On Track for 23,000 Barrels, Cape May Expands Distribution in Pennsylvania

A month away from its eighth anniversary, Cape May Brewing Company is quickly growing into one of New Jersey’s largest craft breweries.

Last year, Cape May achieved “regional brewery” status — those breweries making between 15,000 and 6 million barrels of beer annually — increasing production by 75 percent, to 16,269 barrels, according to the Brewers Association.

Speaking to Brewbound, Ryan Krill — who co-founded the brewery with his father, Bob, and friend Chris Henke in 2011 — said the company is on pace to sell as much as 23,000 barrels in 2019.

“Brewery wise, we’re sort of growing into our britches,” he said.

That kind of growth puts Cape May in a select group, as only a handful of New Jersey’s 100 craft breweries produced more than 10,000 barrels of beer in 2018. According to Krill, that leaves a lot of opportunity for growth in a state of nearly 9 million people.

Cape May is also the cusp of a key summer selling season in New Jersey, which lasts from the Fourth of July through the Labor Day holiday.

“We’re approaching prime time,” Krill said.

“It’s always like a big bet because it’s such a narrow season for us,” he added. “We work really hard to do planning and forecasting and think really critically about what we’re going to do for the next year, and now we’re just focusing on executing it.”

Cape May’s focus throughout that two-month stretch will be on a handful of core brands, including Cape May IPA, Cape May Lager, The Bog Cranberry Shandy and Summer Catch Belgian-style wheat ale.

“We try to balance out what we’re selling,” he said. “We try not to rely just on hops to sell beer.”

Helping offset New Jersey’s seasonality is Cape May’s expansion into the Pennsylvania market. Over the last four years, the company has sold its offerings in the nearby Philadelphia market through Origlio Beverage. On Monday, Cape May announced it was expanding its relationship with Origlio into Lancaster, Berks, Lehigh and Northampton counties.

The goal, Krill explained, is “to continue to build momentum in Philadelphia, where the company sold about 70,000 case equivalents last year and is now “neck-and-neck” with Cape May’s home market.

“We still see a ton of opportunity for our brand in Philly,” Krill said. “We’re not even in all the places that we need to be.”

Krill added the Pennsylvania expansion is “a long-term” play, with 2019 serving as a “building year.”

Cape May’s expansion in Pennsylvania doesn’t foretell the addition of other states, however. Although Cape May could begin shipping beer to Delaware in the next couple of years, it isn’t looking beyond a three-state territory, Krill said.

“We’re not going to go anywhere else until we can fill in what we have,” he said.

That fill-in effort includes the northern part of New Jersey, which Cape May plans to expand into later this year through its distribution division, Cape Beverage, which launched in late 2018.

Once the company has filled out statewide distribution in New Jersey, Cape Beverage will begin adding outside brands to its portfolio, either later this year or in early 2020. The plan for Cape Beverage is to add a “handful of brands” that can sell statewide in New Jersey and “resonate” with consumers in the state, Krill said.

What Cape Beverage can offer those brands is “focus” that other wholesalers may not be able to do with portfolios that have “swelled up with so many SKUs.”

“If we just have a few brands come along for the ride — that’s the value proposition,” he said.

Although Cape Beverage will operate like other wholesalers, it won’t hold its suppliers in nearly unbreakable contracts via the state’s franchise law. The company will also maintain cold storage throughout the supply chain.

Meanwhile, Cape Beverage’s search for a general manager to run the business is ongoing, as Krill fills the role in the interim. However, Krill doesn’t anticipate filling the post until early 2020.

As for its core beer business, Cape May is at nearly 100 percent utilization at its production brewery next to the Cape May Airport. As such, the company has begun contract brewing at Philadelphia’s Yards Brewing Company and New York’s F.X. Matt Brewing Company. Between the two operations, Krill expects to produce “a couple of thousand barrels.”

Those arrangements will continue for the “foreseeable future,” Krill said. Cape May is “maxed out for space” at its 33,000 sq. ft. production facility and unable to build onto the property, which is owned by Cape May County. The company has explored purchasing the property, but the county hasn’t been willing to sell, Krill said.

“Really, the only developable space is the airport,” Krill said. “We’re talking with the county about building us something, but we’ll see if they actually build us something. If they don’t, it means that we’ll be continuing to phase production out of Cape May County, which is a shame because we have the highest unemployment rate in New Jersey or one of the highest.”

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