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CO: Craft beer a billion-dollar boon to Colorado economy

CO: Craft beer a billion-dollar boon to Colorado economy

Industry members wary of legislation, changes to distribution network moves


The Denver Post

By Alicia Wallace

August 18, 2015

Colorado’s craft brewing business has chugged along to become a $1.15 billion boon to the state’s economy, but growing pains have come with the maturing market.


Industry leaders say they are wary about looming legislation that would put full-strength beer in grocery stores and about recent deals that gave giant Anheuser-Busch InBev control of beer distribution across two-thirds of Colorado.


This month, Anheuser-Busch snapped up Loveland-based American Eagle Distributing and took over Standard Sales Co.’s operations in Littleton, Pueblo and Colorado Springs in a swap for two Kentucky wholesale operations.


Anheuser-Busch products account for about 86 percent of American Eagle’s portfolio, but the company also sells brews made by Odell Brewing Co., Great Divide Brewing Co. and High Hops Brewery into restaurants, bars and liquor stores.


Bob Tallett, Anheuser-Busch’s vice president of business and wholesaler development, said in an e-mail that the company is evaluating American Eagle’s product lines and plans to maintain a “handful” of locals.


This has stirred uncertainty for mom-and-pop shops like High Hops.


“We have a pretty big footprint that American Eagle has helped. It’s a sad thing to see American Eagle go,” said Pat Weakland, who runs the family-owned High Hops in Windsor, “but it’s a real sad thing to see Budweiser, or InBev, buy American Eagle and possibly get rid of all the small craft breweries.”


The Colorado Brewers Guild is taking a wait-and-see approach to the InBev play, spokesman Steve Kurowski said.


“It’s a sign of maturity,” he said. “You can’t be a $1 billion industry in a state and not get the attention of larger corporations.”


Craft beer accounts for 11 percent of all beer sales by volume nationally and about 22 percent of the $101.5 billion in annual sales, or about $19.6 billion , according to the Boulder-based Brewers Association.


New neighborhood breweries combined with surging sales from established operations combined for an estimated $1.15 billion economic impact in Colorado last year, according to a recent study for the brewers guild by the University of Colorado Leeds School of Business.


And that number is likely to grow.


The majority of the brewers surveyed said they expect to tally year-over-year sales growth of 20 percent in 2015 and 2016.


“We have 309 brewing licenses (in Colorado), and five to six are large operations,” Kurowski said. “So we have almost 300 of the small, neighborhood breweries where their sales and their production really adds up .”


Some of those little breweries have found success in the tasting-room model — “an easy, less-expensive way to come to market,” he said — and may choose to not try to compete for wholesale market share.


The success of the Twisted Pine Brewing Co.’s Boulder tasting room — sales are up 45 percent from last year — has made the brewery shift its wholesale distribution strategy.


“I would rather spend my money in getting people to walk in my front door than I would to get somebody in Nebraska to buy my beer,” president Bob Baile said.


Baile said he’s optimistic about the industry’s continued growth, but is concerned about perennial efforts to change state law to allow grocery stores to sell full-strength beer.


The smaller brewers would have difficulty getting on the shelves of large supermarkets, and smaller, neighboring liquor stores could lose sales, he said.


Baile estimated that the passage of the law could slash 30 percent of Twisted Pine’s annual revenues.


“If that law passes,” he said, “we’re screwed.”