Good Beer Hunting

What Does This Shuttered Ohio Brewery Tell Us About Industry Closures?


One of Columbus, Ohio's tenured breweries announced an unclear hiatus of production this week. Four String Brewing Co., which opened in 2011, alerted vendors that its upcoming anniversary party and all other future events were cancelled, according to Drink Up Columbus.

“As of today we are closed until further notice,” Sara Kruis, Four String's HR administrative assistant, told the outlet. “Unfortunately I don’t have any answers for anyone other than that.”

Drink Up Columbus added that staff had recently been laid off at the end of September and shortly after began to cut hours at one of their two taprooms.

Four String didn’t reply to requests for comment.

Without any details, it's hard to pinpoint what could have been the source of issues for the brewery, but the rapid growth of Four String at least connects the financial realities. In 2015, the company announced a $2 million expansion to help the brewery grow to a max capacity of 60,000 barrels a year, which founder Dan Cochran said was "far more beer" than he could contemplate, "but maybe not that far into the future," as reported by the Columbus Dispatch.

“This is moving so much faster than I ever imagined," Cochran said at the time. "The opportunity for Four String to grow is greater than I could have possibly thought.”

Then just last year, Four String started its own contract brewing service and was producing significant amounts for Canton, Ohio’s Royal Docks Brewing Co. until the latter business bought its own equipment to start using this spring. Until that point, Royal Docks had built its contract up to almost 6,000 barrels a year at Four String, a level which puts it in the ballpark of breweries like Kentucky's Against the Grain, North Carolina's Triple C Brewing, and South Carolina's Holy City Brewing.

“That's not easy to replace as everything is slowing down," Collin Castore, co-founder of Columbus’ Seventh Son Brewing, tells GBH.

Castore emphasized how shocked and saddened colleagues in Columbus’ beer community were at the news of Four String’s closure. From the outside, he says, it seemed like the brewery was doing all the right things—Four String had packaged beers in the market, held community events at their taproom, and contracted for additional income from unused capacity. "But for whatever reason, it just didn't work for them," he says.

"You can kind of tick boxes and do things right and base things on what your growth patterns have been, but the industry and consumers are really fickle right now," Castore says. "It's tough out there."

According to IRI-tracked sales from grocery, convenience, and other stores, 2018 was going to be a down year for Four String's packaged beer after seeing in-store sales growth of 63% in 2016 following the company's expansion, and then 8.5% growth last year. Looking at numbers though the end of September, Four String's family of beers was likely to be flat at best in 2018, but likely down.

One shining spot was its Hilltop Heritage Lager, an American Lager that sold in 16-ounce six-packs for around $8. That beer easily became Four String's best seller in 2017 and already surpassed its 2017 sales volume through Sept. 30, gaining 22% growth with three months to go in 2018. This year, the company doubled down in the space with Hilltop Light Lager, which became the #3 beer for Four String in IRI stores.

The idea of creating a flagship, especially one that grew so quickly and apparently resonated with consumers, couldn't stop the inevitable, however.

The surprise of Four String’s closure is felt in its hometown, but in a small way contributes to a larger and regular discussion of how to assess a previously-thought unflappable business coming to an end, whether temporary or permanent.

In what has become an annual game of Telephone where one comment builds and changes from person-to-person, it seems the beer industry may be preparing for its near-annual existential worry about an impending bubble.

Take your pick: 2011, the “end times” of 2014, or maybe 2017, when media around the country feared the burst was about to happen or already did. But beer in all its macro and craft glory is still around, even though one of these anxious stories appeared just last month.

The Reality is that breweries close all the time. The Narrative is not as simplistic, nor as dramatic, since Craft Beer as an ascendent subculture of the centuries-old beverage has long been positioned as a bullet train that can’t be stopped. So when a brewery closes in Wichita, Kansas or New Orleans or Georgetown, Delaware, an anecdotal connection is easy to make. If all we read or hear about is how impactful “small and independent” beer has become, when the unstoppable force (breweries) meets an immovable object (historical market norms) the crash seems far more horrific than it actually may be.

“Last year it was under 3%,” Brewers Association chief economist Bart Watson recently told Beverage Dynamics of the 2017 closure rate. “It’s a little higher this year, 3-4%. That’s more in line with national averages. From 1986-2017, 4.3% has been the average. 3-4% is something people should expect. We’ll be seeing more closings, because it’s a natural part of the small-business cycle.”

It’s also a matter of mathematical probability. If record numbers of openings keep happening, then higher numbers of closures are a natural part of that process.

In 2017, there were nearly 1,000 openings and 165 closings, the latter of which saw a big jump from 2016 (97) and 2015 (78). The raw numbers are something to point to and yell about w/r/t the sky falling, but in a conversation with GBH earlier this year, Watson noted that nobody has been talking about the fact that those rising closure numbers are simply the market normalizing.

Over the previous four years, he said, the closing rate for craft breweries has been 2%, 2%, 2.1% and 2.6%. The Small Business Administration notes that about 80% of businesses survive past their first year, and about half survive at least five years. Even the Bureau of Labor Statistics says that, while new operations are important for the economy, "it is inevitable that some of these establishments will eventually fail."

"I’m still kind of shocked that craft beat the odds as long as it did," Watson said at the time.

The unique challenge of addressing all this is how anecdotal experiences might impact broader worldview. Closures of companies like Four String aren’t indicative of a bubble so much as the difficulty for many breweries to fully and successfully adapt to the market around them.

This is front-of-mind for Castore and Seventh Son, who are about to open a new barrel-aging and blending facility and taproom after a 15,000-square foot expansion in 2017. Given his brewery's own growth rates and focus on own-premise sales, Castore says he felt comfortable with these changes. About a third of Seventh Son’s beer was sold on-location until this year, and there’s currently a 25%/75% split between taproom and packaged beer for market. The brewery has grown from about 3,000 barrels last year to as much as 7,000 in 2018.

"We hedged our bets when we did the expansion," Castore says, "But we had a little pent up demand. We've been hustling."

Part of that hustle includes keeping an eye on industry trends.

"If I was opening another production brewery in one-to-two weeks, I'd be scared shitless," he says. "But since I'm opening another retail bar, I actually feel really good about it."

—Bryan Roth