Ska Brewing Sitting Pretty in Durango After Deciding Against Major Expansion

Once upon a time (about four years ago), the owners of Colorado’s medium-sized and larger craft breweries faced a choice: Use some of the cash they were earning from double-digit sales growth to take a major leap in size and keep up with the demand for their beers, or make do with what they had — and try to be content that way.

Avery Brewing, Great Divide, Dry Dock and Breckenridge Brewery (then still an independent craft brewery) all plunged in, investing tens of millions of dollars in new campuses, buildings and equipment. Even some smaller breweries, like Denver Beer Co. and Renegade Brewing, laid down serious cash to add production facilities that they hoped would allow them to greatly increase their market share and prepare for the future.

In 2017, as many craft breweries tighten their belts in the face of fierce competition and flattening or declining sales, those choices are probably making for some sleepless nights and second-guessing.

But not at Ska Brewing in Durango. In 2014 and 2015, owners Dave Thibodeau, Matt Vincent and Bill Graham talked about adding or buying a new facility to keep up with the demand for Modus Hoperandi, Mexican Logger and their other beers. They looked in Durango and some other southwestern Colorado towns. They even looked in Denver and the Front Range. In the end, nothing worked out, and Ska stuck with what it had.

“Am I glad I didn’t just take out a $30 million loan? Boy howdy,” Thibodeau says with characteristic humor. “I kind of feel like it was a blessing in disguise that nothing lined up for us to go bigger.” But Thibodeau also had an inkling that things might slow down, and he didn’t want want to be “left holding the bag” if they did. He and his partners also weren’t sure they wanted to upend their lives for the sake of growth if they could be content where they were.

Instead, since space was getting tight, Ska overhauled its “world headquarters” on the outskirts of town, starting last year with the addition of the Mod Project, a small brewing system where the brewers could experiment with styles, ingredients and techniques. So far, the Mod Project has made more than 25 different beers, including Pink Vapor Stew, a beer that graduated out of the Mod Project and into year-round production just this month.

Then Ska added five new ninety-barrel fermenters, a second kettle in the main brewhouse and a “de-aerated water system” that freed up the owners' time and equipment and allowed for a 20 percent increase in brewing capacity. In the past few months, Ska also hired longtime Avery Brewing executive Steve Breezley as its first COO, and new head brewer Kurt Randall, who took over for longtime head brewer Thomas Larsen, who left in March.

The changes will wrap up this spring with a redesigned outdoor beer garden and bar that will draw more people to the taproom and give them “more control” closer to home, Thibodeau says. Breweries usually make the highest margins in their own breweries, rather than via distribution, by selling pints over the bar.

The new efficiencies mean Ska can keep up with the demand, but also that it's ready to scale back. Production was up by 8 percent in 2016, to roughly 35,000 barrels per year, but “it’s not looking that good this year,” Thibodeau says. “We are down by 8 percent so far. March and April were strong, but January and February were terrible.”

Still, Ska is prepared for a decline, if there is one, because it didn’t overextend itself. “The beauty of it for us is that even if we are stagnant or losing a little, we are kind of at a sweet spot when it comes to production. If we had grown by double digits last year, we wouldn’t have had the space. It’s not a bad thing to be stuck in a sweet spot.”

And Thibodeau is thrilled with the brewery’s newest canned beer, Pink Vapor Stew, a sour ale brewed with beets, carrots and ginger that hit shelves just this week. “The has been the most fun project we’ve worked on for a beer that, to be honest, I’m not sure anyone will buy,” Thibodeau jokes. “It’s got root vegetables...and it’s pink.”

Ska began making versions of the beer last summer when the idea for the Mod Project was simply to be an experimental brewery rather than a pilot system for developing future packaged beers. But the brewers loved it so much — and obsessed about it so frequently — that Ska decided to bring it to market. Later this summer, they will can a new seasonal from the Mod Project as well: a tart version of its flagship Mexican Logger.

Eventually, Thibodeau says, he believes the craft-beer industry will straighten itself out. When that happens, he’d like to grow again, possibly with another taproom somewhere, possibly with another production facility — but until then, Ska is going to continue to sit pretty in Durango, right in its sweet spot.