Renegade Brewing Is Selling Production Plant as Part of New Strategy

Since Renegade Brewing was founded in the Art District on Santa Fe in 2011, the brewery has always done things its own way, and the company's plans for expansion are no different.

Renegade is selling the $1.4 million, 15,000-square-foot production facility that it opened just three years ago at 918 West First Avenue (just a few blocks from its original brewery and taproom at 925 West Ninth Avenue) so that it can focus on adding new taprooms in Colorado and out of state. The brewery is also looking for a new production plant — with cheaper rent — where it can make enough beer to supply grocery stores.

"We see a lot of opportunity to expand the retail model," says Renegade co-founder Brian O'Connell. "But we're not looking to compete with the seventy taprooms that are already in Denver or all the breweries that are in Boulder, so we're looking for areas that don't already have that many breweries...both inside and outside of Colorado. We want to go to a regional taproom model."

In addition to Colorado, Renegade also distributes beer in Kansas, Arizona, Ohio and Wisconsin. O'Connell wouldn't say whether he's looking in those states, but he did say that each taproom location would have its own brewery so that brewers could make regional specialties in addition to serving Renegade flagships.

But O'Connell and his financial backer, Silver Fox Partners, have also decided that they want to be a player in the much more complicated grocery game, which will change completely in 2019. That's when supermarkets and convenience stores throughout the state will — thanks to a law passed in 2016 — be able to sell full-strength beer at multiple locations, something that has not been allowed previously.

For that to make financial sense, O'Connell says, Renegade needs to find a cheaper way to manufacture beer, since the margins on packaged brews are so much smaller than selling beer by the pint.

"We have a strong brand and are in a lot of retail liquor stores now, and we want to continue that. But we are also aware of the level of competition out there and the price pressure that is on," he explains. "So we want to take our manufacturing to a cost level that is going to ensure long-term success in a business that will continue to be very competitive for years and years and years to come."

The current production plant is located in the Yard on Santa Fe development, where the landlord would like Renegade to have a public taproom, O'Connell says. There's already a coffee shop there, along with a barbecue restaurant, a gym and other businesses, but Renegade has never really wanted to open a full taproom at that location since its original facility is just nine blocks away.

Renegade has listed the property for $1.2 million — a cost that includes all of the equipment (much of it purchased in the past four years), a long lease and a manufacturing capacity of 11,000 barrels of beer per year. "We're not in a hurry. This is not a financial decision, so we will only let go of the space if we get the right offer. We'll continue to operate and manufacture beer until then," O'Connell says.

"The best thing is to let someone else take this over and for us to transfer our manufacturing to another location, a long-term home that can help us control rapidly rising rents."

The decision to sell was made in the past few months in conjunction with Silver Fox, which bought an undisclosed portion of Renegade in late 2017. The investment firm is run by former Xerox CEO Ann Mulcahy. "Over the last eight months, [Silver Fox has] been getting to know the business and reviewing the craft-beer industry and figuring out what our best long-term strategy is going forward," O'Connell says.

He hopes to have news soon of a new taproom.