Why my local brewery shut down

[madscientist451]

I came across this article, very interesting perspective:

http://draftmag.com/this-is-why-my-brewery-shut-down/

 

[Grod1]

"When we first start 8.5 years ago, I believe we were the 86th brewer in the state. We opened with the model of brewing a new beer every month. We had about 30 or 40 bars that bought a keg every month, but as more breweries opened, we saw that dwindle to a keg every other month, then a keg every quarter."

why-my-brewery-shut-down
beer-wasnt-good-enough

 

[Bilsch]

Interesting no one mentioned quality of the product as a factor.

 

[Rocksville]

Undercapitalization, heavy competition, difficult to penetrate outside accounts, brand obsolescence. I absolutely love the craft beer/home brewing market, but I see so many people trying to jump from homebrewing to the pro side that are talented (or even not that talented) brewers, but not very accomplished/experienced/motivated on the business side of things and that spells disaster. Making a beer that people will drink isn't that hard (because lets face it, lots of people will drink middling-at-best beers because they just don't care or know the difference), but the best case scenario of the brewer, namely selling all of the beer that they can make, is really the worst possible thing for them as now they are forced into a roll to scale and grow a large multi-faceted business instead of focusing on what they are truly passionate about.

I think going forward, the good beer will rise to the top as always, and then breweries that have solid and disciplined leadership/management in place will survive. Many of the awesome breweries that were just riding the coattails of massive industry growth and don't have a solid financial plan to stick to, will unfortunately dry up.

Moral of the story, if you want to be a commercial brewer you're going to be increase your chances of long term success if you can partner with someone who doesn't want to brew but is capable of running a business.

 

[kristiismean]

"Jesse Evans, co-founder and CEO of Ale Syndicate in Chicago, Illinois (founded in 2012 as a gypsy brewery, opened as an onsite facility in 2014; closed December 2016*)"

I bought the common beers this brewery offered (ipa, etc) , It was okay,but was nothing that i would go out of my way to buy again. Chicago is a powerhouse of an area, and I felt that Ale Syndicate came on to strong with a product that did not match it's competition. (3 floyds, half Acre, Revolution, Two Brothers, Hailstorm, Zumbier, Only Child, Church Street, Metropolitan (lagers)) so for the same price it was not going to move off of shelves. so no surprise it was gone.

 

[triethylborane]

Interesting no one mentioned quality of the product as a factor.

Doesn't have to be part of the equation at all:

Steve Jones, owner of Pateros Creek Brewing Co. in Fort Collins, Colorado (opened 2011; closed April 2017)

But our current landlord bought block [sic] in 2015 and decided they wanted to change the look of the place. As we went down the road, the rent was never negotiable. It was always going to get higher for us. And we’d always struggled with rent already, so to have it go higher wasn’t an option.

Great beer can't overcome the reality you have to pay bills and make a profit.

 

[Baabaad00]

Interesting no one mentioned quality of the product as a factor.

Someone did:

why-my-brewery-shut-down
beer-wasnt-good-enough

I've had some bad beer at some local breweries. TBH, I wish more would purge the poor quality brewhauses off the market. It's irritating going in to one just to sample something and go 'yup. still taste terrible'. Some find a niche in the market I think just having the image of a brewery and the restaurant side of their business pull them up to outlast others.

 

[Weezy]

I cam think of some locals that i wish would close due to quality BUT you can get by quite easily if you mostly serve pints rather than distribute only. The production/ wholesale/ distribution model is really tough now. To2y need some really strong brands power and above average beer as well. There are just too many choices out there.

 

[lslbrew]

Undercapitalization, heavy competition, difficult to penetrate outside accounts, brand obsolescence. I absolutely love the craft beer/home brewing market, but I see so many people trying to jump from homebrewing to the pro side that are talented (or even not that talented) brewers, but not very accomplished/experienced/motivated on the business side of things and that spells disaster. Making a beer that people will drink isn't that hard (because lets face it, lots of people will drink middling-at-best beers because they just don't care or know the difference), but the best case scenario of the brewer, namely selling all of the beer that they can make, is really the worst possible thing for them as now they are forced into a roll to scale and grow a large multi-faceted business instead of focusing on what they are truly passionate about.

I think going forward, the good beer will rise to the top as always, and then breweries that have solid and disciplined leadership/management in place will survive. Many of the awesome breweries that were just riding the coattails of massive industry growth and don't have a solid financial plan to stick to, will unfortunately dry up.

Moral of the story, if you want to be a commercial brewer you're going to be increase your chances of long term success if you can partner with someone who doesn't want to brew but is capable of running a business.

Agree 100%. This is true for any industry and often the home brewer who goes pro is not thinking in terms of industry. I don't remember the author but many years ago I read a quote, "The ability of every business to succeed despite itself will eventually run out."

 

[jwalk4]

I am a firm believer that, during times of recession and depression, most people don't spend less, but rather they just change the way they spend.

This is why the "craft scene" blew up the way it did.

See, people can't justify the big trip, or the new car during times of financial uncertainty, however to make up for that fact, people find new ways to escape the mundane. Instead of dropping big dough on a big ticket item, people opted to spend $3.25 on a can of beer (500ml. Ontario pricing).

Same goes for other "everyday" niceties: steaks, wine, movie theater tickets in fancy chairs and liqour service.

Now the bubble has burst. Economy is on the upswing, and people are ready to buy big items again and not pay for major beer inflation.

I have 5 breweries in my hometown with another 2 set to open next year. The population is 400000. What are those breweries going to offer? Another IPA?

 

[triethylborane]

Someone did:

I took @Blisch comment to mean the people interviewed in the article. But would that be something they would admit to? Making not so hot beer?

 

[azmark]

I have 5 breweries in my hometown with another 2 set to open next year. The population is 400000. What are those breweries going to offer? Another IPA?

Well tons of Hops was one way to cover up you were a bad brewer. But, now they throw in barrels, sours, fruit, coffee. Anything to drag someone in and make them think they are getting something new and special.

 

[Bilsch]

Making a beer that people will drink isn't that hard because lets face it, lots of people will drink middling-at-best beers because they just don't care or know the difference.

Boy that is the truth, at least where I live. There is by my last count 13 breweries in a town of 110,000 and they are still going strong. In my opinion not one of them makes a truly great beer. And only one of the places has maybe 2 decent ones.
We are far from other population centers though and I think people here haven't been exposed to what is possible. I've been waiting patiently for the predicted coming brewing revolution/evolution.
It's kind of the same thing with our restaurant scene as well but that's a topic for another day.

I took @Blisch comment to mean the people interviewed in the article. But would that be something they would admit to? Making not so hot beer?

Yes I did mean in the article, apologies for not being clear.

 

[Homercidal]

I am a firm believer that, during times of recession and depression, most people don't spend less, but rather they just change the way they spend.

This is why the "craft scene" blew up the way it did.

See, people can't justify the big trip, or the new car during times of financial uncertainty, however to make up for that fact, people find new ways to escape the mundane. Instead of dropping big dough on a big ticket item, people opted to spend $3.25 on a can of beer (500ml. Ontario pricing).

Same goes for other "everyday" niceties: steaks, wine, movie theater tickets in fancy chairs and liqour service.

Now the bubble has burst. Economy is on the upswing, and people are ready to buy big items again and not pay for major beer inflation.

I have 5 breweries in my hometown with another 2 set to open next year. The population is 400000. What are those breweries going to offer? Another IPA?

That town is big enough to support several small breweries. They would have to be neighborhood breweries (The kind I prefer anyway), and limit their expenses to fit that.

I do think that there are some breweries who will go under by over-expanding production with hopes to make it big in packaged beer. Store shelves simply cannot contain the vast number of beers produced by the large number of packaging breweries. It's a tough business to get into.

But, a smaller brewery, who focuses on in-house quality, service, food, etc, can make it. A nearby brewery started fairly large and bottled shortly after opening. They are still open, but I am a bit surprised due to the fact the food is average at best, service is below expectations most times, and they haven't really broke out in the bottled beer area.

The smaller, neighborhood places seem to be doing pretty good. Even when compared to the bar across the street selling cheap Bud Light and specials. The service was poor the couple of times I've been there since changing owners. Even some of the yokels I thought would remain true to the local joint have been visiting the craft brewery.

Of course it's a new place, so it's got that going for it, but I've met a few people who are very new to craft beer, and have just started trying it at the new place. They seem to be excited about it and willing to spend a bit more to try new things.

 

[soccerdad]

,Making a beer that people will drink isn't that hard (because lets face it, lots of people will drink middling-at-best beers because they just don't care or know the difference), but the best case scenario of the brewer, namely selling all of the beer that they can make, is really the worst possible thing for them as now they are forced into a roll to scale and grow a large multi-faceted business instead of focusing on what they are truly passionate about.

/QUOTE]

IMO this is a trap in modern business thinking. You need not always 'scale and grow' to succeed. I prefer going to brew pubs rather than breweries. I don't need to buy beer to take home. I have very good beer at home. I want good beer with a meal. A person who runs a great brew pub with a staff of 12 impresses me as much (or moreso) as the person who wants to scale to employ 500. And the great brew pub can indeed focus on their passion .. great brew, great food, great ambiance.

 

[iijakii]

We've had a few good breweries in OR close because they went all in on bottle sales. They did well for awhile and then once competition increased their shelf-space diminished and it was game over. If I were opening a brewery it'd definitely be a brewpub or at least with a tasting room and BYO food plus trying for local keg sales. Supermarket shelf space wars just don't seem like fun to me.

 

[DoctorMemory]

I have 5 breweries in my hometown with another 2 set to open next year. The population is 400000. What are those breweries going to offer? Another IPA?

Seemed to work in Portland when I lived there. There were bars/brewpubs every two blocks, and every one advertised "10 beers on tap". And every one had 9 IPAs, and some random (Scotch ale, dubbel, etc) to round out the selection.

 

[Baabaad00]

...every one advertised "10 beers on tap". And every one had 9 IPAs, and some random (Scotch ale, dubbel, etc) to round out the selection.

lol. I'd walk out.

 

[jwalk4]

But, a smaller brewery, who focuses on in-house quality, service, food, etc, can make it. A nearby brewery started fairly large and bottled shortly after opening. They are still open, but I am a bit surprised due to the fact the food is average at best, service is below expectations most times, and they haven't really broke out in the bottled beer .

And I wish all these places the best of success, but it sounds like you're talking about brewpubs.

I'm talking about breweries. Like, they have product going into the LCBO (until very recently, the one of two places you could buy beer for home consumption in Ontario).
And The LCBO is a brutal player in the market. Sales quotas, high competition, high markup. Like I said $3.25 per 500ml can on average. In restaurants it's like $6-7.

Only two of the local establishments offer what you're talking about, and only one does it well.

I'm just saying the market is becoming saturated. it is impossible for the average consumer to support that much expensive beer. But Im giving it my best try

 

[mattech]

What's interesting is that the breweries are closing in their current form, but not gone really. One guy brews somewhere else, two are going to reload and try again, and one is just for sale in a good spot. The only one that won't be back, at the distillery, was never the primary focus anyway. It sounds like the industry is evolving a bit.