Two of Colorado's biggest craft brewers registered some displeasure late last month over the efforts of one of their colleagues, Breckenridge Brewery, to get a bill passed that would have allowed it to significantly expand its business model in the state.
The rift shows how competitive the craft beer market has become, especially as some of the larger companies strive to keep their competitive edge across the country.
But the owners of both breweries, New Belgium and Odell, say they weren't trying to keep Breckenridge from growing; rather, they had concerns over the wording of the bill, which died in the state House of Representatives last week.
"[New Belgium] felt that the bill wasn't well crafted.... We felt that it would be better to craft legislation that would be accurate and work for more members rather than serve one member," New Belgium owner Kim Jordan said via e-mail. "I have committed to [Breckenridge operations manager] Todd Usry that I am happy to work on legislation for next year that would allow brewpubs and breweries to have both brewpub and brewery licenses. Or that would do away with the brewpub/brewery designations all together."
Next year may be too late, however. On Monday, Breckenridge president Ed Cerkovnik told the Denver Business Journal that the failure of that measure, House Bill 1347, would force the brewery to open a new brewing facility on the East Coast rather than in Colorado. Breckenridge later backed away from those comments, saying other options were on the table and that no decisions had been made about a second operation.
The proposed legislation would have allowed brewpubs -- businesses that operate breweries and restaurants on the same site -- to increase the amount of beer they make from 60,000 to 300,000 barrels per year without changing their business model.
Breckenridge is currently the only Colorado brewery that's maxed out under the law; its primary brewery, at 471 Kalamath Street, will brew close to 60,000 barrels this year. Usry announced last month that Breckenridge planned to open a massive new brewery, restaurant and tasting room somewhere in the metro area, possibly near Littleton.
Other large brewery/restaurants -- like Oskar Blues, Rock Bottom and Mountain Sun -- operate under different arrangements and with different licenses.
Colorado's two largest breweries, Miller Coors and AB InBev, also registered concerns about the bill, as did convenience and grocery stores, who have been trying to pass legislation for years that would allow them to sell full-strength beer and wine.
Odell Brewing founder Doug Odell says he promised Usry that he wouldn't discuss the legislation with the media, but he insists that Odell wasn't directly opposed to it.
"I did have a conversation with my representative, John Kefalas, but it was just to outline the pros and cons," Odell says. "It would be a bad thing if Breckenridge left Colorado."
Kefalas, who represents Fort Collins -- where New Belgium and Odell both are based -- ended up leading the drive to bury the bill, however.
Odell did talk about how quickly the craft beer landscape is changing as breweries like Sierra Nevada, New Belgium, Oskar Blues and Lagunitas jockey for position and market penetration in an industry that saw 13 percent growth last year nationwide in terms of volume and 15 percent in terms of sales.
The four companies plan to build second locations in the next two years on the East Coast (all but Lagunitas in North Carolina) to better serve customers there.
"All four have said it's primarily because of shipping costs. In the case of New Belgium and Sierra Nevada, they are also running out of capacity. Todd [Usry] has said the same thing about Breckenridge and shipping and that they are running out of room.... And he is from Virginia, and I think he would like to move back there one day," Odell says.
"As far as shelf space is concerned, it is finite. There keeps being more and more breweries opening up all the time, so it seems logical that something has to give after a while," Odell adds. "As long as the craft beer market is growing like it is, there is room for people to grow. But if volume declines, that's when I think it will get ugly."
Odell says his company, which distributes beer in ten states, defines itself as a "regional brewer" and "not one with national aspirations," but he adds that he will add new markets -- or new packaging, like cans -- if the brewery doesn't meet its volume goals. Right now, however, neither of those things is necessary, he explains.
"As far as losing out to the guys who are maybe more assertive in their growth goals, I don't know," Odell says. "Oskar Blues is certainly getting a head start on us in New York. But New York is not a part of our plan right now. We want to continue to appeal to customers in our existing markets."
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