When Salt Lake City's Epic Brewing revealed in 2012 that it would open a newer, larger production facility in Denver, co-owner Dave Cole mentioned that the search had come down to Colorado and California. Colorado won out, though, and Epic unveiled its $2.5 million, twenty-barrel brewery the next year.
But on Wednesday, Epic announced that it would expand to California as well — this time with the purchase of an existing company, Telegraph Brewing in Santa Barbara. Epic plans to grow the Telegraph name and brand throughout Southern California by increasing its production capacity and adding twelve-ounce cans. The eleven-year-old brewery, founded by Brian Thompson, specializes in Belgian-inspired beers, but Epic says it will add a new series of "modern IPAs," including hazy ones, and ramp up Telegraph's sour-beer program.
"California is important to us," says Cole, who is a native of the state. "Not only does it have 10 percent of the total market share for craft beer in the U.S., but my hometown of Los Angeles indexes really low." In other words, people in L.A. aren't drinking nearly as much craft beer as residents in other parts of the state.
And Epic might not be done: Cole says the brewery would consider another purchase in the state. "It's a market we want to be active in, so if we can find the right fit, and if it makes sense, we could do it." Epic would also be interested in a Colorado brewery purchase, though Cole says that so far, he hasn't seen the right deal.
Epic is now the second local brewery to buy another brewery in California. Fort Collins-based New Belgium bought San Francisco's Magnolia Brewery in August. Oskar Blues, meanwhile, has purchased breweries in Michigan and Florida with the help of its equity owner, Firestone Capital Partners. And North Carolina's Thirsty Monk recently bought Denver's Deep Draft Brewing along with Bazi Bierbrasserie, a Portland beer bar, as part of a strategy to own a string of small breweries across the United States.
The purchases signify a larger trend toward consolidation by craft breweries that are looking to grow in the face of increasing competition, but without selling out to billion-dollar beer giants like Anheuser Busch InBev.
“So much has changed in the craft-beer world since I started Telegraph, back when.... There were fewer than 1,500 brewers nationwide,” Telegraph owner Thompson says in a statement. “Today, with the number of breweries approaching 6,000, the craft-brewing landscape is radically different. We are extremely proud of what we have accomplished, but the increased competition from the likes of AB InBev's 'crafty beers' as well as new startups is requiring everyone in the industry to re-calibrate their plans for the future."
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Cole says that he and Epic co-owner Peter Erickson financed the purchase with cash, loans and money from their own pockets. "Peter's and my vision a long time ago was to do multiple locations with smaller breweries," Cole says. And although some medium-sized craft breweries are facing flattening or declining sales, Epic is growing and will max out the capacity at its Denver brewery in 2018 at around 23,000 barrels.
The Telegraph addition will give the company an opportunity to grow that capacity somewhere else. As part of that, Epic will move seven of its foeders — large wooden vessels used to age sour beer — to California.
“It’s a long-term dream come true,” Cole writes in a statement about the sale. “I fell in love with craft beer living in California, and that love didn’t diminish when I moved to Utah despite the beer scene at the time. I feel like I’ve come full circle. We have been actively looking for great breweries to purchase for the past eighteen months, and bringing Telegraph Brewing into the Epic family is exciting.
"To be part of such a well-regarded brewery like Telegraph is something I’ve always hoped to do, and now it’s finally a reality," he continues. "It provides us an avenue to combine our teams and build on Telegraph’s portfolio with our innovative vision. This couldn’t be a better fit — including some advantageous distribution overlaps that create opportunities to expand both brands across California and beyond."