Up 34 Percent, Founders Brewing Eyes 625,000 Barrels in 2018

Propelled by the continued growth of flagship session offering All Day IPA, Founders Brewing reported this week that it would produce approximately 468,000 barrels of beer in 2017, up from about 348,000 last year.

The Michigan-based craft brewery, which sold a 30 percent stake to Spain’s Mahou San Miguel Brewery in late 2014, and now ranks as the ninth largest brewery in the U.S., was “pleasantly surprised” to exceed its initial projections, co-founder and CEO Mike Stevens told Brewbound.

“You always go into the year with a forecast, and we are getting better at that, but we were initially projecting around 450,000 barrels,” he said.

Much of Founders’ success in 2017 can be attributed to All Day IPA, a 4.7 percent ABV session beer that now accounts for about 60 percent of the company’s total output. Sales of that beer were up 37 percent in 2017, and Stevens believes there’s still plenty of runway left.

“All Day is really starting to trade into areas that aren’t traditional craft, and it is affording us some accelerated growth,” he said.

Stevens said his company’s flagship brand is sold in just 30 percent of the multi-outlet and convenience stores that off-premise retail data provider IRI Worldwide tracks. Products from larger competitors — such as Boston Beer, Sierra Nevada and New Belgium — are sold in 60 to 80 percent of those accounts, he added.

“When you have the fastest growing craft brand in the U.S., and are only in half of the opportunities that most of your competitors are, there is a tremendous amount of white space,” he said. “The bottom line is that 85 percent of the drinking public does not drink huge craft beers. We know that.”

He added that Founders is currently discussing retail opportunities with large-scale chains such as Walmart and 7-Eleven, which could allow the All Day brand to “pick up some momentum” in 2018.

Beyond Founders’ intense focus on strengthening sales of its largest volume offering in 2018, Stevens said the company would also look to continue growing sales of its seasonal offerings – Azacca IPA, Mosaic Promise IPA and PC Pils – which were up a combined 82 percent in 2017.

“The goal is to take our No. 2 SKU – our seasonal pack – and start to get those secondary placements in all of these PODs (points of distribution) that we have with All Day IPA,” he said. “There is going to be a lot of movement there.”

To help Founders in that effort, the company hired 217 people in 2017. Many of those new employees were added to the sales team, and Stevens said they will be tasked with continuing to increase off-premise sales while simultaneously refocusing on on-premise retail opportunities.

“Frankly, we put so much effort over the last couple years into our chain business, and our off-premise business, that we let the on-premise side suffer a bit,” he conceded. “But we’ve put together some programming and planning to really attack the on-premise in 2018.”

Now distributed in 46 states, Founders will open Colorado in early 2018 and launch a new 4.4 percent year-round lager, Solid Gold, in 15-packs and 6-packs.

“It is a lighter profile beer,” Stevens said. “It lives in the domestic premium and import side, and we are going to tread lightly with it. We are going to slowly watch what it does. We don’t want to bet the farm on new launches, and we will be watching this one closely.”

If Solid Gold takes off, Founders should be well-positioned to capitalize on the momentum – the company already has the capacity to produce 750,000 barrels of beer annually and is adding additional fermentation tanks in February as it scales to 1 million barrels.

“We are all geared up,” Stevens said. “We just have to drop fermenters in and we’ll be able to handle 1 million barrels.”

Stevens stopped short of predicting when the company would cross the 1 million barrel threshold, saying only that the company would continue pushing the pace until growth slows.

“There is going to be a day when things slow down, and that’s OK,” he said. “Until then, we are going to grow like a bat out of hell and give America the great beers that we are producing.”

He added that the company, which opened a new taproom in Detroit last month, has no plans to actively pursue additional retail-focused expansions.

“Never say never, but at Founders, our purpose is to be a manufacturing brewery, not to be a retailing brewery,” he said.

In addition to the figures cited above, Stevens shared a variety of high-level growth statistics with Brewbound, which are included below.

Founders Brewing 2017 Statistics

  • Total depleted volume up 34 percent.
  • 62 percent of packaged volume (bottles vs. cans) is now in cans.
  • International volume accounts for about 4 percent of total output.
  • Founders sales were up 43.5 percent in IRI Worldwide’s MULC universe (8X growth rate for craft segment).
  • Founders currently ranks as the No. 1 craft brewery in can sales, which totaled $52 million in 2017.
  • All Day IPA 15-pack sales account for 54 percent of all 15- and 18-pack can sales in the U.S.
  • 27 percent of IRI-tracked off-premise sales for all Founders brands occurred in Michigan.
  • 5.2 percent of 2017 sales growth came from new markets.
  • Founders grew sales in the West region by 241 percent and in California by 70 percent. Sales in the “Mid-south” region were up 75 percent, while sales in the Northeast were up 50 percent.
  • The company currently employs 561 people.
  • Once Founders begins distributing to Colorado, only Hawaii, Wyoming and Utah will remain. There are no plans in place to distribute to those markets.
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