Stone Brewing Announces Restructuring & Layoffs

This will help clear up a few things but may not contain the specific information you want:

https://www.beeradvocate.com/commun...-true-craft-as-the-answer-to-big-beer.412019/

 

Tom,

I am indeed aware of the "True Craft" aspect but all of the press I have read concerning the VMG investment lacks the detail of whether the $90 million investment is dedicated towards this venture. Maybe some of the $90 million will be used for "True Craft" and some will be used by Stone Brewing for their use (e.g., retire some debt?)?

I was hoping that since @mwa423 works in the industry it might have the specific details on what's up here.

Cheers!

 

That's why I said it might not contain all the details you were looking for.

However, given the wording of the original announcement (which can also be found in at least one national online news source) Stone has created a new company called True Craft which is where VMG has put it's money. Typically the legal aspects of this kind of deal make it highly unlikely that Stone would be able to do more than borrow money that belongs to True Craft. Doesn't help much to retire one low interest debt for another. :-)

 

It does if the interest rate is even lower and perhaps VMG Stone Brewing Coinvestment, L.P. would be willing to do that for Stone Brewing Co.?

Regular people refinance their mortgages when interest rates go down to save money (interest payment amounts).

Cheers!

 

I think this is something that may be a "law of unintended consequences" thing. The industry did a great job (for the most part) about educating the customer about the importance of freshness. Right up to the point that now a whole bunch of 6-week old beer is being looked at as undesirable by those same customers.

It's very good for the consumer to be aware of the importance of freshness when it comes to certain styles. It is undoubtedly ideal for a brewery's reputation for the customer to be drinking the best representation of their beers. But how is that all going to shake out for the bottom line?

 

Reflection of the industry adjustment we are seeing with crafty beers, fight for local and the big craft battle that's been slowly escalating over the last 5+ years. Feel bad for the 5%, that's never fun and tough economically. Hopefully they can find new employment at a local brewery, I'm sure any newer brewery would be happy to hire someone with experience there.

 

Thanks!

The average or worse beers I'm talking about definitely are cheaper than $15 a sixer, but so are the really great breweries I mentioned with New Glarus at around $8 a sixer depending on location, CW around $10, and Lazy Monk around $9 for a four-pack of pint cans; none of these three are having trouble either, from what I can tell, so I guess there's that.

Most of the average or worse beers sit around $9-10 a sixer, which is more expensive than better regional brewers like Sierra Nevada, Deschutes, Bells, and Anchor.

I don't really think it's for transitional reasons because most of the average or worse breweries do not traffic in transitional styles but rather whatever trend is popular. Not to mention New Glarus is a premier lager brewer (which can be easier to palate for newer craft drinkers), and Spotted Cow (as much as I think it's overrated) is usually the transitional beer in WI.

I have to believe the main thing is either they feel brand loyalty related to locovorism, or they simply do not know better, or maybe they even have acquired a taste for beers that people like us beer nerds deem lackluster.

It is worth mentioning that Wisconsinites seem particularly enthused about supporting local products. New Glarus's entire marketing strategy is based around "Only in Wisconsin;" Wisconsin cheese has a similar cult-like feel to it; see also Wisconsin bratwurst companies and the runaway success of farmers markets even in very small towns throughout the state.

I forgot the most egregious example of a bad brewery in WI: Leinenkugel's. Of course they're Big Beer now, but they sell very well, likely partially as a beer for people who don't like beer with the shandies, but also their branding focuses on how they're still a local brewery.

I try not to begrudge anyone their preferences, but when/if it starts affecting brands that I love and that are clearly of higher quality than brands that succeed on something other than merit, well, I have a problem with that. Yes, things are obviously better now than when BMC reigned supreme, but it would not surprise me that much if Stone and their other big regional brethren preferred the landscape then to now. Even if you only count "good" local breweries, most states have at least one, and many have handfuls. A combination of local and good quality is going to be hard to beat for beer shipped from the other side of the country because it has every advantage: freshness, local recognition, local presence, and cheaper probably due less logistics cost.

Nonetheless, there is nothing I can do but support the breweries I think are great. It's just a shame when it affects people in a very real way like here with Stone. I hope all those affected find work they love even more than Stone. I am wary of Stone's future, and the future of those other breweries that have less diversified product catalogues. Time will tell.

 

It's my opinion and I'll back that by observations of cans I see dated on the shelf. There's a resurgence here in local beers, and it's more than supporting local. Burial makes outstanding beers by anyone's definition, as does Wicked Weed, multiple beers in different styles. They're outstanding beers that are always fresh. Now most Ca beers as an example outside beers like Enjoy By this isn't true. I know damn well Alpine/ Stone/ Ballast Point makes great beers, but they suffer on the shelf, they age and sit unloved. I guarentee Pernicious isn't a Trillium beer , or Heady, but it's a damn good beer, and if it's 5 days old it destroyes most IPAs sitting on the shelf. I buy local because it's really good and really fresh, there's plenty of local stuff that's fresh that I avoid like the plague. The local craft here is booming and it's hurting the producers who distribute on a large scale business, after all the distro is out of their hands here and there's a real glut on some styles.

 

Perhaps I'm alone on this one, but in my opinion this is simply business. Stone doesn't suffer from poor planning, quite the opposite. They saw a market that was saturated with IPAs (a large portion of their current portfolio), and expanded to one that isn't (yet). It will take time though to see if this decisioin will be profitable. It's too soon to make a judgement in my opinion. In addition to that, they saw the need to cut costs and save money (shipping costs as @hopfenunmaltz pointed out, thanks by the way, I didn't know that!) and did so by opening up another brewery on the East Coast.

I don't see how they WOULDN'T be in debt from opening up two new breweries, especially one in Europe. As a result, they had to lay off employees. But as a long term strategy, establishing a market where there isn't one in Europe seems logical to me. At their size, it may be the only move.

One could argue that they could expand their portfolio to other styles, but how well do those actually sell in terms of volume? And if there becomes a market for styles other than IPAs, how long before your local brewery(s) figures out how to brew those styles, if they haven't already? Regardless, perhaps they are in fact planning on branching out with different styles to help sell more beer in the US, but why not try this while simultaneously selling hoppy beer in Europe? They're big enough that they can attempt to do both at the same time.

And while this is "simply business" as I initially stated, it still sucks. Good luck to those laid off, I wish them all the best.

 

Okay, so it's my third post ever and it's a long one but I have a lot to say.

According to an article I read, the City of Richmond's partial financing of Stone's Richmond development ruffled some feathers in Richmond in 2014. The relationships seem to have improved somewhat - a collaboration between Stone and Richmond breweries Hardywood Park Craft Brewery and Ardent Craft Ales is supposed to be out now (but I haven't seen it). Just out of curiosity, can someone from Richmond fill us in on their opinion of the local sentiment about Stone?

I run a beer and wine store in the DC suburbs. When we opened five years ago, we needed beers from the west coast and other far away places because I could not completely fill the shelves with high quality micro beers from breweries closer to home notwithstanding the availability of great beers from Dogfish Head, Victory and others. The few hyper local beers either weren't distributed or weren't very good. Now, the hyper local beers are pushing Stone, Lagunitas, Avery etc. off the shelves. I simply do not have that much room for all of these brands. I can only carry about 100 beers and, for business reasons, I devote about 20 slots to macros. The slots for Corona, Miller Lite, Blue Moon, Stella Artois and a few others are not going away. The other 80 slots are for craft beer. These slots are filled according to consumer demand. Right now my customers want local. We are getting good to great beers from places very close to home such as Denizens, DC Brau, RAR and Manor Hill. All of which are in Maryland except DC Brau of course. If my shop is any indication, and this thread seems to support me, this is what consumers are looking for in craft - hyper local beers whose footprint is tiny. Compare this to wine. A major difference between beer and wine is that wine, at least "craft" wine, is inherently local. For most beers, the only local ingredient is the water. The barley and hops generally come from the same places in Europe and North America. With wine, it's the location of the vineyard which usually directly correlates to the wine's quality. I get wine from far away places because you can't replicate Tuscany, Bordeaux or Sonoma in Maryland. Locally, some wine is pretty good, especially Virginia wine, but California, France and Italy has my local wines beat and always will. The mid Atlantic just does not have the grape growing conditions of other places in the world. You can have the best winemaker in the world using top flight Maryland grapes and the wine will never be as good as if the same winemaker was using top flight Sonoma grapes. Beer, on the other hand, will be very good if it is made by a very good brewer using the same ingredients which are largely available to all of the other brewers. In short, brewers from all over the country have caught up with, and even surpassed, Stone. You can have great Maryland beer. Selling Maryland/Virginia/DC/Delaware and Pennsylvania micro beers gives me the warm and fuzzies. Many of my my customers like the local beers. On the other hand, when I travel out of the mid-Atlantic, I don't want to see familiar beers. I was in New York recently and had a terrific fresh hop beer that was a week old from Chatham. Until three weeks ago I had never heard of that brewery. In short, I admire Stone for its pioneering ways and I have enjoyed many, many Stone beers. But I can only drink so much, and there are so many great options made by people who live and work near me that I tend to favor the beers from closer to home.

 

You make no sense. First you complain that there's too much crap local beer on the shelves, then when I point out a good local beer that I can get fresher than 3 month old west coast stuff, you say that doesn't count because it is a limited distribution beer. Of course it is! It's LOCAL! All LOCAL beers are limited distribution, that's kinda the point. No, it's not comparing a Ferrari to a Kia. Ferraris cost 10x more than Kias and are in a whole different class performance-wise. Sip (just one example) is in the same class as anything from Sierra Nevada or Stone.

Sorry you live in such a crappy area. Maybe you should move? I've got Prison City near me, winner of Paste magazine's IPA blind taste test. I've got Ithaca Beer right down the road, doing all kinds of IPAs all the time. Upstate Brewing in Elmira is doing some off-the-charts canned NE IPAs that are miles ahead of any Sierra Nevada or Stone stuff I can get. Galaxy Brewing in Binghamton just started canning their flagship Andromeda IPA. And the North Brewery right down the street has been churning out some fantastic IPAs of late (brewery only).

Again you are contradicting yourself. First you complain that there's too much crappy local beer, then you say, nah, people aren't going to buy local beers. Which is it?

I think one point that hasn't been brought up, that makes your case more than it does mine, is that people don't have any taste. Don't forget, 80-85% (whatever the number is) of beer sold in the US is crappy macro lagers. Clearly the majority puts other factors ahead of taste. Why wouldn't supporting local be one of the factors?

 

I agree with @EnronCFO. I don't think I've EVER had a bad beer from Sierra Nevada. Some may not be my personal preference, but I never drink a beer from them and think, "This is a low quality offering."

If your local breweries are churning out quality beer like this across the breadth of styles Sierra Nevada does, I envy your local scene.

@EnronCFO knows his stuff from what I've read in the New England forums, and yes, being from Mass we do have access to Treehouse and Trillium. But I also think you're mixing a preference for "beer geek popular" styles, especially those juicy New England IPAs, with quality.
I also think calling Trillium and Treehouse the best beers in the world is a lofty statement at this point. I've been on this site long enough to see numerous Trillium and Treehouse's come and go. I'm not knocking them, I drink Trillium's hoppy beer quite regularly. But there's a lot of breweries in the world, who have been brewing for a long time. You can't compare Treehouse's Julius to Weihenstephan's Hefeweizen and call the former a "better beer" when most Beeradvocate's palates will always take Julius first. Not to mention Weihenstephan's beers travel across the world and arrive here 3 - 6 months old (if you're lucky).

Which is my point. You prefer a "New England-style" IPA over a moderately hopped (by today's standards) Cascade "old school" pale ale. It's not a low quality beer, it's just different. Sierra Nevada LITERALLY can't brew an IPA like Trillium/Treehouse and get it to your door step due to the logistics of shipping and freshness.

But they can brew fantastic beers like their Vienna Lager and Summerfest. When Trillium and Treehouse start brewing beers like that (and not 60 different IPA combinations), and then ship them across the country intact, then maybe we can compare the two. Although, this entire thread would indicate that they may want to stay right where they are.

 

Condescending post of the year!

 

I had a few thoughts that are hopefully a little less negative. Maybe this is just par for the course as business grow, equipment and processes get better, more fine tuned, and pump out more quality beer. It wouldn't be the first time people lost mfg jobs to technology. My other thought is, with opening a second major production brewery in the states, they probably can make a little less beer in their california brewery (which has a state going through the worst drought in decades) and pick up the slack on the east coast while reducing shipping and distribution costs. I was thinking well, maybe they should offer the CA employees an option to move jobs to VA but perhaps with the grants they received from VA, and a promise of jobs, they can't take up those jobs transferring people and need them to be new jobs with more local people getting hired to keep up some agreements. Either way, maybe i'm just being positive since I love stone, and they are better than 100% of the local beer I can get in an hour and a half radius in western Massachusetts.

 

When Treehouse's new brewery is up and running we'll see if they can keep up the quality and if the demand is still there. I expect affirmation on both, but it will be interesting to see how they scale (again).

 

What? Did you read what you typed? I too love Sierra Nevada, it's just about the only one outside of New England I buy. Quality? As defined by what? Like Proclamation, Wormtown, Jacks Abby, Cambridge Brewing, Notch, and my fav, Night Shift. Do throw in the OJ ones of Trillium and Tree House too? I think you need to drink some better local stuff, Boston and MA is world class and killing it, Small ,regional and bigger ones too.

 

So your personal environment is fine, but do you really think that also applies to the rest of the US as a whole, say in places like Kane, PA, Moab, UT or Jamestown ND? Such small town places are still far more numerous than places like Boston, Philly, Portland, etc.

 

Surprised by your lack of beer likes. West like Amherst or say Pittsfield? Tried building 8? Berkshire, Peoples Pint, Wormtown, Wachusett? The newer trappist one in Sterling? More than 100 now in MA.

 

My response was to a MA guy . In general, I think "most" major cites and metro areas have a good to great local beer scene. So by population, most people have access to good local beer, not some tiny town in the middle of nowhere. FYI Moab has the Moab Brewery with Unita and Wasatch beers available to buy. It's a mountain bike destination too.

 

A certain amount of profit is necessary to maintain their budget projections. If sales slips, profits fall, something has to give. They have backed pretty big loans with pretty big promises and need to do what's necessary to maintain those promises. Business is not always warm and fuzzy. Does it suck for those laid off? Sure as hell yes. I've been on the layoff side before, and while it sucked, I knew the company well enough to know that it hurt them tremendously to close segments and lay folks off. I'll bet this stings the hell out of Stone as well, but they still have 95% of their employees and creditors that they have to answer to.