Micros’ joy, majors’ sorrow
Who’s more concerned about U.S. beer production having declined about 2.3 million hl each year since 2008? Not the craft brewers. While beer production dropped 1.1 percent in the first six months of 2011, the small and independent craft brewers saw dollar sales rise 15 percent and volume sales grow 14 percent to an estimated 6 million hl (compared to 9 percent volume growth in the first half of 2010). The U.S. now boasts 1790 breweries – an increase of 165 breweries since June 2010.
Capacity expansion is the major issue with which many craft brewers grapple. But few actually plan to do what Sierra Nevada and New Belgium Brewery will do: build a new brewery.
In 2010, craft brew pioneer Sierra Nevada Brewing Co., which also happens to be the second largest craft brewer in the U.S., produced over 900,000 hl of beer at their Chico, California, brewery. Come 2013 and that facility will no longer be able to support increasing demand. Sales have been up 7 percent to 8 percent each year. Because things are going so well, they need to make more beer, but they will not be expanding the current brewery.
Instead, Sierra Nevada has been touring the East Coast for an appropriate brewery site. A brewery in the east, where Sierra Nevada has seen sales rise, has several advantages. Shipping beer via rail and truck from Chico is very expensive, time consuming, energy intensive, and not as environmentally conscious as Sierra Nevada would like to be. With the rising cost of fuel, they thought that it would be worth their while to explore the possibility of an additional facility.
Same with New Belgium Brewing Company, the country’s third largest craft brewer. In 2010 the Fort Collins, Colorado-based brewery produced a little more than 770,000 hl of beer, which is up about 12 percent from 2009. Like Sierra Nevada, they expect to reach capacity limits in 2013 or 2015 at the latest. So their goal is to have something decided and under contract by the end of 2011.
Sierra Nevada’s and New Belgium’s executives must have been bumping into each other as they were looking at potential brewery sites along the East Coast. Despite the East Coast being a huge place, not all states are welcoming to breweries. For example, state law in Tennessee, as it currently stands, would make it impossible for them to brew beer above 6.25 percent abv and it would also be impossible for them to sell beer out of a brewery gift shop.
No wonder Ken Grossman, Sierra Nevada’s founder, and his executives have reportedly already visited over 200 sites without any luck. New Belgium has allegedly narrowed the search down to about six sites, but would not say which.
Ergo, no decisions have been made as yet. But they will all keep on looking.
