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Boston law firm Bowditch & Dewey is capitalizing on craft’s increasing popularity with a “specialty practice” centered on craft brewers, per weekend report by Boston Herald.
The firm plans to recruit “10 to 12 attorneys from offices in Framingham, Boston and Worcester to address corporate formation, real estate, environmental, employment, insurance and licensing issues” for the growing segment.
“It’s a thriving and growing industry,” said Bob Young, co-chairman of the new group. Many of crafts’ issues are common to other startup industries, though of course this one is more stringently regulated. “One of the key challenges … for the brewers is how to convert their passion and their skill of making beer into a viable business,” said Bob.
Obviously, “employment issues come to the fore quite quickly as the business evolves from a couple of buddies in the basement to rented or even owned space with a 200-
barrel tank producing mass quantities of product.”
The Boston Business Journal covered the story, too, noting that the group is expanding their operations in that city (where they reportedly have lower hourly fees than the bigger law firms downtown). Bob told that outlet that wastewater and environmental concerns will also be a focus for the endeavor, as well as helping small brewers “make inroads with distributors,” of course.
This isn’t uncharted territory for Bob and his firm. Just this year, they represented craft veteran Anchor Brewing Company in a non-compete case brought against it and an employee, which has now been resolved and dismissed.
Eric Hendler, co-founder of the Framingham-based Jack’s Abby Brewing, finds the endeavor comforting. “Personally we haven’t needed something like that as of yet, but … if an issue arose, it would be nice knowing that there was someone who had experience in particular to breweries,” he told the Herald.
GREEN FLASH BREAKS GROUND ON EAST COAST FACILITY
Green Flash Brewing Co. has officially broken ground at the site of their new 58,000-square-foot East Coast production facility in Virginia Beach, VA., which will include a tasting room and beer garden. The brewer’s new location is expected to “employ 40-plus Virginians [at its onset] and represent $20 million of invested capital,” per company statement.
Green Flash plans for the East Coast facility to open in 2016, with ultimate capacity of 100,000 barrels. It’s a fitting time for the brewer as they are currently producing 65,000 barrels at their original facility in San Diego and expect to hit their ceiling of 100,000 barrels there by 2016.
If Green Flash opened the Virginia Beach facility “today,” the new brewery “would produce and ship about 45% of its beer from [its new facility] to the eastern half of the U.S.,” a number that is “expected to grow by 2016.” The East Coast facility will allow for Green Flash “to cold-ship fresh beer via second-day freight,” which the company believes will translate to “beer at its best, lower pricing at retail and a smaller carbon footprint.”
Fermentation tanks for the facility “will be delivered in three phases: 50% of capacity up front, with 25% added as needed until reaching the operation’s full capacity to meet demand.”
The facility also builds on the trend of the ever-increasing “destination brewery,” beyond the stainless steel and concrete basics. “Most importantly,” said Green Flash co-founder and VP of marketing, Lisa Hinkley, “we will have the chance to further connect with our customers on the East Coast in the Virginia Beach tasting room and beer garden.” She called that face-to-face interaction their “most powerful brand building.”
RICHMOND LANDED STONE AT A HEFTY COST, BUT STONE WILL SPEND LOTS LOCALLY, TOO
Now that it’s official, Stone is hoping to “begin site work on its Richmond brewery next month” with expectations to start construction in January, per report by Richmond Biz Sense. If things go accordingly, Stone plans to be brewing by January 2016. Their hopes are “to open a retail operation at the same time as the brewery ” and “add the restaurant and garden phases by Stone’s third year in Richmond, if not sooner,” according to Stone co-founder, Steve Wagner.
It seems like a lot of moving parts and a great deal of money for the brewer, especially when you factor in the construction of the Berlin facility around the same timeframe. However, the brewer is receiving a great deal of help from the city of Richmond as well as the state of Virginia in generating bonds and funds for the new East Coast facility.
Stone is expected to receive $23 million in bonds from the mayor’s office to fund the project. Another $8 million in bonds will go toward the restaurant and beer garden. The city of Richmond is also expected to fork over $2 million in grant money, which “will come from new taxes generated by the new facility,” per report.
On top of that, Virginia’s Governor’s Opportunity Fund is putting $5 million toward the new facility and another $250,000 from the Governor’s Agriculture and Forestry Industries Development Fund.
“We put all in to get this project,” Gov. Terry McAuliffe said at the official announcement Thursday.
(Ed. note: One seemingly in-the-know article commentator clarified that “the city is not providing $31 million to the brewery in terms of borrowing,” but that the EDA “will be inducing bonds to support the development, enabling the company to gain its capital at a cheaper rate, and charging the company sufficient rent to cover the interest and principal repayments.”)
To get specific, Stone’s new facility “will ultimately represent a $74 million investment in the city, with $41 million in machinery and equipment, $1.7 million in personal property, and a minimum of 288 jobs in the first three years,” according to email from Tammy Hawley, a spokesperson for the mayor’s office. (The $74 million does not include “rent, land, capital equipment, personal property or real estate improvements,” according to Stone spokesperson Sabrina LoPiccolo.)
The Richmond Economic Development Authority “will develop and lease” the 12-acre plot to Stone. The brewer will have an ” initial 25-year lease on the property.” They are expected to pay rent annually and “the amount will be enough to cover the city’s debt service,” according to Tammy.
Stone “expects revenue at the site to exceed $100 million in its fourth year and eventually reach hundreds of millions of dollars annually.” The facility will become the largest craft brewery in Virginia once it is erected, brewing more than 120,000 barrels of beer in its first year. The Virginia Secretary of Agriculture and Forestry, Todd Haymore, said the facility “will nearly double the production of the state’s 82 breweries currently in operation.”
Dave Gott of local Richmond brewery, Legend Brewing Company, realizes this is a big win for his city. “Bringing a big-name brewery into the area really solidifies Richmond and the surrounding area as a destination now,” Dave said. “If I worked for the department of tourism, I would be dancing in the streets.”
But now that the city has proven it’s capable of spending money to support craft brewers, he would like to see the little guys receive a little more attention. “To bring a major, major competitor into the market – I don’t see anything wrong with it, it’s a lot of jobs – but I think it would be nice for them to reach out to the brewing community in Richmond to see where they can help out, ” he said.
PRESS DEMOCRAT QUANTIFIES CRAFT AT COSTCO
In a very detailed interview on segment breakdowns, Costco’s Asst General Merchandise Manager, Annette Alvarez-Peters, told the Press Democrat that craft beer comprises “approximately one-third of beer sales.” Is it stealing share from wine, reporter asked? “If anything, craft beer is pulling sales from other segments of the beer category,” she said. Of course, IPA is growing share, too.
Pressed on sourcing craft beer locally, a company habit, Annette shared that they currently don’t have a craft beer listed nationwide. “Many of the breweries cannot supply our needs, therefore, by design each region’s buyer will seek out breweries within their region,” she said. (They have 11 buyers on their alcohol beverage team, each responsible for wine, beer and spirits for their region.)
And here’s a nice tip on their pricing strategy: “As with all items sold at Costco, (profit) margins do not exceed 14 percent,” she said of setting wine price.
Until tomorrow, Jenn
“If you don’t risk anything you risk even more.”
– Erica Jong
THE 2015 BEER SUMMIT – The Beer Industry Summit will be at The Breakers resort in Palm Beach, FL. January 11 – 12, 2015. Register and more info here: http://beernet.com/beer_summit.php
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