HALFWAY HOME; HARDER FROM HERE? · Craft Brewers Conference – April, 9, 2014- Denver, CO ♦6...
Transcript of HALFWAY HOME; HARDER FROM HERE? · Craft Brewers Conference – April, 9, 2014- Denver, CO ♦6...
HALFWAY HOME;
HARDER FROM HERE?
BEER MARKETER’S INSIGHTS
Benj Steinman
Craft Brewers Conference
April, 16, 2015
Portland, OR
BIG GROWTH, MANY DEALS, ???
♦ Craft’s phenomenal growth still turning the industry upside down
♦ Big brewers and big money see this and want in; Over a dozen deals in the last 15 months; More big ones coming
♦ Who will be the big winners and who will be left behind?
♦ Who will stay independent and who sells to big beer or big money for big bucks?
♦ What is the meaning of craft? To whom does it matter?
Craft Brewers Conference – April, 16, 2015-Portland, OR
US BEER UP 0.7% IN 2014 ♦ US beer shipments up 0.7% in
2014. Down slightly for 5 yrs.
♦ Taxpaids down 1.1 mil bbls, 0.6% Imports up 1.9 mil bbls, 6.9%; Craft up 3 mil bbls, 18%.
♦ Big Difference: US beer biz up 2 of last 3 yrs, before down 4 of 5.
♦ With improving economy, things are lookin’ up
202,000
204,000
206,000
208,000
210,000
212,000
214,000
216,000
05 06 07 08 09 10 11 12 13 14
US Shipments 2004-2014
Taxpaids + No Alcohol + Imports
Craft Brewers Conference – April, 16, 2015-Portland, OR
CRAFT DOUBLED IN 5 YRS
Up about 9.7 mil bbls for 5 yrs, before redefinition
BA-defined craft 10 share in 2014; 3500 brewers, 2000 in planning
Fifth straight yr of double-digit gains; Going for 6 in 2015
Some portion of growth not even visible in official stats
Craft Brewers Conference – April, 16, 2015-Portland, OR
9000
11000
13000
15000
17000
19000
21000
2009 2010 2011 2012 2013 2014
Craft 2009-2014
Bb
ls-0
00
US BEER LESS CONCENTRATED
Top 2 Down 1.9 Share to 70.7
At 78 in 2008; Under 70 in 2015?
Constellation and Boston are the Big Share Gainers
Craft Up 4.6 Share in 5 Yrs; Gained 1.4 Share Last Yr
Split Between 3500 Players
Craft Brewers Conference – April, 16, 2015-Portland, OR
AB (44.7)
MC
(26.0)
STZ
(6.7)
Pabst
(2.5)
HUSA
(3.9)
Others
(16.1)
AB/MC DOWN; CRAFT, STZ, SAM UP
Craft Brewers Conference – April, 16, 2015-Portland, OR
Bbls (000) Chg
2014 2013 bbls %
AB 96,000 74,180 -1,350 -1.4
MillerCoors 55,780 44,055 -1,420 -2.5
Constellation 14,415 10,190 1,385 10.6
HUSA 8,425 6,470 125 1.5
Pabst 5,330 4,430 -150 -2.7
Boston 4,093 3,403 690 20.3
Yuengling 2,920 2,725 195 7.2
NAB 2,450 2,590 -140 -5.4
Diageo/Guiness USA 2,275 2,375 -100 -4.2
Mike’s Hard 1,600 1,510 90 6.0
Others 21,488 19,066 2,422 12.7
Total 214,776 213,029 1,747 0.8
♦ AB and MC down 2.8 mil bbls last yr
♦ 5 of top 10 down
♦ Constellation and Boston Up 2.1 mil bbls
♦ Craft up about 3 mil bbls
AB AND MC VOLUME LOST 20
MIL BBLS IN 6 YRS
♦ Lost 19.7 mil bbls, 11% in 6 yrs, 2008-20014
♦ Making $3 Bil more; Part of global game
♦ Further earnings growth more difficult; Invest more to arrest decline
♦ Same pattern continues in early 2015; MC STRs down 2.7% in Q1
Craft Brewers Conference – April, 16, 2015-Portland, OR
2014 2008 Bbls
Loss
(All in millions of bbls)
AB 96.00 107.025 11.0
MC 55.8 64.5 8.7
Total 151.8 171.5 19.7
TOP 10 CRAFT BREWERS
♦ Robust health; all did well, yet top 5 lost 2.4 share of craft segment
♦ Lagunitas Fastest Gainer; Up the most bbls since 2010; Sierra over 1 mil bbls; NBB’s strong 2014, up near 20%
♦ Many sizable enterprizes attract attention
Bbls (000) %
Chg
Craft Share
Boston 2,550 9.7 13.3
Sierra Nevada 1,067 8.4 5.6
New Belgium 945 19.3 4.9
Craft Brew Alliance 791 9.0 4.1
Spoetzl(Shiner) 600 5.6 3.1
Lagunitas 599 49.8 3.1
Deschutes 335 17.1 1.7
Bell’s 319 28.6 1.7
Stone 287 34.7 1.5
Brooklyn 252 16.7 1.3
Source: BMI
Craft Brewers Conference – April, 16, 2015-Portland, OR
32 craft brewers over 100,000 bbls
14 craft brewers over 200,000 bbls
NEXT WAVE #11-30
(Bbls-000)
2014 2009 Chg
Founders 193 17 176
Firestone Walker 208 59 149
Dogfish Head 228 97 131
Sweetwater 193 62 131
Oskar Blues 149 29 120
Ballast Point 123 11 112
Craft Brewers Conference – April, 9, 2014- Denver, CO
♦ 6 craft brewers from #11-30 grew 110,000 bbls+ last 5 yrs
♦ 4 of 8 sold part/most of their co
(Bbls-000)
2014 2009 Chg
Ninkasi 96 17.5 78.5
Southern Tier 99 15 84
AND THE NEXT
DEALS TRANSFORM LANDSCAPE Over a dozen deals in 15 mos
AB bought 3; out shopping
Private Equity Did 6; Ditto
9 of top 50 sold at least stake
Some of hottest in recent yrs; Founders, Sweetwater, Oskar Blues, Southern Tier
More Big Ones Coming
Craft Brewers Conference – April, 16, 2015-Portland, OR
DEALS, DEALS, DEALS
Craft Brewers Conference – April, 16, 2015-Portland, OR
Date Seller Buyer Stake
4/2015 Abita
Friedman, Fleisher & Lowe, Rich
Doyle
Enjoy Beer bought; unknown
stakes
3/2015 Oskar Blues Fireman's Group Majority
3/2015 Perrin Fireman's/Oskar/Klopcic 100%
3/2015 Full Sail (ESOP) Encore Consumer Capital 100%
1/2015 Elysian Brewing ABI 100%
12/2014 Founders Brewing San Miguel 30% stake
11/2014 Alpine Green Flash
100% already did contract
brewing for Alpine
11/2014 10 Barrel ABI 100%
9/2014 SweetWater TSG Minority stake
9/2014 Southern Tier Ulysses Group majority stake
9/2014 Uinta Riverside Company minority stake
7/2014 Rich Doyle Harpoon Brewery ESOP
Employee own 48% of biz, rest
remains with Dan Kenary
1/2014 Blue Point ABI 100%
BIG $$$ JOCKEYING
FOR POSITION
Bankers bumping into each other at the CBC- Craft Bankers Conf?
As more deals happen, changes meaning of the movement
Is the “Soul of Craft” Slipping Away? Hopefully not.
Craft Brewers Conference – April, 16, 2015-Portland, OR
INSIDE THE MIND OF PRIVATE
EQUITY
Many craft brewers starting to make real $$$
Can project future earnings streams
Roll them up
Potentially go PUBLIC
Craft is cool; prospect of outsized returns; limited time frame
Craft Brewers Conference – April, 16, 2015-Portland, OR
INSIDE THE MIND OF ABI
# 1 Brewer with $47 bil in revs, $18.5 bil in EBITDA
Have to compete in space; deals are a “rounding error” to ABI
If you can’t beat ‘em buy em: BP, 10-Barrel, Elysian
Muddy waters of perception
Or drop the price; $60 off
Disruptive force
Craft Brewers Conference – April, 16, 2015-Portland, OR
CRAFT FLYING SO FAR IN 2015
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ Craft $$ up 20%+ in IRI
♦ Top 6 at 46.8 share of segment; down 3.4; 3 of top 6 much slower
♦ Sierra sped up
♦ Lagunitas gained 1+ share of segment
Craft Thru 3/29 in IRI MULC
$$ Mil Chg ($$-mil) Chg (%) Share of Craft
Craft 583.2 99.1 20.5
Boston Beer 75.7 1.6 2.1 12.9
Sierra Nevada 60.6 13.4 28.4 10.4
New Belgium 44.9 3.1 7.3 7.7
Gambrinus 33.9 2.6 8.6 5.7
CBA 29.8 1.1 3.7 5.1
Lagunitas 29.4 10.9 59.0 5.0
Source: IRI MULC YTD Thru Mar 29
IPAs: HALF OF CRAFT GROWTH
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ IPAs eating up segment; at 27 share of craft $$, up 46%
♦ Gained 5 share of craft $$; half growth
♦ 33 IPAs in top 100 brands; 20 of top 50
♦ IPAs- Half of segment 2x as large?
♦ 20+ mil bbls?
IRI MULC DATA YTD THRU MARCH 23
$$ Mil Chg (%) Chg ($$-mil) Share Chg
IPAs $144.3 45.6 45.2 26.9 4.7
Seasonals $69.0 8.8 5.6 12.9 -1.4
Pale $56.4 12.1 6.1 10.5 -0.8
Craft $536.2 20.4 90.7
4 IN TOP 60 DOUBLING;
6 IN 40 +50%
Craft Brewers Conference – April, 16, 2015-Portland, OR
Doubling in IRI
Rank Chg (%) Share Chg
21 Ballast Point 124 0.6
44 Revolution 120 0.1
52 Hop Valley 265 0.2
60 Alch & Science 553 0.2
50%+ in IRI
Rank Chg (%) Share Chg
6 Lagunitas 59 1.2
18 Firestone 56 0.3
22 Founders 71 0.2
28 Oskar Blues 54.5 0.2
34
Devil’s
Backbone 58 0.1
40 Cigar City 75 0.1
10 in top 100 gained 100%+ 6 gained 2.1 share of craft
Source: IRI MULC YTD Thru Mar 29
HUGE REGIONAL DIFFERENCES ♦ Zero in on 3 markets that tell different stories but craft growth
engine in each
♦ Portland, San Diego, state of Florida
♦ Most developed, perhaps the hottest, and underdeveloped
♦ Vastly different but local strength central to craft in each. Local lesson different in each mkt too
♦ Smaller players taking off in Portland, incredible strength of leading locals in San Diego, and local has lotsa room to run in Florida
Craft Brewers Conference – April, 16, 2015-Portland, OR
A TALE OF TWO CITIES
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ Portland/ San Diego Parables; Whassup?
♦ Portland Craft at 42 share of $$; Up 3. Cider at 6. Half.
♦ San Diego craft on fire, gaining near 5 share. 30 Share Doesn’t tell whole story
Source: IRI Food
Dollar Sales Dollar Share of
Current $$
(add 000)
Current $$
vs YA (000)
% Chg Current Chg
vs YA
Portland,
OR
Beer 42,082 1,913 4.8
Craft 17,741 1,979 12.6 42.2 2.9
Cider 2,649 521 24.5 6.3 1.0
San Diego,
CA
Beer 35,127 1,533 4.6
Craft 10,604 2,008 23.4 30.2 4.6
Cider 785 204 35.0 2.2 0.5
PORTLAND CRAFT
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ In last several yrs, Ninkasi, 10 Bbl, now Hop Valley successively took off
♦ Several other smaller Oreg coming up fast behind; beyond scan hyperlocal is hot
♦ Most bigger crafts slowed, including AB’s 10 Bbl
♦ Natl players further down list
Portland, Oregon
$$ Share $$ Trend
CBA 6.3 8.8
Deschutes 6.0 3.0
Ninkasi 3.3 4.7
Full Sail 2.4 14.2
NAB 2.2 2.8
Gambrinus 1.95 -23.1
AB Craft 1.7 5.9
Sierra 1.6 21.2
Lagunitas 1.5 11.6
NBB 0.8 -6.2
STILL SIZZLING IN SAN DIEGO
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ Top local players getting stronger and stronger; up 2.7 share
♦ Ballast Point #1 with a Bullet; Flew past Stone, tho Stone Up more than 20%
♦ Sculpin #1 Brand; Sculpin Grapefruit #6 brand
♦ Power of Local; 5 of top 10
♦ Boston, NBB Each Down
San Diego, CA
$$ Share $$ Trend
Ballast Point 5.4 69.5
Stone 4.0 24.4
Sierra Nevada 2.7 22.6
CBA 2.4 12.6
Lagunitas 2.2 38.5
New Belgium 1.6 -5.3
Boston Beer 1.4 -21.3
Coronado 1.0 25.1
Karl Strauss 1.0 -3.4
Green Flash 0.8 3.9
Source: IRI Food
FLORIDA CRAFT SHIPMENTS
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ 3d Biggest State, Craft Less Than 5 Share
♦ Boston Beer and New Belgium Dominate
♦ Cigar City Is Biggest Local at 0.2 Share
♦ In-state Craft Less Than 1 Share
FL Craft Shipments
2013 bbls 2014 bbls Trend
Share of
Craft
Boston Beer 144,000 154,000 6.9 25.2
New Belgium 28,106 54,988 95.6 9.0
Sierra Nevada 39,977 36,826 -7.9 6.0
Cigar City 21,291 30,354 42.6 5.0
SweetWater 24,938 30,108 20.7 4.9
CBA 18,728 18,718 -0.1 3.1
In-State Craft 69,700 100,960 44.8 16.5
Total Craft 484,900 610,600 25.9
Total Shipments 13,096,000 13,295,000 1.5 4.6
Source: 2015 Craft Brew Guide
CRAFT AT 35 SHARE ON-PREMISE
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ Craft at 34.6 share of $$ on premise in 2014 in GuestMetrics
♦ On premise down 3%, craft up low singles
♦ Craft up 2 share; lights down 1.5; Craft share gains slowing
♦ Tasting rooms, tap rooms, brewpubs, nanos
GuestMetrics Data
2013 2014
Share of Beer $$
Craft 32.4 34.6
Import 21.3 20.5
Premium Light 23.2 21.5
Cider 1.5 2.1
% Chg
2014 Volume 2014 $$
Beer -3.4 0.2
BOSTON BEER 2015: $1 BIL REVS
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ Boston will likely pass $1 Bil in Revs in 2015; Small Brewer?
♦ Grew 2 mil bbls in 5 yrs; Doubled
♦ 1 Mil bbls of Cider
♦ Expects 8-12% growth in 2015
♦ Benchmarks: $220.08 per bbl, 15% operating margin
Boston Beer
Add 000 to all figures. All figures in $$$ except bbls.
2014 2013
Bbls 4,103 3,416
Net Rev 903,007 739,053
Operating Income 146,567 113,093
Stock Mkt Cap $3.4 Bil
TOP 2 CAN PLAY HERE, BUT
Craft Brewers Conference – April, 16, 2015-Portland, OR
♦ AB and MC more than doubled, up 2.6 mil bbls, but slower
♦ Conundrum: better you play in niches, tuffer on main biz
♦ AB’s 10 Bbl slowed; Promo Opti plans
♦ Blue Moon White IPA; Goose Island IPA $10 Mil
♦ Over 4.5 mil bbls, another 2+ share
Bbls (000)
2014 2009
Blue Moon 2100 1150
Shock Top 1100 >200
Goose Island 375 114
Leinenkugel 975 480
SKUMAGEDDON
♦ Incredible fragmentation; over 10,000 SKUs in 2014; 12,000 in 2015?
♦ Over 20,000 SKUs predicted by T&B’s Tom Cardella at SCOL
♦ Distribs with 2000 SKUs
♦ Rotator Bars; Winification
♦ New Reality
Craft Brewers Conference – April, 16, 2015-Portland, OR
BREWERS ON EVERY CORNER
Local is where it’s at
Hyper local, uber local
In Portland, other cities, increasingly by neighborhood
Different business than capital intensive regional brewer
How many? Sustainable?
Craft Brewers Conference – April, 16, 2015-Portland, OR
CRAFT BREWERS STILL DONT
RULE POLITICS (YET)
♦ Craft brewers are not in charge in federal legislatures, for all their local strength.
♦ Fed tax bill not likely to pass; Difficulty advancing agenda in state legislatures—look at difficulty getting 64 oz growlers in Fla, tho that may finally change
♦ Rome not built in a day; BA struck markedly better tone
♦ Craft brewers and distribs remain natural allies, as in battle against AB branch in KY; good for each other for most part
Craft Brewers Conference – April, 16, 2015-Portland, OR
DUELING TAX BILLS
BA’s Small BREW vs BI’s Fair Beer
Big brewers, wholesalers now actively against BREW; reduces chances
BREW ahead in Senate; Fair Beer has more cosponsors in House
Now the distillers want tax break too
Reduces chances of passage
Craft Brewers Conference – April, 16, 2015-Portland, OR
A PEEK INTO A POSSIBLE 2015
Craft up 15% would be 2.9 mil bbls; a slowdown
Constellation at 7% is 1 mil bbls
Boston Beer sez 8-12%; 300-400,000 bbls; a slowdown
Industry way down in early 2015; If Flat, Rest Would be Down 4+ Mil Bbls
Craft Brewers Conference – April, 16, 2015-Portland, OR
RAPID GROWTH, RAPID CHANGE
Craft well on its way to putting up another yr of strong double growth
Rising tide not lifting all boats. Some large and many local going great
To get to 20 by 2020, craft needs low double digit growth on bigger base
M&A reconfiguring industry at all levels, especially craft now
Meaning of craft may be changing with influx of big $$ and many deals
Craft Brewers Conference – April, 16, 2015-Portland, OR
HALFWAY HOME;
HARDER FROM HERE?
BEER MARKETER’S INSIGHTS
Benj Steinman
Craft Brewers Conference
April, 16, 2015
Portland, OR