One of the hardest decisions faced by brewers in the current craft environment relates to scale and expansion. As many brewers recognize rapidly increasing sales, the challenge is to manage growth in a smooth and sustainable manner. In an ideal world, brewers would be able to exactly match supply with demand, meaning that they would only spend money on new kegs and fermentation tanks at the right time. This idea is related to the strengths of contract brewing: as a brewery see a rise in demand for a beer, it can place a larger order from the contract brewery.
This is a much harder challenge for production breweries. First off, the biggest constraint is access to capital. It is very hard for craft breweries to grow organically, meaning reinvesting profits into expansion. While possible, it takes a much longer amount of time than an infusion of capital, whether that is an investment into the company or taking on debt. Secondly, production breweries face space constraints. At some point there will no longer be room for new fermentation tanks, and a brewery may have to move to a larger location. This process can take over a year to execute, requiring foresight on the part of the brewery. That bet, which is the third challenge of scale and expansion, really is the key issue faced by a brewery.
This is where a brewery’s strategy and goals really come into play. Every brewery should understand its mission before making a decision about scale and expansion. To continue to meet demand requires taking on added risk. If a brewery has the goal of expanding its distribution, has a long-term time horizon, and sees a realistic path for continued growth, then this risk probably make sense. If a brewery’s goal is to serve its local community, then it probably does not. This strategy should be understood well in advance: waiting too long to expand could lead to lost opportunities and missed sales, while spending precious capital if not part of the strategy will put a drag on the business. Managing growth is a difficult challenge, but one that brewers would rather face than not.
