After completing an $8 million expansion earlier this year, Chicago’s Revolution Brewing is now equipped with 150,000 barrels of capacity. They’ll finish 2016 somewhere around 75,000 barrels or, expressed differently, about half of what it is capable of producing.
Donn Bichsel, the company’s director of sales and marketing, understands that the brewery’s capacity utilization situation is not ideal — in a perfect world, the fermentation tanks would be full and Revolution would be selling north of 100,000 barrels in Illinois.
They’re currently selling about 60,000 barrels of beer in Illinois – an impressive number for sure – but new points of distribution are getting tougher to find and increasing competition from more than 4,600 U.S. breweries is making it difficult to stay on tap at bars and restaurants. On-premise establishments that had at one time kept two or three Revolution beers on draft are now rotating more frequently between a variety of products from smaller producers.
At the same time, off-premise retailers are pushing back on the number of SKUs they will carry from each brewery, and Revolution is quickly finding out that if it wants to continue expanding at a double-digit clip, it needs to look elsewhere for growth.
That’s why in June, the company quietly launched in Wisconsin with General Beverage. It’s also why it will enter New York City with Manhattan Beer in October.
“We like to think that we have a long-term plan, and we do,” Bichsel told a crowd of 100 beer industry professionals attending last night’s Brew Talks event in Chicago. “Wisconsin was probably predicated by opportunity of excess capacity and an opportunity to move forward on something that I probably had thought we would put off for another year or two.”
New York will be the company’s fifth state of distribution and it was a market that Bichsel actually wanted to enter two years ago. But at the time, local demand for Revolution products was high, competition wasn’t as stiff and, in an effort to capitalize on opportunity, Bichsel ended up promising retailers more beer than his brewery could produce.
“During the time that we ran low on beer in the summer of 2014 — and once again in 2015 — the marketplace changed,” he told the crowd. “Shelves got filled with other products and we have had to get ourselves back deep into the game.”
It’s a situation that plenty of fast-growing regional breweries have found themselves in before and it’s understandable, especially when the risk of telling a retailer you can’t fill their order is not making the set at all.
But attempting to forecast for increasing demand while simultaneously trying to predict how the market will turn is a fool’s errand. In many ways, the best a craft brewery like Revolution can do is simply react to shifting winds.
And that’s exactly what its doing. Armed with excess capacity, Revolution has adjusted its strategy to include the new market entries, a greater focus on canned packages and an emphasis on its off-premise chain sales.
In the video below, Bichsel shares the latest Revolution updates and discusses how his own strategies are changing as the company pushes toward 100,000 barrels.