One of the questions that I’m most frequently asked of late is whether or not I will consider selling the brewery. It seems that our precious little industry has reached epic heights and now us “dumb brewers” are being considered titans of industry. I have to laugh just a little.
You see, I have a law degree from the University of San Diego and made the decision years ago to run from the money of a legal career toward the financially unsuccessful world of the small American craft brewer. For many years, it looked like a foolish decision to some, but I was happy creating liquid art and putting in a hard day’s work.
Financially, the hard times continued for close to 13 years as AleSmith struggled to find its way to the black. Then one magic day, the number at the bottom of my profit and loss statement changed from red to black and we haven’t looked back since.
The golden age for American craft beer kind of caught me by surprise. After many years of focusing solely on the quality of the beer I brewed, I awoke one day as a true CEO of a respected, growing and successful business. I'm not really sure exactly when it happened — somewhere around 2008-09 was the start, and now we toil in a highly explosive industry.
A brewery count of 140 never seemed like a possibility, but that's what we could soon have here in San Diego County. I’m one of the believers that the industry will continue to grow and reach over 200 local breweries in the near future. Is this a worry? Not in the least. I welcome the new brewers and wish them the same success that I’ve experienced. These are my “compatriots,” not my “competitors.” We each share an interest in getting as many people as possible to become craft beer enthusiasts.
And then like many successful businesses, craft breweries have become attractive investment vehicles for venture capitalists and large, macro-breweries. The decision to sell all or part of a brewery is a very personal decision, and judgment should be reserved.
Many craft brewers, me included, have had their life savings invested in their brewery more than once, and it was never a guarantee that the money would ever be seen again. Loans, lines of credit and second mortgages generated the money necessary to sustain the brewery and to expand. Brewing is an expensive process and a great deal of equipment becomes necessary to reach a sustainable efficiency level and grow. It was only in our 20th year of operation that AleSmith was able to make a major expansion project a reality.
Through it all, I have had the good fortune of focusing on my craft while being able to keep my head above water during lean years and now prosper during this golden age. I have forged relationships with banks to help with expanding to a new supersized facility with a capacity of 250,000 annual barrels of beer. These were the same banks who refused a simple line of credit to me a short six years ago.
Personally speaking, I'm enjoying these times of high volume sales and am looking forward to sharing the highest quality craft beer that I am capable of producing with a larger segment of consumers. The art of brewing has always been sacred to me and my team, and I'm fairly sure that our story would not ring as true if I were to sell to a macro-brewery. It's funny how no one asks about the ownership structure while enjoying their favorite beer, but if that brewery is sold then it becomes topic number 1.
So to answer that question that I’m frequently asked, the short answer remains “no.” There are other options for AleSmith to formulate a succession plan, as well as raise the necessary capital to prosper and grow. It has been a dream of my wife Vicky and mine to one day offer the brewery to our team members who have given us their best to make AleSmith great in the form of an Employee Stock Option (ESOP). For now though, I’m going to sit back and enjoy the fruits of my labor during this truly golden age for American craft beer.Copyright © 2018, The Baltimore Sun