By Keiter CPAs
Growth Considerations for Craft Beverage Businesses
Patrick Murtaugh, co-founder and brew-master of Hardywood Park Craft Brewery; Dave Michelow, president and co-founder of The Veil Brewing Co.; and Brad Cooper, founder of Steam Bell Beer Works and Canon & Draw Brewing Co. shared their unique insights on craft brewery expansion considerations during Keiter’s Fall EmergingRVA event. The panelists discussed financing, branding, and hurdles they have faced in expanding their tasting rooms and manufacturing facilities.
In this article, we feature highlights of comments from our panelist, Patrick Murtaugh from Hardywood, a Virginia craft brewery with locations in Richmond and West Creek.
Q: Discuss your financial considerations and the process you have taken to acquire capital for expansion of new locations and/or your product line.
“Hardywood was only one of two craft breweries in Richmond when we opened in late 2011. Breweries are capital intensive and take lots of money to start. For those reasons, banks weren’t interested in investing so we relied on family investors. As we looked to expansion, our family investors were willing to provide additional help but it wasn’t going to be enough to meet the needs of building our much larger Westcreek location. We had to seek other financial resources while steering clear of adding additional investors as much as possible. We were fortunate to receive a couple of grants, including the Commonwealth Opportunity Fund, which provided a small portion of the equity raise. Banks were another resource. It is extremely important to develop a good relationship with your banker so they fully understand the uniqueness of your business and the ebbs and flows of income that are inherent to operating a brewery.”
Q: What considerations influenced the selection of your additional location’s address and/or your new product line?
“When we opened our first taphouse, it was illegal for craft breweries to sell beer from their brewery direct to consumers. So, we were solely focused on the size of the space—would it fit our equipment? Is there room for an office?, etc. Aesthetics were not a concern at all. The location we picked was a vacant warehouse in a forgotten neighborhood of Richmond.
Shortly after we opened, the law was changed and breweries were able to serve their beer to the public. The ability to have people enjoy their beer in our taphouse changed our focus from warehouse space to well-designed venue. When we decided to expand, aesthetics and customer experience were top of mind. Our Westcreek location incorporates everything we wanted to offer our customers—natural setting, views of the brewhouse, beer garden, games, music, and event space.”
“Our beer selections offer a variety of taste experiences that pair well with the changing seasons. We’re enhancing our product line to include beers that appeal to different diets and different occasions. We recently launched a new brand, Suncrush which incorporates a lighter taste with lower alcohol and reduced gluten. It’s a light beverage to enjoy on the beach, hiking, or out on the golf course.
The craft beverage market is extremely competitive—our approach is to remain flexible in our product offerings without compromising on quality.”
Keiter is focused on supporting emerging businesses and their owners to successfully manage and grow their businesses. Interested in joining us for future EmergingRVA educational and networking events? Contact us. 804.747.0000 | email@example.com
About the Author
The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.