One of New England’s older and best-known craft breweries now seeks an immediate buyer through auction after sales could not keep up with the company’s expansion.
Smuttynose Brewing Co. opened in 1994 during the first craft beer boom. Ever since it has been a mainstay of New England microbrew culture. In 2014 the company opened a brand-new, $24-million facility, raising annual production capabilities to 75,000 barrels.
However, Smuttynose sales plateaued around 35,000 barrels annually.
“The company’s financial models were based on 20 years of consistent growth but the explosion of microbreweries has led to changing dynamics in the marketplace,” explains Smuttynose founder and owner Peter Egelston, in a press release. “This dramatic shift occurred just as Smuttynose committed to a major infrastructure investment with the construction of the new production facility. As the turmoil in the marketplace stabilizes, Smuttynose, a trusted brand with strong consumer loyalty, can regain its footing with a major infusion of capital.”
Longtime fans of craft beer may recall a similar story with Catamount Brewing Co. Among the original New England craft breweries to open during the late-’80s craft explosion, the brewery closed in 2000 after a new expansion outpaced demand (there were also issues of poor marketing). Catamount’s timing in expansion was particularly unfortunate as the overall craft industry entered recession around the time.
While craft beer is currently slowing in growth, it’s still on an upward trend. Another crash like around 2000 does not appear imminent. But the sheer number of new breweries — which exceeded 6,000 nationwide towards the end of 2017 — could mean more struggles ahead for larger breweries that misjudge demand for their product.
The sale of Smuttynose includes the brand, its new state-of-the-art facility on the historic Towle Farm in Hampton, and the Hayseed Restaurant located next to the brewery on the 13-acre campus. The brewery is among the largest in New England. The company employees 68 people and generates more than 10 million dollars in revenue a year.
It is easy to imagine one of the drinks conglomerates scooping up this legacy microbrewer, making Smuttynose another corporate-owned producer of craft beer.
Lead lender Provident Bank is managing the auction process, with Auctioneer James St. Jean out of Epping, New Hampshire, and Delta Capital of Simsbury, Connecticut, as financial advisors. For details about the March auction visit http://www.jsjauctions.com.
