Year-over-year growth in the craft sector may have eased off its double-digit pace in recent years, but craft still represents the biggest gainer in the overall beer category (a fact of which big beer and craft brewers are both very well aware), and many craft brewers continue to enjoy robust demand for their brands. Some skeptical prognosticators say that breweries should do their best to grow to their respective right sizes before the music stops and everyone scrambles to find a seat, but the craft market shows no signs of hitting a ceiling anytime soon. Rather, it seems many breweries are in an enviable position of attempting to forecast production needs and expansion projects in the midst of continually rising demand. A reasonable, consistent, and conservative approach is sound business sense in a mature market marked by smaller but consistent gains, but it’s much trickier to forecast financials, construction projects, and production needs when the sales charts lead nowhere except up, but the future is fuzzy. How can you also hedge against any unexpected dips while still aggressively growing?
Home Court Advantage
Jack Hendler, founder and co-owner of Jack’s Abby Craft Lagers brewery in Framingham, Massachusetts, has navigated a seriously steep growth trajectory since the brewery opened in 2011. Jack’s Abby invested in a new 130,000-square-foot brewery in January 2016 and is among the fastest growing breweries in the country, according to stats collected by the Brewers Association. While its overall growth has been nothing but up, variances within brands have made it tricky to accurately dial in production schedules and volumes and keep everyone supplied without creating a bottleneck.
“We have challenges with day-to-day forecasting,” Hendler says. “If we run out of a brand, it can be a long time before the next batch is ready. But we can usually see it coming and, hopefully, are able to take steps to make changes. We spend a lot of time with our distributors forecasting, planning, and making sure that we’re brewing the right amount of beer so that we don’t have too much if sales slow down short term or vice versa. It’s a critical relationship.”