And, have only been running at 50% capacity the past couple years. Citing that this financial model was built on 20 years of sustained success, it must be shocking to the likes of Smuttynose to see the bubble burst in their face.
What do you think? Is craft beer getting more localized? Is the number of new craft breweries growing faster than the number of new craft beer drinkers?
I just feel the supermarket model of craft beer might not work at the end of the day. People do not drink like they used to and have less loualty to that same old six pack. My father might still buy cases of craft beer, but that is not the story with everyone.
Also, my wife thinks Smuttynose has terrible graphic design.
I been saying to my friends that the future of Craft was really in local beers for years. By local I mean regional - just just one or maybe two states away. This was after months/years of continually picking up random bottles of beers from who knows where - often from across the country - and having them all taste stale, old, boring, etc. Even from prestigious breweries. Often they just didn’t live up to what I had heard and because I had no personal attachment from them
While I know it’s happened before, I remember DFH pulling out of 3-4 states a while back, and that really was what cemented my thoughts.
I know it’s a dream of some of these breweries to be all across the country, but I don’t think that’s the future anymore for most breweries.
I think they just had started to debut some new labels - still pretty similar to their previous ones, but still recognizable.
It probably depends on the brewery and the beers they have in the store. It’s going to get hard, especially with IPAs if the don’t fly off the shelf. Of course the average joe doesn’t seem to like super hoppy beers, so maybe a stale IPA would be to their liking…
Erm, nope, running at 50% capacity means you’ve been a failure for years, from a business perspective. You misread the market, you were arrogant, and you ploughed in way too much money into equipment, property and/or rent (probably from loans, and thus incurring an interest overhead too).
They built a new brewery a few years ago. You don’t build a new one and size it for your current output. It was sized based on their growth over the previous two decades. It was expected to continue to grow. the bank agreed and gave them the money. Then, lots of new local breweries popped up and there was a seismic change in the industry. They got caught in it, just like Red Hook did in Washington. They recently closed the Woodinville brewery.
Those breweries have upside, profitability, and growth potential. Smuttynose, obviously, had none of those things. The bank is going to liquidate the equipment and shutter; they didn’t make this purchase to try to get into the brewing game.
However, larger breweries should be brewing at a higher capacity ratio, as their peaks and troughs should be relatively smaller, so smuttynose really should have been more like 0.8.
You’re of course 1-2 decades ahead of us here with the craft revolution. It remains to be seen what the guys frantically expanding as they’re at 100% capacity (and having to turn away large orders) here will look like in a decade or so. Some will over-reach, I’m sure.
Typically expansion into a market happens as a logistic curve. But the first half of a logistic curve looks identical to an exponential curve. So it’s easy to think you’ve got plenty of exponential growth ahead, when in fact the slow-down is nearly upon you. It’s an extremely common mistake to make. Many will make it in the future. This is of interest to me as I do have skin in the game (but am not a decision maker).
I cannot cite specific numbers, but it seems that even some of the bigger brewers here in Michigan (Founder’s, Short’s, Bell’s) have not hit their projected numbers, nor are they running at full capacity of their massive expansion projects. (I am not saying that these breweries are failing, at all. Just that they all underwent big expansion projects within the last 3-4 years (even current)…and I am guessing this was based off of sustained success. )
Even 4 or 5 years ago, it seemed difficult to predict the craft beer explosion would take its current shape. Of course, hindsight is 20/20…and you need to be able to adjust to the market flux…but, when it takes so much time/planning/money to make such strides, you can be elbow deep in your expansion when another market shift takes place. Tough to stop a runaway train sometimes.
As someone else noted, Smuttynose was sold to the bank. They claim it will allow them to keep brewing the beer they’ve been brewing. But I guess we’ll see. The bank will be negotiating with potential investors. I can’t help but to wonder if they will have to scale back some to only brew their old stand-bys and flagships. They probably won’t have much of a chance to experiment like they did with their SmuttLab brews.
I was actually thinking about Founders recently. Two years ago, you could get A LOT of their beers in Austria, where distribution is usually shitty, even with local craft brews. But you could get Founders Seasonals relatively easy. Now they’ve almost completely disappeared. I was wondering if by the the way they’ve expanded, they’ve helped to build a wave of IPAs etc locals, cheaper and fresher, are now riding on.
Another example: You can still get Flying Dog Easy IPA in supermarkets here as well. But whenever I have a look at the BBD of the bottles in the usually full shelves, they’re either close to BBD or long past. I guess this will change rather sooner than later as well. As somebody put it: maybe the “supermarket model” really is at a crossroads. While locals are still trying to produce enough to actually get in, others will disappear.