Do you mind when breweries refuse to grow or expand?

There is a huge amount of capital that must be invested in order to expand. I don't think most beer consumers realize how difficult it is for a small brewery to expand. Even a mid-sized successful brewery expands only after it has done the due diligence. And even then, the owner might chose not to. The US micro-brewery world is littered with closed down breweries that expanded only to see their cash flows dry up due to high debt load. Fiveteen years ago one of the darlings of the micro scene was Catamont Brewery in Vermont. It consistently won awards, opened new accounts, and was operating at full capacity. The owners borrowed $5 million in order to build a new state of the art brewery that would take them from 5000 barrels to 25000 barrels annually. Within months of completing the expansion, the micro brew market contracted. Despite continued strong sales, the new operation was only operating at 50% capacity. By the end of the year Catamont filed for bankruptcy and closed its doors.

Brewing is a captial instensive industry. And it takes quite a bit of money to expand. And like all industries cash flow is King. Many brewers sell off their breweries after a decade or so for this very reason. They are in a Catch-22. They can barely keep up with demand; but they haven't the cash flow to expand without taking on a heavy debt load. The hours are long (many owners haven't taken vacations in years), and not even love of good beer will keep their doors open. In that regard we should be thankful for those intreped souls who continue to plug away despite the odds set against the,

 

I don't mind at all. Yes, I'd like to try some breweries that aren't distributed in my area, but so what? There's hundreds of other options. I buy 2-3 new brews every week, and I'll live many years before I will ever run out of new options. The brewers are doing their best to survive in a competitive market anyway. They can do whatever the hell they want.

 

Adam Smith covered this in 1776:

"It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

 

I don't know what their capacity is. I think Bells took out $50 million to expand a few years ago. They now have the capacity to brew over 125,000 barrels. Whether they can sell that much remains to be seen. For even a regional brewery must contend with notorious state alcohol distribution systems. This isn't the good ol' days where local breweries dominated the local neighborhoods and towns. In total, the microbrew segment only occupies at best 12% of the total beer market. Micros don't even come close to competing with the big boys; therefore, they must market to a small, niche market. Breweries like Bells or New Belgium, therefore compete against other micros and the imports (but even the imports are now owned by the big congolmerates such as InBev and SAB-Miller). Even in a best case scenario, Bells will only sell to 15% of the Michigan beer market (Bells is located in Michigan). Bells, which has been around for 20 years and is heavily marketed in its home state, will unlikely carve up much more of a niche in Michigan. Therefore it must go to other states and regions. But, that in and of itself is nearly impossible. Goose Island sold out for this reason. And even such Micro heavy hitters as Dogfish Head may be pulling out of its national distribution. Bells, may in fact continue to grow within the Great Lakes. But, it takes constant work, marketing, and salesmenship to expand beyond a certain point. And lurking over their operations is a huge debt load.

To expand or build a micro, complete with bottleing line, is expensive. Huge amonia or gylcol cooling systems must be purcahsed; the larg copper mash tuns, boilers, fermenting tanks, settling tanks, cool ships, bio-labs, grain elevators, sterile rooms, control systems and PLCs, electrical control fixtures, etc... not to mention the building, warehousing, filling lines, shipping docks, office space, data centers, etc... have to be built. The costs in permitting alone are considerable. And then there are the architechts, engineers, and planners. The build a 100,000 barrel brewery can easily go to the tens of millions.

 

Let's correct a couple things from your statement. Bell's made 185000 barrels last year and is on pace for 230000 barrels this year. We are looking at a 25% growth there, it is safe to say they are moving their product. Bell's new brewhouse is a 200 brewhouse which would allow them to produce up to 500000 barrels a year.

Bell's has been around for over 25 years and when they have expanded they have done so the right way. Bell's has not expanded and had to pull out of markets because they were in over their head. Bell's makes sure they can supply a market before they have made a move. Their current expansion was driven by the increased demand for the product, they did not expand simply because they hoped the may be able to sell more beer, they expanded because they knew they could. Bell's foot print stretches far beyond the Great Lakes, Bell's sells Oberon year round in Florida, parts of Alabama, Arizona and Puerto Rico. Beyond that Bell's has no issue creating a market in the 18 states (plus DC and PR) they distribute to and would have no problem creating new markets if they chose to.

I understand the point you were attempting to make but your facts were inaccurate and I am not sure the argument was a success. Bell's is a good example of a brewery who expands carefully and deliberately, which is something many breweries could take note of. Maybe that is a better argument to make.

 

Not at all.

But I think there's conflation of "refusing to expand" and "refusing to risk the money" to expand. Either way, in my book it's their business, they can do with it what they like.

 

This entire thread is demonstration of the fact that you can't accept that fact. By transforming what is a business/personal decision for reasons known or unknown to you into a question of their values (and let's face it, more often than not, being selfish isn't a positive), you have shown an inability to understand or empathize with their reasons. They are no more selfish than they are lazy or unmotivated.

 

I actually had a chance to speak to the OP over a few brews this afternoon. I did not agree with him based on some of the posts in the thread, but his reasoning was a lot different compared to how it came out in these posts. I think the word selfish was misused, and was the reason for this thread spiraling like it did. He even told me today he didn't think every brewery should distribute to his state/area. All he wanted to say was that if a brewery has the demand/funds/capability of expanding, it's unreasonable to think they wouldn't want to explore the option of an expansion. I'm still not in full agreement with him on this, but his point was a little different than how it was portrayed in this thread imho.

 

Can I get an amen?!
On Tuesday I'm heading up to the great North West to do just that---drink local beer with local people. Seattle, Olympia, Portland, Bend, Hood River and Boise. Should be a hoot-n-nanny!!!

 

The point is that the op has no clue about funds and capabilitcy.

 

I am sure most breweries do explore these options when the time comes. I think it is inevitable that at some point a brewery will have to answer these questions for themselves. The choice of wording and critical nature of the OP really harmed any chance of being taken seriously by anyone here.

 

Enjoy your trip! You'll love Bend, I promise. If you have the time, truck on up from Seatthole and visit us up here in the Fourth Corner. Bellingham has beer. Plenty of great local/regional breweries you should check out!

 

So let me get this straight. To summarize your argument, it is the small business owners (in this case, brewers) that do not risk everything they have worked their entire lives to create so that you have unlimited access to the beers of your choosing, that are selfish. To reiterate, those brewers that do not place themselves and their families in danger of economic ruin and risk destroying the lives their hard work has allowed them to enjoy so that you are free to enjoy every type and brand of beer you desire....those are the selfish people. Irony is a funny thing.