Sneaking Up on Competition, 21st Amendment Grew Production to 42,000 Barrels in 2012

Brewery considers owning its own space in the future

21st Amendment Brewery’s new brew – Sneak Attack Saison – is as much a metaphor for its growth in the past two years as it is a creative attempt to capture consumer mindshare by releasing a summer beer style during the winter.

Market share for the San Francisco-based craft brewer has grown steadily since 2012. Co-founder Nico Freccia told Brewbound.com that 21st Amendment produced approximately 42,000 barrels of beer in 2012, nearly double the previous year. And that 42,000 number is up from just 12,400 barrels produced two years ago, moving 21st Amendment into the top spot as the country’s largest contract craft beer producer.

The company hasn’t always been profitable, however. In 2008, when 21st Amendment added packaging operations to an already healthy brewpub business, the company actually lost money on its canned products during the first three years of production, Freccia said.

“We expected that,” he said. “We are profitable now and will do about $10 million in sales on the production side in 2012.”

But Freccia said that despite the impressive growth figures, 21st Amendment has struggled to keep up with demand, especially after its contract brewing partner – Cold Springs Brewing Company – took longer than expected to complete an expansion project.

“We would have hoped that the capacity would have come online a bit sooner so that we could make a smoother transition,” said Freccia. “But that’s all part of the big picture. The brewery is amazing; it’s one of the most state of the art craft breweries in America.”

Freccia, eyeing another year of at least 50 percent growth in 2013, told Brewbound.com that the company is toying with the idea of eventually owning its own space.

“If I had to look at where 21st Amendment could be in five years, I’d say that we’d like to have our own production brewery on the West Coast producing beer for those markets,” he said.  “Cold Spring would ideally continue to produce volume for the Midwest and perhaps we would look for a brewery partner on the East Coast as well. But having a production brewery of our own would allow us to create our own destiny.”

Nico Freccia

While Freccia made it clear that the idea is one simply discussing, the company has nevertheless made more concrete attempts to diversify its manufacturing capacity. Last year, the pair auditioned Memphis, Tenn.-based City Brewing to supplement the contract production from Cold Springs.

Although Freccia ultimately decided to hold off on regular production runs at City, he said he might explore the model again in the future. He also pointed to other craft breweries like Portland, Maine-based Shipyard Brewing, which has also begun contracting out production of its own flagship brands.

“It is a great example of a brewery wanting to go out and test the market without investing the capital themselves,” he said. “Why wouldn’t a large brewery that has met their expansion capacity go and brew one of their flagships at a facility like City Brewing?”

Freccia said that eliminating tank space that would normally be dedicated to flagship beers allows craft brewers the opportunity to experiment. And 21st Amendment has found success by experimenting: The company’s seasonal program boasts three innovative offerings which account for 35 percent of the company’s total production, supplementing sales from its mainline offerings IPA and Back in Black, which Freccia said accounts for 55 percent of the company’s annual production. The remaining production comes from the company’s Insurrection Series which includes offerings like Hop Crisis, Monk’s Blood and the recently released Marooned on Hog Island.

Because Freccia is expecting production bottlenecks in 2013, he said the company’s biggest focus this year will be to continue penetrating deeper in its current 17-market distribution footprint.

“If, halfway through the year, we find ourselves with all the capacity we need, we will consider new markets,” he said. “But at this time there are no plans to add additional territories.”

Freccia also said he plans to continue focusing even greater attention on its top performing markets – Boston, New York City, Washington D.C., the Pacific Northwest and the Bay Area. And to generate an early year buzz, the company launched Sneak Attack, which is brewed with whole organic cardamom pods. The beer checks in at 6.2 percent ABV and is currently available in all markets where 21st Amendment products are sold.

“It our answer to the big beers of winter,” Freccia said. “We are sneaking up on winter and attacking it with a summer style.”

Brewery: 21st Amendment Brewery Website: http://www.21st-amendment.com
Address: 563 2nd St
San Francisco, CA 94107
United States