Appalachian Mountain Brewery (AMB) has extended its strategic partnership with Craft Brew Alliance (CBA), entering into an alternating proprietorship agreement that will include increased production of the North Carolina-based company’s core beers at the larger company’s east coast brewery.
In an earnings release, AMB said it is “excited to be able to increase capacity significantly by leveraging excess capacity that CBA has in Portsmouth, N.H.”
Karmen Olson, CBA’s senior manager of emerging business, told Brewbound that the two companies began making trial batches of Long Leaf IPA and Boone Creek Blonde at the Redhook brewery in Portsmouth, NH about two months ago.
“We started on the 3-barrel system, doing some small one-off batches, and just scaled up for the first time about a month ago,” she said.
Today’s announcement marks the latest evolution of a relationship that officially began last December, when the two companies jointly announced the formation of a partnership aimed at “driving business growth and shareholder value through sharing resources in key strategic areas.”
In April, the two companies signed a master distributor agreement, which gave AMB access to CBA’s nationwide network of Anheuser-Busch wholesalers in exchange for a per-case distribution fee.
“I think things are developing really well,” said Spiegelman. “Signing the initial distribution agreement helped to make Boone more efficient by building out our capacity through CBA’s distribution channels and it has been a nice way for us to get to know each other.”
Olson said there was always a mutual understanding that the two companies would move towards shared brewing opportunities.
“This allows us to fill our capacity needs and get more AMB beer in the market,” she said.
The new alternating proprietorship arrangement will enable AMB to produce considerably larger batches of beer — the CBA facility in Portsmouth features a 100-barrel brewing system while AMB currently brews on a 10-barrel system, CEO Sean Spiegelman told Brewbound. The company produced just 800 barrels in 2014.
“To have the opportunity to brew on a system that size has been really awesome,” said Spiegelman. “A lot of breweries don’t ever get the opportunity to make beer on a system that large.”
It also enables CBA to improve its “owned” capacity utilization, which dipped to 82 percent last quarter (compared to 87 percent utilization in the second quarter of 2014).
AMB is currently on pace to produce 5,000 barrels of beer out of Boone and will begin delivering 16 oz. cans and kegs of all core beers, produced at the Redhook brewery, by the end of the third quarter. The new brewing arrangement could add upwards of 2,500 barrels this year, Spiegelman said.
In the release, AMB also said its second quarter revenues increased by 60 percent, to $478,572.
And for those wondering, Spiegelman also confirmed that AMB has not sold equity in exchange for access to CBA’s distributor network or its breweries.