News Smuttynose Brewing Co. to be sold at auction

Discussion in 'Beer News & Releases' started by Rysk22, Jan 18, 2018.

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  1. Rysk22

    Rysk22 Aspirant (245) Nov 12, 2014 Massachusetts
    Beer Trader

    Hopefully someone swoops in and can turn the business around without destroying it. I've yet to visit this new place but I've heard great things, and Smuttynose holds a special place from my early craft years. Might have to buy a pack of Finestkind today.
    http://www.fosters.com/news/20180118/smuttynose-brewing-co-to-be-sold-at-auction
     
  2. TheMattJones88

    TheMattJones88 Initiate (112) Sep 12, 2009 Massachusetts
    Beer Trader

    Yeah, here's to hoping the new owners can keep things going and improve their presence in the market.

    Smuttynose holds a really special place in my heart, they were my first favorite brewery. Finestkind and Old Brown Dog were staples in college for me.
     
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  3. EnronCFO

    EnronCFO Zealot (525) Mar 29, 2007 Massachusetts
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  4. Jbrews

    Jbrews Aspirant (254) Aug 6, 2013 New Hampshire
    Beer Trader

    Being a Portsmouth resident, this is a bummer for sure.

    Wonder if Craft Brewers Alliance will come into play here....
     
  5. cavedave

    cavedave Poo-Bah (2,455) Mar 12, 2009 New York
    Beer Trader

    "Smuttynose owner Peter Egelston said, “The company’s financial models were based on 20 years of consistent growth but the explosion of microbreweries has led to changing dynamics in the marketplace. This dramatic shift occurred just as Smuttynose committed to a major infrastructure investment with the construction of the new production facility. As the turmoil in the marketplace stabilizes, Smuttynose, a trusted brand with strong consumer loyalty, can regain its footing with a major infusion of capital.”
     
    Tdizzle, SaltofOH, Brolo75 and 7 others like this.
  6. cmoney13

    cmoney13 Initiate (166) Sep 9, 2017 Massachusetts

    :slight_frown: I still really like finestkind.
     
  7. jlordi12

    jlordi12 Devotee (430) Jun 8, 2011 Massachusetts
    Beer Trader

    Freshness is killing all the legacy breweries
     
    nc41, rather, Brolo75 and 12 others like this.
  8. ecpho

    ecpho Aspirant (212) Mar 28, 2011 New York

    uh oh, I will have to infuse them with some capital next time I see them in the grocery store.
     
    kexp, flat_lander, GOBLIN and 9 others like this.
  9. lic217

    lic217 Champion (892) Aug 10, 2010 Connecticut
    Beer Trader

    Robust porter and old dog were both excellent brews
     
  10. drtth

    drtth Poo-Bah (3,459) Nov 25, 2007 Pennsylvania

    One more, and very few can convincingly blame it on producing sub-standard beers.
     
    drmeto, Tdizzle, Kendo and 28 others like this.
  11. Leebo

    Leebo Initiate (180) Feb 7, 2013 Massachusetts

    Love me some robust porter.
     
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  12. Squire

    Squire Poo-Bah (1,907) Jul 16, 2015 Mississippi
    Premium Member Beer Trader

    From the viewpoint of a spectator "an explosion of microbreweries" can be viewed as a good thing.
     
  13. hopfenunmaltz

    hopfenunmaltz Meyvn (1,383) Jun 8, 2005 Michigan

    Just saw a link to the auction on Facebook. Another sign that the market has slowed. The bet on continued high growth didn’t pan out.
     
    Brolo75, George1005, Jaycase and 4 others like this.
  14. GrimmGrinninGhost

    GrimmGrinninGhost Initiate (11) Dec 27, 2010 Massachusetts

    This is sad but not entirely unexpected. I remember going to their old garage brewery. They talked for years about building their new facility and it happened to open up as the boom was hitting.
    Their new facility is gorgeous and they did a nice job with hayseed. Smutty was a go to 12 years ago. Old brown dog was a staple in my fridge. I still stop in to their new facility from time to time for a sampler, but rarely do I buy any of their normal offerings anymore. Some of their smuttlabs offerings have been enjoyable. Apple Brandy gravitation was a treat. Seems like they're a large enough brand now that only a large AB type buyer could afford them.
     
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  15. cavedave

    cavedave Poo-Bah (2,455) Mar 12, 2009 New York
    Beer Trader

    The changing marketplace model, as Mr. Eggleston notes above, is one of the best ongoing discussion within discussions here on BA. Given somewhat of an ominous dataset now by this happening to such a stalwart Northeast brewery.
     
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  16. jrnyc

    jrnyc Meyvn (1,281) Mar 21, 2010 New York
    Premium Member Beer Trader

    Yep, this already is and is going to have a huge impact on bigger breweries. Smuttynose, Green Flash, Stone, etc., etc. And it rarely gets talked about on here, but the local beer stores have to be taking a big hit. When people can go to their local small brewery who are making great beer that is fresh, they are not buying from their local store.

    Craft Beer Cellar near me closed down, nice store, good selection, knowledgeable workers but when I can go to local awesome breweries near me and buy direct, it has a big hit on the middleman's business.
     
  17. Immortale25

    Immortale25 Poo-Bah (3,061) May 13, 2011 North Carolina
    Beer Trader

    Totally saw this one coming. Just the other day I was like "No one's buying this stuff anymore." As others have said, Smuttynose was among the first craft offerings I had experimented with as I was cutting my teeth. However, I did not like Finest Kind when I first tried it nor Old Brown Dog. As my palate started to develop, I began to appreciate their beers more, especially in their Big Beer Series (their Wheat Wine still is among the best I've ever had), but they don't produce beers - at least on a national level - that scratch the itch that today's beer geek has, i.e. hop bombs, BA beers and fruited sours. The last beer I even had from them was about two years ago when Durty came out and it was good, but not something I felt the need to revisit. It's a shame, but you've got to stay relevant to survive in today's cutthroat market.
     
  18. Alexmc2

    Alexmc2 Aspirant (274) Jul 29, 2006 Massachusetts

    This saddens me greatly. Smutty was always one of my go to brands and one of the ones that introduced me to great craft beer. Wish I had the capital to buy and turn them around.

    Should we have a BA car wash to raise money to bid?
     
  19. Ranbot

    Ranbot Zealot (512) Nov 27, 2006 Pennsylvania

    Wow... did not see that coming. I hope they survive.

    ditto.
     
    HorseheadsHophead likes this.
  20. jesskidden

    jesskidden Meyvn (1,295) Aug 10, 2005 New Jersey

    CBA just sold the 220k bbl. capacity Woodinville, WA brewery to a non-brewing company, which will use the building for offices and sell off the equipment. (An deal to sell it to Pabst fell through earlier).

    In the Brewbound story (below) they mention the company is "considering its options" for their Portsmouth, NH pub and it appears that for needed brewing capacity, they are now brewing at partial-owner AB facilities.

    https://www.brewbound.com/news/craft-brew-alliance-sell-woodinville-brewery-24-5-million

    Well, "lack of freshness" anyway. There's a sixpack of their Vunderbar Pilsner still sitting on the shelf of one of my local stores that I'm pretty sure is the same one I rejected as "too old" a year or so ago.
     
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  21. OntheLambic

    OntheLambic Disciple (322) Jan 9, 2015 Connecticut

    I think it's safe to say that we are going to continue to see more of the medium sized breweries that are highly leveraged struggle due to increased competition and the shift towards local options, rather than those with a wider distribution footprint. Medium to large breweries with wider distribution that have made recent significant capital investments in infrastructure/production are likely walking on eggshells, given the direction the market appears to be headed. The shake out/correction is coming and I think the impact is going to be truly realized in the next 2-3 years, once the access to easy money runs dry.

    With that said, I'll be pulling for these guys, Smuttynose is one of the breweries that introduced me to the craft game.
     
  22. DISKORD

    DISKORD Initiate (174) Feb 28, 2017 North Carolina

    Yeah, but what about if you want something that's not local?
     
  23. EnronCFO

    EnronCFO Zealot (525) Mar 29, 2007 Massachusetts
    Beer Trader

    Yeah, saw the listing for that brewing equipment the other day. Good luck finding a buyer for something that size.
     
    Loops likes this.
  24. EnronCFO

    EnronCFO Zealot (525) Mar 29, 2007 Massachusetts
    Beer Trader

    Same here. I like to joke that there was a period from 2008-2010 where I drank more Smutty/Portsmouth beers than anyone not related to the breweries. It’s probably not far off from being true, Smutty Finest Kind was always in my fridge and my office was around the corner from Portsmouth.

    But I have to say, when they released the menopausal beer last year, it was a pretty clear signal that they were a bit out of touch with the current market.
     
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  25. smutty33

    smutty33 Defender (641) Jun 12, 2009 Connecticut
    Beer Trader

    Wow, truly saddened to hear this....

    So many awesome memories from that old garage style brewery on 20 Heritage ave. Smuttynose variety packs are what really brought me full swing into craft beer. Used to love going to any tap take-over I could find to try delicious barrel aged offerings and the infamous "Short Batch Series". My absolute favorite craft brewery for YEARS. Must admit though, not entirely surprised by this news as their presence has brutally diminished here in CT.

    I hope the new owners give a damn, and keep the brewery right where it is and move forward.

    Long live Finestkind IPA!!
     
  26. woodchipper

    woodchipper Savant (968) Oct 25, 2005 Connecticut
    Premium Member

    Wow. I was drinking an Old Brown Dog last night thinking that I have not thought of Smutty in a while or purchased their great products in a while for that matter. Also was thinking I should go see their new facility soon.
    Should of, could of, would of.
    I hope something good comes out of this sale. I hope Egelston comes out of it okay. If he is reading this thread- Thanks for the memories.
     
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  27. hopfenunmaltz

    hopfenunmaltz Meyvn (1,383) Jun 8, 2005 Michigan

    The first six articles in Beer News are 2 about beer, and 4 about breweries closing or restructuring. Thought that says something about the market.
     
  28. JohnnyChicago

    JohnnyChicago Champion (815) Sep 3, 2010 Illinois

    Love Smuttynose. This is a bummer.

    I always find it quizzical when breweries talk about the ‘unprecedented explosion of breweries’ when the market has been trending in the direction for half a decade or longer.

    The little guys have advantages over their big, slow counterparts. They can try new recipes and techniques on a whim. They aren’t hindered by long-term sales and marketing campaigns and flagship brands. They can kill and rebuild themselves every couple of years, constantly adjusting to the changing market.

    The big, older craft brewers, with a couple of exceptions, really only have five options nowadays:
    1. Close or sell. The suicide option. Cut your losses, get what you can and get out.
    2. Buy. Take a cue from the big guys and use your profits to grow by acquisition.
    3. Create the illusion of growth by constant expansion into new markets. You’ll see an immediate bump in sales as you open a new market followed by a permenant slump as oversold beer ages on shelves. When you run out of new markets to open up, you either go with option number 1, like Ballast Point, or, like Green Flash...
    4. Shrink your distribution footprint and focus on the local, hoping that your hometown business will be enough.
    5. Embrace the Red Queen hypothesis! Probably the most exciting option. You can still maintain your flagship beer or beers, but go full in on the evolution and continuous innovation. A combination of setting trends, following trends, and just throwing shit at the wall to see if it sticks will go a long way. Really, only your own lack of creativity and imagination can kill your growth. Stone and Sierra Nevada come to mind.
    Good breweries will embrace the new normal and hire the right people to make the right calls and choose the right option for the business and it’s employees.

    Bad breweries will higher yes men and head-in-sand standpatters who will post misleading numbers to fool investors, then bail in the 11th hour when it all comes crashing down.
     
    #28 JohnnyChicago, Jan 18, 2018
    Last edited: Jan 18, 2018
  29. kinopio

    kinopio Aspirant (238) Apr 30, 2009 Massachusetts
    Beer Trader

    It makes sense that Night Shift was doing some brewing there since Smutty was only brewing at 50% capacity.

    This comes as a surprise to me but perhaps it shouldn't because I went from buying Smutty often for a decade to not buying it at all in the last 3 years.
     
  30. cavedave

    cavedave Poo-Bah (2,455) Mar 12, 2009 New York
    Beer Trader

    -Better quality.
    -Fresher.
    -More affordable.
    -Local.
    -Hot style of the moment

    Better have 3 of these or more if you are thinking of expanding in today's market. Better have at least two if you hope to still exist in a few years. Just my .02
     
  31. AlcahueteJ

    AlcahueteJ Crusader (725) Dec 4, 2004 Massachusetts

    I would say I'm surprised...and I am, but not about this...

    I'm surprised there aren't MORE breweries closing or having to sell.

    I love Smuttynose, but admittedly hardly purchase them anymore. Finest Kind was one of the very first IPAs I ever tried, and I still distinctly remember that first sip being an explosion of grapefruit....and BAM, I was hooked, I instantly "got" what craft beer was (this was back in the early 2000s).

    But I recently had it on draft, and I think the West Coast style IPA (ok, it's technically not "West Coast", but it's bitter, and not a New England style) is simply not doing it for me anymore. I also had a Green Flash West Coast IPA recently, same thing.

    I feel that style was a nice foot note in the US craft brewery story, but it was simply a stepping stone as the style has evolved. The overly bitter hop bombs of the past are a bit too unbalanced for my palate these days. But I still dig Celebration, but that's always been more balanced/its own beast.

    My point being, Smuttynose's best sellers are a bit antiquated, like Old Brown Dog and Finest Kind. They're still a great brewery, and I still like their Vunderbar Pilsner. And this year's Oktoberfest was a nice Maibock-like riff on the pale Oktoberfest style.

    But you can only go so far on year old stock of Vunderbar and a seasonal Oktoberfest. If you're not selling day old 16 oz. cans of New England style IPA straight from your packed tap room...you're kind of screwed.
     
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  32. Leebo

    Leebo Initiate (180) Feb 7, 2013 Massachusetts

    MA guy here. My 2 CBC stores on my commute home get 90% of my business for beer. I get stuff from most of my local breweries, 2-7 days old. All the time. Works for me.
     
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  33. jrnyc

    jrnyc Meyvn (1,281) Mar 21, 2010 New York
    Premium Member Beer Trader

    99% of the IPAs I buy are local, they are fresher and better than what I can buy on shelves. I do buy Stouts and Sours off the shelves though.
     
    cavedave likes this.
  34. MistaRyte

    MistaRyte Devotee (437) Jan 14, 2008 Virginia

    Last thing I had from Smuttynose was Really Old Brown Dog (a kick in the head old ale) and the Baltic Porter. Both excellent.

    They'll be missed.
     
  35. Alexmc2

    Alexmc2 Aspirant (274) Jul 29, 2006 Massachusetts

    I don't disagree. Honestly, I'd have bought more Smutty if I could find it fresh. Seems like they were always a day late to the innovation dance. That is crazy to me since Peter had Portsmouth Brewery as a built in testing facility to note trends. The NEIPA craze has sucked so much oxygen from the local craft market, you're seeing long term market trends accelerate.

    The Smuttlabs stuff was always intriguing, if not always a hit (with me/my personal preferences anyway). With the destination facility of Towle Farm, they'd have been perfectly positioned to crank out a solid NEIPA for an on-site release. You're checking all the boxes: Local, sustainable beer friendly food in an interesting setting.

    I wish I could dig into their distribution and P/Ls to see what they did 'wrong' beyond failing to innovate and change with the market.
     
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  36. TargaFlorio

    TargaFlorio Defender (643) Jul 3, 2012 Indiana

    I drank a lot of Finest Kind the past couple of years. Surprisingly, I could often find it relatively fresh here in Indiana and the price was always right (the flavor and the price were a nice contrast to all the NE Style IPAs around). I haven't noticed it on the shelf in the past couple of months. Meant to ask about it last week and forgot. Really hope I get to drink it again.
     
  37. EvenMoreJesus

    EvenMoreJesus Savant (914) Jun 8, 2017 Pennsylvania
    Premium Member

    Not for nuthin', but this is the very hallmark of mismanagement.

    I wouldn't say this is as much to blame on the growth of the craft beer market slowing, because the growth has slowed, not stopped or contracted. The craft beer market has changed and those who failed to make the appropriate changes to stay relevant are experiencing difficulty.

    Agreed. This runs counter to what I've expected to happen with the market. Quality has not been the determining factor for success. It seems to be relevance in regards to trends.
     
  38. jageraholic

    jageraholic Devotee (412) Sep 16, 2009 Massachusetts
    Beer Trader

    Damn, I still buy a couple cases of smutty per year. Their Robust Porter, Baltic Porter and Really Old Brown Dog are top notch. Just drank a couple FinestKinds over the weekend best by of May 2018 and the beer was delicious. unfiltered so slightly haze, big grapefruit flavor, not as bitter as I remembered. I hope a macro doesn't buy them so I can still continue to purchase. Love visiting the location as well, Hayseed is great.
     
  39. drtth

    drtth Poo-Bah (3,459) Nov 25, 2007 Pennsylvania

    That was indeed my point. The demographics are changing, but there are lots of discussions on here where people express the belief that in the changing market the breweries that get "weeded out" will be the ones making substandard beer.

    Much more likely is those, who, as you suggest, misjudge the trends, and dynamics of the marketplace, etc.
     
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  40. JackHorzempa

    JackHorzempa Poo-Bah (3,545) Dec 15, 2005 Pennsylvania
    Premium Member

    I am not too surprised about this announcement because of a number of topics which have already been discussed by others:

    How well was/is Smuttynose selling?

    @Immortale25 did a fine job expressing my personal thoughts via the post of: “Just the other day I was like "No one's buying this stuff anymore." I have been thinking along these lines for the past 4-5 years. I just did not witness Smuttynose selling briskly at my local beer stores. This bring me to a second point:

    Why did Smuttynose invest and expand a few years ago?

    I already articulated my observations about the ‘saleability’ of Smuttynose beer above. The best that I could rationalize is that maybe Smuttynose is selling real well in its home region of New England? Based upon discussion on BA this did not seem to be the case so I then further rationalized: Maybe BAs are not enthusiastic about purchasing Smuttynose but the other portions of the craft beer market are?

    @OntheLambic expressed some business thoughts I was having:

    “I think it's safe to say that we are going to continue to see more of the medium sized breweries that are highly leveraged struggle due to increased competition and the shift towards local options, rather than those with a wider distribution footprint. Medium to large breweries with wider distribution that have made recent significant capital investments in infrastructure/production are likely walking on eggshells, given the direction the market appears to be headed. The shake out/correction is coming and I think the impact is going to be truly realized in the next 2-3 years, once the access to easy money runs dry.”

    A combination of non-growing sales plus a large investment in a new/expanded brewery is simply not a sustainable business model given the contemporary craft beer market conditions.

    It will be interesting to see how the auction goes. Perhaps if another business can obtain Smuttynose at a ‘fire sale’ price then this brewery/brand can be sustainable in the future?

    I am sorry to read/hear this news. I really wish that Smuttynose did not make the business decision to invest/expand into a new brewery but instead decided to just stay status quo with their old brewery.

    Cheers!
     
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