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Sierra Nevada’s Ken Grossman On Craft Beer’s Growth And Plans For A New Brewery

July 27, 2011

Chico, California-based Sierra Nevada Brewing Co. was founded in 1980 and is one of the nation’s craft beer pioneers. Today it’s a thriving, independently-owned brewer with total volume of 779,065 barrels in 2010. The company nationally markets its flagship brew Sierra Nevada Pale Ale, which depleted 551,648 barrels last year. Sierra Nevada’s newest label, Torpedo Extra IPA, is emerging as a particular favorite among craft beer consumers. Shanken News Daily spoke recently with Sierra Nevada co-founder and president Ken Grossman.

SND: You’ve been seeking a new brewery in the eastern United States to complement your existing facility in California. How is the search going?

Grossman: We’re still conducting due diligence and evaluating sites for a second brewery, but we haven’t made a decision yet. Our existing facility will be pressed for capacity in about two and a half to three years.

SND: Are you considering only a new brewery?

Grossman: Yes. There’s really nothing out there that meets our standards.

SND: There have been reports that you’ve looked at a new site in Tennessee. What other areas are you considering?

Grossman: We’ve looked at quite a few states, including around 200 sites on the East Coast. We are indeed considering a site in Tennessee as well as in Virginia, but we’ll expand our search again if things don’t work out with either of those.

SND: What type of growth are you projecting for Sierra Nevada’s portfolio this year? Are any particular brands driving that growth?

Grossman: We’re projecting 7%-8% growth overall. Torpedo Extra Dry IPA has been doing quite well for us—growing at a 40% rate. It’s not in many markets, but we expect Torpedo to continue performing well as it expands into new states.

SND: You’re a pioneer among U.S. craft brewers. What are your reflections on the strides that craft beer has made in the last 30 years?

Grossman: There were just a couple of cart brewers when I started Sierra Nevada, and today there are some 1,700. There’s also huge awareness among younger consumers. It’s been very exciting to watch it all unfold, but it’s also been a long 30 years. Growth hasn’t been in a straight line. There were plenty of fits and starts.

SND: Most craft brewers cite SKU proliferation and the need for capital as being among the biggest challenges today. How do you see things?

Grossman: The industry is grappling with both of those issues. There are a lot of brands and packages out there. SKU proliferation creates challenges for brewers who are looking to expand into new markets. Meanwhile, many craft brewers are in the midst of capital projects. For a small player, the capital requirements can be very demanding. We’ve been fiscally conservative over the years, so we’re not in a debt situation.

SND: Despite these challenges, do you believe craft beer will continue to see healthy and consistent growth in the years to come?

Grossman: Yes. Whether it’s five or 10 years of steady growth, I think we’ll see a sustained period of expansion in the craft segment.

Sierra Nevada Brewing Co. – U.S. Depletions
(thousands of barrels)
2009 2010 % Change*
Sierra Nevada Pale Ale 546 552 1.0%
Total Sierra Nevada Brewing Co. 716 779 8.8%
* Based on unrounded data.

Source: IMPACT DATABANK

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