THE INS AND OUTS: WHO WANTS TO BE A
CRAFT BEER BREWER?
Editor’s note: The article posted here was
originally appeared in www.westcoastersd.com,
the website of print magazine West
Coaster magazine.
In 2006, when Jim Crute transitioned
from a long career as a biochemist to become a brewery owner, the landscape in
San Diego County was very different. For one thing, the story of a starry-eyed
homebrewing enthusiast turning his back on a lucrative career to follow his
fermentation passions was not an old and much-duplicated tale.
There were
only around 20 operating brew houses in San Diego County when Crute opened the
doors to Lightning Brewery in the north-inland community of Poway. Most
prominent among them were Stone, Karl Strauss, Ballast Point, AleSmith, and the
family of Pizza Port businesses that included Port Brewing and The Lost Abbey.
That last dual-personality operation also opened in 2006 as a
production-brewery venture for Pizza Port.
Looking at
the much smaller sudscape in the county at the time, it made sense that Pizza
Port, a highly successful brewpub chain with three locations would want to
start producing and distributing beer in larger quantities, in both kegs and
bottles. After all, that’s how the biggest brewing companies in the county were
doing it. It was the only way to gain visibility, as tasting rooms were hardly
the lucrative revenue-centers they are now. Few were the folks who spent
weekends shuttling from one brewery to the next like so many do now.
About the
only chance a brewery had of getting their logo and brand-identity to the
consumer in a meaningful way and look like a legitimate business versus some
fly-by-night, oh-isn’t-that-cute “microbrewery” was to get bottles out to
grocery stores. That’s where most people first saw the likes of Stone, Ballast
Point, AleSmith and even the young Green Flash, which at that point had just
bounced back from a shaky start that nearly saw it close.
So Crute
opened with the notion that 10-20% of his beer would be sold out of his tasting
room—which was then just a small pad in front of the cold-box right on the
brewery floor—while the rest would be wholesale. So, he started bottling nearly
from the start, and self-distributing before catching on with Stone Distributing
several years ago.
By his own
admission, his perception, method and timing were off, and, as a result, the
business suffered from a financial standpoint. As today’s brewery owners will
tell you, brewing companies make the best margins on their beer by selling it
in their tasting rooms where they can charge more, avoid the cost of doing
business with distributors and take all of the profit for themselves.
Fittingly, brewery owners make a point of constructing tasting rooms that will
at very least get people in the door and, in the best cases, lure drinkers from
appealing bars and restaurants, not to mention their own homes, to drink their
beer at the source.
Crute
recalls a conversation with Ballast Point’s Jack White around 2009, wherein the
founder of the brewery that eventually grew itself into a behemoth that sold
for a whopping $1 billion told his Lightning contemporary that, to his
amazement, the only thing making BP any money was the tasting room at its
Scripps Ranch brewery.
White went
on to expand that space multiple times until there was nowhere left to expand.
He eventually did the same with the company’s original Home Brew Mart location,
while simultaneously constructing new facilities in Little Italy and Miramar
that both included not tasting rooms, but full-on restaurants with attached
bars.
Meanwhile,
it wasn’t until 2014 that Crute, who by then was no longer with Stone
Distribution, constructed a tasting room and an outdoor beer-garden. But by
then, it was too late. Were he opening Lightning today, he says he would adhere
to a reversed business plan where he’d look to sell 80% of his beer out of his
brewery, and distribute the remainder.
But in the
real-life present, Crute has made the decision to sell his business. He put up
a craigslist ad titled “Turnkey Brewery and Tasting Room for Sale” on December
7, and hopes to be able to hand his decade-old labor of love to someone who is
looking to get into the industry, just as he did. Purchasing Lightning would be
advantageous in that it is currently in operation and would be ready for
someone to take over and get straight to work. The 5,500-square-foot facility
has a 30-barrel brewhouse, a combined cellar capacity of 490 barrels
(350-barrels’ worth of fermenters with 140-barrels’ of brite tanks), a bottling
line capable of filling 12- and 22-ounce glass, and the aforementioned tasting
room and beer garden.
Crute says
he is also open to existing companies purchasing Lightning for use as a
secondary brand, wherein the company name and, possibly its beer-brands would
remain active, but under a new owner. But the bottom-line is that he says he
has enjoyed pursuing his dream and feels he gave it his all for 10 years. He
feels it’s important to be reasonable and turn the page, but in doing so, hopes
another entrepreneur can realize their aspirations in the place where he
realized a good many of his.
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