For Some Craft Brewers, the Best Way Forward Is Back
The year I got into covering the beer business, Allagash Brewing Co. got out of it. Well, sort of.
In 2010, the Maine craft brewer pulled its beer out of about half the states it had been distributed in, citing the strain of expanding too fast in the run-up to the segment’s second big boom. “We ended up in like 30 states with no full-time reps at the company,” founder Rob Tod recalled in a 2019 interview with The Brewer Magazine. “We probably weren’t a great partner to our wholesalers back then. We weren’t doing planning meetings. I could only get to so many markets so many times a year. I was on the road constantly.” Spread too thin, Allagash exited over a dozen states, forfeiting the revenue opportunities and cachet of near-national distribution and focusing most of its efforts on its home market in the Northeast. It proved to be a canny move. Having slowly re-expanded into states late last decade and into this one, the brewery is now celebrating its 30th anniversary on enviably sturdy footing. “We’re absolutely beating both beer and craft trends,” Tod said on a media call earlier this week.
That’s not exactly a high bar these days. Allagash’s sales are down about 2 percent year-to-date through mid-September, according to All About Beer; the category overall is down around 5 percent, and the craft segment within it down around 7 percent. But without the Maine brewery’s addition by subtraction 15 years ago, it might be doing much worse. The road it’s traveled in for three decades has lately been littered with the wreckage of craft breweries that overextended themselves straight into unfavorable acquisitions and brutal bankruptcies, if not out of business entirely. Maybe the most cautionary tale among these is that of Modern Times Beer (MTB), which made it as high as No. 40 on the Brewers Association’s (BA) annual list of the top-50 craft brewers by volume in 2020 before getting clocked by the classic one-two punch of slowing sales and called-in debts a couple years later. Maui Brewing Company would scoop up MTB in late 2022 to accelerate its own expansionary ambitions under the Craft ‘Ohana banner. But in 2024, it spun that business off to Great Frontier Holdings. Somewhere along the way, it decided to follow Allagash’s example instead.
“It was very clear a while ago where we should be, and what baskets we should be putting our eggs in,” Scott Metzger, the chief operating officer and president of Craft ‘Ohana, tells Hop Take. Of its 26-state distribution footprint, there were plenty of places where “it just didn’t make sense for us to be there right now.” As the company reverts to its Maui Brewing Co. moniker, it will retrench from semi-national distribution to just a handful of West Coast states. (Those states include California, Oregon, Washington, Alaska, and Idaho; Colorado, where Maui is currently winding down a contract relationship, is still an open question.) The move, first reported by Brewbound, will set up the Hawaiian brewer to invest more time and effort in more lucrative markets closer to home, says Metzger. “When we’re strung out across 26 states, given the resources available to us, we’re really just being mediocre suppliers to more of our customers than we would be by focusing on the states we’ll be focusing on, and delivering them excellent customer service.”
Of course, it’s a rare boss who would speak about the failure of an expansion plan in plain terms, even if that’s indeed what happened. (To his credit, the late interim chief executive of Republic National Distributing Company, Bob Hendrickson, was refreshingly direct on that front when the mega-wholesaler abandoned California earlier this year, saying “We had no path to profitability.” An honest answer that provoked many still-unanswered questions!) But like New Glarus Brewing Co. — arguably the paragon of the craft-brewing pullback, having found much success and acclaim after withdrawing to Wisconsin in the early aughts — before it, Maui is initiating its pullback from a position of relative strength. As Hawaii’s largest craft brewer (and sixth-largest overall), it grew its volume 10 percent year-over-year in 2024, per BA data; it’s the segment’s 17th-largest player nationally. Its growth at home is up 9.5 percent in volume and 12.1 percent in dollars year-to-date through mid-September, trailing only the Michelob Ultra brand family. Its hard seltzer brand is hammering along, beating out that segment’s malaise with eye-popping growth on the West Coast.
Here especially, you can see Maui’s counterintuitive calculus paying dividends. “I think it’s easy to look at what’s happened with the category and say that the fad is over, but in reality, I don’t think it is,” says Metzger. “If you’re on the inside, it’s fine. If you’re on the outside, then you’re thinking, ‘This isn’t really worth it. We’re going to abandon ship, which just leaves a lot of drinkers who were enjoying those products abandoned, and they’re just fleeing to what’s left, which [in Hawaii] is us and White Claw.” On the mainland, the segment is a bit more competitive, but with Truly in freefall, Maui’s hard seltzer has runway: In Washington, for example, sales of the line are up 49 percent year-over-year.
Metzger is quick to note that Maui’s success in hard seltzer was “lucky,” while also correctly pointing out that a lot of brewers rushed bad product onto shelves that complicated their operations and confused their own customers. And while he’s been outspoken that others can emulate the Hawaiian firm’s disciplined operational philosophy and customer-first approach to servicing its distributors, he concedes that it has a crucial advantage that few can copy. “No one has solved the problem of needing to work to survive, and until they solve that problem, vacations are never going to go out of style,” he says. Much like Corona rode Caribbean beach escapism onto the short list of the country’s best-selling beers in the ‘80s and ‘90s (and to some extent, still rides it today), Maui has ably harnessed the Aloha State’s iconic legacy of American leisure in a way that’s hard to emulate. (Though not impossible, as Anheuser-Busch InBev has demonstrated with the success of Kona Big Wave, a beer only loosely tied to its island origins.) “We believe the strength of our brand is something that needs to come from a place of authenticity,” he continues. “We’re going to keep riding that wave.”
Operating in paradise presents disadvantages, too, and those animated Maui’s homeward pivot. “We’re already starting behind everyone else on the mainland of the United States in that we have a 2,500-mile ocean journey to deliver to any customer who’s not in Hawaii,” says Metzger. “That’s costly, and the further we get away from the West Coast, it just becomes more and more costly.” The appeal in exiting, say, Massachusetts to double-down on California has little to do with the latter’s sunnier climate and a lot to do with its more straightforward logistics and better margins. “I don’t pay a single bill with revenue, I pay it with gross profit,” jokes Metzger. He believes the reduction in territory will allow Maui to more efficiently supply, service, and support its distributors in its remaining markets. “I don’t expect to lose any revenue off this move,” he says. “I’m just transforming revenue from a less profitable market to a more profitable market.”
That may not be the case for every brewer contemplating a strategic pullback. It’s possible, even plausible, that cutting markets means losing revenue up front. And there’s no guarantee that pruning the distribution footprint will stimulate a burst of new growth. Allagash took years to return to markets it had pulled out of in 2010; plenty of breweries that leave never make it back. (Recall, in June 2023, the company now known as Sapporo Stone Brewing said it would reduce Anchor Brewing Company’s distribution to California only; we all know how that worked out.) And despite Metzger’s quiet confidence, whether Maui’s West Coast rally is successful remains to be seen. But he’s certain it’s the right move for the company, and he urges colleagues to be as dispassionate as possible if (or when) they consider following suit.
“Doing the math and seeing what you need to do is the easy part, having the courage, that’s the hard part,” he says. But: “The ego hit that comes from pulling out of the market is a lot less than the ego hit of closing your doors.”
🤯 Hop-ocalypse Now
What a difference a week makes. Shortly after I filed this column last Friday laying out how hemp-derived tetrahydrocannabinol’s (THC) many enemies had timed their moves against the nascent $28 billion industry to take advantage of the immense pressure on Congress to reopen the government, the action really got going on Capitol Hill. I’m pleased to say it played out more or less as Hop Take predicted: With support from major bev-alc and CPG trade groups, federal lawmakers opposed to the trade attached de facto prohibitionary language to the must-pass agricultural appropriations bill, which survived Kentucky senator Rand Paul’s amendment to strip it out in the upper chamber Monday, then sailed through the House of Representatives on Wednesday evening. THC drinks producers and aligned distributors and retailers won’t be pleased: The effective ban will take effect in 365 days from when the law is enacted. Expect a gnarly year of lobbying to come.
📈 Ups…
Wilding Brands takes another step in its apparent quest to own every Colorado craft beverage firm besides New Belgium Brewery, announcing plans to buy Upslope Brewing… Registration is open for the 2026 World Beer Cup, best of luck… Congrats to Pabst Brewing Co.’s new chief sales officer, also best of luck…
📉 …and downs
Molson Coors booked a ~$75-million impairment charge on its Blue Run Spirits acquisition, declaring it virtually worthless after less than three years… Monster’s brewing division took an absolute beating last quarter, posting a 17 percent decline in net sales… Ball Corporation shuffled its C-suite, including switching CEOs, after a positive Q3, hmm…
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