Boulder Valley breweries prepare for more changes to industry with grocery store sales

BOULDER — On Jan. 1, grocery and convenience stores will be able to carry full-strength beer and obtain multiple liquor licenses, Boulder Valley craft breweries are still waiting to see what that will actually mean for them.

The process, craft-beer CEOs told Bizwest at a CEO Roundtable on Tuesday afternoon, has been scattershot. Some of the fine print needs changes to make the transition logistically possible for everyone involved. Colorado’s process of transitioning to grocery stores starting to carry full-strength beer is an unusual one, and many are figuring it out as they go.

“No one knows how to handle this, this has never happened before,” said Michael Memsic, owner of Sanitas Brewing Co. in Boulder. “Safeway and Kroger don’t know what they’re doing because they’ve never done this before, and we don’t know what we’re doing because that’s part of being a craft brewer.”

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Some brewers will fare better than others, said Jeff Brown, president of Boulder Beer Co. Those who already have relationships with national chains — likely because that are in stores in other states — will be able to petition for the limited additional space grocery stores will add for a larger beer selection. Those with a strong local presence may be able to get into local stores. The hope is that it won’t all be out-of-state beers getting more play.  

“I would hope there would be enough legislative blowback on grocery chains that there will be some pressure,” Brown said. “‘We gave you this to benefit Colorado consumers, and it has to benefit Colorado businesses.’ If it doesn’t, hopefully, they’ll go back and rewrite it one more time.”

The industry is seeing changes in other ways. Earlier this week BizWest reported that Liquor Mart sold for more than $16 million and would likely be redeveloped into student housing.

“Liquor Mart was king before Hazel’s opened,” Memsic said. “They’re close together. But you walk into the two stores, where do you want to shop? When Hazel’s came, Liquor Mart didn’t do anything to pick up its service.”

The industry is also seeing a slowdown of growth.

“Overall beer sales in the U.S. have gone down, but craft beer has gone up slowly,” said Jeffrey Green, owner of Very Nice Brewing Co. in Nederland. “The entire pie has gone down, but the bigger slice has gone to the craft-beer drinker.”

Still, Memsic predicted that by 2019 or 2020, there will be more closures of breweries than openings in the state. The last time that happened was around ’95-’96. That’s likely due to oversaturation of the market, and breweries deciding to close as their leases come to an end and rent goes up.

Some breweries are being strategic in order to avoid the potential of closure.

“A lot of breweries are rallying around the homebase that is their tasting room,” said Davin Helden, co-founder of Liquid Mechanics Brewing Co. in Lafayette.

Rather than trying to distribute, he said, more breweries are staying focused on the tasting room.

“The way we’re competing with what’s about to happen is we’re not going to play,” Green said. “We’re doing the taproom model and are just making sure the people who want our beer have it. Once you realize your beer doesn’t have to be everywhere, life is less stressful, for one.”

Twisted Pine Brewing Co., in Boulder, is one of those breweries that pared back its distribution and focused on its taproom.

“It’s the best decision we ever made in 23 years,” Bob Baile, owner of Twisted Pine, said. “For us, our business philosophy has been that we didn’t want to be big, we wanted to be small. We didn’t want to take over the world. We were in 13 states but it hurt us more than ever because we had conflicting philosophies: We wanted to be small, but we were in all these states. So we pulled the plug, and for us it was the right thing to do because of our business philosophy. We make 30 beers now, five times more than we ever did.”

Other breweries, however, are looking to expand as part of their strategy.

“We started as taproom-only but our goal was to do wholesale,” said Leslie Kaczeus, co-owner of Bootstrap Brewing, which has locations in Niwot and Longmont. “That can be growing while the taproom stays the same. You’re limited by the number of seats you have and how much you can do with that. We’re seeing growth as we add more territories. We’re up and down the Front Range, we have territory on the Western Slope and we’re adding the mountains.”

There are other potential challenges to the craft-beer industry. The increasing popularity of cannabis is bringing in more tourists who are also enjoying craft beer, but it also is potentially causing in-state beer drinkers to consume less as they opt for edibles or other cannabis products.

And, like all Colorado industry, craft beer is also hit by a labor shortage.

“Great people are hard to come by,” said John Bachman, director of Post Brewing Co., which has locations in Boulder, Lafayette, Longmont and Denver. “In Boulder, there’s an influx of students so that makes it a little easier. Enthusiastic employees are available and when you find ones that really want to work you hold onto them.”

For most breweries, it’s not as difficult to find production employees as it is to find front-of-house. Some breweries, such as Liquid Mechanics, are making up for that by taking their time in hiring. Others, such as Twisted Pine, try to hire people only vouched for by employees, while Very Nice Brewing Co. will hire long-time customers to sling beer.

Looking ahead, as the industry continues to evolve, many breweries are sticking to what they know: sharing their stories with people who want to hear them.

“I think stories will always be important, especially with saturation and the number of breweries,” Memsic said. “The industry is growing up. If you’re trying to build a strategy that doesn’t have a story, you’re going to lose out significantly. You have to shout your story. We’re all makers here and we’re all small, no one here has the opportunity to sell for $1 billion. If you start giving up on your story, you won’t be one of the survivors. Consumers care about stories, they care about the source and the product.”

The Boulder Valley Brewery CEO Roundtable was: Bob Baile, owner of Twisted Pine Brewing Co.; John Bachman, director of Post Brewing Co.; Jeff Brown, president of Boulder Beer Co.; Jeffrey Green, owner/ brewer of Very Nice Brewing Co.; Davin Helden, co-founder of Liquid Mechanics Brewing Co.; Leslie Kaczeus, co-owner of Bootstrap Brewing and Michael Memsic, owner of Sanitas Brewing Co. Moderated by Chris Wood, editor/ publisher of BizWest. Sponsored by EKS&H, now part of Plante Moran (represented by Bob Bond) and Berg Hill Greenleaf Ruscitti.