(Portland, OR) – Craft Brew Alliance held its Q1 2012 conference call last week. The CBA conference calls give brand-by-brand perspective (Kona, RedHook, Widmer Brothers) to what is driving performance for CBA as a whole. Notes from the call are below.

Overall:

• Shipments to retailers up 8%, a positive trend from 4% in Q4 2011
• Production figures: Widmer Brothers – 60,500 barrels and Kona production (48,400 barrels) passed RedHook (44,400)
• Package mix changed from 61/39% bottle/draft to 65/35%.
• Year-round offerings (individual packages and variety packs) led growth
• (Note carried over from Q4) Sizable price increase for Widmer Brothers & RedHook in home markets of Pacific Northwest (ed. note: FYI, 2/3 of all CBA sales come out of PNW per financials)
• Pricing up mid-high single digits in off-premise channel due to portfolio re-position and promotional timing so SIG-tracked channels up only 6%. They are “price followers” as opposed to “price leaders.”
• Sales on restaurant/pub side grew 8%
• Of projected $8.5 to $9.5 million in capital expenditures, $5-6.5 million will be allocated to growth and the rest allocated to maintenance

Distribution:

• 100% distributed by Anheuser-Busch wholesalers. Distribution agreement allows for them to go to other distributors if AB declines product but it hasn’t happened yet
• Have total ACV of nearly 50% in SIG-tracked off-premise channels (ACV primer)
• Widmer Brothers & RedHook are distributed everywhere. Kona is now available in 30 states
• Room to grow from an “activation” perspective (putting resources in markets to help sell beer), especially in East and Midwest

• Emerging East region grew over 16% while established West region grew over 6%
• < 1/5 of total CBA sales but contributed over 1/3 growth
• Widmer Bros. led East Coast growth, followed by Kona and then RedHook (all three up significantly)

Widmer Brothers Brewing:

• Shipments down 5% but revenue grew slightly as company asserts this as high-value brand in portfolio
• Rotator IPA series doubled year-ago volume of IPA it replaced
• High-end (Alchemy Project, 924 Series, Brothers Reserve) grew over 40%
• Variety packs grew in high-single digits
• Hefeweizen continued significant decline (Management recently cited stiff competition from Blue Moon, Shock Top among reasons for decline in Modern Brewery Age interview)
• Omission will roll out to markets outside of Oregon in Q2 but won’t be able to carry gluten-free message on label until regulations are changed. Launching outside of Oregon on West Coast this month. East Coast rollout will be later in quarter.

RedHook Brewery:

• Shipments up 7%
• Long Hammer IPA up 15%
• Variety packs up over 60%

Kona Brewing:

• Shipments up 30%
• Longboard Lager – double-digit growth
• Variety packs up triple digits
• Aloha Series Q1 seasonal, Koko Brown up double digits
• Adding a second “mainland” offering to flank Longboard Lager in the second half