By Ava Schwemler
Small breweries are starting to join forces with state-of-the-art incubation breweries to expand their production and distribution operations without the expense of creating their own.
According to Gregory Dunkling, director of UVM’s Business of Craft Beer Certificate Program, more craft breweries are turning to partnership brewing to help keep up with the growing demand for local and hyperlocal brews.
BrewHub provides a 100,000 barrel partner brewing operation and marketing/distribution services for craft brewing brands whose growth is constrained because of geographic or financial factors.
Since opening in 2014, the company has developed 16 partnerships with craft brewers. The success of BrewHub has given it the capacity to lay out business plans for breweries while also collaborating to craft beer that aligns with a particular brand.
On a recent UVM Business of Craft Beer podcast titled “Partnership in Brewing,” Dunkling, along with Tim Shoen, CEO of BrewHub, and Andrew Godley, president of Parish Brewing, discussed the BrewHub business model and how the company is finding success with brewery partnerships.
How Do Brewery Partnerships Work?
The craft brewing industry and the growth of partnerships has only begun to flourish. Shoen says the intersection between opportunity and innovation came about six years ago, when the craft brewing industry was growing at a “meteoric” rate. The convenience and necessity of partnership brewing came about, and those who ordinarily would have struggled to succeed in the industry are now benefiting from the resources, location, and branding of a brewing partner.
Shoen says that through partnerships, BrewHub has been able to stand out in the market with collaborative branding, and will be able to maintain their production and market advantage in times of low resources.
BrewHub provides partners with a finished price, which tells the partner what the exact net profit of selling BrewHub goods would be. It also offers advice on how the seller can use profits to expand its marketing and brand awareness. The finished price offered by BrewHub also allows partners to eliminate the unpredictability of contract brewing costs.
Parish Brewing, based in a Louisiana, partners with BrewHub. Parish President Godley says one of the key benefits of working with BrewHub and knowing the exact profit margin is that his company can plan better for growth and not use too much capital in doing so. In a larger-scale brewing business model, however, companies don’t know their exact profit margin, requiring them to take out large loans and risk going into debt.
Joining forces with organizations, such as BrewHub, allows smaller breweries to benefit from the resources of a large-scale operation, such as storage capacity and quality control.
“One of the biggest problems with small guys getting bigger is quality control,” Shoen says.
-Ava Schwemler is a junior at UVM studying public communications with a minor in green building and sustainable community design.