Craft Continues Growth Spurt

July 28th, 2014 by CCBA

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Craft brewers (as defined by the Brewers Association) increased volume by 18 percent during the first half of the year.

That equates to approximately 10.6 million barrels of beer sold by craft brewers, up from 9.0 million barrels over the first half of 2013.

Keep in mind that the BA updated their definition of craft brewer in February of this year. According to the BA in their statement released today, “The 18 percent growth rate is based on the updated craft brewer definition1 and derived from comparable barrel total from the first half of 2013. Mid-year figures first reported in 2013 were based on the previous craft brewer definition.”

No matter how you slice it, craft beer, and full-flavored beer in general continues to take over the American beer culture. Yes, it’s true; the majority of beer consumed in the US is still light Pilsner-style lager. But that percentage continues to decrease year after year. I don’t see that trend reversing. Some markets, most notably Portland OR, Seattle and San Francisco have flirted with a 50% craft market share (depending on how you measure it) and some chain grocery stores are now reporting the majority of their sales as craft. And so, it is not far fetched at all to think that in a not-to-distant future, the majority of beer consumed in the U.S. will be full-flavored “craft” beer.

Another figure that continues to jump out is the number of operating breweries, and “breweries-in-planning” that now exist. According to BA figures, as of June 30, 2014, there were 3,040 breweries were operating in the U.S. and 1,929 breweries in planning.

So it is with no surprise, but never without some amazement, that craft beer continues to grow in very big leaps and bounds.

Note; enter your email address in the field to the left and receive an email notice with each new blog post. We will be following the trends of the California craft beer industry on a regular basis.

Growlers – Q&A

July 9th, 2014 by CCBA

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Why is it that while some breweries sell growlers, others don’t? Why do some breweries refill used growlers while many breweries only sell beer filled in their own growlers? Why do some retail stores sell growlers but most do not?

To answer these questions, we must wade into the deep, dark confines of the California Alcoholic Beverage Control Act (ABC Act), which comprises the Business and Professions Code and the Code of Regulations. If you are looking for some nighttime reading to put you to sleep, you can find it on the ABC website. The ACB code is the legal statute by which manufacturers, distributors and retailers of alcoholic beverages must abide. The rules of the road, so to speak. And remember, that alcohol beverage regulations vary state to state. While some states allow just about anything (Oregon allows retailers to fill an empty mason jar if they choose), some states have very strict laws governing the sales of growlers. California lies somewhere in between. 

In the 1800′s pails were used to transport beer from the tavern to the home or the workplace.

A good starting point when contemplating all things growler is to note that the term doesn’t even exist in the California ABC code. The growler is considered a “container” by the ABC, just as a bottle or keg, and has no special meaning or separate set of rules.

To answer our first question, some beer manufactures simply choose not to sell growlers. They may be so small that they sell all of their beer in pints through the tasting room. Some craft breweries don’t have a tasting room or retail store and instead sell everything through a wholesaler. Some simply may not make enough beer. So although most craft breweries do sell growlers, some do not. This is by choice, not because of regulatory constraints.

Addressing the second question regarding the refilling of growlers is more complex. Prior to last year, the ABC did not allow breweries to refill a growler from another brewery. For a variety of reasons, the ABC recently reinterpreted the regulations and they now allow a beer manufacturer (holder of an ABC type 01 or type 23 license) to refill for sale any sealable container (such as growlers) as long as specific regulatory guidelines are met. AB 647 (Chesbro) which passed the legislature last year and was signed into law by the Governor affirms the right for a beer manufacturer to refill previously used growlers (as long as labeling requirements are met).

Just like a bottle of beer, all growlers must have an affixed label that has been approved by the ABC and meets all of the state’s labeling requirements. The container must also be sealable (screw top, cork, flip top, etc.) to distinguish it from a glass of beer or other open container. And most notably, any and all information pertaining to another beer manufacturer other than the one filling and selling the container must be removed or obscured. This last requirement is sometimes difficult to accomplish. When a consumer brings an empty growler that was previously filled and labeled by Brewery A into Brewery B to be refilled, Brewery B must completely remove or obscure any and all information from Brewery A. No easy task. This can be time-consuming for a bartender at a busy tasting room. It can also be very difficult to obscure etched or painted labels. Thus, brewers may not be able to comply with label requirements of refilling certain growlers.

Perhaps of greatest concern for many breweries is the cleanliness of the growler. Craft breweries take great pride in their products. It is of utmost importance that the quality and integrity of the beer they produce be maintained from the time it leaves the brewery until the moment it is consumed. The cleanliness, functionality and integrity of the growler are critical, and not all growlers are created equal. Cheaper growlers do not seal well the second time they are filled, and some growlers have thin glass that will not withstand certain filling methods. The cleanliness of the container when it is brought in for refill is also a big concern. It may not be practical for the filling brewery to take the time to ensure that each growler they refill is properly cleaned and sanitized.

Add up all of these issues and you have a lot of good reasons that many craft brewers choose not to refill growlers previously filled by another brewery. Refilling growlers is a great way for consumers to sample beers from different breweries in an affordable way and offers an environmentally favorable method of doing so. But in many situations it simply isn’t practical or may diminish the quality of the beer.

Our final question about retailers selling growlers is easy. Retailers are allowed to sell growlers, but they cannot fill growlers. Only a licensed beer manufacturer may fill a container with beer. Retailers can buy growlers either directly from a brewery or through a licensed wholesaler and more retailers will likely sell growlers as brewers develop better filling methods that will allow for a longer shelf life (similar to bottles).

For a more detailed explanation of refilling and other growler details, see the “Growler Clarification” on our web site here.

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The winners have been announced for the 2014 California State Fair Commercial Craft Brew Competition. There were 858 entries judged and 239 registered participants, judges, and stewards. Track 7′s Panic IPA brought home the Best In Show with Old Republic’s California Common taking second.

You can see the full results here.2014 California State Fair Commercial Craft Brew Competition Winners

The ABC’s of Marijuana and Beer

June 25th, 2014 by CCBA

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The annual National Conference for State Liquor Administrators was held last week in San Antonio, TX. This conference is attended by state alcohol beverage regulatory agencies and other liquor control departments along with many trade associations and stakeholders in the industry. The CCBA was on the scene.

One panel discussion addressed the regulation and enforcement of both medical and recreational marijuana. All panel members agreed it’s not a question of “if” more states will legalize cannabis, it’s just a question of “when.”

Here in California, most people in and around the Capitol feel pretty darn sure that the legalization of recreational use of marijuana will take place in 2016.

Why is the legalization of marijuana being talked about at an alcohol beverage conference? Because it will almost certainly have some impact on the alcohol beverage industry. One area that could impact our industry here in California is if the Alcohol Beverage Control becomes the agency assigned to regulate and enforce recreational use.

Most states are looking at their alcohol beverage regulatory agency as the common sense choice for assuming the regulation of marijuana. In many ways it does. The California ABC has law enforcement agents, they issues licenses and they have statewide district offices. But adding another new, complex and controversial product into the laps of the ABC will unquestionably have some sort of impact on the Department which could have an unintended impact of licensed brewers.

One big concern is staffing. Many people feel that legalizing marijuana will reduce the need for cops to go around busting people for smoking, growing or possession. True. But, there will also be a very big need to enforce the state laws once it is legalized. If they are not enforced, there will be no incentive for growers and sellers to enter the regulated system, where the taxes and licensing revenue will come from. So instead of relieving enforcement, legalization simply shifts the enforcement burden from city and county cops to ABC agents. It has not been determined if California will put the regulation and enforcement on the ABC or not, but cannabis advocates generally favor the ABC as the ‘agency of choice.’ This could dramatically alter the size, scope and capabilities of the ABC. It might be for the better, it could be for the worse. It all depends on funding and how it is set up internally within the Department. The CCBA will be watching closely. Stay tuned.

Bubble Talk

June 18th, 2014 by CCBA

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At the annual Beer Marketer’s Insight conference in Chicago last week, two industry economists shared the podium together to talk numbers.

Bart Watson from the Brewers Association and Lester Jones, who is leaving a long term post at the Beer Institute to take a new seat at the National Beer Wholesalers Association, were both in agreement in dispelling the bursting bubble talk heard in the industry hallways lately.

Lester commented that of the over 2800 breweries that the TTB reported tax returns on, over 70% made less than 1000 bbls. And 20% made less than 7500 bbls.

Bart pointed out that that while new start-ups accounted for over half of the total craft brewery count in operation in 2013, but they only made up 5% of the volume

It is clear that a new model is emerging. Start-ups are predominantly nanos and small micros with a tasting room concept, selling most of their production direct to the consumer and reaping the benefits of the high margin. Like restaurants, communities can support multiple breweries of this nature, which would suggest that the total number of breweries that may eventually open up in the US could be much higher than it is today.

As of today, there are 2948 breweries in the country (as reported by BA prez Paul Gatza yesterday at the National Conference for Liquor Administrators currently being held in San Antonio, TX). We could hit 3000 by end of the month. In California, we currently have 459 breweries, opening at a rate of about 6-8 a month. Will we hit 500 by the end of the year?

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California Craft Brewers Ladyface Alehouse & Brasserie, Russian River Brewing Company, Golden Road Brewing and Linden Street Brewery were honored as businesses of the year today at the California Small Business Day awards.Thank you Senator Noreen Evans and Senator Fran Pavley and their staff for honoring Russian River and Ladyface.