Revolution Opens New York and Wisconsin

FILED SEPTEMBER 13, 2016

Dear Client:

Chicago's Revolution Brewing is a top 50 craft brewer in only a handful of states. Literally -- the Logan Square-born brewer just added states four and five: Wisconsin, where they'll enter with General Beverage, and grand ol' New York City, where they've signed with Manhattan Beer. They roll next month.

NEW YORK DEETS. Founder Josh Deth and sales chief Donn Bichsel told CBD they've been working on New York City for "a couple of years." The timing is finally right, having just completed an $8 million expansion ("we're gonna dig in and have ability to make a lot of beer now," Josh said; they hope to do 80,000 barrels this year). And chain relations are helping move the dominoes for early (albeit targeted) distribution in new areas.

Siren sales call that it may be, the guys have no illusions that The Big Apple is an easy market to crack. But the two entities have sympatico DNA: Revolution is a big-city, urban-oriented brand. And they've hired an industry darling to represent them in NYC. He's been everything from a buyer to a brand ambassador in the business (and even been on reality show, "Big Brother").

"He's the guy that's giving us the events that are gonna happen in the Barcades of the world, the Blind Tiger -- all the craft-centric accounts," said Donn.

But make no mistake: This brand is about Chicago. (And Anti-Hero IPA, which is a little less than 50% of their sales, though they strive for a diverse portfolio). They're Illinois no. 1 independent craft brewer in IRI.

It's having built their own strong taproom in a "world city" that will help Revolution sell beer in New York.

ON BIG CITY BREWS. "Coming to New York -- we live and breathe every day in a big city environment," said Josh. "I live around corner from the brewpub, so does Donn." That lifestyle helps "lay the heartbeat, be cool; bring the flavor, packaging ...

He points out that "New York is huge on-premise. Chicago is huge on-premise. And if you're opening a brewery in Chicago you gotta bring the on-premise game: marketing to people, etc." Just trying to hit a place like New York in just the off-premise, "you get lost, swallowed up."

The irony is that the strength of brewer-owned taprooms --you know, like Revolution's model -- could be tempering Revolution's growth at local-brewer-owned on-premise accounts beyond their own (see more on the explosion of local Chicago brewers below). Indeed, Donn shared that they've flip-flopped this year from having been 55/45 on- to off- premise mix to just the opposite. Of course, a lot contributes to that number.

FROM ONE LIQUOR LICENSE ON THEIR BLOCK TO 11. When Revolution was in planning, circa 2009, there was a single liquor license in on their block: a liquor store that's still there.

"Then one bar opened up while we were opening," said Josh. "Now there's like 10 different liquor licenses on the block. Same with taps; a bar that used to have 8 taps now has 16." Even distributors are getting "more competitive" with "everyone going for all the accounts" where accounts used to sometimes discriminate against certain big brew affiliations (red or blue houses). That changed after Reyes bought Windy City.

So where their off-premise business is up 20-plus points overall, says Donn, they're flattish on-premise.

Donn pinpoints the hardest on premise spots: "It's in the urban centers [where we've lost some on-premise traction]," he says.

"In Chicago Beverage territory," their largest distributor partner, Revolution's business has shown some modest softness in the on-premise (and we hear others are as well). Why? New breweries are coming on-line weekly fighting for handles and opening their own pubs and taprooms, and it's changing the overall landscape.

100 BREWERIES IN CHICAGO. "You've got a situation now where there are nearly 100 breweries in the city of Chicago and moving toward 200 in Illinois," says Donn. To wit: about 8 breweries will have opened in the last two years within 1.5 miles of Revolution -- many of them starting with draft/taproom operations.

And yet: "Whenever I talk to startups, I tell them, 'never think about opening without the taproom business,'" says Josh. The marketing angle is just so strong.

CANS DRIVING GROWTH. So with on-premise being what it is, cans have been driving Revolution. That package has gone from 54% to 60% of their mix. (Meanwhile bombers, which were low-single digits anyway, have been shaved in half.)

"In Chicago, we've flipped the switch, building brands in the off-premise with our packaging and the great liquid in [it]," said Josh.

While new breweries could find it easy to contribute to the downtown Chicago on-premise glut by jumping into keg,"it's hard for a tiny brewer to compete with Revolution in 6-pack 12 oz. cans for $9.99 at the grocery store."

In fact their rotating, 2-month "Hero" IPA can series is going gangbusters after moving from bombers to cans: "we're selling 9X the CE's that we were doing in bombers," said Josh. "The visibility of those cans are helping this product's draft sales too that have more than doubled; it's the fastest thing we've got growing."

And of course, cans play well in chain. "Chicago is a chain-driven market," said Donn.

That brings up another set of dynamics: "You've got to be willing to allow your beers to play in avenues like Walgreens, 7/11... a lot of people want their beer only to be in specialty bottle shops," but there isn't a ton of velocity or space available in those channels.

More on those chain and brand trends tomorrow. Teaser: Target and drug are becoming huge for Revolution's off-premise business. (To wit: Target in Illinois is up to 3.2% of their entire off-premise business, for example. And drug is approaching 10% of their sales off-premise.)

LEFT HAND RECALLING AT LEAST 20,000 CASES OF MILK NITRO STOUT

Left Hand Brewing has announced a voluntary recall of its flagship beer, Milk Nitro Stout, per Denver Post.

TOO MUCH FIZZ. The Colorado brewer initiated the recall after discovering a foreign yeast had come in contact with its house ale yeast and infiltrated its way into the bottles. The resulting beer is safe to drink, but when it is properly poured (bottoms up into the glass) it causes the brew to overflow. "It is definitely not to our specifications," said Left Hand spokesperson Emily Armstrong.

AT LEAST 20k CASES AFFECTED. The recall case amount is currently pegged at a minimum of 20,000 cases. The impacted Milk Nitro Stout bottles carry "best by" dates from October 16 to February 28. The flagship beer also appears in Left Hand's Mountain Mixer variety packages so those packs with codes ranging from 130B to 242A are affected as well.

The only available form of Milk Nitro Stout cleared from the recall are kegs of the product as its packaging procedure is different. "Consumers can still find Nitro Milk Stout on tap," Emily said.

4-6 WEEKS BEFORE IT'S BACK TO NORMAL. "Left Hand has begun dumping beer that was in production and is scouring its production lines," Emily told the Post. She estimates it will be "four to six weeks before replacement bottled Nitro Milk Stout is available."

Left Hand is asking consumers to return the beer to the point of purchase, though they are still ironing out the details on how to recompense these customers. "It's definitely going to be challenging," Emily said referring to the varying state alcohol regulations. "But we don't want to put up a roadblock. People can reach out to us. We would certainly rather restore people's faith in us, rather than turning our back on them."

BEER BRIEFS:

DESCHUTES HITS RICHMOND; HOPES TO FILL OUT VIRGINIA BY SPRING. Deschutes Brewery continues to fill out its distribution footprint in Virginia. Yesterday, the Bend-based brewer announced it would enter into Richmond and the surrounding area with Loveland Distributing Co., per Richmond.com. The two will pair up to bring Deschutes offerings such as Mirror Pond Pale Ale, Black Butte Porter, Fresh Squeezed IPA, Pinedrops IPA, variety packs and its winter seasonal, Jubelale, by early November. Deschutes said it expects to fill out the state footprint by spring. So Virginia residents should be fairly familiar with Deschutes by the time its new East Coast facility in Roanoke is up-and-running in 2021.

Until tomorrow, Jenn

"A gentleman is a man who can play the accordion but doesn't."
- Unknown

---------- Sell Day Calendar ----------
Today's Sell Day: 9
Sell days this month: 22
Sell days this month last year: 22
This month ends on a: Fri.
This month last year ended on a: Wed.
YTD sell days Over/Under: +1
----

(c) 2016 BeerNet Communications, Inc. - All rights reserved. Please, no forwarding or copying. Individual subscriptions $435/year. Corporate rates available.

Editor: Jenn Litz-Kirk - jenn@beernet.com
Associate Beer Editor: Jordan Driggers - jordan@beernet.com
Publisher: Harry Schuhmacher - hs@beernet.com
Customer Service: Kimberly Nelson - kim@beernet.com

Check craftbusinessdaily.com for back issues or to subscribe or renew.
Phone: 210-805-8006. Email: Kim@beernet.com

Make yourself heard, your opinions count. Anonymous feedback and tipster form: http://www.craftbusinessdaily.com/hotline.php

We Have a New Mailing Address:
909 NE Loop 410, Suite 720
San Antonio, TX 78209
BeerNet Communications, 909 NE Loop 410, Suite 720, San Antonio, TX 78209, USA

Unsubscribe | Change Subscriber Options

Go back to listing Go to next article Go to previous article

Comments

Top Secret News Hotline:

Got craft beer news for CBD?

Submit Anonymously
twitter facebook