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Thread: Rough Times

  1. #1
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    Nov 2013
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    Dallas Texas
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    3

    Rough Times

    Three breweries within 5 miles of each other shut down in the last month or so: Vindication Brewing, Skye Brewing and Open Door Brewing; in Boulder/Longmont CO.

  2. #2
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    Mar 2011
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    Yup

    I follow a ton of breweries on Facebook located all over and the past few months I see a post from a brewery announcing their closing every other week it seems (I saw two just today saying they are closing).

    I always hate to see a small business close but I do think that a chunk of the 6,000+ breweries that we have are ones that started because it is the hot thing to do right now and were not financially or educationally ready to start in the first place. The same thing happen back in the late 1990’s and a bunch of breweries went out of business shortly after. I honestly thought this possible correction would have happened about 2-3 years ago instead of now.

    I cringe when I see these new breweries pop up with brand new state of the art 15bbl-30bbl systems all decked out with extra large cellar capacity, pricey canning lines and tons of bank loans...good luck trying to sell that much beer in this crowded market place to off set your huge loan payments. I’m probably sounding like an old timer but I remember when getting a 15bbl-30bbl sized system was on a microbrewery’s first or second expansion, not starting out with no sales/branding history.
    Last edited by Catfish002; 07-06-2018 at 05:51 PM.

  3. #3
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    Oct 2013
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    Cincinnati, OH
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    Quote Originally Posted by chewse View Post
    Three breweries within 5 miles of each other shut down in the last month or so: Vindication Brewing, Skye Brewing and Open Door Brewing; in Boulder/Longmont CO.
    I was more bummed by The Walnut getting closed after the Boulder Beer buy out. I think it’s the “trendy” consumers creating this issue as much as us brewers. There is not much in the way of consumer loyalty as there used to be. Hell, I’m guilty myself. Love Sierra, Firestone, Odells, etc but rarely buy them nowadays. There are too many new ones to try (for better or worse) and obviously my funds are quite limited (I am a brewer after all).

  4. #4
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    Feb 2016
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    San Francisco, CA
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    As a recovering techie, some of these new, big-investment breweries look eerily familiar. They're going to have a hard time making money grinding away at brewing good beer year after year because that's not how they're planning on making money (kinda wonder whether their employees, many of whom would probably be quite happy making good beer year after year, understand that?). They saw that Ballast Point sale and said "woah, billion-dollar exit, and the employees are pulling brewery salaries rather than tech salaries? Where do I sign up!" When you're building for quick growth and a quick sale, you don't need a well-crafted product, just a well-crafted sales strategy; you need to get customers quickly, but you don't care about keeping them, that's the acquiring megabrewery's problem. You end up with all hype and marketing and cut corners barely held together with duct tape, and, frankly, I'd be happy to see more breweries built along those lines fail, to see the market punish this quick-turnaround profiteering behavior, than see InBev write them big, fat checks to reward it.

    That being said, I don't know much about Vindication, Skye, or Open door, but if they were looking to sell their beer rather than their brand, I'm sorry to see 'em go.

  5. #5
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    Quote Originally Posted by feinbera View Post
    As a recovering techie, some of these new, big-investment breweries look eerily familiar. They're going to have a hard time making money grinding away at brewing good beer year after year because that's not how they're planning on making money (kinda wonder whether their employees, many of whom would probably be quite happy making good beer year after year, understand that?). They saw that Ballast Point sale and said "woah, billion-dollar exit, and the employees are pulling brewery salaries rather than tech salaries? Where do I sign up!" When you're building for quick growth and a quick sale, you don't need a well-crafted product, just a well-crafted sales strategy; you need to get customers quickly, but you don't care about keeping them, that's the acquiring megabrewery's problem. You end up with all hype and marketing and cut corners barely held together with duct tape, and, frankly, I'd be happy to see more breweries built along those lines fail, to see the market punish this quick-turnaround profiteering behavior, than see InBev write them big, fat checks to reward it.

    That being said, I don't know much about Vindication, Skye, or Open door, but if they were looking to sell their beer rather than their brand, I'm sorry to see 'em go.
    Very well said!!!

  6. #6
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    Aug 2010
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    Enterprise, Oregon
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    1,838
    How many breweries have opened in the Colorado area in the last five years? In the entire US? Competition is fierce. Adapt, migrate, or become extinct.

    Unfortunately, many of these life or death decisions for breweries, esp. start-ups, are made by the distributor and not necessarily based on sales.
    Timm Turrentine

    Brewerywright,
    Terminal Gravity Brewing,
    Enterprise. Oregon.

  7. #7
    Join Date
    Nov 2009
    Location
    Moab, Utah
    Posts
    511

    Common Delusional Mistakes

    As a side note its worse than in the 90s and for good reason.
    Common mistakes:
    1.Having not fully mastered brewing at 10 gallons batch size in both keg and bottle.
    2.No concept of cold side contamination or how to address it.
    3.Attempting to make Brewing more Science than art, this is a major one.
    4.Attempting to reinvent the wheel with respect to methods that are tried and " true."
    5.Failure to respect the maths of Engineering calculations, and to listen to and take heed of well seasoned professionals......
    6.Attempting to make cut corner, shade tree Engineering tricks " work out " to scale.
    7.Never having visited many working Breweries and gotten a grasp of " whats really going on."
    8. Overconfidence based on your current skill set and overall quotient of " egos " in the mix.
    9. Thinking that brewing is somehow easier than other businesses in which to turn a " profit."
    10. Getting in over your head and then asking questions way late in the game.
    11. Being seduced by flash digital technologies, social media, and expensive build out strategies that you do not need, while ignoring the basics.
    12. Attempting to do everything of the cheap and failing to know where and how to invest in " better " gear.
    13. Failing to locate genuinely qualified " Skilled " Tradesman " who truly understand the entire scope of the Brewery Environment in its totality.

    This is a short list......
    Warren Turner
    Industrial Engineering Technician
    HVACR-Electrical Systems Specialist
    Moab Brewery
    " No Cell Phone Zone."

  8. #8
    Join Date
    Feb 2018
    Location
    Fort Wayne, Indiana
    Posts
    43
    Perhaps people should focus on making a good product first, and then re-invest.

    Don't quit your day job.
    Form a break even plan. (Your day job will cover your living expenses)
    Make a lot of the beer that everyone will buy.
    Make a little of the creative stuff to supplement the popular stuff.

  9. #9
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    Mar 2011
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    The South
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    All very good points listed above. I think we will really know that the correction is happening when we see used equipment getting listed here regularly, with below new equipment prices, for sale instead of new equipment manufacturers just bumping their ads 100+ times. I have heard from people who really got some insane deals on brewery equipment right after the late 90s/early 2000s craft beer bubble pop.
    Last edited by Catfish002; 07-12-2018 at 05:01 PM.

  10. #10
    Join Date
    Feb 2014
    Location
    west coast
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    i get a bit of schadenfreude when i see that stuff. lots of noses tilt up when we say we're "just" a brewpub and dont distribute. but we're laughing our asses off down to the bank. i was lucky to have a partner who had worked for the local AB distributor. sharp study, quick learner. he kept us on the right path.

    as a newbie (coming from bar/restaurant side), i would have pulled the trigger on all that stuff. buying more equipment, bottling, canning, pushing distribution. stuff that just wasnt worth it given the crush of competition rushing into every damn supermarket and liquor store in the country.

    luckily the partner learned the rules of playing with the big boys-

    your brand better tell a story (thats how the sales reps get you a handle, or a shelf spot)
    your beer better move (seems obvious, but even more important when everyone wants the super hoppy stuff)
    you better be reliable (great way to lose that handle/shelf space is for the sales rep to say "im out of that, what else can i sell you?")

    its amazing how this stupid 3 tier system makes understanding distributors and their side of the game so crucial to your success as a brewery. even with his knowledge and experience, we're still on the sidelines of the distribution game. and that decision keeps looking better and better.

  11. #11
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    Jul 2013
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    Idyllwild, CA, USA
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    Quote Originally Posted by brain medicine View Post
    i get a bit of schadenfreude when i see that stuff. lots of noses tilt up when we say we're "just" a brewpub and dont distribute. but we're laughing our asses off down to the bank.
    I have a similar story. Once we got our brewpub opened, the investor was really interested in getting our products out there and even funding a standalone production brewery to do so. I told him that the market was pretty much saturated and that we should wait and watch for a while before we decide to make that leap. So far, it's turned out to be the right decision and I don't see that changing anytime soon. In fact, I think the market reset is just starting and "there will be blood" over the next few years.

    Cheers,
    --
    Don

  12. #12
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    Aug 2010
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    Enterprise, Oregon
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    Quote Originally Posted by idylldon View Post
    I have a similar story. Once we got our brewpub opened, the investor was really interested in getting our products out there and even funding a standalone production brewery to do so. I told him that the market was pretty much saturated and that we should wait and watch for a while before we decide to make that leap. So far, it's turned out to be the right decision and I don't see that changing anytime soon. In fact, I think the market reset is just starting and "there will be blood" over the next few years.

    Cheers,
    --
    Don
    On a related note:

    Our brewery sales supported the pub for many years. We kept the pub open largely as a favor to locals who liked real beers. In the last five or so years, pub sales have overtopped the off-premises sales and sales are still growing (unfortunately, the pub is not in terms of space). Seems the market is saturated for distribution of kegs/bottles/cans.
    Timm Turrentine

    Brewerywright,
    Terminal Gravity Brewing,
    Enterprise. Oregon.

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