The great thing about being a loudmouthed moron is that sometimes smart people respond to your buffoonery with interesting information. Such is the case with my post yesterday about Schlafly’s plans to expand their brewing operations using contract brewers.
The obvious answer to why they chose this route is financial prudence. Why take on a load of debt to expand in a marketplace that is growing so rapidly that it’s practically unstable?
Well just because this reasoning makes sense, it didn’t stop me from speculating (as a moron will) that it also might have to do with the fact that Schlafly’s is essentially for sale, and adding fresh debt to the balance sheet might make it unattractive to potential investors.
This was enough to prompt Schlafly’s Communications Director Troika Brodsky (who started off delivering kegs and now does lots of the design and writing for the place) to reach out and tell me what we already knew – I’m a moron! Here’s what Troika had to say:
I can assure you our choices have nothing to do with the succession planning of our owners, nor is it entirely about overextending ourselves financially (although that is a prime reason). Because our breweries were built in the middle of a city, we literally have no room to expand on our existing facilities (unlike a brewery like New Belgium that is essentially in the middle of a giant field and can just keep adding). So what that means, is that if we were to build a brand new facility in St.Louis, it would have to be really big (like 20-25$ million big) to future proof us for growth and it would also immediately make our Bottleworks redundant.
We would also essentially have to commit to creating something, that would take roughly 5 years to design, build and get up and running, that would cost us about twice what our entire company is worth (including the fact that about half our sales still come from our two restaurants), and it’s size would have to be entirely based on very loose guesswork as to what our capacity needs might be 5-10 years from now. That’s a pretty ridiculous and frightening prospect for a company our size.
Add to all of that…the overall economy is in the dumps. We really don’t know what our growth is going to look like going forward, and we don’t want to make any decisions that suddenly put us in a position where what we brew is dictated by a massive bank note. Even more importantly, our owners don’t want to make any decisions that were they to go south, would put Schlafly jobs at risk. Obviously we want people to drink Schlafly Beer, but we’re not out to take over the world, nothing is more important to us than making sure our employees feel secure in their jobs.
What we’re doing really isn’t contract brewing. We don’t own these breweries, but to an extent, they are built similar to our specs, with our own expertise and we’re using our own people to oversee the brews. We are very much considering the capacity we’ll get from Nashville and Iowa as coming from satellite Schlafly breweries. This is pretty great for us because it allows us some time and wiggle room by accessing an extra 10k+ barrels with low risk and it allows us to help our friends get up and running as well.
As you can imagine, getting a huge bank loan these days to open a new brewery isn’t easy, and being able to tell your bank you already have a guarantee of capacity from a large brewery like us really helps. And…if and when we bottle at either place (as for now, it will just be kegs of one, maybe two styles), I guarantee you won’t see a “Brewed In Saint Louis” logo on those bottles (I’m personally hoping to see “Brewed In Nashville” and “Brewed in Coralville”) . We intend to be completely transparent with what we’re doing and are completely committed to making sure the quality is as spot on as its always been.
Thanks for the great write up, support and the kind words.
So there you have it, right from the mothership. I think it all makes good sense, except I found one bit disappointing – when Troika said “we’re not out to take over the world…” Why not?! If you can manage to keep the quality up, I think the America would be a better place if 49 of the 50 states were brimming with Schlafly’s brews.
Everywhere except Idaho.
Sorry Don. 🙂