As Craft Growth Slows, Brew Hub Shifts Strategy

Brew Hub has hit the pause button on an ambitious plan to spend $100 million to build five new contract brewing facilities throughout the U.S. by 2018.

“Building a new brewery in another geography doesn’t seem as strategic as it did four years ago,” Brew Hub CEO Tim Schoen told Brewbound.

Instead, the Lakeland, Florida-based beer company — which is majority-owned by Yucaipa Companies, a private equity firm started by billionaire Ron Burkle — is going small and eyeing expansion via brewery taprooms.

The company today announced plans to open its first standalone taproom, pilot brewery and restaurant in St. Louis.

The 120-seat location, which will include a 4-barrel brewing system, a distilling operation and a barrel-aging program, will showcase Brew Hub’s own Keybilly Island Ale, Diver Down Red Ale and Rome City IPA offerings, as well as products from “14-plus” companies that pay Brew Hub to produce beer in larger batches.

The company expects to open the new location in early February, Schoen told Brewbound.

The decision to open a taproom also means that Brew Hub has officially tabled plans to build a new, 71,000 sq. ft. production facility in Chesterfield, Missouri, a site that was announced as the home of the company’s second large-scale manufacturing plant in March 2016.

“We want to open the market here and, when we get large enough, we would build or buy a brewery here,” Schoen said.

Pivoting toward expansion via smaller taprooms also coincides with a shift in the company’s approach to building a nationwide network of contract brewing facilities. Instead of building new breweries from the ground up, Brew Hub has adopted an acquisition-minded mentality and explored several opportunities to buy existing facilities.

“We don’t think we are going to build anything new,” Schoen said of the company’s strategy moving forward. “We are going to acquire and convert, but you have to marry it up with marketplace dynamics and, ultimately, demand.”

Driving the company’s shift in strategy are slower craft growth trends, which are the softest they’ve been in 13 years.

“I thought I was going to build five brand new $20 million breweries,” Schoen said. “But volumes are slowing, and I have to get more nimble.”

In the meantime, Brew Hub has invested in capacity at its original Lakeland facility — which is capable of being scaled beyond 200,000 barrels – and will ship beer around the country from that location, Schoen said.

“We will incur a little more in freight, but that is pennies on the dollar compared to the investment in a large production brewery,” he added.

Brew Hub will produce about 83,000 barrels of beer for more than a dozen brands this year, which is a 10 percent decline from the 92,000 barrels it made in 2016, Schoen said, noting that Hurricane Irma significantly disrupted business for many of its partner brands as well as the Florida wholesalers that sell their products.

The company also missed out on significant volume from Tampa’s Cigar City Brewing, which moved production from Brew Hub to Oskar Blues’ North Carolina brewery following its sale to the Oskar Blues Holding Company (now known as CANarchy).

A press release with additional details about the St. Louis taproom is included below.

Brew Hub Taproom to open in St. Louis

ST. LOUIS (Dec. 19, 2017) — Brew Hub, the award-winning craft brewer and partner brewer for several of the most popular names in craft brewing, announced plans to open The Brew Hub Taproom at 5656 Oakland Avenue in the City of St. Louis.

The location will feature beers from Brew Hub’s own collection including Keybilly Island Ale, Diver Down Red Ale and Rome City IPA, which was awarded a gold medal in the Session India Pale Ale beer-style category at the 2017 Great American Beer Festival. The Brew Hub Taproom will also serve beers from the company’s 14-plus partner brewers, marking the first time these and several additional craft brands will be available in St. Louis.

In addition to the 20 beers on tap, the location will include a full-service kitchen offering lunch and dinner. The Taproom will feature a 4-barrel pilot brewing system, a distilling operation and a barrel-aging program, under the direction of Brew Hub’s chief brewer Jim Ottolini. This set up will allow the Brew Hub team, its partner brewers and other local brewers the ability to work on unique and nontraditional batches in a small and intimate setting. The Brew Hub Taproom is scheduled to open early February 2018 and will operate Tuesdays through Sundays.

“Brew Hub will offer local beer enthusiasts access to dozens of craft beers from around the country found nowhere else in St. Louis or the Midwest,” said Diane Schoen, vice president of marketing of Brew Hub. “We considered several locations for our Taproom and this is the ideal spot. There’s a great mix of residential, hotel and office tenants within walking distance of our front door, and being near Forest Park and other great St. Louis attractions sealed the deal.”

Andy White, a 25-year St. Louis culinary veteran who has worked at The Ritz-Carlton, Harvest and Schlafly, will serve as the chef and general manager of the restaurant and tasting room which seats 120 guests. The Taproom will also feature a 30-seat, dog-friendly patio. The menu, developed by White, will consist of sharable small plates and heartier fare with ingredients sourced from local farms.

“As someone who grew up in this neighborhood, I couldn’t be more excited to be involved with the Brew Hub Taproom,” said White. “Our food is going to walk in harmony with the quality craft beers we’ll have on tap, and I look forward to working with the great talent and purveyors we have in our city to provide guests with a memorable experience.”

Local handcrafted furniture maker Rustic Grain is building custom tables, bars and architectural accents for the space fabricated with reclaimed lumber from Missouri and Illinois farms to give the space a warm and inviting atmosphere.

Brew Hub’s first brewery and Tasting Room is located in Lakeland, Florida, and opened in 2014. At this 100,000-barrel brewery, the company brews its own beers as well as for a variety of notable and award-winning craft brewers including: Toppling Goliath, J. Dub’s Brewing, M.I.A. Beer Company, Blackberry Farms Brewing, Orange Blossom Brewing, High Heel Brewing, Booth Brewing, Big Bend Brewing, Parish Brewing, Palmetto Brewing and Crooked Can Brewing.

“The Brew Hub Taproom will serve as an ideal location for our partner brewers as they look to introduce their brands to St. Louis and the region,” said Tim Schoen, CEO of Brew Hub. “Our team is focused on providing outstanding service for our guests, and we look forward to bringing more great beers to our hometown.”

For more information or to learn about employment opportunities, email Andy White at andy@tapbrewhub.com.

About Brew Hub

Brew Hub was founded in 2012 in St. Louis, Missouri, by a team of beer-industry executives and craft-brewing experts led by Tim Schoen. At the company’s Lakeland, Florida, brewery provides full brewing, packaging, distribution and selling services for craft brands that are constrained by capacity, geography or capital. To learn more, visit www.brewhub.com.

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