Founders Brewing announced this week plans to start contract brewing its flagship All Day IPA outside its home of Grand Rapids, finding a partner with Colorado’s Avery Brewing. Production will begin in 2019, according to an announcement posted on Founders’ company blog, with the goal of shipping All Day to West Coast markets to offer “the freshest product possible.”
The connection isn’t out of thin air, as both breweries have sold 30% stakes to Spanish beer maker Mahou San Miguel—Founders in 2014, Avery in 2017.
“Rest assured, anything created with the Founders name on it will be just as delicious and consistent with product coming out of Grand Rapids,” Founders wrote on its blog. “Our production team has completed a number of quality checks at the Avery facility. We’re confident in their system’s ability to replicate All Day IPA.”
WHY IT MATTERS
On face value, this might seem like a relatively plain announcement to end the year, but beyond the new connection between Mahou-invested breweries, it also reflects two companies moving in divergent paths.
Founders has been nothing but up and to the right in recent years, riding the popularity of All Day and an array of 15-packs toward record production numbers, all while becoming the largest brewery in Michigan. From 2017 to 2018, the company expects to grow about 24% in volume, finishing this year at around 580,000 barrels. No longer considered a “craft brewer” by the Brewers Association, that production level would nevertheless put Founders among the top-five “craft” companies in the country.
Avery, meanwhile, has seen production levels flatten drastically. After growing by 7% in 2015 (52,805 BBLs) and 18% in 2016 (62,097 BBLs), barrels were up just 2% in 2017 (63,250 BBLs), according to numbers reported by the Brewers Association. Earlier this year, the company said it wouldn’t reveal how much beer it would produce in 2018, and at least according to figures tracked by IRI, things weren’t looking great.
In its home of Colorado, IRI tracks sales through the state's liquor stores, where full-strength beer is sold, and Avery was well off its 2017 pace in volume and dollar sales. According to those figures only, which aren't fully reflective of all in-store sales, Avery lost 38% of IRI-tracked volume from 2016 to 2017. In 2018, its volume sales sat at about 77% of all of 2017's sales with five weeks to go in the year. Nationally, in IRI grocery, convenience, and other stores, Avery had grown by 3.4% from 2016 to 2017, and had sold about 72% of its 2017 total volume with several weeks to go until the New Year.
Among all the realities of production and sales, Avery has still used 2018 as a year to reflect and rebuild. In April, it announced a rollout of rebranded packaging. This summer, it announced it was laying off employees in restructuring efforts. It’s an unfortunate collection of stats and stories after the company moved into a $27 million new home in 2015 that has the capacity to make 150,000 BBLs a year.
Meanwhile, All Day IPA accounts for something around 350,000 BBLs of Founders’ total output, according to previously reported company estimates.
Elsewhere, Founders' Solid Gold Premium Lager has quickly become the company's third best-selling beer in IRI channels in its first full year of production, soon to eclipse Centennial IPA as the #2 product in its portfolio. It would only make sense that opening up capacity by shifting All Day elsewhere would be beneficial to the Michigan company, especially if it’s seeking to ramp up the brewing schedule of a Lager that would take longer from brew day to package than Founders’ popular IPAs or Dirty Bastard Scotch Ale.
In an interview with Brewbound this fall, co-founder and CEO Mike Stevens said Founders was looking to build or purchase an East Coast facility to supplement demand during peak months. Shifting some of the burden from All Day elsewhere—especially if it becomes helpful to a connected brewery that has plenty of space to spare—can help accomplish that in a cost-effective way. On top of that, Colorado became Founders’ 47th state for distribution this October.
“Colorado is a competitive market, and it costs a lot of money to get beer there,” Stevens told Brewbound. “We kind of stayed away for awhile, and our retail customers and the people we were dealing with weren’t demanding it, so we just didn’t go there.”
Now? Founders is going all in, shipping beer there, but from there, too. For one a quickly growing brewery, it’s a natural fit. What it means for Avery, however, and what it sees of its future growth potential, is another side of this story waiting to be told.