We said it one year ago and we’ll say it again: What an exhausting year.
Much like the 12 months before it, 2016 brought plenty of headlines about the continued evolution of the beer segment. Dozens of craft brewery owners sold all or parts of their businesses, key executives at many of the country’s top beer companies vacated their positions and taproom culture began to boom at a time when sales for some of the largest and most established players softened.
So, with another busy year in the books, let’s take a look back at some of the more noteworthy storylines in 2016.
7.) Hard Seltzer Mainstreamed
It’s hard to believe, but hard sparkling seltzers emerged as a legitimate trend in 2016.
Billed as a lower-calorie alternative to beer, hard seltzer products — grouped within the broader category of flavored malt beverages — began to grow in popularity in 2016. Year-to-date through November 27, volume sales of all FMB products were up more than six percent in supermarkets, according to market research firm IRI Worldwide.
The niche category was once entirely dominated by Connecticut’s Boathouse Beverage, which produces the SpikedSeltzer line of products, andquickly grew to include offerings from some of beer’s biggest players.
Boston Beer Company launched Truly Spiked & Sparkling, Mark Anthony Brands introduced White Claw Hard Seltzer, Smirnoff released a line of spiked sparkling seltzers, Wachusett Brewing unveiled its Nauti hard seltzer products and Anheuser-Busch went as far as purchasing category creator Boathouse Beverage.
6.) Health-Conscious Consumers Emerged
A growing number of drinkers are pointing to healthy habits and alcohol abstinence as a priority, according to research jointly developed by Nielsen, The Harris Poll and Brewbound released earlier this year.
According to the survey — which polled nearly 1,400 respondents who drink alcoholic beverages several times per month — 60 percent of millennial craft beer drinkers who consume at least one beer per month said they only drink on the weekends. About 44 percent of millennial craft drinkers said they take time off from drinking entirely in order to maintain a healthy lifestyle, and
78 percent of monthly craft beer drinkers surveyed believe it is important to read nutritional labels when buying food and beverages.
Recognizing a consumer shift toward transparency, the Beer Institute launched an initiative asking brewers large and small to display caloric and nutritional information on individual products, packaging and websites. Calling it the “Brewers Voluntary Disclosure Initiative,” the BI is encouraging its 44 brewer and importer members – as well as more than 4,000 non-member craft breweries — to voluntarily include a serving facts statement on their products.
5.) MillerCoors Made Its Move
In three short weeks this summer, MillerCoors, via its Tenth and Blake craft & import division, went from being a large brewer with a passing fancy in craft beer to one that was deeply invested in the space.
MillerCoors, the country’s second largest beer company, purchased three craft breweries in 2016: Texas’ Revolver Brewing on August 11, Oregon’s Hop Valley on July 29 and Georgia’s Terrapin Beer Company on July 20. The company also purchased San Diego’s Saint Archer Brewing last September.
At the time of the Hop Valley transaction, Tenth and Blake president Scott Whitley discussed his company’s merger and acquisition strategy with Brewbound.
“Wherever this crazy craft business goes in the next five or ten years, brands are going to matter,” he said in July. “What occurred to me when I came to Tenth and Blake was that we had a strategy, but not one that had been adapted to what had been happening recently. Instead of making a minority investment, the best bet for us was to take a majority interest and maintain a partnership with these craft breweries. The board approved that strategy a little over a year ago and away we went.”
4.) Executives Left the Building
New Belgium, Sweetwater, Duvel USA and Dogfish Head were just a few of the more notable craft breweries that experienced a CEO shakeup in 2016, part of an ongoing industry-wide shuffle of key craft brewery executives.
Below are some of the more significant comings and goings:
- Christine Perich exited as CEO of New Belgium
- Nick Benz left his post as CEO of Dogfish Head
- Simon Thorpe departed Duvel USA
- Sweetwater CEO Kim Jones parted ways with the Atlanta craft brewery
- Brewmaster Mitch Steele left Stone Brewing
- Multiple Ballast Point executives made their exit
- Surly Brewmaster Todd Haug departed for Three Floyds
- Sierra Brewmaster Steve Dressler announces his retirement
- Alan Newman departed Alchemy & Science
3.) Pay-to-Play Never Went Away
Boston’s pay-to-play saga rolled on in 2016, and it’s not done yet.
What began in 2014 as a series of tweets from a disgruntled brewer — who, at the time, alleged that Massachusetts beer wholesaler Craft Beer Guild had violated state laws prohibiting unfair and illegal inducements — eventually turned into more than $3 million in fines and penalty payments for the distributor.
Earlier this year, Craft Beer Guild was ordered by the Massachusetts Alcoholic Beverages Control Commission to pay $2.6 million in fines, the largest ever levied by the ABCC against a Massachusetts alcohol beverage license holder.
Also, in November, The Alcohol and Tobacco Tax and Trade Bureau (TTB) announced it had accepted a $750,000 payment from Craft Beer Guild, following its own investigation into allegations that the wholesaler violated state and federal laws prohibiting the inducements, known as pay-to-play.
The payment to the TTB, however, was separate from the $2.6 million fine that Craft Beer Guild paid the Massachusetts ABCC and the distributor is currently appealing that decision.
Craft Beer Guild has also asked Hampshire Superior Court to dismiss a lawsuit brought by another Massachusetts alcohol company, Shelton Brothers Imports, which claims that Craft Brewers Guild’s illegal pay-to-play practices between 2013 and 2014 had cost the importer $1.7 million in potential sales.
This story will undoubtedly continue to develop in 2017.
2.) Stone Restructured
Citing slower growth and an increasingly more competitive craft beer landscape, San Diego’s Stone Brewing Company laid off more than 50 employees in October as part of what it termed as a “restructuring” effort.
Cutbacks extended across the entire organization, including personnel in sales, marketing, media, administration, and production.
In a statement, newly appointed Stone CEO Dominic Engels blamed the downsizing on “recent declines in domestic growth for the category and for Stone.”
“Due to an unforeseen slowdown in our consistent growth and changes in the craft beer landscape, we have had to make the difficult decision to restructure our staff,” he wrote.
1.) Dealmaking Continued
But that wasn’t the only significant beer deal to unfold in 2016. In fact, more than 25 craft deals occurred throughout the year and some noteworthy names transacted. Below is an incomplete list of deals that occurred in 2016.
- MillerCoors scooped up three craft breweries (Revolver, Hop Valley and Terrapin)
- Anheuser-Busch purchased Devils Backbone, Karbach Brewing and SpikedSeltzer. The company’s ZX Ventures unit also purchased homebrew supply company Northern Brewer and invested in the “Kombrewcha” line of kombuchas.
- Lagunitas Brewing struck deals with Moonlight Brewing, Independence Brewing and Southland Brewery & Smokehouse.
- Pennsylvania’s Victory Brewing tied up with New York’s Southern Tier Brewing via a sale the Artisanal Brewing Ventures holding company, backed by family office Ulysees Management LLC.
- Florida’s Cigar City sold to the Fireman Capital Partners-backed Oskar Blues Holding Company.
- Brooklyn Brewing sold a 24.5 percent to Japan’s Kirin Brewing
- Texas’ Deep Ellum Brewing sold a majority interest Storied Craft Breweries
- Craft Brew Alliance purchased a 24.5 percent stake in Miami’s Wynwood Brewing
- Pabst Brewing struck a distribution and sales partnership arrangement with Michigan’s New Holland Brewing
- Seattle’s Two Beers Brewing and Seattle Cider Company were purchased by French cooperate Agrial
- Private equity firm VMG Partners formed a $90 million limited partnership with Stone Brewing
Other breweries involved in transactions in 2016 are listed below:
- Hilliard’s Brewing sold to Odin Brewing
- Prairie Brewing sold to Krebs Brewing
- Florida Avenue Brewing sold to the Brew Bus
- Florida Beer Company sold to ANSA McAL Group
- Spinnaker Bay sold to Northwest Peaks
- Huss Brewing acquired Papago Brewing
- Terrapin co-founder John Cochran purchased Altamont Brewing
- Flying Fish sold a stake to private investors
- Davidson Brewing was acquired by Northern Eagle Beverage