Food Service & Agriculture and Manufacturing

Founders uses window of opportunity

Brewer is ready to roll after culmination of $40 million project.

June 26, 2015
| By Pat Evans |
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Founders fermenter
The expansion includes 15, six-story-tall fermenters that each hold approximately 1,500 gallons of beer. They were lowered in through the roof. Courtesy Founders Brewing Co.

Despite growing to be the 17th largest craft brewery — No. 23 overall — in the country last year, Founders Brewing Co. is about to embark on a scale that is new to the company.

Founders CEO Mike Stevens said the brewery plans to break in its new $40 million expansion with its first brew next month. The latest expansion for the brewery will increase its annual capacity to approximately 900,000 barrels, which would put the brewery among the top five breweries in the nation if using current production numbers.

Five years ago, Founders didn’t even crack the top 50; it first popped onto the charts in 2011 at No. 42, according to Brewers Association data.

Stevens attributes Founders’ extraordinary growth to the liquid in the bottle.

The 300-barrel brewhouse is nearly double the size of the company’s last expansion completed less than two years ago and combines two 85-barrel systems into a 170-barrel brewhouse. Additionally, the expansion includes 15, six-story tall fermenters that each hold approximately 1,500 barrels of beer. A barrel is 31 gallons.

“The scale of this facility is something we’ve never been a part of,” Stevens said. “It’s really exciting to watch. Eighteen years ago, I could touch the top of our fermenters and I’m a pretty short guy.”

Also included in the expansion are new packaging lines.

“Of that $40 million, a lot went into machinery and process equipment that’s needed to scale up a brewery to that magnitude,” Stevens said.

Pioneer Construction spearheaded the eight-month project.

Without the quality of its product, including many now world-renowned beers, Founders never would have gotten to this point — or past its near bankruptcy more than a decade ago.

“We wrote a mission statement 12 years ago, and the first sentence is: ‘We’re a product-driven company with quality and innovation first,’” Stevens said. “I’ve always said that profits are a byproduct of making great beer, and that’s it.”

One beer that paved the way for this massive expansion wasn’t even in Founders’ product line a few years ago: All Day IPA.

“Most breweries have led with a flagship, and for 18 years of selling beer, the first 15 we didn’t have All Day,” Stevens said. “We’ve never had a brand that represented more than 27 percent of our portfolio up to about three years ago.”

All Day IPA has been embraced by many in the craft beer industry as the standard for session IPAs, a relatively new beer category. That’s largely because when Founders began the development of All Day IPA, session IPA wasn’t a definition, and the brewery spent nearly four years developing the beer.

As it was finalized and released, it coincided with the growing trend of session IPAs, but with much more thought having gone into it than many of the other entries.

“We wanted a beer under 5 percent alcohol that tasted like a Founders beer,” Stevens said. “We got a little lucky, I guess, but that’s something we talk a lot about here — pioneering is a big thing to us. We want to create fads, not follow fads.”

He pointed back to the late 1990s, when Founders and several other breweries across the nation led an “extreme beer movement,” which helped define what the craft beer industry is today.

With a category-defining beer such as All Day IPA, Founders is now getting calls from chain buyers across the country. The request for All Day IPA is often accompanied by requests for auxiliary brands such as Dirty Bastard, Centennial IPA, Porter or seasonal beers.

“Typically, in a grocery-store setting, they don’t just want one brand, and it allows us to backfill,” he said. “We look at it as a big success opportunity to grow our whole portfolio, knowing that we’re doing it on the successes of All Day, and that’s OK.

“It’s how a lot of breweries have done it in the past, and we’re doing it 18 years later.”

All Day IPA will make up a large portion of the beer brewed in the new expansion, but Founders also will make Dirty Bastard, Centennial and Porter using the new system. Seasonal and specialty beers will be made on the 170-barrel combined system, and new research and development beers will now be brewed on the company’s original 30-barrel brew system.

With the craft beer segment continuing to grow and take market share away from large domestic lager producers nationally — most recent numbers show a 12 percent share — Founders has used the window of opportunity to grow quickly.

Stevens said he hasn’t added up the production volume of the top 100 brewers in the nation, but he’d wager they make up 80 percent of the craft beer volume. Before long, it will only be the established breweries at the top gobbling up the market share.

“That window is present and open now, so we’ve elected to take the opportunity to invest a lot of capital back into the business and see if we can’t continue to grow this and fulfill the demands of our consumers, which we really have yet to do,” Stevens said.

Although there’s a large push for local products and a movement away from commoditization in food and beverage, Stevens said technological advancements have made it easier to balance the art of brewing with mass production.

He also said brand trust will help keep larger brewers from faltering. He said during a recent grocery store run, he bought a six-pack from another brewery and two 15-packs of All Day IPA.

“The nature of the drinker is they love to experiment and jump around, but maybe 50 percent of the time, you go to the brands you truly respect and trust,” he said.

“An All Day IPA could be the next domestic premium light beer. I really do believe there are technological advancements in brewing science that allow us to make a truly great beer at scale.”

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