Why craft brewers must innovate and team up to survive
Independent brewers need to work together and become more innovative to survive, according to Colorado’s Left Hand Brewing Co.
The predicament, which was recently outlined by the Longmont-based brewer during a local business interview, laid bare the current climate for craft breweries. It identified that the situation many brewers find themselves in is to either watching the market crumble around them with closures mounting or stay agile enough to rethink their position with allies.
In a discussion about the issues facing the sector, Left Hand Brewing Co founder and CEO Erica Wallace told BizWest that craft brewers are now facing such tough times because they are in a “structurally contracting market”.
This has meant that there has been a ‘survive or die’ mentality among the brewing sector that has been evoked by the concerns of how many have watched while others have folded.
Emphasising this with a rhetorical question, Wallace asked: “So what are we going to do? Are we going to shut the doors, or we’re going to try to change it up?”
The changing trends in beer have been the subject of much research of late, with flavoured beer, fruit beer and rice being used in beer recipes all being flagged as ways industry tastemakers are leaning. However, last year it was still noted how US beer sales had fallen to lowest level in quarter of a century.
According to Left Hand, whereas the sector used to lead trends, now the industry needed to take note of them and stay responsive to people’s tastes. As well as this, the brewer suggested that this need was fed by a desire to move things forwards, but also, more pertinently, by fear of being deemed irrelevant and being wiped out.
Wallace explained: “I think innovation is one part creativity and two parts survival. You’ve got to innovate as the market changes. And as tastes change you’ve got to respond to that or you become obsolete.”
According to Wallace, his brewery has “changed it up” by “seeing who else is feeling the squeeze and who wants to team up”.
Collaboration has recently been the name of the game in Colorado with the Colorado Brewers Guild (CBG) recently having brought together more than 180 craft breweries pouring side-by-side at Collaboration Fest which took place in Westminster back in April.
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Plus, this spring, Left Hand also absorbed Dry Dock Brewing Co from Aurora and is also now set to produce its apricot-forward line of beers which answer the fruit beer trend.
Wallace pointed out that Left Hand is always “trying to stand out a little bit” and also noted how Left Hand’s flagship Milk Stout Nitro, “certainly helps us with that” owing to the fact that nitro stouts often garner attention too and that is “definitely a niche that we occupy”.
Looking at the way the business has looked to complement its range by seeking out another brewery where the portfolio works alongside it seasonally has been a method Wallace has been keen to enthuse about.
For instance, while Milk Stout Nitro is oft-considered best suited to cold-weather drinking, Dry Dock Brewing Co.’s lineup has effectively plugged the gap during the warm-weather months.
Wallace explained how Dry Dock “matches up with us really well because of this opposite seasonality”.
Left Hand also uses its extra manufacturing capacity to brew beers on a contract basis for breweries that it doesn’t own to assist in supporting fellow brewers while also giving the business a boosted income stream.
He highlighted how some smaller breweries might have labour costs that are “five or six times higher than ours. So in some cases, for some companies, it makes sense to push that off, especially if they’re capacity-strapped and they have a lot of varieties that they need to keep up with.”
In addition to beer, Left Hand also contracts to produce hard kombucha and tea as a means of staying agile within the marketplace. Added to this, the brewery has been more recently been raising money via WeFunder, an online platform helping companies solicit capital from non-accredited investors, as well as using a Securities and Exchange Commission Regulation D funding round.
Wallace admitted: “I had to buy out my partner or they were going to sell the company. So we spent a lot of money, like millions, to buy back over half the stock, and I needed to replace some of that.”
The company has since raised about US$1.8 million through its Regulation D and WeFunder efforts, a move that has purportedly put Left Hand about two-thirds of the way to reaching its ultimate fundraising goal.
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