The end of Frederick Brewing?

[LJDolan]

From the 01/06/04 Washington Post business section:

Frederick Brewing, makers of Wild Goose and Blue Ridge beers, will be sold

to settle about $3.1 million in debts, the company's court-appointed

receiver said. Mark Dottere said he expects to conclude a sale of the

Frederick Brewing building and sox-acre property inthe Wedgewood Business

Park to an unidentified buyer by late January or early February. The brewing

equipment would be sold separately to an operator who would then lease the

plant and continue producing beer, Dottroe said.

Let me also add that Frederick also brewed the Crooked River line and was the contractor for the 12 oz. bottles for Stoudt's Brewing. In 2002 FB took home a GABF gold for the Crooked River ESB and a bronze for the Wild Goose oatmeal stout. The Crooked River Yuletide Ale was one of my favorite new beers of 2002.

[Rich Pawlak]

From the 01/06/04 Washington Post business section:

Frederick Brewing, makers of Wild Goose and Blue Ridge beers, will be sold

to settle about $3.1 million in debts, the company's court-appointed

receiver said. Mark Dottere said he expects to conclude a sale of the

Frederick Brewing building and sox-acre property inthe Wedgewood Business

Park to an unidentified buyer by late January or early February. The brewing

equipment would be sold separately to an operator who would then lease the

plant and continue producing beer, Dottroe said.

Let me also add that Frederick also brewed the Crooked River line and was the contractor for the 12 oz. bottles for Stoudt's Brewing. In 2002 FB took home a GABF gold for the Crooked River ESB and a bronze for the Wild Goose oatmeal stout. The Crooked River Yuletide Ale was one of my favorite new beers of 2002.

Lloyd, beer writer Lew Bryson had also heard that things were not good at Frederick; the Wild Goose Snow Goose we included in our Christmas Mix, he feared, would be the last of that beer that we would ever see. Sad.

[beergirl]

A bit more information is in the following article:

http://www.sunspot.net/business/bal-bz.bre...0,3085934.story

[LJDolan]

Rick, I had e-mailed this to Lew yesterday. He had heard it was going to happen but not when.

[Roger Troutman]

From ABC 7's website:

http://www.wjla.com/news/stories/0504/146717.html

Frederick Brewing Building Sold To Pay Debts

Friday May 14, 2004 7:51am

Frederick, Md. (AP) -  The building that houses the Frederick Brewing Company has been sold for $3.9 million to help settle the company's debts.

The Frederick brewer makes Wild Goose, Blue Ridge and Hudy Delight beers. Its parent company is Snyder International Brewing Group of Cleveland.

Attorney Michael Cheselka says the sale will allow Frederick Brewing to pay its debts.

He says he hopes Frederick Brewing can then emerge from court-supervised receivership in Ohio by August.

He says the sale won't affect employment at the brewery.

The building was sold to Brewer Building L.L.S., of Laytonsville, Maryland.

Frederick Brewing opened in 1996.

Apparently, the only change is in the ownership of the building. While I've never been a huge fan of their products, it's still nice to have them around.

[Mayhaw Man]

Frederick Brewing is one of the best examples of microbrewers who somehow deluded themselves into believing "if we build it, they will come". The original ownership group went heavily into debt to build capacity (with really swell, dreamworld equipment-the brewery is a gorgeous state of the art facility) to provide beer to consumers that may or may not have existed at that time. Beer is a business and many, many microbrewers (and to a greater extent brewpub operators) went into the business thinking that if they made good beer, the rest of that "business stuff" would work out. This has not been the case.

The breweries that are still standing, and to one degree or another thriving, are the brewers who thought about the business equally as much as they thought about their yeast. There are some seriously sucessful breweries in the United States that opened in the late 80's and early 90's, but they struggled for market share and capital as they grew. The failures were the ones that got sucked into the go-go mid nineties capital boom when capital guys were actually CALLING US and asking if there was "anything that they could do to help us out?". Some brewers got sucked into the thought that the beer market had plenty of room for people who make good beer (regardless of the size of their local market or their ability to make a profit) and that beer from Key West might be attractive to someone in Portland, OR and that beer from Portland, ME would be attactive to drinkers in San Diego just because they found a wine and liquor distributor willing to take a couple of palletes off of their hands. This is not marketing or expanding your market-this is putting beer on the back of a truck and shipping it farther than it should be shipped in conditions that almost guarantee mishandling and ruination of the product.

The key to the success of the Micros that are thriving is that to a very large degree they covered and serviced their local markets almost completely before they EVER thought seriously about moving farther afield. People like Frederick Brewing (the original owners were really nice people, incidentally) thought that if they had enough brewing and aging capacity that they would be able to keep adding distributors (once again-whiskey and wine distributors for the most part-not people who are able or qualified to handle beer-particularly beer that deteriorates fairly quickly) and keep growing. What they failed to see is that once the distributor pipeline is full, they are screwed. THe beer that they shipped is just one more beer on the shelf, far from home, with no one or nothing to promote it and by the time some beer lover does pick it up off of the shelf, the stuff has gone bad. So that's one more person that won't buy another one and one more beer nerd who will likely get on the net and trash your much beloved (by you) product on any of 25 or so beer sites that enable people to post their own "reviews" anytime they feel like firing up the p.c.

The same thing is true today as was true in 88, take care of your local market as best you can and don't borrow past what you can pay back with local sales. The rest of the stuff is just icing on the cake and needs to be treated that way.

[paul o' vendange]

As usual Brooks, beyond being one of the country's finest brewers, proves himself to be an analyst without peer. You are spot on, Mayhaw Man, down the line.

I have seen the two things you pointed out - moving too far from home, and overcapitalization/burdensome debt service - too, too often. Goose Island, where I formerly worked, moved very quickly from being a midwest bastion (they still are, at least in terms of barrelage reports) to trying to go somewhat national, when I was there, 14 states. Additionally, they capitalized the installation of Hooch equipment, having worked out a re-distribution agreement with United States Beverage to contract brew the stuff. Somewhere in the neighborhood of $2 mil, I think it was, on top of a bright Krones and state of the art bottling/packing line costing roughly the same. Time will tell, of course; but I know the company was relatively cash poor then, and as National Distribution Manager (my title alone signified the aim of the company), I saw what happened to our beer where our distribution network was weaker, i.e., away from home. Not a pretty sight, and at the time I fervently felt we did ourselves no favors. I hope the best for the company and as one of the older guys, they've got enough in place they might prosper over the long haul. Others are not so lucky.

I know that 4 or 5 years ago I was very close to putting together my own micro in the Upper Peninsula - there, some of the market dynamics Brooks laid out so well had not yet hit, and we were seeking to build on the idea of "the first craft/production U.P. beer - ever." Follow that idea with a big "so what?" I thank god we never got into it, as the market has certainly matured, or, more, congealed and new entrants are all but squeezed out entirely. In our neck of the woods (the Upper Michigan area), Bell's, having been around (and stayed local) is the craft powerhouse. They have moved beyond the goofy distribution and production bumps of their earlier years, and I predict they will do quite well for many years to come - provided they stay home and service their existing distribution network.

Sadly, we have seen many companies beyond Frederick that forgot the most fundamental maxim of business - whether I (as the owner) am proud of my product, or make it well, it matters not unless there are those who will buy it.

To Brooks' two principles - service your distribution network well, and don't strangle yourself with debt service you haven't earned, I would also add that many in the craft business, hot for the profits they saw screaming through the '90's era craft breweries of note, forgot that on top of the above, they were also required tp produce good, and consistently good, beer.

I have been saddened to see many fine breweries close over the last several years. I have not been saddened to see many others close - those breweries that knew nothing about fine brewing, and as they arrogantly and greedily sought to make a quick buck, they had no business getting into the game in the first place.

Fine analysis, Mayhaw man, thank you.

Paul

Edited May 22, 2004 by paul o' vendange (log)

[Lew_Bryson]

Just wanted to follow up: I visited Frederick recently, and the news is cautiously good. Sales are up sharply, management seems clear-headed and focused, the quality of the beer is excellent, and Wild Goose IPA is selling as fast as they can make it.

I'd be very happy to see Frederick make it in a big way (they're still made over 22,000 bbls. last year), if only because the industry doesn't really need another big failure.

[Mayhaw Man]

Just wanted to follow up: I visited Frederick recently, and the news is cautiously good. Sales are up sharply, management seems clear-headed and focused, the quality of the beer is excellent, and Wild Goose IPA is selling as fast as they can make it.

I'd be very happy to see Frederick make it in a big way (they're still made over 22,000 bbls. last year), if only because the industry doesn't really need another big failure.

I wish them the best. I always liked the product. But I fear that they will need to sell a hell of a lot more that 22,000 bbls per year to make a living at it. If I remember correctly, that plant can operate in the 150,000 range ( I have to get an old New Brewer to find out exactly). Once again-the place is a brewers dream. Nice brewhouse, shitloads of refrigeration and storage, decent packaging capacity on nice gear. They need to get out and sell some beer.

[Lew_Bryson]

I wish them the best. I always liked the product. But I fear that they will need to sell a hell of a lot more that 22,000 bbls per year to make a living at it. If I remember correctly, that plant can operate in the 150,000 range ( I have to get an old New Brewer to find out exactly). Once again-the place is a brewers dream. Nice brewhouse, shitloads of refrigeration and storage, decent packaging capacity on nice gear. They need to get out and sell some beer.

Full annual cap at Frederick is currently 60K bbls. 22,000 is not where they want to be, for sure, but they were down sharply last year, from something like 35,000 the year before, because they were in receivership and couldn't buy malt. They've got that problem under control now, and sales are coming right back up to where they were. They're finally putting some smart sales work behind the Little Kings Cream Ale line, and it's selling like crazy in the Midwest. Wild Goose is going back into old markets and picking right up where it left off. I still think the best stuff they make is the Blue Ridge line; had a great, fresh Blue Ridge ESB last night. The place, BTW, is unfortunately no longer a dream; maintenance got neglected when there was no money, and they're limping in places. But there's a very can-do attitude...I think they've got a good shot, if the money men can give them a little room to run.

[paul o' vendange]

I wish them the best. I always liked the product. But I fear that they will need to sell a hell of a lot more that 22,000 bbls per year to make a living at it. If I remember correctly, that plant can operate in the 150,000 range ( I have to get an old New Brewer to find out exactly). Once again-the place is a brewers dream. Nice brewhouse, shitloads of refrigeration and storage, decent packaging capacity on nice gear. They need to get out and sell some beer.

Full annual cap at Frederick is currently 60K bbls. 22,000 is not where they want to be, for sure, but they were down sharply last year, from something like 35,000 the year before, because they were in receivership and couldn't buy malt. They've got that problem under control now, and sales are coming right back up to where they were. They're finally putting some smart sales work behind the Little Kings Cream Ale line, and it's selling like crazy in the Midwest. Wild Goose is going back into old markets and picking right up where it left off. I still think the best stuff they make is the Blue Ridge line; had a great, fresh Blue Ridge ESB last night. The place, BTW, is unfortunately no longer a dream; maintenance got neglected when there was no money, and they're limping in places. But there's a very can-do attitude...I think they've got a good shot, if the money men can give them a little room to run.

This is very good news. My hat's off to them for having the tenacity to stick it out when many would have caved.

Paul