Interview: Why Contract Brewing Helps the Whole Industry

The craft beer industry has never been more competitive. Launching a new brewery in this crowded market is difficult, as is expanding rapidly when a brand takes off. Both scenarios require a lot of time and money, plus marketing and sales staff, which entrepreneurs have in precious short supply in their early-goings.

Hence the rise of contract manufacturers like Chicago’s Great Central Brewing Company. Besides making its own line of German-style beers in its 50-barrel brew house, the company provides high-end equipment, a tasting room and packaging solutions for small and mid-sized breweries.

We recently spoke to David Avram, CEO and co-founder of Central Brewing Company, about how his brewery helps grow others.

Kyle Swartz: Where does your company fit into the ecosystem of the craft beer industry?

David Avram: We’re one part incubator, one part capacity expander. We’re also a logistical remedy from time-to-time. We can help people who are expanding in the central west and west.

We sit in an interesting place. We help the younger guys expand into off-premise. We’re also helping guys who are established and are moving towards greater growth.

KS: How do you help the smaller producers?

DA: What we see a lot is when the smaller manufacturers try to open a distribution relationship, the distributors have concerns about whether the manufacturer can continue to support their own brand. So we provide them with the brewing equipment necessary so they’re able to able to invest more into brand growth, their sales team and marketing. Rather than dumping all that money into equipment, they can shift cash flow elsewhere.

There are also concerns with smaller manufacturers about quality, freshness and consistency. Our equipment is on the upper end. We give these guys the opportunity to make product that’s manufactured on time and at a higher standard.

And they can rely on us to be on time with packaging materials. There will be lower oxygen pick up in our cans. That means less oxidization, which means that beer flavors will hold up better over time. It helps maintain freshness. The seam quality on our cans will also be better. That means less liquids or oxygen leak.

All this allows smaller manufacturers to be more nimble with their cash flow.

Besides making its own line of German-style beers in its 50-barrel brew house, Chicago’s Great Central Brewing Company provides high-end equipment, a tasting room and packaging solutions for small and mid-sized breweries.

KS: What about brewers that are more-established and now growing?

DA: The tough thing for these guys is reacting to their success in a timely manner. When you do get attention, when all your hard work finally begins to pay off, you want to react in a manner that’s aggressive but not reckless as you scale up quickly.

A good example of this among our clients is Maplewood Brewery. I’d compare them to Trillium in Boston in terms of rapid growth. They’ve been around for four years. In that time they’ve gone from manufacturing 1,000 barrels of beer annually to 12,000 barrels. This year we’re looking at them to cross into that 15,000-plus barrel size where they become a truly regional brewery.

They were one of our first clients when they joined with us in the fall of 2016. I was just talking with their owner the other day and he said he’s hiring another sales guy. They’ve invested a lot of money into branding and their sales team. That’s because they don’t have to make huge cash outlays into equipment. They’re at the point where they would need to move into a 30-barrel brewery with a whole series of tanks, which would be a $6-7 million investment. Instead, now they can pursue rapid growth with a lot less risk.

“We’ve had a shift from cans with sleeve labels to pre-printed cans. It’s a better aesthetic and it’s one fewer quality-control check.” — David Avram, CEO and co-founder of Central Brewing Company

KS: You recently entered into a partnership with Berlin Packaging.

DA: They cover so much in terms of packaging. We have an on-demand supply relationship, which is important for our inventory management.

In Chicago, it’s tough to get your hands on real estate. In our production facility, we have to make sure that space is used for equipment that can manufacture for clients — and not storage. At the same time, we’ve had a shift from cans with sleeve labels to pre-printed cans. (It’s a better aesthetic and it’s one fewer quality-control check.) So when we have 10-plus clients, multiplied by all their SKUs, we’d fill half our facility just with pallets of cans.

So we were looking for storage and packaging solutions. Berlin Packaging has better buying power than we do. They have more pull in the craft-beer business — where even accessing raw goods has become more difficult — because they buy directly from the major manufacturers.

We order from them weekly. It keeps our storage space down and it helps the cash flow for everybody. They buy cans in bulk and then resell to us for a small profit. The amount of space this conserves and the timeliness of it are both well worth it. And by eliminating the sleeves on cans, that’s one less item with cost, which helps tighten the bottom lines of our clients.

Culturally, Berlin Packaging’s level of creativity and customer service were huge factors in our decision to go with them. Their whole staff takes the approach that there is always a solution possible. They’re helping build smaller businesses into bigger ones, and we appreciate that.

All photos by Tatum Byrd.

Kyle Swartz is managing editor of Beverage Dynamics magazine. Reach him at kswartz@epgmediallc.com or on Twitter @kswartzz. Read his recent piece 11 Trends Defining Craft Beer in 2018.

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