launch of 100-calorie, 8.5-ounce slim cans in a 12-can variety pack with three avor varietals: Dry Pear, Rosé Apple and Original Dry. BI

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A key to craft brewery growth Standard-Knapp offers craft brewery packaging equipment from garage brewing up through national distribution

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Special Report NEW PRODUCTS THE PERFECT DISGUISE Dogfish Head Craft Brewery, Milton, Del. Telephone: 302/684-1000
Special Report NEW PRODUCTS THE PERFECT DISGUISE Dogfish Head Craft Brewery, Milton, Del. Telephone: 302/684-1000

NEW PRODUCTS

THE PERFECT DISGUISE Dogfish Head Craft Brewery, Milton, Del. Telephone: 302/684-1000 Internet: dogfish.com Distribution: National

BREWING A DISGUISE

As part of its latest Off-Centered Art Series Beers, Dogfish Head Craft Brewery has created a beer that is an IPA disguised as a Kölsch or is it a Kölsch disguised as an IPA? The Perfect Disguise is the craft brewer’s newest Double IPA and is made with nearly 4 pounds of German and American hops in each barrel, bringing tropical flavors of citrus, tangerine, mango, gooseberries and peach, the company says. The limited-release beer is packaged in six-packs of 12-ounce bottles and is available nationwide.

SPACE CAMPER COSMIC IPA Boulevard Brewing Co., Kansas City, Mo. Telephone: 816/474-7095 Internet: boulevard.com Distribution: National

Internet: boulevard.com Distribution: National OUT OF THIS UNIVERSE Boulevard Brewing Co. launched Space

OUT OF THIS UNIVERSE

Boulevard Brewing Co. launched Space Camper Cosmic IPA, a new year- round brew. The juicy India Pale Ale features minimal upfront bitterness and maximum tropical fruit flavors, the company says. With a 5.9 percent alcohol-by-volume content and 50 IBUs, Space Camper Cosmic IPA boasts flavors of fresh citrus, stone fruit and watermelon from Ekuanot, El Dorado and Galaxy hop varietals. Space Camper was inspired by Boulevard’s desire to offer drinkers an escape from the heavy-handed bitterness characteristics commonly associated with IPAs, the

HEMP INSPIRATION

FIFCO USA launched Hemptails, a flavored malt beverage (FMB) made with organic, sterilized hemp seeds, the company says. At 8 percent alcohol by volume, Hemptails is low-sugar and contains no psychoactive ingredients, it adds. Featuring an herbal aroma and flavor, the hemp FMB is available nationwide in 23.5-ounce single-serve cans for a suggested retail price (SRP) of $2.99, and in four-packs of 16-ounce cans for a SRP of $8.99.

TECATE TITANIUM Heineken USA, White Plains, N.Y. Telephone: 914/681-4100 Internet: tecatebeerusa.com Distribution: National

Internet: tecatebeerusa.com Distribution: National TI STRENGTH Tecate, a brand of Heineken USA , announced the

TI STRENGTH

Tecate, a brand of Heineken USA, announced the launch of Tecate Titanium, a 7.5 percent alcohol-by-volume beer. Packaged in a 24-ounce single-serve can, Tecate Titanium delivers a bold and refreshing taste, the company says. Available nationwide, the beer was specifically created for sale in licensed off-premise accounts, specifically convenience stores, to capitalize on the growth of high alcohol-by-volume beers, it adds.

HEMPTAILS FIFCO USA, Rochester, N.Y. Telephone: 716/431-2176 Internet: fifcousa.com Distribution: National
HEMPTAILS
FIFCO USA, Rochester, N.Y.
Telephone: 716/431-2176
Internet: fifcousa.com
Distribution: National
CLEAN MACHINE BRUT IPA Lakefront Brewery, Milwaukee Telephone: 414/372-8800 Internet: lakefrontbrewery.com
CLEAN MACHINE BRUT IPA
Lakefront Brewery, Milwaukee
Telephone: 414/372-8800
Internet: lakefrontbrewery.com
Distribution: National

CLEAN BREW

Lakefront Brewery announced the release of a new Brut IPA: Clean Machine Brut IPA. Like the name sounds, a Brut IPA is brewed to emulate Champagne; clear, bubbly and flavorful, the company says. With an alcohol-by-volume content of 6.8 percent, Clean Machine Brut IPA contains 26 IBUs. Brewed with Cascade, Lemondrop and Mandarina Bavaria hops, Clean Machine is dry and refreshing, the company says. It boasts grapefruit, tangerine and pineapple flavors, it adds. The name Clean Machine was tapped from Queen’s 1975 hit “I’m In Love With My Car,” written by Roger Taylor.

FIRST CUT MANGO IPA Tröegs Brewing Co., Hershey, Pa. Telephone: 717/534-1297 Internet: troegs.com Distribution: Select markets

Internet: troegs.com Distribution: Select markets HOPPY ROTATION Tröegs Brewing Co. announced the release of
Internet: troegs.com Distribution: Select markets HOPPY ROTATION Tröegs Brewing Co. announced the release of

HOPPY ROTATION

Tröegs Brewing Co. announced the release of its rotating Hop Cycle beer for spring: First Cut Mango IPA. The limited-edition beer features an alcohol-by-volume content of 6.2 percent and 45 IBUs. Packaged in aluminum cans, First Cut Mango IPA is available in markets where Tröegs’ craft beers are sold.

DOS EQUIS MEXICAN PALE ALE HEINEKEN USA, White Plains, N.Y. Telephone: 914/681-4100 Internet: dosequis.com
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LAGER LOVE

Stone Brewing announced its newest year- round brew: Stone Tropic of Thunder Lager. The beer’s name is a nod to the uncharted tropical islands, according to the company. With a heritage of bold and flavorful porters, stouts, sours, IPAs, strong ales and more, Stone continues its tradition of pushing boundaries with an unconventional lager, it says. The 5.8 percent alcohol-by-volume beer features Mosaic, Citra and newcomer Cashmere hops. The three hops combine to form an array of citrus, tropical and fruit aromas and flavors, the company says. The new addition to Stone’s lineup now is available throughout the United States in 12-ounce six-pack cans, 19.2-ounce single-serve cans and on draft.

A MEXICAN TWIST

Dos Equis, a brand of HEINEKEN USA, debuted a new beer to drive brand penetration and store traffic with the launch of a Mexican Pale Ale [MPA]. With citrus hops and a hint of spicy heat on the finish, Dos Equis MPA is a traditional Pale Ale with a Mexican twist, the company says. After testing for several months in select on-premise accounts, the sessionable Mexican Pale Ale is rolling out to off-premise outlets in the Sun Belt. Dos Equis MPA is available in 12-pack bottles and cans and six-pack bottles.

STONE TROPIC OF THUNDER LAGER Stone Brewing, Escondido, Calif. Telephone: 760/294-7899 Internet: stonebrewing.com
STONE TROPIC OF THUNDER LAGER
Stone Brewing, Escondido, Calif.
Telephone: 760/294-7899
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Distribution: National

LA FOLIE GRAND RESERVE: PX New Belgium Brewing Co., Fort Collins, Colo. Telephone: 970/221-0524 Internet: newbelgium.com Distribution: Select markets

Internet: newbelgium.com Distribution: Select markets 2019 EXPERIMENTAL INDIA PALE ALE Upslope Brewing Co.,

2019 EXPERIMENTAL INDIA PALE ALE Upslope Brewing Co., Boulder, Colo. Telephone: 303/396-1898 Internet: upslopebrewing.com Distribution: Select markets

Internet: upslopebrewing.com Distribution: Select markets EXPERIMENTING WITH A NEW BREW Upslope Brewing Co. announced

EXPERIMENTING WITH A NEW BREW

Upslope Brewing Co. announced the latest iteration of its annually released style: 2019 Experimental India Pale Ale. In addition, the brewery revealed its Rocky Mountain Kölsch now is a year-round, core style. The

2019 Experimental IPA features Cashmere, Loral and

Cascade hops. The brew is an amalgamation of malt

structure meets ripe melon and orange zest, it says. Featuring a 6.5 percent alcohol-by-volume content,

2019 Experimental IPA is available in 12-ounce cans in

six-packs. The limited-edition release will be available throughout 2019 in Colorado, New Mexico, Utah, Arizona, Wyoming, Montana, Nebraska and Florida.

DESSERT INSPIRATION

A love of dessert wines inspired New Belgium

Brewing’s latest small batch version of its

sour brown La Folie — La Folie Grand Reserve: PX. The PX stands for Pedro Ximénez, a white Spanish wine grape

varietal grown under intense sun to produce the super sweet, unctuous Pedro Ximénez Sherry with flavors of figs, molasses, roasted nuts and exotic spices, the company says. La Folie Grand Reserve: PX has 8 percent alcohol by volume and is available in 375-ml bottles and on draft. Available for

a limited time, La Folie Grand Reserve:

PX can be purchased in Colorado, North Carolina, California, Hawaii, Missouri, Arizona, Nebraska, Iowa, Texas, Washington state, Oregon, Minnesota, Illinois, Idaho, Georgia, Tennessee, Florida, Pennsylvania and Massachusetts.

bevindustry.combevindustry.com || MARCHMARCH 20162019 || BeverageBeverage IndustryIndustry ||

37

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A s a developer of innovative functional ingredients, Applied Food Sciences (AFS) has seen a lot recent changes within the craft beer industry. As the market becomes more saturated, brands are taking greater risks to

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Inspiration of Global Flavors

Imbibe reports an annual growth of 20 percent between 2013 and 2017 for spicy flavors like cardamom, ginger, turmeric and chilies. Although we have already seen coffee, tea, juice, and RTDs all increase in these global flavors, craft beer quick to join.

“Earthy Flavors”

Ginger was the top searched “earthy flavor,” according to Google Beverage Trends Report. The most researched flavor pairings associated with ginger were blackberry, lemon, honey and turmeric.

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New in Coffee & Beer: Cascara?

Although coffee and beer have been a popular pairing for some time there is a different part of the coffee plant that is offering something new to add to craft beer. Cascara is the “husk” or coffee cherry fruit that surrounds the coffee bean. Cascara has a beautiful flavor with subtle sweetness and notes of caramel and maple.

“Beyond the Brew” Functional RTDs

Quite frankly, beer is one of the best functional beverages on earth, and craft beer makers are embracing other RTDs with functionality beyond alcohol. Even the larger craft beer makers are losing market share due to the sheer velocity of new breweries popping up everywhere. Some of these breweries are identifying that they can double up on their facility’s value by producing other beverages beyond beer. Hops, ginger, turmeric, coffee, and many of the same ingredients in beer have added health benefits and can go across channel into functional waters, energy drinks, shots and more. During the past few years, the largest incorporations in beer, such as AB InBev, Asahi Holdings, and Constellation Brands have taken more stake in functional beverages investing in RTD coffee, CBD, energy drinks, and more.

Constellation Brands have taken more stake in functional beverages investing in RTD coffee, CBD, energy drinks,

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Cover Story By Jessica Jacobsen

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By Jessica Jacobsen

Sierra Nevada Brewing is sharing the recipe of

Resilience Butte County Proud IPA to help generate funds to help rebuild the communities that were impacted by the wildfire that spread across Butte County in Northern California. (Image courtesy of Sierra Nevada Brewing Co.)

Sierra Nevada uses brewing expertise to help wildfire victims

THIS PAST FALL, THE PHRASE CAMP FIRE TOOK ON A DEEPER MEANING AS

people across America followed the progress of the Northern California wildfire dubbed Camp Fire. Named after Camp Creek Road, where its origin hails, the Camp Fire began Nov. 8 and spread throughout the region until it was fully contained Nov. 25. According to the San Francisco Chronicle, the fire burned 153,336 acres and claimed the lives of 85 people. Many companies and consumers stepped up to help those impacted by the fire. In the beer community, Sierra Nevada Brewing Co., Chico, Calif., has not only given of itself but has created an opportunity for other members to help those who were and continue to be impacted by this wildfire.

The Camp Fire originated in Butte County in Northern California, the county in which Sierra Nevada Brewing’s headquarters resides, and came uncomfortably close to the craft brewer’s operations. “The fire came just about a mile from the brewery,” says Robin Gregory, communications

manager for Sierra Nevada Brewing. “Officials were calling for mandatory evacuations in our neighboring zones, so we voluntarily evacuated the brewery in the interest of safety. Our physical facility itself was not impacted, but many of our employees were directly impacted. We had about 50 employees lose homes and many others that

continued on page 42

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were evacuated for some time.” However, even those who did not lose their own home have experienced the effects of the wildfire in one way or another. “Almost everyone has friends or family members who lost homes; many employees have had people staying with them for months,” Gregory says. Even before the fire reached containment, Sierra Nevada Brewing was finding ways to help those in the community. “When the fire was still burning, we responded to immediate needs,” Gregory explains. “We opened up our taproom and served free meals to First Responders and those who lost homes. We also gave out free shirts and sweatshirts to anyone who needed them. We hosted a free all-day Thanksgiving dinner at the brewery and fed about 1,000 people.” As officials were getting closer to containment of the Camp Fire, Gregory says the craft brewer decided to direct its energy into addressing the long-term effects of the wildfire and the communities that it impacted. “As the fire started to reach containment, we shifted our focus to long-term needs,” she says. “We established the Sierra Nevada Camp Fire Relief Fund and seeded it with an initial $100,000. Then we started the Resilience project.”

#BUTTESTRONG

When Sierra Nevada Brewing shifted it efforts from short-term to long-term needs for the victims by establishing the Sierra Nevada Camp Fire Relief Fund, the decision to embark on this fundraising adventure was an easy one. “It was really never a question,” Gregory explains. “We’ve been in Butte County since we opened in 1980 and our community has supported us for nearly 40 years. We felt strongly compelled to support it right back. We would not be where we are today without our community.” Although the Sierra Nevada Camp Fire Relief Fund began with the $100,000 seed donation from the craft brewery, Gregory notes it hopes to raise $10 to $15 million through donations as well as proceeds from the Resilience project. The Resilience project emerged

after Sierra Nevada Brewing announced that it would brew Resilience Butte County Proud IPA, a beer in which 100 percent of the sales will be going to the Sierra

Nevada Camp Fire Relief Fund. “We knew right away that we wanted to brew a fundraising beer,” Gregory says. “We were strongly compelled to help, and beer is

what we do. We’d been inspired by Russian River Brewing Co.’s Sonoma Pride beer effort after the fires in Santa Rosa. We wanted to take this effort to the next level

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T he Innofill Can C can filler gives operators the technological innovations of the big machines and is convincing with its compact design

and quick installation. With the Innofill Can C can

filler, KHS GmbH satisfies the demand of smaller breweries on the international market. Since introducing the prototype at drinktec 2017, there has been increased interest in the new technology from the Dortmund systems supplier. This is one of the reasons why KHS has launched a further machine size with a greater capacity to market. The German systems provider will be presenting the Innofill Can C at Craft Brewers Conference from April 8 to 11 at Booth 16033.

Craft Brewers Conference from April 8 to 11 at Booth 16033. At the world premiere of

At the world premiere of the Innofill Can C at drinktec 2017 Canadian craft brewery Steamworks procured the very first machine with a serial number of 001. In commissioning the can filler in February 2018 KHS laid the foundations for the future machine series. “The high order entry demonstrates that this machine concept is already proving convincing,” says Kevin Rathbun, project manager at KHS USA.

KHS shipped the can filler in a single container to the customer in Vancouver where it was commissioned on site on a plug- and-produce basis without any need for complicated installation processes. As the 21 filling and three seaming stations, valve manifold, cladding and control cabinet on the Innofill Can C form an enclosed, ready-to-produce machine unit, all that had to be done during installation was to connect up the electricity cables, piping and conveyors.

Just 14 days lay between delivery and the commissioning of the prototype. According to Steamworks its new plant engineering fills approximately 15,000 cans an hour in its standard 355-milliliter can format. The craft brewery also uses cans holding 473 and 500 milliliters. “With its new development KHS has again made the technical innovations of its big machines available to the craft brewing segment,” says Rathbun.

Steamworks’ CEO Gershkovitch is very pleased with his new can filler. “I like the KHS approach to design. In my experience things with a logical array work best.” In addition to the compact layout and fast installation, Gershkovitch also appreciates the machine’s hygienic design. In particular, this includes a gapless bell guide with PTFE expansion joints (Teflon) and bells which are lifted and positioned fully electropneumatically to seal the cans — without any mechanical action from cams and rollers. This does away with the need for water lubrication, simplifies cleaning and promises a service life which is up to twice as long as before.

The Innofill Can C is designed for low to medium outputs depending on the can size. KHS has now implemented a further machine size in order to increase the capacity for filling 330-milliliter cans from 15,600 to 27,800 cans per hour. “In addition to craft brewers, who continue to grow and grow, medium-sized breweries are also increasingly asking for further cost-efficient machines for the medium capacity range,” emphasizes Rathbun.

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by inviting every brewery in the country to brew.” To date, 1,478 breweries worldwide have pledged to brew and donate to the fund, Gregory

says. “We’ve been completely overwhelmed by the response,” she adds. “We initially hoped that 200 breweries would sign up.” This outpouring is how Sierra

Nevada Brewing hopes to reach its donation goal for the Sierra Nevada Camp Fire Relief Fund. “If all of the breweries brew what they committed to and sell all of the beer,

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Resilience should raise between $10-15 million,” Gregory says.

should raise between $10-15 million,” Gregory says. A Sierra Nevada employee adds ingredients to the brewing

A Sierra Nevada employee adds

ingredients to the brewing kettle. Resilience Butte County Proud IPA is a classic West Coast-style IPA. (Image courtesy of Sierra Nevada Brewing Co.)

Packaged in 12-ounce aluminum cans, Resilience IPA is a West Coast- style IPA that features a dank, hop- forward character, Gregory says. “The recipe for Resilience IPA is similar to our Celebration IPA with a few tweaks,” she explains. To get the mass brewing effort rolling, Sierra Nevada Brewing was orchestrating all the logistics, but was easily aided by its connections throughout the beer community. “We handled the effort in house, so it’s been quite a task for our team,” Gregory says. “It was pretty much all hands on deck. Fortunately, we had many pre- existing relationships with other breweries thanks to our Beer Camp Across America beer festival tours. But we called in every favor for this one.” Although the craft brewers are the recognizable supporters, Gregory highlights that everyone in the beer community — suppliers and beer wholesalers — have been vital allies in the fundraising effort. “We provided the recipe, information on how to register the beer, graphics, tap handles, coasters, posters, social media assets — hopefully just about everything a brewery would need to get going,” Gregory says. “A huge piece of the puzzle has been our supplier partners. Our malt, hop and yeast suppliers all pitched in and donated ingredients to all participating breweries to get the cost down for the brewers. Our wholesalers and retailers agreed to carry the beer for free. It’s been a huge effort from everyone up and down the supply chain.”

continued on page 44

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Cover Story

Cover Story

Cover Story
Cover Story
Cover Story
Cover Story

continued from page 43

Gregory notes that many breweries have released their version of Resilience while others still have the brew on tap. “[S]o the first funds are just starting to come in,” she adds. Because some brewers were unable to add another beer project to their calendar, they willingly assisted in fundraising efforts. For example, Milwaukee-based Lakefront Brewery could not accommodate a new beer to its production schedule. Instead, from Dec. 2 through 9, Lakefront Brewery sold its Riverwest Stein Amber Lager on special and donated 100 percent of the sales to California’s Camp Fire relief efforts, it said. During that week, each pint was $3 and generated more than $1,000 in donations, Lakefront Brewery Brand Manager Michael Stodola reported in December 2018. “We’ve helped a number of other breweries over the years, and this one went even farther,” said Lakefront Brewery Owner and President Russ Klisch in a statement. “We’re proud to assist our independent craft beer family and their communities.” Although the brewing effort might be getting all the attention, Gregory notes that the project wasn’t just about the beer.

Gregory notes that the project wasn’t just about the beer. Ingredients for Resilience Butte County Proud

Ingredients for Resilience Butte County

Proud IPA ferment in a beer kettle. Sales of Resilience IPA and sales from the sister beers will go to support the Butte Strong Fund. (Image courtesy of Sierra Nevada Brewing Co.)

“It’s about the incredible brewing community coming together for a common cause,” she says. “We are of course open to any way folks want to help. It has been overwhelming and heartwarming to see the response from so many other breweries around the world, and we are so grateful to everyone who has helped in any way that they can.” As the Sierra Nevada Camp Fire

Relief Fund has expanded, Sierra Nevada Brewing has partnered with other foundations to streamline recovery efforts. “We have joined forces with two

other local groups (The North Valley Community Foundation and the Aaron Rodgers NorCal Fire Recovery Fund) to form the Butte Strong Fund,” Gregory says. “Though some funds were

committed to other projects, the bulk of the Sierra Nevada Camp Fire Relief Fund will fund Butte Strong Fund initiatives. We will be actively working on community recovery projects

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through the Butte Strong Fund in the coming years.” Gregory adds that the formation of the Butte Strong Fund came about after the craft brewer learned about the efforts

the other organizations were doing. “As we were starting to work on recovery efforts, we found that there were other groups working on very similar projects,” she says. “In some

cases, we were even doubling efforts in inefficient ways. By joining forces, we found that we could not only work more efficiently, but we could also pool resources to make a greater impact

but we could also pool resources to make a greater impact together than we ever could

together than we ever could alone.”

“When the fire was still burning, we responded to immediate needs. We opened up our taproom and served free meals to First Responders and those who lost homes. We also gave out free shirts and sweatshirts to anyone who needed them. We hosted a free all-day Thanksgiving dinner at the brewery and fed about 1,000 people.”

— Robin Gregory, communications manager for Sierra Nevada Brewing Co.

Gregory explains that Butte Strong has identified six areas of focus: housing, children and youth services, health and wellness, education, community development, and business recovery. “Some current projects include providing temporary classrooms, providing bus passes, creating a business recovery task force, helping to fund a city planner and more,” she says. Although direct assistance partners still are being determined, Gregory explains that the craft brewer is eager to see the Butte Strong Fund get fully underway to help the community that means so much to Sierra Nevada Brewing. “The goal of the Butte Strong Fund is to be a catalyst to start the rebuilding process. There are currently many obstacles and rebuilding can feel overwhelming,” she says. “We want to help remove those barriers and allow the community to move forward. The needs are massive and there are no quick fixes. We hope to work alongside the community and provide assistance wherever needed.” BI

For more information …

To read more about the U.S. beer market, visit bevindustry.com/

For more information … To read more about the U.S. beer market, visit bevindustry.com/
For more information … To read more about the U.S. beer market, visit bevindustry.com/

topics/2244-beer

Up Close With

Up Close With

Up Close With
Up Close With
Up Close With
Up Close With

To life, L’Chaim!

Shmaltz Brewing Co. honors Jewish heritage

FROM

A WILD

ART

PROJECT

AND “EXPERIMENT” TO

START

A

JEWISH

celebration microbrew, Shmaltz Brewing Co. has advanced from delivering 100 cases of HE’BREW Beer out of a Volvo to building a brewery in Upstate New York and back to a contract brewing model while combining innovation and “schtick” to expand its brand across 30 states, through 40 wholesalers and in nearly 5,000 retailers.

Founded in 1996 as a 100 percent contract packed venture in San Francisco, Shmaltz Owner and Founder

Jeremy Cowan details that his microbrewery started as

a whim and an “inside joke” with a group of longtime

friends. “I honestly thought it was just fun, funny and

delicious to have my own beer and to be able to share it to those who might get a kick out of it,” he explains. “I went to a tiny little brewery in Northern California that made me 100 cases of our first HE’BREW Beer, which we then hand-bottled, hand-labeled and I delivered

it by borrowing my grandmother’s Volvo to several

accounts in Northern California. “My mom and a couple of friends helped with the first deliveries as well,” he continues. “I’m not even sure I would have counted myself as a full-time employee at that time since I had a full-time job and I relied on the kindness of my friends and family to get those cases out the door. Contract brewing was by far the best way to start this little crazy experiment.” What began as a crazy little experiment now is going into its 23rd year. The award-winning Upstate New York-based Shmaltz Brewing Co. produces a gamut of craft beers widely varying in style and taste — from light to dark, hoppy to malty, high alcohol-by-volume (ABV) beers to easy-drinking session beers, Cowan says. He notes that a lot of hutzpah, or extreme joy, and experimentation goes into his brews since “none of his beers are rarely to a specific style target.”

packaging designs on three of the brewery’s year- round offerings — Messiah Brown Ale, Hop Manna IPA and Hop Momma IPA — proclaim “Gold Medal Champion,” a highly coveted honor bestowed at the World Beer Championships. Despite the commercial and fan success of Shamltz’s core lineup, Cowan is reluctant to name one brand as its flagship SKU. “For many years, many of us fought against the concept of a flagship beer and went more for diversity of creativity and flavor,” he explains. “These days, everyone wants what’s new — but the sales channel often demands focus, so we are trying to accomplish both things at once by putting a much bigger push on our core brands this year all in cans. “And, diversifying through our various brands (Shmaltz, Alphabet City, etc.) as well as the one off draft-only rarities. It’s hard to balance creativity and commerce,” he continues. “For 2019, given the amazing expansion of breweries and beer styles in the country, we have scaled back on our different styles so we can focus on building core brands — very tough for our constant love of creativity. But, we introduced a new year-round beer, Hop Momma, as well as several new special releases that I’m really excited about. This year, we’ve also transformed our barrel-aged sour program into multiple special releases. We moved everything into cans, 12-ounce and 16-ounce, and we have really special draft-only options as well.”

THE CRAFT BEER TRIBE OF SHMALTZ

To date, the company offers four year-round core brands: Slingshot, a 5.3 percent ABV American Blonde Ale billed as a “fermented tribute to the Glories of the Underdog” that boasts a bright, citrusy hop aroma, supported by touches of wheat and rye and the light spice accent of Noble hops; Messiah Brown Ale, a 5.2 percent ABV with a complex yet smooth blend of bold dark malts revealing hints of chocolate, coffee and toffee paired with hop character; Hop Manna IPA, a 5.2 percent ABV dry hopped India Pale Ale, offering a golden opportunity to feed one’s inner hop head; and one of the company’s popular mistakes, the 5.8 percent ABV Hop Momma IPA, a juicy, fruity IPA brewed with real peach, apricot and a hint of habanero pepper, the company says. Slingshot and Messiah Brown Ale are packaged in 12-ounce cans of six-packs and on draft, while Hop Manna and Hop Momma are available in 16-ounce slim cans in four-packs, as well as on draft. The

16-ounce slim cans in four-packs, as well as on draft. The (Image courtesy of Shmaltz Brewing

(Image courtesy of Shmaltz Brewing Co.)

A TRADEMARK SHTICK

All said, Cowan plans to release about 12 to 15 beers this year and proclaims there will still be enough flexibility for a “ton of fun” across its multiple brand lines, including Shmaltz Brewing, 518 Craft, Alphabet City Brewing Co. and the Star Trek beers. “This year, we will definitely have a slew of tasty IPAs, varying widely in style,” he says. “At this point, everyone knows how much fun we like to have with our names, and our packaging — our shtick is truly our trademark — and a favorite part of the biz. “Each year, perfect opportunities arise for new styles and given we are still rather a niche brewery, there are always new customers to expose to the Shmaltz sensibility” he continues. “The names usually come out of brainstorms, rock lyrics, references to the Torah or Mel Brooks. We often wish we had more time to crank out endless fun names, but for now we need to focus on selling what we have cooking now.” For example, the limited-edition Jewbelation 22, was re-released in celebration of the company’s 22nd anniversary. Packaged in single-serve 16-ounce slim cans and on draft, the dark American 11 percent ABV

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complex strong ale features 11 malts and 11 hops. Other special releases include SHE’BREW, a Northeast style, hoppy hazy double IPA annually brewed for International Women’s Collaboration Brew Day (March 8); NO SHTICK, a golden hued American Imperial IPA style beer; and the 10 percent ABV Bittersweet Lenny’s R.I.P.A., a rye double IPA brewed with 10 malts and 10 hops and packaged in 16-ounce slim can four-packs and on draft. In honor of Hanukkah, the company’s “chosen beer” of the holiday season, Hanukkah, Chanukah: Pass The Beer is a dark ale brewed with eight malts, eight hops, and boasts an 8 percent ABV. To keep its fans stoked and coming back for more, Shmaltz Brewing also offers a seasonal Funky Blender Series of barrel-aged sour beers with three limited on- draft releases in spring, summer and fall. “I’m really excited to release our barrel-aged sours for 2019 in smaller specialty draft-only drops. This will be about our 10th year doing barrel-aged sours and the flavors just keep blowing me away,” Cowan says.

RAMPING UP PRODUCTION

Shmaltz Brewing continues to evolve. After 17 years of being an outspoken cheerleader for contract brewing, Cowan and his staff opened their own New York State production brewery in 2013 in Clifton Park, N.Y. Even with a 50-barrel brewhouse and 30,000 barrels of

annual capacity, Cowan notes it was difficult to keep up demand so the factory was sold late last year to some friends who needed the capacity, Cowan says. In July 2018, the brewery officially opened a new bar and tasting room in the craft-centric community of Troy, N.Y. The move also combined the hyper-local brands 518 and 838 under one name: 518 Craft. To showcase the breadth of Shmaltz’s portfolio as well as select releases from New York State craft breweries, 518 Craft boasts a bar and tasting room, local art displays and artisanal food, while the Shmaltz Shop features handcrafted to-go beers, spirits, wines and hard ciders. Bridging out again, in February, Shmaltz opened an official tasting room at The Comedy Works in Saratoga Springs, N.Y. The company’s craft beers continue to bring in accolades. The brewery has garnered one platinum, 10 gold and six silver medals from the World Beer Championships. “As far as I know and I joke about it all the time, we are the first, the biggest, the smallest, the most award- winning and still the only Jewish-themed celebration beer in the country,” Cowan says. “… Sometimes it’s hard to stand out in a crowded beer world so it’s great to have a unique identity. I have lived through plenty of the ups and downs, and have a good sense of what we need to do to fight our way toward growth as well as to maintain the creative passion that got us here in the first place. L’Chaim to that.” BI

By Barbara Harfmann

first place. L’Chaim to that.” BI By Barbara Harfmann Founded in 1996 by Jeremy Cowan, Shmaltz

Founded in 1996 by Jeremy Cowan,

Shmaltz Brewing Co. began as an “experiment” now boasts a portfolio of

12-15 craft beers. (Image courtesy of Shmaltz Brewing Co.)

of 12-15 craft beers. (Image courtesy of Shmaltz Brewing Co.) bevindustry.com | MARCH 2019 | Beverage

bevindustry.com | MARCH 2019 | Beverage Industry |

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