At a time when double and triple digit growth rates dominate the craft beer headlines, at least one Colorado brewer prefers to take a more modest approach.
In the mid-1990’s, Boulder Beer Company, Colorado’s oldest craft brewery, made a few critical decisions to ensure that it could survive for the long term if the industry hit a blowout. Sure enough, the bubble burst in 1997, as the growth of craft beer sales slowed to just 2 percent, with consumers fleeing from craft beer after sampling offerings that didn’t quite pass the quality test.
Jeff Brown, president of Boulder Beer, described a few of the company’s cautious maneuvers that helped the company make it through that challenging time. He believes the decision to pull out of distant markets in the early 1990’s to focus more attention on sales and distribution efforts in Colorado is at least one reason why the company is still making beer.
“We hadn’t really built a brewery that needed to survive on exponentially greater barrels than what we felt was within our home market,” Boulder president Jeff Brown said. “We didn’t bring capacity online that we felt we weren’t going to be able to continue to fulfill and continue to meet if there was a slight downtrend in the market.”
That planned growth strategy continues to guide the company, even during today’s craft beer gold rush. Even this year, when the category has skyrocketed, Boulder Beer’s percentage growth has been relatively modest: the company will finish the year having produced about 32,000 barrels, up just 12 percent over 2011.
But that’s exactly what Brown likes to see. And the forecast – at least for the short-term – looks pretty similar. Brown said the company is projecting about 37,000 barrels of production in 2013 and about 45,000 in 2014. Even though it plans to grow modestly, the brand does share one thing in common with many of the faster-moving companies out there: it needs more space.
Brown said the company will add an additional 1,500 barrels of fermentation capacity, bringing total brewery capacity to about 57,000 barrels. Brown also said the focus will continue to remain – as it did when the bottom fell out in the late 90’s – with the company’s core brands, like Mojo IPA and Hazed & Infused dry-hopped ale, which make up about 50 percent of total sales.
“For us, it gets back to asking ourselves what we really feel is manageable growth and how, from an infrastructure standpoint, we can continue to manage that growth going forward,” Brown said.
And although the company has once again started sending its beer to more states – it’s now in 37 – Brown said the company’s focus in 2013 will be to continue penetrating deeper in existing markets before adding new distributors.
“Our opportunities for growth are in current markets,” he said. “One of the markets we plan on expanding more into is California, especially San Francisco and San Diego.”
Having lived through the last crash, Brown said he’s more optimistic this time around.
“The pie is just going to get bigger,” he said. “I think the craft segment has a lot of growth years ahead of it. I think craft can hit 10 percent market share in the next five years.”
Nevertheless, he’s aware of history, and the role that careful growth played in keeping him going last time will likely continue, even in the good times.
“Our position is to predict and accurately forecast,” he said. “You can’t just wish that you are going to grow 30 percent.”
Brewbound.com met with Brown at this year’s Great American Beer Festival. In the latest installment in our video series, Brown discusses the differences between craft beer’s growth in the 90’s and today.