Over the next few posts on This is Why I’m Drunk, I’m dedicating my research efforts to learn more about Craft Brew Alliance, a company that could be up to big things in 2014.
As beer lovers, we judge breweries in all sorts of ways. The people who run them, how they market themselves and the quality of their beer.
But what about financial performance? That’s something that easily falls to the wayside when all you want is something tasty in your glass. But it’s also indicative of what we may be pouring out in the future.
If that’s the case, it’s hard to ignore this: Craft Brew Alliance is kind of kicking ass.
Flying under the radar in a Big Beer world monopolized by AB InBev and MillerCoors, the brewer’s stock grew by more than 160 percent in 2013, roughly double the next company, Boston Beer:
I didn’t see that coming, but looking back at the past year for the company, it makes perfect sense.
After starting 2013 with a stock price of roughly $6.70, I wanted to find out just how Craft Brew Alliance was able to end the year trading at about $16.50. In today’s beer business world, the answer wasn’t utterly surprising, but it does offer a great peek into how this brewer may be taking up more shelf space at your local grocery store and bottle shop.
While you may not be intimately familiar with the name Craft Brew Alliance, you’re probably familiar with its brands – Kona, Redhook, Widmer and the gluten-free Omission. Despite its name, the brewer isn’t considered “craft” under Brewers Association standards because a third of the company is owned by AB InBev, essentially so Craft Brew Alliance [CBA] can utilize AB InBev’s monstrous distribution network.
That’s a big part of what made CBA a success in 2013 and what will help them beyond. Another aspect? Their brand selection.
Widmer Brothers
Naturally, hops play a big role in the expansion of Craft Brew’s brands. Widmer, suffering from slow sales declines, was slightly rejuvenated in 2013 after focusing less on “classic” brews like their hefeweizen, discontinuing their Drifter pale ale and shifting a third of their portfolio to IPAs, India pale lager or hop-forward pale ale. If you remove beers only sold in 22-ounce bombers (usually higher octane stouts), then hop-forward beers become half of what Widmer sells. A new IPA, Upheavel, is expected to launch in 2014 to take advantage of a category that went up more than 40 percent in sales last year.
By diversifying a struggling brand, Craft Brew is taking an important step in today’s beer business – highlighting hops. Why is this important? Because “Widmer’s goal is to get the attention of hard-core craft beer consumers” and we know how craft beer enthusiasts love their India pale ale.
Whether or not you consider Craft Brew Alliance’s beers “crafty” or not, it’s clear the company is taking a proactive approach with Widmer Brothers in order to revitalize the brand:
It’s consistently rolled out new beer after new Widmer beer, rebranded old ones, redesigned packaging and charged higher prices.
“In the next 12 month period, we’re going to be brewing 23 different Widmer beers,” chairman Kurt Widmer said this week. That’s about twice what the brand produced only two years ago, said Joe Casey, Widmer’s senior director of brewing.
Part of the decline in Widmer sales is directly attributed to less interest in the brewer’s hefeweizen and discontinuation of Drifter pale ale, but Alchemy Ale – the new pale ale – now makes up 50 percent of Widmer’s gains.
What can you expect from Widmer going forward? A recent $3 million investment by Craft Brew Alliance into Widmer’s Portland, Ore. brewery will allow the brewer to make between 700,000 and 800,000 barrels annually, which would make Widmer a top-5 craft beer producer … if it were considered as such. Take this to mean there’s great potential to see more of Widmer brand beers in your local store, especially in 12-packs.
As Widmer focuses on the hoppier side of things for Craft Brew Alliance, we’ll next delve into how the company uses Redhook to expand its brand in a similar way Big Beer giants like AB InBev and MillerCoors try to attract drinkers.
Now you tell me: what are your thoughts on Widmer Brothers beers? Any you like? Hate?
Craft Brew Alliance profile:
- Part 1: Widmer Brothers
- Part 2: Redhook Brewery
- Part 3: Kona Brewing
+Bryan Roth
“Don’t drink to get drunk. Drink to enjoy life.” — Jack Kerouac
This Is Why I'm Drunk 
I don’t consider these brands “craft” as per the Brewers Association definition but the Widmer Reserve series are some damned tasty stouts!
There was a pretty solid run of the Reserve brews a year or two ago (IIRC) but I haven’t been terribly crazy about them lately. The last one I had was the raspberry imperial stout which I don’t think I minded, but I’ve got a chocolate imperial sitting in my pantry.
Is there one you’re fond of?
I used to love Redhook ESB, but the last few I’ve tried fell really flat. Maybe it’s because I have a lot more points of comparison now, or maybe it’s just not quite as good as it was in ~2009.
Either way, nice investigation here. I wonder if we’ll see any more of these guys pop up this year, as those breweries bought up by the big guys or straddling the craft/crafty line try to join forces in a marketing blitzkrieg.
I don’t want to assume too much since it’s just my opinion, but I think the relationship with CBA and therefore AB InBev has definitely had an impact. A large distribution network with AB InBev begets bigger exposure which requires more publicly-friendly brews and can dampen creativity.
Of all the Craft Brew brands, Widmer is by far the most craft-like, especially for the reasons I point to. CBA has great incentive to keep it that way as they make some bigger changes to their other brands.
But I won’t get ahead of myself…
The only beer I’ve had from this group is the Redhook Longhammer IPA. It’s not a great IPA, but I guess you could say it’s one of those “entry level” IPAs and that kind of makes sense for them if their goal is to distribute this stuff far and wide. Approachable isn’t going to wow anyone that’s hardcore into their beer, but it will help with sales and keep that stock price rising.
I don’t think this is stealing my thunder too much, but that IPA is the fourth-best selling IPA in the country.
Nice article. The growth of the craft beer alliance and the fact that it is partially owned by AB-Inbev was news to me.
Back in the early 1990s when I moved to Oregon, Widmer Hefeweizen on tap was one of the beers that got me into drinking what we now call craft beer. I didn’t think it was as good once bottled though and I haven’t had one in many years. When I was curious to try beers with NZ hops a year ago their Nelson Imperial IPA was one of the only examples I could find on the shelves in Ohio. It was not bad (although the jury is still out on NZ hops for me), but very difficult to get it fresher than 6 months or more past the bottling date. If you are going to be focusing on hoppy beers I think it is important that the distribution system gets the beer to the shelves quickly.
… and that connection with AB InBev certainly helps!
While I had the Mikeller single-hop Nelson IPA a year or two ago, it was Widmer’s Nelson Sauvin IPA that really turned me onto that hop around the same time. There’s one place near me that constantly has that in bottles that tastes fresh enough. Might be my favorite Widmer brew.
I checked out this article on the history of Widmer as a source for the post, but didn’t grab anything specific. You may be interested!
Thanks for the link. I did find it interesting and this whole piece has brought back some fond memories. Red Hook was another brewery around then that I used to enjoy but haven’t paid much attention to lately. So I’ll look forward to future installments in this series.
Exactly right. We really need to see bottled on dates or drink by dates listed on all beers eventually, but hoppy beers especially. The difference is striking between something that is fresh out of the gate and something that has been on the shelf for a long time.
This is why I love local seasonal beers so much. They rarely last more than two months on the market so you know that if you can still buy it it is still fresh.
I can only remember having 2 Widmer Bros. beers; a hefeweizen and a barley wine, and I don’t think I liked either of them. Never tried anything else by them. I don’t have a particular opposition to them – I’ll still buy/drink Goose Island because their beers are excellent – but if a brewery’s product is just okay AND it’s not independently owned, I don’t think I’ll be buying anything from them.
IIRC, I’ve enjoyed most Widmer IPAs I’ve had, but their Reserve series used to blow me away. Their Brrrbon was my among initial forays into barrel-aged beers and really turned me on to them. For that, I’ll always owe Widmer something.
Great write-up! Now, if Kona only brought their Castaway IPA to the mainland..It’s only available on tap in Hawaii…the parent company would be doing even better.
There has been lots of news about Kona expansion in the past week, so it may not be too long…
Appreciate the kind words!
Some additional information, Redhook used to be 100% owned by AB (prior to the Inbev merger). Redhook didn’t even show up on “craft beer” sales reports. Widmer got in bed with AB in the early days when they put in a major expansion and the sales didn’t quite pan out. AB swooped in and helped with their debt and provided their distribution channel. I’m not sure how Kona came into the picture. I do know that the majority of their beer is actually brewed at Widmer’s facility here in Portland. Once the merger happened, they reorganized the craft brands.
Thank you for this extra context, Chris. Much appreciated.
According to my Untappd, the only beer I’ve had from Widmer was their Hefeweizen (on July 1, 2011, to be exact). It was at an Applebee’s, so Widmer’s relationship with ABI probably helped get the beer in the restaurant. I recall it being a decent Hefe, though!
In the oral history article from March 2013 linked above, I kind of laughed at this quoute:
“9.2 percent of the craft category is wheat beer. Widmer Hefe is a staple…. It’s our MVP year after year.”
… because as things are going, it isn’t close to their MVP less than a year later.