Two Roads Announces $2.4 Million Expansion

Two Roads Brewing today announced it will increase production capacity to 176,000 barrels as part of a $2.4 million expansion project.

In addition to investing in new capacity, the Stratford, Conn.-based brewery will also add filtration, cooling and storage equipment, which, the company said is “necessary to keep up with demand.”

The brewery, which launched in December, 2012, has a portfolio of its own proprietary brands, and also leases its space to 12 contract brewers.

“This investment is an indication of our commitment to provide timely production to our distributor customers as well as to our contract customers,” Two Roads CEO Brad Hittle said in a company statement. “Just as important, we continue to invest in top-of-the-line equipment from Rolec so we can deliver the highest quality beers.”

The expansion effort is being financed with a combination of debt and cash flow, and the new equipment is slated to be fully operational by next April.

“We needed this expansion to keep up with demand for Two Roads beers while keeping our long term commitment to our contract customers,” added Clem Pellani, vice president of sales and marketing at Two Roads in the statement. “I couldn’t be more excited about our future.”

Hittle told Brewbound that the brewery is on track to “hit or exceed” its production estimates for 2014, which were initially pegged between 70,000 and 80,000 barrels.

“That’s a combination of exceeding our plans on the Two Roads brands and our contract customers, many of them are growing beyond what they initially estimated,” he said.

Currently, Hittle added, Two Roads’ own beers account for “about 25 percent” of total production, while its contract partners produce the remaining 75 percent.

“That ratio is going to change over time as we grow,” Hittle said. “If I could be Nostradamus of the beer business, I’d give you an exact number.”

Among Two Roads’ 12 contract partners are Evil Twin Brewing Co., Notch Brewing Co., Stillwater Artisanal Ales and Lawson’s Finest Liquids. While Hittle declined to name all 12 of its contract brewing partners, the company also works with Maine’s Peak Organic Brewing Co., which has an alternating proprietorship with Two Roads.

Peak Organic founder and president Jon Cadoux said the relationship with Two Roads began when his company was looking for a place to efficiently produce Peak’s Fresh Cut Pilsner in the desired quantities.

“We we’re basically just looking for something, somebody that would have enough lagering capabilities and at the volumes that we brewed,” Cadoux said. “That world is pretty small.”

He found that place in Two Roads, however, likening the brewing process in Stratford to operating a luxury automobile.

“Lagering beer is no easy task, and I mean, the facility is a Cadillac,” Cadoux said. “It’s an absolute dream system to use and brew on. It’s a craft beer playground.”

In explaining how the expansion would impact Peak, Cadoux said his brewery hasn’t been capacity constrained, but the announcement ensures that it will be able to make beer, as needed, to supply future growth opportunities.

Along the same lines, Hittle noted that the expansion offers Two Roads flexibility amid rising demand for its brand and the overall growth of craft beer.

“We can allow our base to grow prolifically in the future, and we have enough investor appetite to take on either more debt or more equity to facilitate growth,” he said.

Two Roads’ own brands are currently available in its home state of Connecticut, as well as Massachusetts, Rhode Island and New York. There are no immediate plans to enter new markets, but when the company does grow its distribution footprint, it will be through “contiguous expansion,” Hittle said.

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