The Woodinville Brewery was running at about 30% of its capacity, despite a contract with Pabst Brewing Co. under which CBA was brewing Rainier Pale Ale and other brands for Pabst. Pabst wasn’t able to deliver sufficient volume, leading to the closure. Pabst will pay CBA $6 million in termination and shortfall fees.
Not only is CBA selling its Woodinville brewery, but it is terminating a contract with City Brewing to produce its brews in Memphis, moving production to Anheuser-Busch, which owns 31% of the company.
Widmer Brothers and Redhook shipment volume declined, as did shipment volume. Widmer shipments were down 16%, and Redhook shipments were down 21%. Overall depletions were flat in the first quarter, although Kona volume was up 14% and Big Wave volume increased 33%.
CBA’s earnings report wasn’t totally gloom-and-doom, however.
CBA’s total net sales rose 13% to $44.3 million, and shipments increased 2.1%. The company reported a first quarter loss of $1.8 million, which is less than the $3.2 million loss the company posted a year earlier.
“Our first quarter results are strong in and of themselves. And they’re especially remarkable given the dynamics in today’s increasingly challenging market,” said Andy Thomas, chief executive officer, CBA.
“The substantial progress we made across many areas of our business – from continuing Kona’s double-digit growth and strengthening our local brands, to expanding our gross margins while evolving our brewery footprint and reducing our wholesaler inventory days by a third – provides tangible evidence that our strategy is working and beginning to bear fruit.”