That's strange. I found it doing a Google search and can still see the entire article via Google, but linking directly to it you only get the summary.
Anyway, here's the whole thing, including a great pic (not sure about the caption though!):
Craft Brewers Tap Big ExpansionNiche Market Is Bucking the Broader U.S. Beer IndustryBy MIKE ESTERLCraft brewers are making a big bet on their small-label beers.
As sales of specialty craft beers increasingly encroach on established U.S. brands, dozens of regional brewers are pouring millions of dollars into new brew kettles, fermenting tanks and bottling lines, while others are buying land and erecting facilities to meet growing demand.
An employee inspected oak barrels at a Sierra Nevada
Pale Ale brewery in Chico, Calif., in August.Two craft brewers, Chico, Calif.-based Sierra Nevada Brewing Co. and New Belgium Brewing Co. of Fort Collins, Colo., have a combined U.S. beer-market share of less than 1%, but each is planning to invest at least $75 million next year in their first plants east of the Mississippi River to broaden their production footprint.
The smaller brewers' activity is a bright spot in an economy still struggling to kick manufacturing and construction into higher gear. The niche market is also bucking the broader U.S. beer industry, which has sold fewer barrels for the third year in a row, according to industry trackers.
"It's like Silicon Valley right now, or Florence during the Renaissance,'' says Jim Koch, chairman and founder of Boston Beer Co., which makes Samuel Adams and is the largest craft brewer in the U.S.
Craft sales jumped 14% to 5.1 million barrels in the first half of 2011 after rising 11% last year, putting them on course to log their fastest annual growth rate since 1996, according to the Brewers Association. The Boulder, Colo.-based industry-trade group defines a craft brewery as "small, independent and traditional'' and counted 1,740 of them as of the end of June, with another 725 in planning stages.
Anheuser-Busch InBev NV, which brews Budweiser, and MillerCoors LLC, maker of Miller and Coors, boast a combined U.S. market share of more than 75%. But their dominance is slipping as consumers branch out from light lager to experiment with bolder-tasting brews such as India Pale Ale, or IPA, and fruit-flavored wheat beer served up by local brewers.
Boston Beer, with roughly a 1% share of the U.S. beer market, expects to spend as much as $35 million in capital investments next year at its brew-houses in Ohio, Pennsylvania and Massachusetts. The company's shipments rose 6% to 1.8 million barrels in the first nine months of 2011.
Ken Grossman, Sierra Nevada's founder and owner, hopes to settle on an East Coast brewing site this winter and break ground next summer. North Carolina and Virginia are two possible landing spots, with initial plans to add 300,000 barrels of annual capacity and bank financing in place. Capacity "will be a little tight" before the second plant is completed, says Mr. Grossman, whose Chico brewery produced about 850,000 barrels this year, up 8% from 2010, and is quickly nearing its one-million-barrel ceiling.
New Belgium, maker of Fat Tire Amber Ale, also expects to decide in the coming weeks on a mid-Atlantic location to build a 300,000-barrel plant. It shipped roughly 700,000 barrels to 28 states this year from its Colorado plant. A second facility would cut transportation fuel costs and relieve bottlenecks at the squeezed Fort Collins site, says Kim Jordan, the company's co-founder and chief executive.
Craft brewer Larry Bell, owner of Kalamazoo, Mich.-based Bell's Brewery Inc., is in the midst of a $20 million expansion project including a new warehouse and brewing facility after sales rose 19% this year to 180,000 barrels. Mr. Bell, who began brewing beer in a 15-gallon soup pot in the early 1980s, says the expansion, with enough space to eventually brew 700,000 barrels, was financed with tax-free bonds from a federal government program to spur construction. He said he is hiring 30 more workers, increasing staff to 175.
Output at Surly Brewing Co. in Brooklyn Center, Minn., has jumped to 17,000 barrels from 11,500 barrels last year. Omar Ansari, the owner, says he used a small section of his family's industrial abrasives plant to brew beer in 2006, making 800 barrels that year, before gradually taking over the entire space as the abrasives business "got smaller and smaller." Surly is searching for a second local site to build a brewing facility that would more than double output after pulling out of markets in Illinois, Wisconsin and South Dakota because it couldn't fill orders, according to Mr. Ansari.
But some in the industry are questioning whether the craft business will return to the bubble it experienced in the 1990s, when hundreds of small brewers opened their doors and enjoyed rapid growth before craft beer sales slowed.
"The pie isn't growing enough," says David Peacock, president of Anheuser-Busch's U.S. operations. "You're going to have some level of shakeout.''
Even so, Anheuser-Busch, which sells nearly half the beer in the U.S., isn't standing idle. Earlier this year it acquired Goose Island, a Chicago-based craft brewery, for $38.8 million. It also ramped up distribution of Shock Top, an in-house wheat brand that sits next to craft brews on store shelves but doesn't mention its owner on the label.
MillerCoors, the No. 2 brewer in the U.S., owns Blue Moon and Leinenkugel's, two specialty brands that compete with craft. This year, it acquired a minority stake in Terrapin, a craft brewer in Athens, Ga., for an undisclosed amount. John Cochran, Terrapin's president and co-founder, says the outside money will help it boost capacity to 45,000 barrels by the end of next year after producing 18,000 barrels in 2011.
Some craft brewers are contracting out production to keep up with demand. One contract brewer, Minnesota's Cold Spring Brewing Co., is spending $13 million to double its capacity to 250,000 barrels. "I would guess 100% of [the new capacity] will be going to craft,'' says Doug Degeest, the general manager.
But many are sticking to old-fashioned bank loans to expand their own facilities.SweetWater Brewing Co. recently bought a DHL sorting facility next to its Atlanta brewery and has spent this year connecting the two buildings. The closely held brewer hopes to have a new bottling line running by February, its 15-year anniversary, and boost output 25% next year to 125,000 barrels, with enough space to eventually expand to half a million barrels.
Sam Calagione, founder of Milton, Del.-based Dogfish Head Craft Brewery, says he has turned down approaches from venture capitalists, private-equity firms and one large brewer. He is relying on a traditional bank to finance a five-year, $45 million expansion to more than double the brewery's 200,000-barrel capacity. That included the recent purchase of a 40-acre neighboring lot, where a 75,000 square foot warehouse will be built next year.
"We care a lot more about IPAs than IPOs,'' says Mr. Calagione of his family-owned brewery, which produced more than 140,000 barrels this year, up about 20% from 2010.
Some small brewers, fearful of losing control, are slamming on the brakes.
Output at Santa Rosa, Calif.-based Russian River Brewing Co. has grown to roughly 12,000 barrels from 2,000 barrels in 2004, partly bankrolled by a $2 million small business loan. After it ran out of brewing space in early 2011, it decided to pay off existing debts rather than take on more. Russian River's website warns customers it cannot meet all orders.
"It's a lot of work to basically say no. If you look at our FAQ, everything is no,'' says founding co-owner Vinnie Cilurzo.
Write to Mike Esterl at
mike.esterl@wsj.com