THE GIST
On Dec. 16, 3 Floyds Brewing Co. informed investors it would permanently close its Munster, Indiana, brewpub. Co-founder Nick Floyd announced in late May the company would “indefinitely close” the 15-year-old brewpub as a result of the COVID-19 pandemic; this week’s announcement makes that closure permanent. 3 Floyds, the 31st-largest Brewers Association-defined “craft” brewery in the U.S. by volume, will continue to produce and distribute beer from its Munster production brewery.
The brewpub employed about 50-60 workers before it shuttered, and was a destination for craft beer drinkers across the Midwest. But in recent years, 3 Floyds had seen sales for its packaged beers accelerate it to a regional powerhouse. Its products are available in a growing number of retail outlets: In 2016, 3 Floyds sold $1.78 million in chain retail stores, as tracked by market research company IRI. In 2020, those sales will top $12 million.
As a result, the brewery planned to quadruple the size of its Munster production brewery as part of a $7.5 million expansion. According to its website, 3 Floyds currently distributes to seven states in the Midwest and South; its beer has also been spotted for sale in New York and New Jersey, though those states are not listed on the website.
WHY IT MATTERS
Permanently scrapping the brewpub solidifies what had been clear for years: 3 Floyds is growing as a production brewery—and a distillery—rather than a destination brewpub. With its packaged beer sales surging even before COVID-19 made that avenue a cornerstone for businesses all over, it makes sense for the brewery to focus attention and resources on expanding brewing and packaging capacity rather than a brewpub with a 70-person occupancy limit.
The closure deals an economic and emotional blow to the small town of Munster. It also underscores dramatic shifts in brewery business models, accelerated by COVID-19: A brewpub that was designed to be a star attraction falls by the wayside as 3 Floyds grows fast and focuses on off-premise sales.
“Quite honestly, it’s devastating,” Damian Rico, a board member of the Munster Chamber of Commerce, says of the brewpub closure. “People know where Munster is because of 3 Floyds.”
Rico is the marketing and community relations director for Hospice of the Calumet Area, which is located just two blocks from the brewpub. Though he’s not a beer drinker himself, Rico says the brewpub loomed large in the town’s mind—and its economy.
“If you’ve met a person who knows about beer, they know about 3 Floyds, and they know about Munster. It’s put my community on the map,” Dustin Anderson, town manager for Munster, Indiana, told GBH in 2018.
Dark Lord Day, a spring festival celebrating metal music and the release of 3 Floyds’ Dark Lord Russian Imperial Stout, annually drew 6,000 attendees from across the world and benefited local restaurants and hotels.
“The thing about 3 Floyds is I know they’re a huge business, but I think they set the tone for all these little guys making beer in their garages with their buddies and their family members,” Rico says. “They’re that Rocky Balboa story of the brewery industry here. There’s a dozen little breweries in the area who’ve come along saying, ‘If they can do it, I can do it.’”
3 Floyds had grown significantly since relocating from Hammond, Indiana, to Munster, in 2000. Especially over the last five years, its sales in distribution exploded. The company sold 15% more beer in 2019 than the year prior to reach 97,750 barrels. That’s double its 2015 numbers.
And that’s also with sales in just seven states: Illinois, Indiana, Kentucky, Ohio, Wisconsin, Tennessee, and Minnesota. Likely, 3 Floyds sees a long runway for sales in other parts of the country. In early March, the company posted for sales representative jobs in New Jersey and New York. A tweet from 3 Floyds indicated the brewery would be expanding into New York in September. Dan Lamonaca, the owner of Beer Karma NYC, confirmed that 3 Floyds distributes to New York City and has a sales employee there. Posts on a BeerAdvocate thread indicate 3 Floyds has been selling beer in both New York and New Jersey. To grow off-premise sales this far outside its Midwest base takes resources, but sales growth over the past half decade indicates a potentially huge payoff.
It’s logical, then, that the company would invest its resources in those efforts rather than a brewpub that’s been closed since March. A K-shaped recovery has followed the initial spring nosedive for beer sales:
Packaging breweries whose beer was already available at grocery and big-box stores were ahead of the game, so they rebounded at the top of the K-shape.
Taproom-focused breweries with few outside-their-walls opportunities, or those heavily invested in draft, are more slowly struggling along at the bottom of the K-shape.
3 Floyds had a foot in both worlds, but clearly saw its packaged sales as the safer lifeline. And while COVID-19 played a role in the decision to keep the brewpub closed, it’s hardly the only reason 3 Floyds would see the wisdom of investing in packaged beer. Still, Rico can’t help but see the larger tragedy in the pandemic and the brewpub’s closure.
“I feel disappointed by how this whole nightmare has transpired not just for our country but for the world,” Rico says. “It’s just so disheartening to see … that we couldn’t do a better job of getting together and making sure businesses were surviving, in a more expeditious manner. We’re better than this.”
Words by Kate Bernot