News Tallgrass Production Brewery Suspends Operation

Discussion in 'Beer News & Releases' started by StarRanger, Aug 24, 2018.

  1. StarRanger

    StarRanger Initiate (124) Nov 27, 2006 North Dakota

    https://www.mhk.business/trending/tallgrassbrewingannouncesclosing

    "Manhattan, Kansas-based Tallgrass Brewing Company has confirmed with MHK Business News that the production plant will suspend operations indefinitely after Friday, August 24. The employees of the regional brewery will be furloughed. The Tallgrass Tap House will remain in operation."
     
  2. Mute_Ant_Brew

    Mute_Ant_Brew Initiate (56) Mar 28, 2017 Wisconsin
    Trader

    Just got this sent to me from the wife. Very unfortunate news for, what i consider, a great brewery.
     
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  3. DarkDragon999

    DarkDragon999 Aspirant (230) Feb 13, 2013 Rhode Island

    “A few short years ago, craft beer drinkers were going to the liquor store to buy their beer. As craft beer became more prolific, people started frequenting their local taproom or brewery instead of buying regional or national craft brands from the liquor store. For a small, regional brewery like Tallgrass, that shift hit us really hard,”

    So does this mean a lot more small, regional breweries will be closing then ?
     
  4. Oktoberfiesta

    Oktoberfiesta Aspirant (238) Nov 16, 2013 New Mexico

    Anyone familiar with what they were producing before the expansion? They mention full capacity for awhile. What was their goal with the new building bbl wise?

    18 states sounds like a green flash sort of problem. Too small and yet not big enough.

    There’s nothing wrong with just totally dominating your home market year over year and having smaller upgrades.

    This one seemed to take a bit too long. They needed to have the funding etc and be up and running by 2014

    Also. Quality of product. Nothing really above 4.0 on ba. What stands to be ‘solid’ in your true home market may not go over so well elsewhere. They stayed within their home range but still failed. One now needs to be stellar to impress the masses.
     
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  5. Harrison8

    Harrison8 Poo-Bah (2,532) Dec 6, 2015 Missouri
    Premium Trader

    Buffalo Sweat original, 8 & 16 Bit, and Pub Ale.

    I believe the extra brewing facility is what has brought about a lot of the Buffalo Sweat variants, King Buffalo, Jam series, etc.

    Fun fact: I sent out Buffalo Sweat regular and vanilla as extras in my first several trades, although I've never reviewed/rated Buffalo Sweat myself.
     
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  6. jesskidden

    jesskidden Meyvn (1,325) Aug 10, 2005 New Jersey

    Some financially-overextended ones, sure.

    This 2015 Press Release pdf announcing the new facility (50 bbl. brewhouse, 100k bbl capacity) said:
    Brewers Association's stats have them peaking at 21.8k bbl. in 2015, dropping to 20k in '16 and 15,181 barrels last year.
     
    #6 jesskidden, Aug 24, 2018
    Last edited: Aug 24, 2018
  7. Squire

    Squire Poo-Bah (1,979) Jul 16, 2015 Mississippi
    Premium Trader

    Regrettable, I liked their stuff, but rarely bought it because there were other choices I liked as well or better.
     
  8. Hoos78

    Hoos78 Aspirant (207) Mar 3, 2015 Ohio

    That’s a bummer. I did enjoy many of their beers that I tried...just not enough to become a high rotation buy. Regular Buffalo Sweat was fairly regular in my fridge as a really good everyday stout.

    Frankly, I have this concern for many similar sized breweries. I really don’t want to name names as I’m loathe to put bad juju out there, but you probably know the breweries that are potential casualties.
     
    #8 Hoos78, Aug 24, 2018
    Last edited: Aug 24, 2018
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  9. JackHorzempa

    JackHorzempa Poo-Bah (3,639) Dec 15, 2005 Pennsylvania
    Premium

    Yup, the beer market conditions for distributing craft breweries is hyper-competitive right now. I think the folks of Tallgrass summed it up well:

    “A few short years ago, craft beer drinkers were going to the liquor store to buy their beer. As craft beer became more prolific, people started frequenting their local taproom or brewery instead of buying regional or national craft brands from the liquor store. For a small, regional brewery like Tallgrass, that shift hit us really hard,”

    If people are spending their beer budget on the beers of "their local taproom or brewery" then there is little (or no) money left to purchase the beers of the distributing breweries. There will be impacts from this changing, dynamic aspect of the craft beer market and we have already read about how this impacted Tallgrass.

    Cheers!
     
    islay likes this.
  10. Number1Framer

    Number1Framer Initiate (105) Mar 13, 2016 Wisconsin
    Trader

    I'll be sad not to see their Key Lime Pie kettle sour on the shelf anymore. Guess I better grab another sixer before it's gone.
     
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  11. thebeers

    thebeers Poo-Bah (2,168) Sep 10, 2014 Pennsylvania
    Premium Trader

    Jack or @jesskidden, do you have any data on direct sales at taprooms versus retail sales? Anecdotally, I've seen it happening. But it's hard to judge how big this is compared to, say, just more retail shelf competition -- which also seems to have exploded.
     
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  12. JackHorzempa

    JackHorzempa Poo-Bah (3,639) Dec 15, 2005 Pennsylvania
    Premium

    The short answer is that I do not have this data.

    Longer answer:

    It is my understanding that data for brewery taproom sales is tough (impossible?) to come by. Brewery Taproom sales are not collected by IRI. Bart Watson the economist of the Brewers Association apparently uses surveys to collect some data here:

    https://www.brewersassociation.org/insights/analyzing-2017-craft-brewery-growth/

    MillerCoors did some of their own research here with the headline being: "Brewery taproom visits dragging down the corner bar".

    https://www.millercoorsblog.com/news/brewery-taproom-visits-dragging-down-sales-at-the-corner-bar/

    For the small, local breweries with taprooms the plus for them is they receive 'extra' profit. When they sell you a pint at the taproom for say 5 bucks they are realizing as profit the margins that otherwise would have went to the Wholesale Distributor and Retailer under the Brewery -> Wholesale Distributor -> Retailer (bar) supply chain.

    Needless to say but volume of beer sold is less for a single taproom vs. if the beer was widely distributed. Is is a better business model for a brewery to solely sell their beer at a taproom (and realize 'extra' profit) or to sell more beer via distributing but realize less profit per unit volume? I suppose the answer here will vary per each individual brewery?

    Cheers!

    P.S. The other consideration to keep in mind: Many of the Brewery Taprooms around me also package their beers (e.g., Mobile Canning Services). I see lots of folks come in to drink a pint or two and then purchase cans of the beers to take home for home consumption. It is not just an on-premise thing for these taprooms.
     
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  13. Alefflicted

    Alefflicted Initiate (72) Dec 2, 2017 Minnesota

    Well it's a good thing I just brought in a few mixed 12 packs into the store. I'll be able to have a few more of their brews before they are gone forever.
     
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  14. Czequershuus

    Czequershuus Poo-Bah (1,522) Feb 7, 2014 Minnesota

    Very unfortunate news, Buffalo Sweat is a real standard bearer for the style, and they have been knocking it out of the park with affordable 6 packs kettle sours. Not complex beer, of course, but fun, and at the lowest price for the style in the area.

    Oddly, those sours have been blowing up in our area, I bet my stores Tallgrass sales are up substantially from last year.
     
  15. Harrison8

    Harrison8 Poo-Bah (2,532) Dec 6, 2015 Missouri
    Premium Trader

    Those affordable sour 6 packs are one of my friends go-to choice. It's about the only choice for affordable sours in a 4 or 6 pack around here. Crane brewery has added a 6 pack of 12oz bottles to their abilities, but haven't put any of their sours in them yet. Maybe they'll seize this gap.
     
    #15 Harrison8, Aug 24, 2018
    Last edited: Aug 24, 2018
  16. thebeers

    thebeers Poo-Bah (2,168) Sep 10, 2014 Pennsylvania
    Premium Trader

    Thanks, Jack. I definitely get the advantages of cutting out the middlemen. And I'm sure people lining up for cans at Tired Hands, for example, cuts somewhat into the sales from Victory or Troegs. I'd like more evidence, though, that those taproom sales are more significant than just increased competition on the retailers' shelves.

    No dog in this fight. Just curious.
     
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  17. TongoRad

    TongoRad Poo-Bah (2,454) Jun 3, 2004 New Jersey
    Premium Trader

    Yeah, even though the current trends aren't in the larger brewer's favor, I bet we'll start to see that it was the over extension based on unreasonable projections that turns out to be the real poison pill in any future closings. It sure does look like it in this case.
     
  18. EvenMoreJesus

    EvenMoreJesus Champion (809) Jun 8, 2017 Pennsylvania
    Premium Trader

    The industry is definitely trending this way. Earlier this year a bigger local brewery, Rivertowne, filled for Chapter 11 because of similar management "issues".

    https://triblive.com/local/westmore...towne-brewing-files-for-chapter-11-bankruptcy

    I'm sure there are similar examples in every area.
     
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  19. JackHorzempa

    JackHorzempa Poo-Bah (3,639) Dec 15, 2005 Pennsylvania
    Premium

    Having data for Brewery Taproom sales would be a real plus. If you ever find this information please share it with me (and Bart Watson).

    Cheers!

    P.S. With around 3 new craft breweries opening every day, collecting accurate data here is indeed a HUGE challenge.
     
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  20. Brewday

    Brewday Initiate (108) Dec 25, 2015 New York

    and in 2015 the company set out to build a large-scale production brewery.

    They should have known 3 yrs ago that due to the increase in new brewery's it's probably not a good ideal to expand. Almost every Brewery I've visited recently is about 100 sq feet.
     
  21. thebeers

    thebeers Poo-Bah (2,168) Sep 10, 2014 Pennsylvania
    Premium Trader

    Taproom sales numbers would be great -- but even just data on craft beer sales through retailers by year would be pretty informative.
     
  22. JackHorzempa

    JackHorzempa Poo-Bah (3,639) Dec 15, 2005 Pennsylvania
    Premium

    That data is partially available via IRI; they track beer sales through retailers like supermarkets, convenience stores,...

    The IRI data is not complete since it does not track all retailers. One example is beer sales in PA (e.g., Retail Beer Distributors).

    Cheers!

    P.S. I do not have access to IRI data but perhaps some of this information is listed in reports on the Brewers Association website.
     
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  23. JackHorzempa

    JackHorzempa Poo-Bah (3,639) Dec 15, 2005 Pennsylvania
    Premium

    Below is from the analysis by Bart Watson (March 28, 2018) that I linked above:

    A More Mature Market

    As with every year, 2017 brought changes to the craft brewing market. Nearly 1,000 breweries opened, increasing competition while growth decelerated another small notch. Given that there still appear to be thousands of breweries in planning, this pattern is likely here to stay for several years. It will be difficult for all breweries to succeed in this environment, but professional brewing is fundamentally a business, and in any business there is the risk of failure.”

    I do not know what was published in 2015 but the above citied paragraph presents a sobering picture IMO.

    Cheers!
     
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  24. Harrison8

    Harrison8 Poo-Bah (2,532) Dec 6, 2015 Missouri
    Premium Trader

    Does this make me shameless? The store rep saw I was eyeing Tallgrass and he said "you better get it while it's still available." News has spread pretty quickly around the KC Metro area.

    [​IMG]

    8-Bit is new-to-me, but Buffalo Sweat is an old favorite.
     
  25. ypsifly

    ypsifly Meyvn (1,025) Sep 22, 2004 Michigan

    Every time this happens, I'm left wondering if the brewery would have been better off hiring reps to work in the market BEFORE increasing production. Brewers shouldn't depend upon their distributors to push the product. You need your own boots on the ground getting handles and shelf space. An effective brewery rep can make a difference in sales both on premise and in bottle shops. I never met a Tallgrass rep and sales, at least in my store, have been lackluster after the "two week honeymoon" most breweries enjoy after first getting distro here.
     
  26. DarkDragon999

    DarkDragon999 Aspirant (230) Feb 13, 2013 Rhode Island

    [​IMG]
    "The first Belgian-style Tripel ever released in a can." according to their website.
     
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  27. JackHorzempa

    JackHorzempa Poo-Bah (3,639) Dec 15, 2005 Pennsylvania
    Premium

    That is indeed sage advice.

    Of the brewery brands you carry in your store, what percentage would you say have Reps that visit you and 'sell' their beers to you?

    Cheers!
     
    Bitterbill likes this.
  28. islay

    islay Initiate (193) Jan 6, 2008 Minnesota

    I wouldn't call Tallgrass small, at least by craft brewery standards, but I think all breweries that depend on distribution, especially distribution outside of their home market and extra-especially those that depend on revenue growth to be profitable, are in serious danger.

    There are a lot of breweries making terrible beers that impress the masses (including terrible beers that receive very high ratings). The idea that the likely impending shakeout disproportionately will negatively impact breweries making bad beer is wishful thinking. There are some very good breweries that have fallen into the trap of excessive optimism about future growth prospects in the industry.
     
  29. ypsifly

    ypsifly Meyvn (1,025) Sep 22, 2004 Michigan

    About 10 maybe 15% and those brands do relatively better than most others because of it.
     
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  30. donspublic

    donspublic Poo-Bah (1,573) Aug 4, 2014 Texas
    Premium Trader

    Man sad to see this. I brought a lot of their beer down from Oklahoma before they distributed here in Texas. That tripel was solid, and they had a BA version of it called Wooden Rooster which was outstanding. Loved the Buffalo Sweat and it's variants, all the canned sours were good, and at a good price point. What kills me is they have never made a really good hoppy beer. They had Ethos IPA out there which was a solid old school IPA but they discontinued it. And the other beer that I always had a hard time getting was Big RICC, which was a great Coffee Stout that was begging to be put in a barrel. I will miss them, fortunately there is a shit ton of fruited kettle sours on the market now to replace what I used to get from them (outstanding beach beers).
     
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  31. Oktoberfiesta

    Oktoberfiesta Aspirant (238) Nov 16, 2013 New Mexico

    So looking at this link , they were second in their area only to boulevard. I know it’s been mentioned before but cigar city made mention that they were going down a vicious cycle where they would have had to spend millions in order to make any sort of money long term.

    At peak 16k capacity, can a brewery not run profitably? Was a jump to 20k not feasible? 16 to 100 is a AB InBev buyout sort of plan.

    I get having one restaurant and then wanting to expand and expand and expand and strike while the iron is hot. But did no one see this coming from a beer perspective?

    It’s always amazing to me to see seemingly successful companies go about being mismanaged. Many successful places are one mistake away from going under. Scary.
     
    russpowell likes this.
  32. Harrison8

    Harrison8 Poo-Bah (2,532) Dec 6, 2015 Missouri
    Premium Trader

    Tallgrass did do well with their barrel aging. I purchased their "explorer" pack that featured a few big beers and was impressed with all of them, but especially Wooden Rooster.

    I'm disappointed they never put Big Ricc in barrels. It's hands down my favorite from them, with Wooden Rooster in second place.
     
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  33. Harrison8

    Harrison8 Poo-Bah (2,532) Dec 6, 2015 Missouri
    Premium Trader

    I think this topic has been discussed on this forum in regards to the "craft beer bubble bursting", but as we get more and more breweries, it'll become apparent which are good on the business side of the house vs. focusing on making beer. It's a business, a business about making and selling beer, but a business none-the-less.
     
  34. Tilley4

    Tilley4 Poo-Bah (1,968) Nov 13, 2007 Tennessee
    Premium Trader

    Truly unfortunate news.... While I didn't purchase regularly (and thus contributed to their demise), I did enjoy Buffalo Sweat on occasion
     
  35. JackHorzempa

    JackHorzempa Poo-Bah (3,639) Dec 15, 2005 Pennsylvania
    Premium

    Wow! That is a disappointingly small value.:slight_frown:

    One more reason why distributing breweries are not doing so well in today's craft beer scene!?!

    Cheers!
     
  36. russpowell

    russpowell Poo-Bah (8,685) May 24, 2005 Arkansas
    Premium Trader

    Sad, I fear more will follow. Trying to grow too much I'm guessing is what did them in. So many more choices large & small brewer-wise compared to when I first had a Tallgrass. Tough to get shelf space these days. Honestly, they are better than about all but 2 or 3 brewers in Arkansas. They will be missed
     
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  37. Scott17Taylor

    Scott17Taylor Meyvn (1,322) Oct 28, 2013 Iowa
    Trader

    I wouldn’t blame quality, they had some very solid beers. Pub ale was a great brown ale, Buffalo sweat was a very good oatmeal milk stout. They just didn’t do very well in the styles that are the bulk of the market now. 8 bit was not a very good pale ale, and honestly I never bothered to try their other hoppy stuff.

    I’ll miss them, but we’re lucky enough to have so many great breweries right now that losing this one won’t be too big of a deal, I’ll find a replacement for buffalo sweat.
     
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  38. donspublic

    donspublic Poo-Bah (1,573) Aug 4, 2014 Texas
    Premium Trader

    That specific Explorer pack was the shit. It had Big Ricc, Wooden Rooster, BA Buffalo Sweat and BA Vanilla Buffalo Sweat. I grabbed one and when I got home and had Wooden Rooster I sent my daughter back to buy 4 more. Even their Saison Songbird was a good beer. So sad thinking about this as I write this out
     
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  39. donspublic

    donspublic Poo-Bah (1,573) Aug 4, 2014 Texas
    Premium Trader

    Found another article that went into a little more detail on brewbound
    I guess that explains the shuttering of some of the lines. But man I tell you what, in this market I think you would be successful in releasing a rotating line of IPA's. I know this doesn't get you any stability on tap handles, but one offs seem to be doing pretty well now by those pushing them out.
     
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  40. Squire

    Squire Poo-Bah (1,979) Jul 16, 2015 Mississippi
    Premium Trader

    I get how it happens, the perceived need to expand in order to compete only to find you can't service debt in the face of declining sales. I guess the only answer is to grow with sales and not ahead of them.
     
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