Two Roads Founder Banking on Growth of Contract Brewing

Brad Hittle, a former Pabst CMO and founder of Two Roads Brewing, believes a “looming shakeout” of the craft beer category could lead to more business for his start up contract brewing facility.

“As the industry evolves and as the looming shakeout occurs, capacity will be released,” he said. “Smaller brewers will suffer. I don’t think any of that released capacity is going to be efficient enough for a contract brewing model.”

And that’s exactly where Hittle hopes his $18 million contract brewing outfit, Two Roads, will succeed.

“We want to become a long term home for people rather than just a short term fix,” Hittle said. “There has been too much short term fixing going on over the years.”

Hittle said that significant progress has been made on the build out since the company closed on the Stratford, Conn. property in March.

“In an economy like this, things can really go in your favor,” he said. “In a booming time, we might have had trouble scheduling a contractor but we have a partner that has agreed to a pretty aggressive timetable. There is a 90 percent chance we will begin brewing in November.”

The primary focus at Two Roads will be to attract contract brewing partners. Hittle said he has had several talks with potential customers.

“We have had conversations with a number of ‘seriously interested’ brewing partners,” he said.

He wouldn’t share specific names but did say they were “very viable customers, not startups.”

Those contract partners will be able to take advantage of a 100-barrel Rolec brewhouse, a Westfalia Centrifuge, 100 and 300-barrel Rolec fermenters, a 300 bottle-per-minute bottling line and 60 keg-per-hour kegging line. Hittle said he plans to install a canning line in early 2013 and he’s also hired former Southampton Publick House Brewmaster Phil Markowski.

Hittle also dished on financing for the project. He told us that 50 percent of that $18 million figure came from 30 different investors. The additional financing is fueled by a $1 million loan from the Connecticut Development Authority, a $500,000 state grant to help offset the costs of various ‘environmentally –friendly’ projects, and traditional bank loans.

UPDATE: Hittle wrote Brewbound.com this afternoon to clarify the following quote: “As the industry evolves and as the looming shakeout occurs, capacity will be released,” he said. “Smaller brewers will suffer. I don’t think any of that released capacity is going to be efficient enough for a contract brewing model.”

We inaccurately suggested that Hittle was “banking” on a shakeout as part of his business plan. Below is his statement.

Hittle writes: “I believe that if there is a shakeout, and a lot of people are predicting it, it is less likely to negatively affect Two Roads because the players falling out will likely be small-capacity players and should they need to survive by attempting contract brewing they will not be able to compete as well because our brewery is larger (100 barrel system) and our cost structure should be more efficient. I certainly don’t want people to be hurt by any possible shakeout.  My business plan is predicated on a growing and successful craft market, not on an industry crash of some sort.”