Steamworks to Cease Most Wholesale Distribution
According to a press release sent out yesterday by Steamworks Brewing Co., they have announced that the Bayfield Beer Factory will close on December 31st. Steamworks announced about a month ago that they would be closing the Bayfield Beer Factory soon, but did not disclose a date. This brought up many questions regarding the future of Steamworks Brewing Co., as the majority of their beer was being brewed in Bayfield. With this new release the future of Steamworks has become more clear and some of those questions have been answered.
UPDATE from Durango Herald below.
The biggest news in my opinion is that Steamworks will “cease off-premise distribution with the exception of key accounts in Southwest Colorado”. Steamworks was producing upwards of 5000 barrels of beer a year in Bayfield and rapidly expanding their distribution across the country. With the closure of the Bayfield Beer Factory and the loss of that production capacity, Steamworks will only be producing 1400 barrel’s a year in Durango, not enough to sustain widespread distribution. Essentially Steamworks will become a brewpub, beer brewed and consumed on premises, without much distribution. What is unclear from this press release is how much Steamworks will cut back on distribution.
There is no further explanation of what the “key accounts in Southwest Colorado” might mean. The press release also mentions that the 1400 barrels will meet demand at the brewpub in Durango. In order to meet the demands of distribution Steamworks will look into contracting with another brewery to brew their beer for distribution. No word on a timeline for this contract brewing, what brewery this might be, or where this beer will be distributed.
I don’t mean to focus on the negatives surrounding Steamworks right now, I wish them the best and think they could do very will cutting back and focusing on Durango. Only time will tell if this is bad for the future of Steamworks Brewing Co., but I don’t think this is necessarily bad news for Durango beer drinkers as long as the Steamworks restaurant and brewpub stays open. I doubt the average person drinking or eating at Steamworks in Durango will notice many changes. It’s unclear whether we’ll still be able to buy Steamworks beers in local liquor stores, but growler fills are always an option. Bayfield locals will lose the Bayfield Beer Factory, which is a shame for the people of Bayfield. The big loss here is for people out of the area that enjoy Steamworks beer.
I’ve sent an email to Steamworks requesting further comment and will update this post if I receive a response. The full text of the press release is below.
UPDATE
While I did not hear back from anyone at Steamworks, the Durango Herald has a story in today’s paper that provides a little bit more info. Two employees (presumably brewers but the story doesn’t say and just mentions this in a photo caption) Patrick Jose and Mike Offutt will be laid off after the new year. Best of luck to them finding new jobs. Wholesale distribution will end except for key accounts in Southwest Colorado, as I mentioned yesterday, the article does not expand on what “key accounts” might mean. If a contract brewer can be found Steamworks will continue distributing throughout the state, but no time line is discussed on when that might happen. So it appears as if Steamworks fans in other states, including Texas, New York, Virginia, Minnesota, New Mexico and Arizona will no longer see Steamworks beer on the shelves of their local liquor stores.
News
FOR IMMEDIATE RELEASE – December 21, 2009
Steamworks Brewing Co. confirms company restructuring
Bayfield Beer Factory will close Dec. 31, 2009
DURANGO, Colo. – Demonstrating fiscal responsibility and in an effort to return the whole company to profitability, Steamworks Brewing Co. (Durango, Colo.) has finalized its plan to restructure its business model. The move includes closure of the Bayfield Beer Factory (including restaurant operations) and sale of the property and equipment in Bayfield, as well as a refocus on the successful and profitable Durango operation.
“We are in a very good financial position outside of the Bayfield operation,” said Kris Oyler, Steamworks CEO and co-founder. “After five years of continual losses in Bayfield, and new pressure by our shareholders to return to profitability, we have decided to divest the company of the operations in Bayfield.”
The immediate plan calls for sale or lease of the building and property in Bayfield Center. Asking price is $1.395 million, for the assets appraised in July 2008 as $1.475 million. This includes two parcels in Bayfield Center, one vacant, plus the approximately 8,000 sq.ft. brewery space and restaurant.
In spite of Steamworks’ successes and future potential in wholesale national beer sales (some 40 percent growth in 2009) the company will cease off-premise distribution with the exception of key accounts in Southwest Colorado. The bulk of wholesale production has been focused at the Bayfield operation. Brewery production now will be confined to the Durango brewpub – a 1400-barrel operation.
“Essentially 1400 barrels will meet the demand at the brewpub,” said Oyler. “We would like to continue to service our regional and statewide accounts as we’ve received tremendous support in Colorado. To do this in the immediate future we would look toward engaging a contract brewing operation – in essence, another brewery producing beer according to Steamworks’ recipes. This is very common in the industry, especially with regional breweries who are distributing long distances from their central operation.”
Going forward, Steamworks will return to its core competency in Durango, investing funds that over the years had been diverted to Bayfield into the Durango operation. Some brewery equipment to bolster production capabilities will be moved to Durango, but the bulk of it will be sold.
“When we opted to build the Bayfield operation in 2003-2004, the economic climate in Bayfield was strong,” said Oyler. “That changed, and a subsequent series of unforeseen events such as Bayfield’s sewer issues and building moratorium led us to this current situation and our tough decision. We have not ruled out expansion in the future, but in the current economic climate, we want to be responsible to our investors and to our home community of Durango, which has embraced us and supported us since 1996.”
Noted Brian McEachron, director of marketing and sales and co-founder, “In the past few years we have worked hard turning Steamworks Brewing into a nationally-recognized brand and we see the opportunity to capitalize on those efforts at our brewpub with our craft beer, culinary leadership and unique service experience more than ever before in company history. That time spent in distant markets trying to emulate our success will now be re-focused back in our little Napa Valley of craft beer here in Durango.”
Steamworks Brewing Co. is located at 801 E. Second. Ave., Durango (970.259.9200). For further information, visit www.steamworksbrewing.com.
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As much as I enjoy Steamworks (the brewpub), with the Thursday pint night (my cabinets are FILLED with them after a healthy 3 years of drinking in Durango), the great food, and the wide variety of beer, when I am at Argonaut I nearly always reach for an Avery, Ska, or Great Divide 6-pack (or 4 pack), and never really consider Steamworks. I agree with you Jeff, and I hope that the restaurant and brewing operation can continue to succeed in Durango, but I’m not particularly suprised at this news.