Knowing how and when to expand have become increasingly challenging issues for craft breweries looking to capitalize on growing consumer thirst for high quality beer. While the temptation to try and grow rapidly is undoubtedly a palpable one, Sean Wilson, founder and “chief executive optimist” of Fullsteam Brewery is focused on a slow and steady approach.
Fullsteam – which opened its doors in August, 2010 – brewed approximately 2,300 barrels in 2012, and Wilson said the company plans to increase that number to 10,000 by 2014. To do so, the Durham, N.C.-based company is planning a $500,000 expansion that will include a new 30-barrel brewhouse, additional fermentation capacity and a bottling line.
“We are still exploring where the market is going and what people want from us,” Wilson said. “The decision to grow in a slower, smarter way rather than take on large amounts of debt or add an outside an investor, is better for our situation right now.”
Wilson said that he considered a bullish, capital-intensive expansion project, but being a first-time entrepreneur, he said that didn’t he want to over leverage his business – one where he has controlling interest, amid 20 silent equity partners.
“If you can’t service your debt you won’t be around for very long or you will have to take on additional investors at less than attractive terms” he said. “I am trying to grow this thing organically rather than have outside forces guiding it. We have been successful with this approach for two years and we hope to continue finding success with it.”
Fullsteam is currently in the process of recapitalizing its existing debt and finalizing a bank loan, and Wilson expects the expansion project to be completed midway through the year. Although the expansion will benefit the growth of the brand, it will add a layer of complexity to the Fullsteam business model. Until now, Fullsteam has been focused on building the brand on-premise and in the company’s own tap room. The expansion will enable for an increase in the packaging and distribution of 22 oz. bottles, which in 2012 represented 8 percent of Fullsteam’s approximately $1 million in revenue. Wilson plans for the draught to package ratio to become more evenly spread in 2013.
“It’s a shift towards lower margin, higher scalability,” he said. “We have to make sure we manage our cost of goods as our sales begin shifting away from being driven at the on-premise level and become a smaller portion of our overall revenue.”
Nevertheless, Wilson said the focus will remain on emphasizing the company’s “plow to pint” message, one that manifests itself in product offerings like its ‘El Toro’ cream ale, which is made with corn, and its ‘Carver’ ale, a beer made with local sweet potatoes. Wilson will continue spreading that message across Raleigh-Durham but said he hopes to eventually shift away from the company’s current self-distribution model.
The company is currently expanding distribution into Charleston, S.C. through Advintage Distributing, and Wilson is also eyeing the Virginia and Georgia markets. He said the company will look make two key hires in operational and sales oriented roles, positions designed to help execute his long term vision of becoming a southeast regional brewery.
“I’d like to ultimately sell our beer from the D.C. to New Orleans stretch,” he said.