Capacity utilization can be quite the balancing act.
Just ask Nick Matt, the third generation chairman and CEO of F.X. Matt Brewing Company, the country’s eighth biggest craft brewery and a large producer of contract brewed craft beers.
Even after 125 years in the beer industry, Matt said, his company still struggles with maintaining the perfect equilibrium between the production of its own Saranac line of beers and faster-selling SKUs from some of its contract partners, like Brooklyn Brewery.
“There really isn’t a prioritization per se,” Matt told Brewbound.com in a recent video interview. He estimates that about one-third of the brewery’s 400,000 barrel capacity is dedicated to contract brands, but noted that slower sales of Saranac beers have pushed that number closer to 40 percent in recent years.
“It’s [Saranac] not growing as fast as some of the other craft brands are and we are obviously disappointed with that at times,” he said. “We are certainly focused on changing that.”
But even as Saranac sales slow, Matt said, he’s not presently looking to take on any new contract business partners. Remaining space is still reserved for existing partners and for F.X. Matt itself.
F.X. Matt is currently in the planning stages of an expansion that would increase capacity by about 150,000 barrels. But Matt said it’s nevertheless more likely that the company would entertain a partnership with craft brewers who already own their own production facilities.
“We actually like the model of someone who is up, and has a brick-and-mortar situation themselves,” he said. “What is perfect is for them to take a relatively larger product, let us produce that because it fits with our size, and then they can do a lot of the more specialized stuff.”
Matt will have competition from a number of other contract brewing companies, including startup Brew Hub LLC, which plans to spend $100 million over the next five years to build five contract brewing facilities in different regions of the U.S.
So what does Matt think of the concept?
“I think it is a good thing from the standpoint of the industry,” he said. “I know there [are] some questions about contract production but as long as people are honest about what they are doing, I don’t see a problem with it.”
In this video interview, filmed at the 2013 Craft Brewers Conference, Nick Matt discusses the growing concerns surrounding capacity constraints, contract brewing and F.X. Matt’s future growth plans.