Craft Brew News - 5/3/2019

Craft Brew Alliance Agrees to Settle Kona Labeling Dispute

Craft Brew Alliance (CBA) has agreed to settle a years-long class action lawsuit over alleged “false and deceptive advertising” of its Kona Brewing beer brand.

In an SEC filing, the publicly traded Portland, Oregon-based craft beer company – today said it expects to incur costs of about $4.7 million to settle the dispute, which surfaced in early 2017.

That amount is inclusive of all legal and administrative fees but does not represent the total amount CBA will pay to the class, according to Marcus Reed, the company’s general counsel.

According to Reed, the nationwide settlement will be open to consumers who purchased Kona-branded beer products dating as far back as 2013.

The original complaint alleged that CBA, “intentionally misleads consumers into believing that Kona Brewing Company beer is a local beer made in Hawaii.”

Although CBA maintains a production facility in Hawaii and produces thousands of barrels on the island, it produces a majority of the Kona beer sold in the continental U.S. at facilities in Portland, Oregon, Portsmouth, New Hampshire, and at an Anheuser-Busch brewery in Fort Collins, Colorado.

Speaking to Brewbound, Reed said the company agreed to a settlement after two years of litigation because it was becoming a “distraction” to the company’s day-to-day business.

“It got to the point where it was time to reach a settlement,” he said.

Canada’s Moosehead Breweries Enters Cannabis Sector in JV with Sproutly

Canada’s oldest and largest independent brewery is getting into the cannabis business.

Moosehead Breweries Limited and Sproutly Canada, which aims to become the leading supplier of water-soluble cannabis solutions, yesterday announced their intent to form an exclusive joint venture that will develop, produce and market cannabis-infused beverages.

In the release, Moosehead CEO Andrew Oland said Sproutly’s proprietary “Infuz2O” process for delivering cannabis effects within five minutes drove the brewery’s interest in entering the cannabis market.

Recreational use of cannabis was legalized in Canada last October, however, the sale of edibles and infused beverages are not currently permitted. Legalization of those products is expected to occur on October 17.

Moosehead joins a growing list of beer manufacturers that have already invested in the cannabis space. Large beer companies such as Anheuser-Busch InBev (Tilray), Constellation Brands (Canopy Growth) and Molson Coors (Hexo) have each struck partnerships with other Canadian cannabis companies. Hamilton, Ontario-based Collective Arts Brewing has also established a sister company called Collective Project Limited to develop and sell cannabis-infused beverages.

Cannabis is not federally legal in the U.S., however 10 states — Alaska, California, Colorado, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, Washington, and Washington, D.C. — have established laws permitting the sale and use of recreational cannabis within their borders. Several other states are currently working to decriminalize and legalize cannabis.

Meeting of the Malts: Pennsylvania Craft Beer Production Tops in the Nation

For the third consecutive year, Pennsylvania produced more craft beer than any other state in the nation, Brewers Association chief economist Bart Watson shared during the Brewers of Pennsylvania’s annual Meeting of the Malts gathering in Hershey, Pennsylvania. (Check out Craft Beer Storm – Episode # 41 with Bart Watson!)

In 2018, Pennsylvania’s 354 craft breweries combined to produce more than 3.7 million barrels of beer. And, according to Watson, the state ranked second in the number of brewery openings, trailing just California. Most of that growth, Watson said, is coming from the small breweries that sell directly to consumers.

Direct-to-consumer sales at Pennsylvania breweries increased by 15,000 barrels last year, Watson said. He added that Pennsylvania brewers have room to grow as national taproom sales accounted for about 12.5 percent of beer sales.

Looking at the national landscape, Watson said he believes there will be 10,000 breweries in operation in the U.S. within the next two years. In 2018, a record number 7,346 breweries operated for all or part of the year.

As more breweries have opened, the median size of all beer companies has shrunk to 400 barrels, Watson said. He added that half of the breweries in the country produce 400 barrels or fewer.
However, Watson said craft brewers have the opportunity to buck those trends and grow over the next decade as millennials “age into beer, rather than aging out of beer like previous generations.”

Veteran New Belgium Communications Director to Depart on May 10

Longtime New Belgium Brewing spokesman Bryan Simpson will depart the company on May 10, Brewbound has learned. (Founder is Kim Jordan)

“It’s been an absolute honor to represent this brewery and everyone’s collective love and talent,” he said via a statement.

Leah Pilcer-Pitman, who most recently served as New Belgium’s director of retail development and strategy, will supplant Simpson as director of communications.

Simpson, who spent 21-years with the country’s fourth largest craft beer company, said he will launch his own boutique digital media agency this summer.

“I’ll be moving on to pursue my long-deferred dream of creative film and media production, and I will always be a passionate and vocal fan of New Belgium Brewing and the entire craft brewing industry,” he said via the statement.

Speaking to Brewbound, Simpson said his yet-to-be-named agency would focus on “content generation” and the creation of “digital and web assets.”

Simpson, one of New Belgium’s longest-tenured employees, joined the company in July 1997. At the time, New Belgium produced about 80,000 barrels of beer, its offerings were distributed in just five Western states, and the entire craft brewing industry comprised fewer than 1,100 breweries that collectively produced 5 million barrels.

Today, more than 7,300 breweries make nearly 26 million barrels of craft beer, according to industry trade group the Brewers Association. For its part, New Belgium, now the fourth-largest U.S. craft brewery according to industry trade group the Brewers Association, produced 846,000 barrels of beer in 2018, down from 955,000 barrels in 2017. The company distributes to 50 states.

“I was literally hired on the bottling line, and then I worked in the tasting room for one-to-two years, but at that time everyone was doing a bit of everything,” he said.

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