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California Craft Brewer Lagunitas Poised To Achieve National Presence

March 8, 2012

Lagunitas Brewing Co., one of the fastest-growing craft brewers in the country, will begin covering most of the U.S. market after completion of a brewery expansion in April. The increased distribution, coupled with sustained organic growth, could likely mean another year of 60% volume gains in 2012 for the Petaluma, California-based brewer.

Lagunitas beers currently are distributed in 35 states and Washington, D.C., including major beer markets like California, Texas, Florida, New York, Illinois and Pennsylvania. With a $14 million brewery enlargement that will more than triple annual capacity from 185,000 barrels to as much as 600,000 barrels, Lagunitas will expand into another 14 states, bringing distribution to 49 states. Tennessee will be the lone state without Lagunitas brands, due to the state’s restrictions on high-alcohol beers (Lagunitas brews range from 6%-10% abv). Among the upgrades to the Sonoma County brewery are a 250-barrel brewhouse, a doubling of fermentation space and faster bottling and kegging lines.

Lagunitas founder Tony Magee told Shanken News Daily that he initially was targeting 30% sales growth for 2012, but changed that forecast after January and February numbers came in at double that rate. Magee claimed that Lagunitas—one of the first craft brewers to popularize beer in large bottles—has “quietly been the fastest-growing craft brewer for the last two years.” Sales volume was more than 161,000 (31-gallon) barrels last year, easily placing it among the top 15 craft brewers in the country. Magee said that due to spiraling demand, the brewery is producing at full capacity for the second half of the year.

Lagunitas, like other successful craft brewers, is thus struggling to keep up with demand. According to the Brewers Association, craft beer volume jumped 14% and dollar sales rose 15% in the first half of last year. In addition to the 1,740 craft brewers tracked by the Brewers Association, a further 725 new craft breweries were in the planning stages last year. Magee said the competition doesn’t concern him. “This is the best time in the last thousand years to be opening a brewery,” he remarked.

Lagunitas India Pale Ale is the company’s top-selling and best-performing label. The Lagunitas label, at 6.2% abv, was California’s leading IPA until the introduction of Sierra Nevada Brewing’s Torpedo label in 2009. Other Lagunitas year-round beers include Hop Stoopid Ale (8% abv), Maximus Ale (8.2% abv), Imperial Stout (10.1% abv), PILS (6.2% abv), Censored Ale (6.8% abv) and Dogtown Pale Ale (6.2% abv). Seasonal brews include Cappuccino Stout, Imperial Red Ale, Little Sumpin’ Wild Ale and Brown Shugga Ale, ranging in alcohol content from 7.8% to 9.9%.

Lagunitas beers are known among craft beer lovers for their irreverent names, background stories and packaging descriptions, all written by Magee. However, Magee turned serious when asked what is the biggest challenge facing craft brewers today. “Remaining genuine while becoming professional,” he replied.

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