Craft Brew Alliance CEO: “We Are Not Satisfied With Our Second Quarter Growth”

The Craft Brew Alliance (CBA) released its second quarter earnings report yesterday, following it up with an investor call this afternoon.

During today’s call, CEO Terry Michaelson made it clear that the company would have preferred stronger top-line growth in the second quarter.

“We are not satisfied with our second quarter growth,” he said. “We believe 2012 will be a very important transition year for our national portfolio strategy.”

Portfolio Breakdown:

CBA brands – which include Widmer Brothers, Kona Brewing and Redhook – experienced yet another mixed bag of results in the second quarter.

Kona Brewing was again the biggest gainer, growing 20 percent over the second quarter in 2011. That growth was anchored by Longboard Lager and the Aloha Series, which grew 25 percent and “nearly 50 percent” respectively. Andy Thomas, president of commercial operations, said part of the success came from the successful introduction of Longbard Lager in cans, which debuted in March.

The Widmer Brothers brand saw a decline of 8 percent due in large part to losses in west coast markets, where Thomas said Hefeweizen draught lines continue to suffer from stiff competition and pricing.

But the most “fascinating” brand for Thomas is Redhook. He said it’s seeing single-digit declines in its home market of Washington but growing in the mid-teens at the national level. Redhook’s Longerhammer IPA grew in the low teens on a percentage basis with help from the introduction of cans in May.

Thomas called the newest addition to the CBA portfolio, the company’s gluten-free beer line Omission, an “unqualified success.” In its home market of Oregon, the brand has already captured the No. 1 and 2 gluten-free SKU spots in Symphony IRI tracked channels. This is due in large part to more lenient labeling regulations in the state, allowing CBA to name Omission as a “gluten-free” product. On a national scale however, both the FDA and TTB have yet to allow for this distinction on labels, which Thomas could be limiting the brands initial success. Still, he is “bullish” about the growth of the entire gluten-free category.

“We believe Omission functions within the overall beer market more so than just the craft beer market,” Thomas said. “We are attracting a lot of people back into the beer market who weren’t drinking the current offerings.”

Speaking of bullish, Thomas is also incredibly optimistic on Kona’s newest introduction, Big Wave Golden Ale.

“We decided to phase the launch to make it more successful for the long term,” he said. “We are focusing resources in key markets where Kona is doing really well for us right now.”

Those key markets include Southern California and NYC where the Kona crew is spending considerable time at various launch events. Thomas said to also expect a good amount of energy and focus for not only Big Wave, but all CBA brands.

“Florida is a market we can win in if we continue to add resources appropriately,” he said.

Changes on the Horizon:

Expect to see an increased emphasis on promotional pricing strategies across all brands as well as a stronger push on the east coast with fall and winter seasonals. This includes a brand new variety 12-pack which will feature winter seasonals from all three brands (think beers of Mexico).

“We believe our portfolio makes us different,” Thomas said. “This is a manifestation of that in a very tangible way.”

Offerings will include Widmer Brothers Brrr Seasonal Ale, Kona Pipeline Porter and Redhook Winterhook.

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