Revenue Recognition

The following table disaggregates our Sales by major source (in thousands):



	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	Beer Related¹		Brewpubs		Total		Beer Related¹		Brewpubs		Total
Product sold through distributor agreements²	$	55,905	$	—	$	55,905	$	97,033	$	—	$	97,033
Alternating proprietorship and contract brewing fees³	352		—		352		1,200		—		1,200
International distribution fees	812		—		812		1,624		—		1,624
Brewpubs⁴	—		6,066		6,066		—		12,269		12,269
Other⁵	680		—		680		1,457		—		1,457
	$	57,749	$	6,066	$	63,815	$	101,314	$	12,269	$	113,583



	Three Months Ended June 30, 2018						Six Months Ended June 30, 2018
	Beer Related¹		Brewpubs		Total		Beer Related¹		Brewpubs		Total
Product sold through distributor agreements²	$	54,148	$	—	$	54,148	$	93,815	$	—	$	93,815
Alternating proprietorship and contract brewing fees³	3,175		—		3,175		5,886		—		5,886
International distribution fees	850		—		850		1,700		—		1,700
Brewpubs⁴	—		6,101		6,101		—		12,112		12,112
Other⁵	979		—		979		1,825		—		1,825
	$	59,152	$	6,101	$	65,253	$	103,226	$	12,112	$	115,338

(1)

Beer Related sales include sales to A-B subsidiaries including Ambev, ABWI and ABC. Sales to wholesalers through the A-B distributor agreement in the three-month period ended June 30, 2019 and 2018 represented 80.9% and 77.9% of our Sales, respectively. Sales to wholesalers through the A-B distributor agreement in the six-month period ended June 30, 2019 and 2018 represented 81.0% and 77.3% of our Sales, respectively.


(2)	Product sold through distributor agreements included domestic and international sales of owned and non-owned brands pursuant to terms in our distributor agreements.


(3)	Alternating proprietorship fees ceased in the fourth quarter of 2018.


(4)	Brewpub sales include sales of promotional merchandise and sales of beer directly to customers.


(5)	Other sales include sales of beer related merchandise, hops and spent grain.

Revenue is recognized when obligations under the terms of a contract with our customers are satisfied; generally this occurs when the product arrives at distribution centers or when the wholesaler takes possession. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. We consider customer purchase orders, which in some cases are governed by a master agreement, to be the contracts with a customer. For each contract related to the production of beer, we consider the promise to transfer products, each of which is distinct, to be the identified performance obligation. The transaction price for each performance obligation is specifically identified within the contract with our customer and represents the fair standalone selling price. Discounts are recognized as a reduction to Sales at the time we recognize the revenue. We generally do not grant return privileges, except in limited and specific circumstances.

As of June 30, 2019, we had receivables related to contracts with customers of $30.2 million, net of the allowance for doubtful accounts of $25,000. As of December 31, 2018, we had receivables related to contracts with customers of $30.0 million, net of the allowance for doubtful accounts of $25,000.

As of June 30, 2019 and December 31, 2018, contract liabilities, which consisted of obligations associated with our gift card programs, were $0.2 million and $0.4 million, respectively, and were included in Other accrued expenses on the Consolidated Balance Sheets.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of accounting pursuant to ASC 606. In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined.

We entered into an International Distribution Agreement ("IDA") with A-B for the rights to serve as our exclusive distributor in international territories defined by the IDA for a 10-year period. The IDA represents a single international license to all territories defined in the IDA. Revenue is recognized on a straight-line basis over the 10-year term of the agreement. In accordance with ASC 606, we evaluate the factors used in our estimates of variable consideration to be received under contracts on a quarterly basis. We estimate variable consideration as the most likely amount to which we expect to be entitled. We have evaluated, on a quarterly basis, the qualitative factors, including current market conditions and our relationship with A-B, and we consider receiving $34.0 million over the 10-year term of the IDA the most likely outcome under the IDA. We believe that the possibility of a significant reversal of cumulative revenue recognized from this agreement under this conclusion is remote. Under the IDA, A-B has the right to issue purchase orders to distribute product in international territories defined by the IDA. Each purchase order placed under the IDA is a distinct performance obligation. The transaction price for each performance obligation is a sales-based royalty, which is recognized as revenue in accordance with the sales-based royalty exception. Accordingly, royalty revenue is recognized as the variability associated with the royalty is resolved, which is upon A-B's subsequent sale of our product.

In cases where all conditions to a sale are not met at the time of sale, revenue recognition is deferred until all conditions are met. As of December 31, 2018, Deferred revenue on our Consolidated Balance Sheets included $6.0 million related to the IDA. For the six months ended June 30, 2019, we recognized $1.6 million as Sales, resulting in Deferred revenue of $4.4 million at June 30, 2019. In the absence of receiving a Qualifying Offer, we expect to earn the right to receive an additional $20.0 million in the remainder of 2019. In the absence of receiving a Qualifying Offer, we expect to recognize an additional $1.6 million of Deferred revenue as Sales in the remainder of 2019, $3.2 million in 2020, and $19.5 million thereafter.