Night Shift to Open $10 Million Brewery in Philadelphia, Expand Production in Everett

Everett, Massachusetts-based Night Shift Brewing announced plans Wednesday to open a $10 million, 130,000 sq. ft. production production brewery in Philadelphia.

Speaking to Brewbound, Night Shift co-founder Michael Oxton said the company is “committed” to opening the new brewery before the end of 2020.

The Philadelphia project is being financed through a combination of cash flow and bank debt, he added.

“Generally speaking in beer, growth comes often at the cost of independence,” he said. “We really proudly own our own future.”

Night Shift’s three founders — Oxton, Rob Burns and Michael O’Mara — collectively own about 80% of the business, with friends and family holding the remaining stake in the company.

“Since our beginning, we haven’t taken on any more investors and we have no plans to do so,” Oxton said. “Our runway is fiercely independent for 100-plus years, and we have no plans of raising outside capital and letting another firm sort of dictate our decisions.”

Construction has yet to begin in Philadelphia, but the company has begun taking quotes from contractors. Oxton said the company is also in the process of getting its federal licenses for the facility, which, once fully operational, will employ about 50 workers.

Earlier this month, the Philadelphia Board of Zoning Adjustment approved Night Shift’s permit to operate a taproom inside a former Anheuser-Busch wholesaler warehouse, according to the Boston Globe, which first reported the story Wednesday.

In Philadelphia, Night Shift will lease the building, which is already equipped with refrigeration space, loading docks and a potential taproom location. The company plans to install a 100-barrel brewhouse in the space, which will immediately unlock 30,000 barrels of initial capacity. Over time, Night Shift could scale production at the facility to 200,000 barrels of capacity, although Oxton stressed that Night Shift remains committed to a philosophy of letting demand dictate growth.

“It’s a pull, not push, relationship for how we put our beer into the market,” he said. “And we’re betting on keeping that relationship the way that it is.”

The plan is for the Philadelphia facility to supply Mid-Atlantic markets, while Everett will focus on Massachusetts, Maine and potentially other New England states.

Night Shift will not be able to operate its wholesaler business the way that it does with in Massachusetts, as Pennsylvania forbids beer companies from distributing brands for other companies.

Night Shift explored building a large-scale brewery in Maine and Massachusetts, but ultimately chose Philadelphia due to O’Mara’s and Burns’ family ties to the area, Oxton said. In fact, both O’Mara and Burns have not ruled out a potential return to the city.

“Whether or not they’re living down there permanently, they are frequently down there anyway, and they’re both potentially interested in moving back at some point in the future,” Oxton said.

Nevertheless, investing $10 million to open a large-scale production facility in an out-of-state market at a time when craft beer volume growth has slowed to single digits is an eyebrow raiser.

Oxton explained that Night Shift’s founders are confident due to its “deep-not-wide distribution approach,” as well as evolution from a beer company to a beverage company with a broader portfolio of offerings beyond beer, including hard seltzer and coffee.

“The fact that this facility could be responsible for more than beer gives us a lot of optimism and excitement,” he said.

Currently, 80% of Night Shift’s beer is sold in Massachusetts, with other markets — Connecticut, New York and Maine — being “under supplied,” Oxton said.

“Just within our current markets, we think there’s room for volume to grow,” he said. “For our brand, we consistently want it to be deep within the market that we’re in. Looking at Pennsylvania and potentially other states, New Jersey being the most obvious next one, we think there’s a lot of runway for the brand.”

Night Shift also plans to fill some of its excess capacity in Philadelphia by contract brewing for other companies. Oxton said some of Night Shift Distributing’s clients in Massachusetts could potentially supplement their production at the facility.

In addition to opening the Philadelphia brewery, Night Shift is upgrading its Everett headquarters, replacing its 20-barrel brewhouse with a 60-barrel system. The new brewhouse is expected to be operational next month.

“The focus of that is tons of Whirlpool,” Oxton said. “Basically just brewing more beer for the demand that we already have.”

Night Shift’s current production capacity is maxed out in both Everett and at Rhode Island contract brewery Isle Brewers Guild, Oxton said. The company is also contract producing at Riverwalk Brewing Company in Newburyport.

All of that demand has Night Shift on pace for 50% volume growth by the end of 2019. Oxton projects the company will produce more than 40,000 barrels, up from around 30,000 barrels in 2018.

Although the company is increasing its owned production capacity, Oxton said it doesn’t necessarily signal the end of its production at IBG or Riverwalk. A lot rides on how quickly the Philadelphia brewery becomes operational and scales.

“I think the flexibility of having them is fantastic and we don’t really see that coming to an end anytime soon,” he said. “

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