The Green Flash Timeline of Regrets

FILED APRIL 5, 2018

Dear Client:

Just a few short years ago, San Diego-based Green Flash was a roaring success. Their flagship West Coast IPA was the toast of the west and the business was growing double digits, expanding markets, and on its way to joining the 100k barrel a year club.

Fast forward to today and the company, in this year alone, has closed two breweries, laid off 75 employees, pulled distribution from 42 states, foreclosed upon, sold off by its bank, and changed most, if not all, of its top management.

WHAT HAPPENED? After being in contact with several former employees and reviewing our own reporting over the years, we've cobbled together a timeline of sorts as a warning to other up-and-coming breweries.

Bottom line: The company's implosion is not just a sign of the times, there were some poor decisions being made... some were too aggressive, some came too late, and in hindsight some were just plain terrible.

THE GREEN FLASH TIMELINE OF REGRETS

2010 - The decision is made by leadership (Mike Hinkley) to move from 6-packs to 4-packs to help fund its new Mira Mesa brewery.

2011-12 - Green Flash quickly opens up many new markets, moving eastward through the Dakotas, Midwest and Great Lakes.

2013 - With the rapid growth spurred by the opening of new markets, Green Flash announces a second brewery on the East Coast even though Mira Mesa still has plenty of capacity. 2013 is also the year that Green Flash announces they're on the hunt for a $2 million San Diego facility, which later became Cellar 3.

2014 - Green Flash moves its portfolio toward double and triple IPAs and takes pricing as consumers are just starting to move away from high ABV beers and retailers and consumers are moving toward 6-pack and 12-packs, cans and variety packs (none of which are offered by the brewery at this point). Green Flash hits all 50 states. And Mike acquires Alpine Beer Co. later that year from the McIlhenneys in what one former employee described as a "snake oil sales call."

2015 - Green Flash starts to move back to 6-packs, but places them at a higher price point than many of its peers. They keep West Coast IPA in 4-packs, but after they get an earful from retailers on this decision leadership releases it in 6-packs at midyear. Construction begins on new $20 million Virginia Beach brewery and Mira Mesa still has capacity. Green Flash rolls out its first canned beer with Jibe Session IPA, but only to a handful of test markets at year's end.

2016 - Green Flash continues to grow and introduce new brands (still mostly in bottles). Halfway through the year, they decide to experiment a little more with cans, and releases their popular fruit beer introduction Passion Fruit Kicker, Sea to Sea Lager and Jibe Session IPA in cans. Still, the company continues to use a mobile canning line, and shies away from putting their core beers in cans.

2016 also marks the first time the company introduced something bigger than a 6-pack - GF puts Soul Style IPA in a 12-pack but it's priced relatively high ($20). Sales of the 12-pack are lackluster. Still, overall sales are flying (up 12% for the year) but starting to show signs of weakness late in the year. The brewer finishes the year at 92,000 barrels, its peak barrelage.

2017 - This is the year that Green Flash hits the wall as they are cycling tough comps from the new brand and package introductions. To add to their problems, consumers move away from fruit IPAs; Green Flash spends a million to upgrade a bottling line when cans are now what the consumer wants; and they take a price increase despite being down. In the summer, Green Flash buys a defunct brewpub in Nebraska. Mike says they want to acquire more small breweries. At year's end, leadership announces they'd like to open up four more outposts over the next couple years.

2018 - Bleeding cash and with soft sales, Green Flash pulls out of 33 states and lays off 15% of its workforce including their national accounts team. A couple months later Green Flash shuts down its East Coast brewery, puts it up for sale, and contracts its distribution footprint once more.

Aaannnnnd, that brings us to this week's news, in which Green Flash is foreclosed upon and sold in a hellfire hurry to an investment firm while their Virginia Beach brewery is put up for auction. Decisions matter.

What are your thoughts? Sign of the times or poor decisions? Ping me in confidence at hs@beernet.com

BEER BRIEFS:

IN RESPONSE TO YESTERDAY'S PIECE ON LOUISIANA CONSIDERING A LICENSE FOR 19 TO 20 YEAR OLDS TO DRINK WITH PARENTS' CONSENT and other conditions, we have ascertained through a reliable source that these are the states which allow ON-PREMISE consumption in the presence of, and with the consent of, parents/guardians/spouse:

NV, WY, TX, LA, WI, OH, CT

Mississippi - beer only (not more than 5% ABW)

AND MANY more states allows consumption at a private residence with the consent of parents.

So it begs the question: What happened to the above states and their federal highway funds? Nada. So why not allow a certificate of parental consent?

---------------------------------------

ON A PERSONAL NOTE: Ladies and gentlemen, I have big news. My entire life has been about the beer industry, as you know. So it seems right that I am moving into an actual brewery. Yes, as I am now an empty nester with my youngest son heading to Austin for college, I'm moving to a small but tidy apartment in the former can plant at the old Pearl Brewery in downtown San Antonio. So when you come to San Antonio this summer for the Distributor Productivity Summit, I can buy you a beer at the bar at the Hotel Emma, which is across the street, before we head to the La Cantera Resort for………

PIPING ALL HANDS: 2018 DISTRIBUTOR PRODUCTIVITY SUMMIT. Join us for our Distributor Productivity Summit at the La Cantera Resort in San Antonio, TX July 30 - July 31, 2018. Yes, it will be hot -- come sweat out your toxins -- and there are several pools outside and inside the A/C works great.

Plus, you can learn best practices and the latest in technology for running a crisp 21st century beer distribution operation -- go home back to the plant being a hero. All the experts will be here. And it's cheap. Early Bird Discount ends April 30. Register and learn more here.

https://beernet.com/distributor_summit.php

Until tomorrow,
Harry, Jenn, and Jordan


"Time flies like an arrow. Fruit flies like a banana."
- Groucho Marx


---------- Sell Day Calendar ----------

Today's Sell Day: 4
Sell days this month: 21
Sell days this month last year: 20
This month ends on a: Mon.
This month last year ended on a: Fri.
YTD sell days Over/Under: +1

----

(c) 2018 BeerNet Communications, Inc. - All rights reserved. Please, no forwarding or copying. Individual subscriptions $690/year. Corporate rates available.

Editor & Publisher: Harry Schuhmacher - hs@beernet.com
Twitter: @beerbizdaily

Executive Editor: Jenn Litz-Kirk - jenn@beernet.com
Associate Editor: Jordan Driggers - jordan@beernet.com

Customer Service: Jessica Lopez - jessica@beernet.com

Check beernet.com for back issues or to subscribe or renew. Phone: 210-805-8006. Email: jessica@beernet.com

BeerNet Radio: http://www.beernet.libsyn.com

We have a new mailing address:
909 NE Loop 410, Suite 720
San Antonio, TX 78209

BeerNet Communications, 909 NE Loop 410, Suite 720, San Antonio, TX 78209 USA

Unsubscribe | Change Subscriber Options

Go back to listing Go to next article Go to previous article

Top Secret News Hotline:

Got beer news for BBD?

Submit Anonymously
twitter facebook