Sam Adams to start moving into whiskey
From the WSJ: http://online.wsj.com/article/SB10001424052702303836404577474741116948830.html?mod=rss_whats_news_us_business
Boston Beer Finds Route Into Whiskeys
Boston Beer Co. SAM +2.33% is diving into a multi-year pact to supply two of its craft beers to a Massachusetts-based distiller, which will turn them into whiskeys.
The plan underscores the growing popularity of the craft distillery movement, which has grown exponentially the past five years, following in the footsteps of craft beer 25 years ago.
Berkshire Mountain Distillers Inc., which was founded in 2007, is buying thousands of gallons of Samuel Adams Boston Lager and Cinder Bock to be distilled in wooden oak barrels and eventually hit shelves by 2015.
Berkshire will receive all profits from the sale of the whiskeys produced in this venture, and the initial products will be branded by Berkshire, though the Samuel Adams name will be indicated on the label.
All whiskeys begin as a beer but the beer used to make whiskeys usually isn't meant for initial consumption.
Boston Beer founder and Chairman Jim Koch said the craft distilling movement comes as consumers seek niche products that aren't made by huge companies. The whiskeys will likely command premium prices as the distillation process is more expensive when using a craft brew. Retail prices haven't yet been set Berkshire, which already produces six different spirits sold in 19 states.
Berkshire founder Chris Weld said when he began as a craft distiller in 2007, there were roughly 30 individuals working in the niche industry domestically. That figure has since jumped to around 300, Mr. Weld said.
The Samuel Adams whiskeys batch will initially be smallproducing 1,000 to 1,500 nine-liter cases, though more batches can be developed along the way. Mr. Weld said the Samuel Adams whiskeys will taste different from each other, as Boston Lager is a lighter beer and should highlight sweet, fruity aromas during the distillation process, while Cinder Bock is heartier and smoky.
Boston Beer mostly operates in the craft-beer industry, which makes up a small percentage of the U.S. beer business though demand in the higher-priced segment is growing rapidly as seasonal blends and other new flavors appeal to more consumers. Boston Beer also sells Angry Orchard ciders and Twisted Tea, broadening the company's slate of alcoholic beverages.
Industry observers and distillers say consumers in recent years have shown a greater interest in moving on from vodka, considered by some to be relatively tasteless, to richer-flavored spirits like whiskey and rum. That trend can help broaden the appeal of Samuel Adams whiskeys and other new brown spirits hitting shelves.
Analysts have lauded the resurgence of brown spirits as alcohol companies like Brown-Forman Corp. BFB +0.62% launch new flavors such as Jack Daniel's Tennessee Honey that have become a hit with consumers. Total domestic whiskey volume grew 1.8% last year, according to the Distilled Spirits Council of America, besting the performance of rum, gin, and brandy and cognac.
Other craft beer makers have moved into distilling. Oregon-based Rogue Ales began distilling spirits in 2003. "For us, it was quite logical," said Rogue President Brett Joyce. "We thought there is no reason why craft brewing is any different than craft distilling."
Mr. Joyce and other craft distillers say consumers are responding to the artisan nature of the products they are cultivating, often from locally sourced products that result in more varied spirits than what the mainstream players sell.