California Brewers Admit the State is Clogged with Craft

FILED SEPTEMBER 12, 2016

Dear Client:

News Flash: if you're looking to open a new craft brewery, you may want to steer clear of building one inside California's state lines. Maybe.

MORE THAN 680 BREWERIES. This past weekend at the annual California Craft Beer Summit, a panel of veteran brewers were asked if they would consider opening a new brewery in the state, which currently boasts more than 680 breweries. The panelists responded with a "unanimous no," per Sacramento Business Journal.

NO BUBBLE BUT LOTS OF COLLISIONS. "I wouldn't say California is the most available place to do it currently," said Port Brewing and The Lost Abbey co-founder Tomme Arthur, who characterized California's current craft landscape as an "increasingly crowded freeway," the publication wrote. "You won't see a bubble, but it's possible we're in for lots of collisions," Tomme said.

Tomme and the other panelists did not explicitly say California has maxed out on its number of breweries, but Tomme did note that "Being relevant is enormously challenging these days," especially in a marketplace as crowded as California.

These comments come on the heels of fellow California brewer and Stone co-founder, Greg Koch, telling Fox News that he "would counsel someone not to get into the business today." Greg's opinion, however, wasn't limited to California.

ADVICE TO THOSE MAKING THE PLUNGE. Still, "the summit didn't discourage future growth," the publication wrote, and instead offered a few pro tips on how fresh-faced breweries "can increase their chances of survival."

Randall Behrens, a senior lender with Live Oak Bank, said one common mistake to avoid is undercapitalization (unsurprisingly). "Everything's going to cost more than you think and it's going to take longer to get done," said Randall. If you're looking to secure a startup loan, Randall said, you better have some commercial brewing experience.

Other errors committed by newcomers include "not planning for future success and not keeping proper data and records," said LJ Govoni, president and founder of Boston Capital Leasing in Clearwater, Florida.

And attorney Jeremy Little, senior associate at Carle, Mackie, Power & Ross LLP, advised brewers to "spend time figuring out the structure of your business and learning about zoning and trademark issues."

Last, but not certainly not least was the issue of quality. Vinnie Cilurzo, co-owner and brewmaster of Russian River Brewing, said on a panel that "he wants to see an extreme focus on quality as the industry moves forward." Vinnie questioned attendees on whether they would "dump a batch of beer" if it failed to live up to its standards.

REVOLVER ROLLS WITH ANDREWS IN NORTH TEXAS AREA

After announcing its decision to sell to MillerCoors last month, Revolver Brewing co-founder, Rhett Keisler, told CBD that "job number one," as far as distribution goes, was to take care of their of their backyard [Dallas-Fort Worth].

Today, Revolver inked a deal with Andrews Distributing to do just that. The partnership signals the first major move into the MillerCoors network for Revolver, who self-distributed the majority of its brands.

Andrews will begin distributing Revolver's portfolio of more than 19 year-round, seasonal and limited release beers within its North Texas territory, excluding Denton County, starting today.

NEW DETAILS EMERGE ON MITCH STEELE'S FORTHCOMING BREWERY

Earlier this summer, Stone Brewing's longtime brewmaster Mitch Steele announced he was leaving the company to "pursue his own dream of starting a brewery."

It's been about three months since the announcement and little to no details have emerged on Mitch's new operation, until today that is. This morning a press release surfaced providing us with a tiny hint of what Mitch has been hiding up his sleeve.

The presser revealed that Mitch is teaming up with a group of beer industry veterans, Carey Falcone and Bob Powers, to open a new craft brewery and brewpub on Atlanta's growing "BeltLine" in 2017. The new project, which is yet-to-be-named, will offer the city "a distinctive place to enjoy craft beer, great artisanal food, and an inviting atmosphere," per release. The facility will feature "a rooftop bar and a beer garden, with brewery tours and brewing classes for the home brewer."

Mitch said he's "excited for this next chapter in Atlanta…. and looking forward to the opportunity to become part of the growing craft beer movement in Atlanta and the Southeast."

BROOKLYN BREWERY CHANGING UP DISTRIBUTORS IN THE UK

Brooklyn Brewery has announced the transfer of its UK distribution rights from specialty wholesaler James Clay to Carlsberg UK, per The Drinks Business. The shift marks the end of a 15-year long relationship with James Clay as Brooklyn's exclusive UK wholesaler.

Brooklyn's UK portfolio, which includes its flagship brew, Scorcher IPA, Summer Ale, East IPA and Sorachi Ace, will transition over to Carlsberg's newly-created brand and sales division, House of Beers, at year's end.

"House of Beers' team of brand ambassadors will drive the continued growth of the Brooklyn Brewery portfolio through unique events, range advice and staff training," per report. Liam Newton, VP of marketing for Carlsberg UK, said "Brooklyn Lager has seen value growth of 54% over the past year in the UK," citing Nielsen data.

This isn't the first distribution deal between Brooklyn and Carlsberg overseas. The craft brewer has worked with the wider Carlsberg Group for more than a decade to deliver its products to over a dozen international markets.

Therefore, "This move is an extension of Brooklyn's relationship with Carlsberg throughout Europe," said Eric Ottaway, CEO of Brooklyn Brewery "and we look forward to working creatively with Carlsberg UK on the continued development of the Brooklyn brand in the UK."

BEER BRIEFS:

WICKED WEED EXPANDS DISTRIBUTION TO DC AND NORTHERN VIRGINIA. The fast growing brewer out of Asheville, North Carolina has announced its expansion into the Washington DC and Northern Virginia markets. Wicked Weed will roll with Premium Distributors of Washington DC and Premium Distributors of Virginia (both part of the Reyes Beverage Group) in the respective markets to deliver its full portfolio, including offerings from both its sour program and their Production Facility.

Until tomorrow, Jenn

"Since we cannot know all that there is to be known about anything, we ought to know a little about everything." - Blaise Pascal

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