New Belgium Begins Contract Brewing for Startup Lager Brand

After experiencing an 11 percent production decline in 2018, New Belgium Brewing has opened its Colorado brewing facility to an upstart lager brand that is aiming to eclipse the 100,000-barrel threshold within two years.

New Belgium — the fourth largest craft brewery in the U.S. — and Charleston, South Carolina-based East Island Brewing Co., maker of the “Island Coastal Lager” brand, today announced the new brewing arrangement in a joint press release.

Scott Hansen, who launched the Island Coastal Lager brand with partner Brandon Perry at the end of 2017, told Brewbound that his company has plans to scale production and distribution rapidly over the next 18 months.

“Last year, we sold 5,000 barrels into the market, and we were ranked by IRI as the No. 1 craft lager in 6-packs in South Carolina,” he said. “With New Belgium’s logistics, capacity, quality control, and supply chain support, our ultimate goal is to pass the 100,000 barrel threshold over the next 18 to 24 months.”

It’s an ambitious goal, but one that Hansen believes can be achieved through expanded distribution via Anheuser-Busch wholesalers across 16 new states.

“We initially launched with wine and spirits distributors in order to have a single solution in each state, and to capture mindshare with major retailers,” he said. “We are going to expand up the East Coast with the A-B network, into every state that touches the water.”

For its part, New Belgium described its partnership with East Island Brewing Co. as a “multi-year” co-packing arrangement that could eventually include production at its facility in Asheville, North Carolina.

Speaking to Brewbound, New Belgium spokesman Bryan Simpson, who admitted that 2018 was a “challenging year,” said the company has no immediate plans to begin co-packing for other brands, but it is open to additional contract opportunities as it looks to better utilize about 1.5 million barrels of total capacity across its two breweries. The company expects to brew around 10,000 barrels of Island Coastal Lager in the first year, he added.

New Belgium production declined from 955,000 barrels in 2017 to 846,000 barrels last year, representing about 56.4 percent capacity utilization across its entire brewing footprint.

Despite the double-digit decline, Simpson said New Belgium has “turned a corner” during the first quarter of this year.

According to market research firm IRI, off-premise volume sales of New Belgium products at multi-outlet and convenience stores through February 24 were up 4.6 percent, while dollar sales are up an impressive 9 percent, a discrepancy that can be explained, in part, by the company’s $1.50 per case price increase this year.

Nevertheless, Simpson said he expected volume production of Coastal Island Lager to be somewhat modest in the first year, and grow over time as the brand expands into new markets.

Coastal Island Lager is currently distributed through wine and spirits wholesalers in South Carolina, North Carolina, Georgia, Alabama, and Florida, and the company is in the process of re-launching with A-B wholesalers in those markets, Hansen said.

During the 52-week period ending February 23, the company’s volume grew over 1,000 percent at off-premise retail accounts, according to Nielsen.

The company is also developing an 89-calorie competitor to Corona Premier, called Island Active, that will be packaged in 12 oz. slim cans.

“We are a crossover lifestyle brand that sits between craft and macro,” he said. “Our brand is very relevant to millennial consumers, and we are positioning this brand for A-B wholesalers to compete against Corona.”

The company also recently secured $2 million in series A funding, which Hansen said would be used to “pour gasoline on the fire and accelerate growth.”

“At our heart, we are a sales and marketing company but with a great love of beer,” he said. “We are thrilled to have New Belgium as a partner that is focused on the beer and the supply chain and logistics.”

A press release with additional details is below.

Island Coastal Lager Widens Pipeline with New Belgium Brewing Partnership

Relationship Quadruples Number of States Selling Fast-Growing Lager

FORT COLLINS, Colo. & CHARLESTON, S.C.– New Belgium Brewing (NBB), the country’s fourth-largest craft brewer, and Island Coastal Lager (ICL) today announced they have entered into an agreement that entitles NBB to handle all brewing and logistics for ICL, the premium alternative to mass-market beers. The relationship will drive ICL’s expansion into 16 additional states.

“We look forward to helping the Island team further by providing high-quality beer and logistics services as ICL expands to the entire East Coast and west through Texas. ”

“Like New Belgium was in 1991 and continues to be today, we were inspired to bring a better beer to American drinkers,” said ICL co-founder Brandon Perry. “Island Coastal Lager has carved out its own clean, easy-drinking category providing an alternative to mass-produced beers brewed with fillers and preservatives.”

Inspired by the coastal lifestyle, Island Coastal Lager is brewed with the freshest, high-quality ingredients. It was first brought to market in South Carolina in October 2017, and within a year became the number one six-pack lager sold in major grocery chains across the state. Distribution in 2018 expanded throughout the Southeast to include South Carolina, North Carolina, Georgia, Alabama, and Florida. Upon its first anniversary, ICL was introduced to the world, launching on Carnival Cruise Lines’ entire fleet of 26 ships traveling to over 70 destinations throughout the globe. Today’s announced partnership will quadruple the number of states where ICL is sold and increase production exponentially.

“Island Coastal Lager is at an exciting inflection point having created both a lifestyle brand and a high-quality product that more consumers are quickly embracing,” said NBB Chief Executive Officer Steve Fechheimer. “We look forward to helping the Island team further by providing high-quality beer and logistics services as ICL expands to the entire East Coast and west through Texas. ”

“The brewing expertise and access that NBB can provide ICL makes them a perfect partner as we accelerate growth within the US,” said co-founder Scott Hansen. “We are now poised to launch brand extensions that will further solidify our place in the market as a crossover between macro and craft.”

New Belgium Brewing will begin production of Island Coastal Lager in March 2019 and will package both draft, 12-oz and 16-oz cans.

About New Belgium Brewing

New Belgium Brewing, makers of Fat Tire Amber Ale and a host of Belgian-inspired beers, is recognized as one of Outside Magazine’s Best Places to Work, one of the Wall Street Journal’s Best Small Businesses and tops Bicycling Magazine’s Best Companies for Cyclists. The 100% employee-owned brewery is a Platinum-level Bicycle Friendly Business as designated by the League of American Bicyclists, one of World Blu’s most democratic U.S. businesses, and a Certified B Corp. In addition to Fat Tire Amber Ale, New Belgium brews fourteen year-round beers: Citradelic Tangerine IPA, Fat Tire Belgian White, The Hemperor HPA, Voodoo Ranger IPA, Voodoo Ranger Imperial IPA, Voodoo Ranger Juicy Haze IPA, Sour Saison, Honey Orange Tripel, Dayblazer Easygoing Ale, 1554 Enlightened Dark Ale, Bohemian Pilsner, Abbey Belgian Style Ale, Trippel and a gluten-reduced beer, Glutiny Pale Ale. To learn more, visit NewBelgium.com and follow the brewery on Facebook, Twitter or Instagram.

About Island Coastal Lager

Island Coastal Lager (ICL) is a beer and lifestyle brand with current distribution in five states in the Southeast and on the water with Carnival Cruise Lines. An American Craft Lager brewed with the highest quality ingredients containing no fillers or preservatives, ICL is an easy-drinking beer at just 4.5% ABV with a smooth, crisp finish. ICL is available on draft and in 12oz cans in both 6-packs and 12-packs and 16oz ‘tall boy’ format. To learn more, visit the website at www.islandcoastallager.com and follow ICL on social media with the handle @islandcoastallager.

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