Three Floyds shortage

I consumed BA alpha klause.... was I not supposed too...?

 

I wanted to but I figured I'll have another shot at it.

 

There was a law passed last year that is slangily referred to as the 3Floyds law. I forget the specifics, but somehow it increased the capacity for IN breweries to still be considered microbrews.

 

Someone call Adam Nason, this is BREAKING and needs to be on Beer Pulse immediately

More explanation:
http://www.guysdrinkingbeer.com/will-indianas-beer-laws-keep-up-with-three-floyds-growth/

They moved the cap from 20k BBL to 30k BBL. If they hadn't moved it, FFF was going to have to cap production or close the brewpub. It also impacts self-distribution for places like Sun King in Indianapolis.

 

I'm still trying to find out a good reason for them to continue brewing Pride and Joy.

1. Get rid of Pride and Joy
2. Make more Zombie Dust
3. Profit

 

Pride and Joy is underrated! It's my island beer

 

NO GETTING RID OF PRIDE AND JOY!

 

I see what you did there with continuing the sarcasm and the jokes. Well played.

 

I thought that spot was reserved for Noble Pils.

 

1A, 1B. I found a Noble Pils glass recently at the 96th Payless. Glass whales!

 

Don't be greedy man. Share. You guys have Revolution, Half Acre, Flossmoor Station, Goose Island... We used to get distribution here in Philly. I didn't need to haul ass out to Munster to get a fix. But then I guess the locals screamed bloody murder and they pulled out. If I lived out that way, I'd only ever need to buy a case at a time, because I could come out the next week to get another. Since we can only make it out there once or twice a year, however, and don't have the luxury of stopping by on the way home from work like the people near the brewery do, yeah...we try and get several cases at a time. Especially since there's oh...I dunno...dozens of us in SE PA that enjoy the stuff and like having it around to drink. We have our own breweries out here, and they actually ship out to Chicago. So we've got our area and yours covered. You fuckers need to reciprocate. lol I'm really not that upset about it. I just like causing a scene because it's entertaining. I have to drag ass up to Hill Farmstead to get their shit too, and I don't imagine that ever changing. So it goes. Besides...having an excuse to travel, especially one that involves the acquisition of beer...is a good thing.

 

They're in an industrial complex/area in the middle of nowhere..... By the "turn around" is a field or something.... they have ridiculous amounts of room in their warehouse as it is.

If you want more "Standard" brews, tell them to stop producing ridiculous "Tuesday Releases" and up their capacity.... They haven't outgrown the building they're in, let-alone the area.

 

Agreed that it's underrated, and my wife would probably call it her desert island beer too.

 

Thought experiment - with many liberal assumptions:

30,000 barrel capacity
1 barrel = approximately 3,968 fluid ounces
Total brewery capacity: 30,000 barrels * 3,968 oz = 119,040,000 ounces of beer
3,968 fluid ounces = 331 12 oz. bottles or 156 750 ml Barrel Aged bottles or 180 22 oz. bottles

Revenue generation:
Previous Three Floyds Model, assuming every oz of beer produced bottled and sold: Gross Revenue with 25,000 bottles of Dark Lord and 12 oz. bottles only, assuming current pricing model, all bottle sales at brewery:

Dark Lord sales: 25,000 bottles * $15/bottle = $375,000
Remaining bottle sales (119,040,000 oz - 550,000 oz = 118,490,000 oz remaining): 118,490,000 / 12 oz = 9,874,167 bottles / 24 bottles per case = 411,424 cases sold * $35 case price = $14,399,826

Total Revenue Generated (previous model): $14,774,826

Current Three Floyds Model, assuming every oz of beer produced bottled and sold: Gross Revenue with 30,000 bottles of Dark Lord, Barrel Aged bottles, and 12 oz. bottles, assuming current pricing model, all bottle sales at brewery:

Dark Lord Sales (660,000 oz): 30,000 bottles * $15/bottle = $450,000
Barrel Aged Dark Lord Sales (40,000 oz): 1,800 bottles * $50/bottle = $90,000
Barrel Aged Beer Sales (assuming new beer released every other week, average price $30) (300,000 oz): 26 * 450 * $30 = $351,000
Remaining 12 oz Beer Sales (118,040,000 oz remaining): 118,040,000 / 12 oz = 9,836,667 bottles / 24 bottles per case = 409,861 cases sold * $35 case price = $14,345,139

Total Revenue Generated (current model): $15,236,139
Revenue Growth: 3.12%

While revenue growth is small if prices are kept constant, finding new and innovative ways to increase revenue while keeping costs and prices flat while operating within an industry with capacity constraints is one way in which a business can remain viable over the long-term, quality of product aside.

Also, though the assumptions are quite liberal, the impact of the barrel program is very minimal on overall capacity. (411,424 cases vs. 409,861 cases) I would surmise that nearly the same amount of product is merely being spread out to a larger area, or, alternatively, they are selling more cases at the brewery, which is what they are entitled to do so long as their agreements with their outside customers are met in full.

 

nice avatar.

I'm just quoting 3 floyds themselves. there is only so much room that they can build close to those train tracks behind them. there is pretty much no room left in that warehouse. sorry if u live right by there or something but i'm just saying that if they want to expand they need to move.

 

Very liberal assumptions, since this doesn't account for keg sales.

 

You guys are the bestest.

 

Or they purchase a secondary brewery space similar to what New Glarus or Revolution have. Or, they do what GI did a long time ago, create a parent company, and have the brewpub be separate from the actual brewery. (I'm not sure what Indiana law does/doesn't allow for in that regard.)

Another issue is that any expansion is a huge capital risk that would be hard to recoup if the market for craft beer goes south. There's no reason to think that demand will keep increasing at the same rate for the next 5 years.

The adult beverage market sees trends come and go, whether it's frozen tropical drinks, wine styles, cocktails, flavored vodkas, odd "martini" drinks, popular spirits, etc. Craft beer happens to be "trendy" right now. That may not last. So, a multi-million dollar expansion may not be the best business plan, especially when you're already making money hand over fist.

 

I agree with you. I think the main reason they are not doing so is because they do not want to take on the risk. If they wanted to take a loan out they can definitely do it but I think they are really comfortable where they are now and after just getting out of debt and now are pretty risk adverse.

 

Also also, they may want to just focus on more interesting projects. Building a full production brewery most likely isn't as interesting as opening another brewpub in Chicago or Europe.