After raising more than $3 million in growth capital from a group of private investors earlier this year, Fort Point Beer Company has embarked on its next round of fundraising.
“We’re actively ready to raise more money for the next 18 months ahead of us,” co-founder and CEO Justin Catalana told Brewbound. “The majority of that will go to launching new territories and cities.”
In just its third year, the San Francisco-based company is already on pace to sell more than 10,000 barrels of beer to more than 1,500 retail accounts across Northern California.
“Our goal is to be a premiere production brewery,” Catalana said.
Catalana, who opened Fort Point in 2014 with his brother, Tyler, credited his company’s initial growth to relationships built by salespeople, with local bars and restaurants.
Fort Point currently self-distributes its beer to about 1,100 on-premise accounts and at 400 off-premise retailers in 12 California counties, he said.
Fort Point’s self-distribution model requires more up-front capital, Catalana admitted, but the additional investment enables the company to retain margins that would otherwise go to a wholesaler.
“It’s not a stopgap for us,” he said. “It’s core to our identity.”
And that investment appears to be paying off. In 2016, Fort Point emerged as top 10 best-selling new craft brand in supermarkets this year, according to a mid-year review by market-research firm IRI Worldwide.
“That’s at the national level,” Catalana said. “The coolest thing about it was we were able to pop up on that list even though we’re in such a small sample size.
“We have a ton of penetration in our area,” he added, noting that Fort Point’s beer is among the top-scanning SKUs at California Whole Foods locations.
The Catalana brothers started in the beer business in 2009 when they opened Mill Valley Beerworks, a neighborhood brewpub that they still own and operate. They founded Fort Point in the Presidio of San Francisco in 2014 and brought over Mill Valley head brewer Mike Schnebeck to head up the beer making.
The brewery’s operations are spread throughout San Francisco — between a 14,000 sq. ft. production brewery and a 500 sq. ft. retail space in the Ferry Building Marketplace. The company also operates a 5,000 sq. ft. distribution warehouse in Richmond, Calif.
“We don’t have access to 100,000 sq. ft buildings,” Catalana said. “Our future is made up of multiple smaller buildings.”
The brewery offers four core beers — a flagship IPA, Villager; Westfalia Nuremberg red ale; Park hoppy wheat; and KSA kolsch — in cans, in addition to a handful of seasonal beers sold in large-format bottles.
“We don’t enjoy making extreme beers,” Catalana said. “We really like to brew beers made for drinking and enjoying with food and friends. All of our beers are relatively sessionable.”
A focus on sessionable products helped the company grow from 2,000 barrels in its first year to 5,400 barrels in 2015. Next year, Fort Point is again planning to double production to more than 22,000 barrels.
To fuel that growth, the up-and-coming California brewery is putting together its next round of funding — courting investors, applying for operating lines of credit and working to secure debt financing, Catalana said.
Fort Point has already built a strong network of individual financial backers through “friends and friends of friends,” Catalana added, some of whom he described as angel investors. That approach has enabled the company to grow more organically in an area of the country where venture-backed tech startups are under pressure to scale quickly and return profits to institutional investors.
Nevertheless, Fort Point was able to secure $3.5 million in seed funding, according to a September SEC filing. That money helped finance Fort Point’s growth this year, Catalana said, allowing the brewery to add a four-vessel 20-barrel brewhouse to its existing two-vessel 20-barrel brewhouse, add six 80-barrel fermenters and expand its delivery fleet.
Catalana said he expects the company’s next round of funding to be completed by January. The company will then look to expand its self-distribution business model to Southern California and beyond, he added.
“That’s the focus next year,” he said. “Getting into more territories is the priority.”