Brewing, Cideries & Spirits  November 9, 2022

CEO Roundtable: Brewers see 2023 as precarious for business

FORT COLLINS — Multiple liquor initiatives on the November ballot were hanging like the sword of Damocles over the heads of executives of Northern Colorado craft-brewing companies as they met Tuesday afternoon in a BizWest CEO Roundtable. 

But for brewers, the election issues may have less of an immediate impact while other issues — labor, supply chain, changing tastes of consumers — are changing the dynamic of their industry. 

Brewers present at the roundtable described the headwinds that they anticipate for 2023. 

Supply chain — “It ebbs and flows,” said Josh Grenz, owner of Verboten Brewing in downtown Loveland. “You never know what the next thing will be. Growler lids. Oktoberfest mugs were received after Oktoberfest,” he said.

Frezi , co-owner of Fort Collins-based Purpose Brewing, cited ingredient shortages. Purpose is a small-batch, specialty brewer that uses European hops in some of its brews. Turmoil in Europe is disrupting that supply chain.

Neil Fisher, co-owner of WeldWerks Brewing Co. in Greeley, said brewers are adapting on the fly. While they may have certain individuals who have helped them keep supplies on hand, “all of us are taking contact info for anyone who sells anything [in order to have options],” he said. Like Purpose, WeldWerks may have to brew fewer classic styles in 2023 because of the shortage of European hops, Fisher said.

“It’s not just Colorado,” Mat Dinsmore, owner of Wilbur’s Total Beverage, said about the supply chain. “The system of ‘just-in-time’ works until it doesn’t. If Jack Daniels can’t get glass, no one else is going to,” he said. 

Dinsmore also said that supply-chain issues are also affecting “big beer,” in reference to the nation’s largest brewers. He said the margins between giant brewers and craft brewers are narrowing.

Still, brewers are somewhat captive to what they can charge for their products. 

“It’s out of our control. Some don’t care what we raise our price to, but 80% are price-conscious. And there’s not a damn thing I can do about that,” said Charlie Hoxmeier, co-owner of the Gilded Goat Brewing Co. in Fort Collins.

Workforce — Finding and retaining workers remains an issue for the brewing industry, much like it is for the other business sectors in the region. Multiple brewers said that workers have opportunities to do other things at higher rates of pay. 

Dinsmore said he is considering moving to self-checkout at his liquor store because of the difficulty of hiring workers. 

“I hate this idea. But if you can’t get people …” he said.

When asked about the impact of increasing minimum wages — the Fort Collins City Council is considering raising the minimum to $18 per hour — brewers acknowledged that such a boost would be difficult.

“It would put me out [of business], said Brad Lincoln, CEO of Funkwerks. Lincoln, who acknowledged a pessimistic attitude toward the future of the industry, has been scaling back operations and selling off assets in product lines that haven’t been profitable for him.

Consumer tastes — Brewers say that determining what consumers want can be difficult because tastes change.

“Where has everybody gone,” Hoxmeier asked. “Where are they spending their money now?”

Lincoln said the tastes of consumers have changed. “The question is, is craft beer still cool,” he asked.  

Dinsmore said beer is losing market share at his store. “Seltzer hurt you guys,” he said. 

Ready-to-drink cocktails in a can are growing. 

Lincoln questioned whether younger generations are as interested in local brands such as those produced by craft breweries.

Tim Cochran, co-owner of Horse & Dragon Brewing Co. in Fort Collins, said “there’s always a ready-to-drink beverage that competes with beer.” He anticipates that craft-beer popularity will return if it is down now.

Dinsmore said seltzer “took off like a rocket” and has plateaued to some degree. He also said non alcoholic spirits are growing in popularity. 

Hoxmeier concurred. “We can’t brew NA seltzers fast enough,” he said.

Economic winds — As brewers prepare for 2023, they’re uncertain about the potential effects of an economic downturn and wondering what their business plan should look like.

It won’t be like 2020, they said, which was a good year for most of them because they were able to pivot toward product lines and distribution systems that enabled them to sell more beer. In 2023, “a lot of us [will] have to pivot from a growth position. Growth may not mean more volume now,” Fisher said. He said he would not be surprised by a year of reduced sales.

Hoxmeier said his strategy remains: “Figure out what people are spending their money on and make sure I’m making that.” 

Grenz said that he’s noticed people buying beers with higher alcohol content, which the brewery is able to price higher. “Volume is down, but money is the same, sort of. We’ve seen a little of that trend. People are willing to spend a little more for the higher alcohol beers.”

Bouckaert said Purpose will focus on more experiences in order to draw people into the brewpub. 

A couple of the brewery operators complained about the need to create experiences. 

“We’re coming up with ideas to drive business. Events. It’s exhausting,” said Zach Weakland, co-owner of High Hops Brewery in Greeley. High Hops beer business has plateaued and the company has placed more emphasis on its distillery.

“We can do gimmicky events to drive traffic, and it’s exhausting,” Hoxmeier said. 

Grenz said Verboten is trying to ride a wave of economic growth in downtown Loveland. “There’s a lot of stuff growing in downtown Loveland. That’s been good for us. When we moved there, it was a ghost town. The median age has come down 15 years since we opened,” he said.

Tim Cochran said Horse & Dragon “has lived through a couple of ebbs for sure.” He and his partner, Carol Cochran, are confident they’ll survive what is coming. 

“No matter how negative the business environment gets, there will be people who have this dream and are willing to buy the equipment to start their own. There isn’t a downturn that you can’t get through if you can hang on,” Carol Cochran said.

She encouraged brewers to send out the message that patrons should “spend your money on a really quality product that you can enjoy. Keep those dollars in your community.”

And said Bouckaert: “Craft is so fun. Go to your local brewery instead of vacation.”

BizWest CEO Roundtables are sponsored in Northern Colorado by Plante Moran, represented Tuesday by Drew Mattox; Elevations Credit Union, represented by Darin Atteberry; and the Berg Hill Greenleaf Ruscitti LLP law firm.

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