Sierra Nevada Appoints New CEO, Eyes 5 Percent Growth in 2019

Sierra Nevada Brewing Company has a new CEO.

Brewery founder Ken Grossman named former chief operating officer Jeff White to the position last October, the California-headquartered brewery confirmed to Brewbound. Grossman, who had served as the craft brewery’s only CEO since the company opened in 1980, has transitioned into the role of chairman.

White was hired by Sierra Nevada as a systems integration director in July 2013. He previously worked for more than four years as the senior director of strategy and operations for MillerCoors’ craft and import division, Tenth and Blake. He also held the COO title at Boston Beer Company for about 18 years before joining MillerCoors in 2009.

Sierra Nevada chief commercial officer Joe Whitney told Brewbound that White will bring a fresh perspective and remain focused on growth.

“He’s great and disciplined about building teams that can attack problems, and growth is a problem in the entire industry,” he said. “The discussions we’re have and the ideations are pretty exciting.”

Nevertheless, Grossman will remain active in the company, Whitney said, and White will report to the board, which consists of Grossman, his wife, Katie, and their children Sierra, Brian and Carrie.

White takes over a company that narrowly returned to growth in 2018 after two consecutive years of mid-single digit declines. According to Whitney, Sierra Nevada’s sales increased 0.2 percent, which amounted to about 25,000 cases.

“When you look at the top craft players, it’s just really tough for everybody, and I don’t think anyone is having a really great time of it,” Whitney said. “There’s a couple of folks that are seeing some nice growth from distribution gains, but when you look at growing brand velocity in a really competitive category, that’s just getting more and more crowded every day, it’s really tough sledding. So to come out of that just a hair above the Mason Dixon Line was a pretty good thing for us.”

Sierra Nevada finished 2018 as the tenth largest beer company in the U.S., according to market research firm IRI, which tracks category-wide sales at major off-premise retailers. Through December 30, dollar sales of Sierra Nevada’s offerings increased 3.2 percent, to more than $252 million, while the company’s volume sales increased 1.2 percent in multi-outlet and convenience (MULC) stores (grocery, drug, club, dollar, mass-merchandiser and military).

Whitney credited the company’s return to growth to Hazy Little Thing, a year-round New England-style IPA that launched last year and is already the company’s No. 4 brand. According to IRI, Hazy Little Thing IPA finished the year with more than $24 million in dollar sales.

Overall, Sierra Nevada produced about 106,000 barrels of Hazy Little Thing, Whitney said.

The company plans to continue stoking Hazy Little Thing’s growth by introducing 12-packs and 19.2 oz single-serve cans in March, Whitney added. Previously, Hazy was only available in 6-packs and on draft. Whitney said the company anticipates 40 percent growth in Hazy Little Thing’s sophomore year.

“We have a pretty big base moving from December into January,” he said. “About mid-year that will level off and it will be up to new packaging and hopefully velocity gains to continue to growth that brand.”

According to IRI, Sierra seasonal offerings grew dollar sales 5.4 percent. Hop Bullet IPA, a spring seasonal, was up as much as 30 percent over the previous year’s spring seasonal, Whitney added. The brand was so popular that the company brought it back as a year-round offering in the fall, selling between 8,000 and 10,000 barrels in the last four months of 2018, Whitney said.

Whitney added that sales of the company’s seasonals slowed after the Thanksgiving holiday, which he attributed, in part, to its push of Resilience IPA, brewed with all proceeds going to those affected by Northern California’s “Camp Fire” wildfire. The company expects to raise as much as $15 million from sales of its beer as well as offerings from nearly 1,500 craft breweries.

Meanwhile, dollar sales of Sierra Nevada’s two largest brands, Pale Ale and Torpedo Extra IPA, declined 5.5 percent and 7.3 percent, respectively, according to IRI.

Nevertheless, Pale Ale finished the year as IRI’s second-best selling craft offering behind MillerCoors’ Blue Moon Belgian White Ale, with dollar sales of more than $107.8 million.

According to Whitney, Pale Ale, which makes up about 40 percent of the company’s sales, finished the year down about 7 percent overall. However, he said the brand began to trend up near the latter part of the year, which he attributed to Sierra Nevada’s first media advertising campaign that launched in August and touched about 40 percent of where the company’s volume is distributed.

“We saw Pale trends improve about five points in those markets, and we saw overall total Sierra Nevada trends do better than that,” he said.

In 2019, Sierra Nevada plans to invest $10 million in digital and paid social media ads, with a 75 percent focus on Pale Ale and a 25 percent focus on Torpedo Extra IPA. Sierra is also in the process of refreshing the packaging of Pale Ale, and it plans to introduce new Torpedo packaging in the next 60 days, Whitney added.

As for innovation, Whitney expects the company’s Brut IPA spring seasonal and “Sierraveza” Mexican-style lager, which was added to its year-round lineup in 2019, to help build upon the company’s growth. According to Whitney, a successful launch for a new beer amounts to about 50,000 barrels.

Although Sierra Nevada is looking for new ideas, don’t look for the company to explore FMBs, Whitney said.

“Ken is pretty clear that FMBs are not something that he wants to do,” he said.

However, Sierra is considering other “well-crafted” beverages such as Kombucha, Whitney said.

“We may never do any of it, but we’re talking about all of it.”

Still, Whitney said he’s bullish on Sierra Nevada’s prospects heading in 2019 and he’s projecting 5 percent growth. He believes that advertising will help turn around Pale Ale’s negative trajectory, and that continued growth for Hazy Little Thing, combined with increased focus on Hop Bullet and Sierraveza, will propel the company forward this year.

“That’s not to say everything’s rosy, because it’s not, but I think our quiver has some nice ammo in there,” he said.

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