Iconic Breweries Face Closures, Financial Hardship

Larry, Shane Welch (@SCW) in a past thread (2017) posted (the bold below is emphasis by me):

“Honestly, the analysis shows we already have enough craft beer and brewing capacity in this country. We don't need MORE beer (and I want to be clear that I don't mean more varieties of beer, I am talking about more volume of beer) - there is already an oversupply.”

https://www.beeradvocate.com/commun...cquired-by-sapporo.529829/page-4#post-5579444

Cheers!

 

I was at Empire Brewing on Tuesday night. The service was poor, the vibe uninterested, and one of the signature beers was surprisingly subpar. I went there because I had seen them on "Brewed in NY," a PBS series, and I really liked the idea of "locabibing" and "locavoring." it really seemed like a great place, but it really wasn't IMHO. I do not know what it was once like, but this sounds like Adam Smith's invisible hand at work.

 

Would you think that any of the 3, okay, 2 be something that an outside investor would be interested in?

 

We're you at the Cazenovia farm or the Syracuse brewpub? I've never been to the farm, but the brewpub was very pleasant the last time I was there (early June)

I don't know anything about the brewery in Rochester.
Empire needs investors if they are going to expand outside of NY. Their Syracuse brewpub seems to be doing okay. It looks like the entire farm operation is being sold, but that Empire will still run the brewery part.
www.syracuse.com/drinks/2019/08/cazenovias-empire-brewery-to-reorganize-in-bankruptcy-remain-open.html

Frankly I prefer their cross-town rival, Middle Ages, but I would hate to see them go under.

Ithaca will get the payment plan they need. It's a typical NY shell game where the various governments and Authorities assess taxes & fees then wait for the company to come hat-in-hand to ask for waivers and payment plans.

 

There is lots of good information in the linked article. Below are some snippets:

“For these mid-sized breweries that deal heavily with distribution, it’s a tough market right now,” says Paul Leone, executive director of the New York State Brewers Association. “Shelf space has not increased, tap handle space has not increased, but more breweries have entered the market, making it challenging for breweries that rely on distribution.”

And:

"It's a competitive market out there, and even when you're known for your IPA, every new brewery is coming out with a new IPA that's localized and everybody is excited about it," says Ithaca Beer's Dan Mitchell. "All of this has taken a major effect on the wholesaler networks. Maybe not in our immediate home market, but as soon as you go out a little, we become 1% at best of [a distributor’s] business.”

And:

“There are so many more small breweries creating so many new brands that our consumer is now looking for something new,” he says. “The traditional model was that you once tried to run with one horse, and that was always Flower Power, but business models have changed.”

And:

The factors that got these businesses to this point—reliable flagships, distribution, less local competition—have now changed drastically. If 85% of legal drinking-age adults live within 10 miles of a brewery at a time when more people are patronizing those locations directly instead of buying from stores, breweries relying on models that worked years ago will likely find themselves in a vulnerable position.”



Any brewery that is operating now (and soon to open) that is depending on distribution of beer through the three-tier supply chain business model to be a significant portion of their revenue stream are experiencing a challenging business environment which will just become more challenging over the next few years as more and more small, local breweries open up.

Cheers!

 

The Ithaca Beer Co. issue has little to do with the city itself. They left their original location in a downtown strip mall years ago, and their current operation is in the town. Business at the brewery itself doesn't seem slow, but they're being pinched elsewhere.

Despite what you've seen around Binghamton, Ithaca has 100% faced a squeeze from other regional competition. These smaller brewers in Rochester, the Finger Lakes, and Buffalo have done a fantastic job in capturing local market share and reducing Ithaca's grasp.

Over thep few years, Ithaca has expanded distribution and tried diversifying, but nothing (at least locally) seems to have stuck. Inventory seems to linger longer on shelves, and at least personally, I think that their quality has significantly decreased for the price point. To your point about location, Ithaca's position in the Finger Lakes is inconvenient for some people, especially because it's not a lakeside 'trail' like some of their local competitors.

I'm going to buy something from Big Ditch, Three Heads, Thin Man, Stoneyard, or War Horse before I buy from Ithaca. I'll buy Torpedo, ST IPA, or Long Trail IPA before I go to Flower Power. Maybe Jeff O'Neil's departure hurt them more than anyone realized at the time; I don't know.

Let's put it this way, there's a reason that Victory, Sixpoint, and Southern Tier joined forces, just as Boston Beer and Dogfish Head did. Adaptation and consolidation are the name of the game. CB closing is an example of the old guard folding for a failure to do exactly that, and frankly, Empire's financial history is a dumpster fire.

Other Half basically took over a turn key operation from Nedloh and improved it by leaps and bounds - too bad they aren't fooling anyone with the 'Rochester' moniker. They're easily the biggest name in this area now, I haven't seen a decrease of consumer traffic at any of the other smaller local places nearby, but it is one more place to go besides those operations in financial hardship.

 

FWIW that is when I stopped purchasing Ithaca Flower Power (and Ithaca beers in general).

Cheers!

 

Alas, I wasn't as quick on the uptake, and I legitimately enjoyed my brewery visits until a couple of years ago. Industrial Arts is lights out and gives me a case of "What if" syndrome.

 

Thanks for that. Haven't visited their brewery and wasn't aware they had moved from City of Ithaca to town of Ithaca. They haven't lost any shelf or tap space down here so I assumed they were doing fine elsewhere in the state.
I buy maybe a 6 pack of Nut Brown a year, but I'd hate to see them close down.

 

We have an assload of "new" small breweries that fit that criteria and Avery Odell and NB appear to be doing fine

 

I misunderstood you. I thought you meant the new breweries that were 5 years old. Sorry about that.

 

We were at the Syracuse Brewpub. I recognize the historical importance of Empire, but when your place is empty, one could be a little accommodating (I didn't get into the whole discussion of trying to negotiate with the hostess to get seated and being rebuffed). Frankly, my wife was (rightly) pretty pissed off at how we were treating. We left after one drink and went to The Evergreen which is a little bit of a dive but served half a dozen Middle Ages brews and an amazing Nine Pin cider. If I'd been more in the know, I would have gone to Middle Ages in the first place.

 

In what world would Empire Brewing Company or CB Craft Brewers be considered "iconic?"

 

Well, I spent the first 40 years of my life in the Rochester area, and of the first wave of craft breweries to pop up, CB and Empire would qualify for "Iconic", for the region. It's maybe not the word I would choose, but I also don't argue with its usage.

 

Big fish in a small pond.

We owe much appreciation to these brewers. With great respect for what they have contributed, and made possible for others to benefit; they unfortunately have lost their edge, and appear to be succumbing to more innovative and energetic competition.

As others have noted, this is just market forces vs. breweries that are too slow to adapt. While sad for the few, it opens space for more innovation and opportunities for the next generation. I think this is actually a positive indicator of the industry’s health.

CB’s prior name was Custom Brew Crafters, which described their very innovative business model. They formulated individual recipes for many restaurants and pubs, so their customers had brand specific beer to serve. The beer was unique, at a time when there was little outside BMC. Now, those recipes are ho-hum in comparison to the variety and quality that has become ubiquitous.

 

Consulting my crystal ball... We will continue to see large, regional, and local breweries, with more emphasis on small/local.

Small/local niche/boutique breweries can be nimble and benefit from local bias, to help them build capital. As more of these breweries open, quality and innovation will trim away the ones surviving on local bias alone. I am hopeful that this may eventually lead to regionally unique tendencies, similar to how language has local character.

As for what fills the void of CB’s, maybe something like what happened with Nedloh and Other Half. Maybe, and this is a long-shot, the space becomes an incubator. Or, even more outrageous: If someone has a a high risk/pain tolerance, maybe a home brew club. Invest in a bunch of home-brew kits of various sizes, sell memberships as well as one-off experiences for employee team building, or pre-wedding/celebration activities, or just a fun night out.