Craft Brew Alliance is doubling down on brewery expansions.
The company today announced it would spend $15 million to build a new 100,000-barrel brewery in Hawaii. A list of potential locations is being reviewed and CBA said it expects the facility to be fully operational by 2017.
The news comes less than 10 days after the company said it would spend $10 million to add 200,000 barrels of capacity at its Widmer Brothers brewery in Portland, Ore. Combined, the two expansions will increase total CBA capacity by 300,000 barrels by 2017.
“We really do believe in the importance of being local, not just throwing it on a label,” CEO Andy Thomas told Brewbound. “There is no substitute for being local and unlike a lot of other folks, we aren’t running from our home markets looking for growth.”
Many of the nation’s largest and fastest growing craft breweries — including Sierra Nevada, New Belgium, Lagunitas, Stone Brewing Co. and Oskar Blues — have all recently expanded brewing operations east of their original production facilities. That strategy, Thomas said, is based on a “hope” that “if you build it, they will come.”
“Rather than following a hope strategy, we are following a pretty disciplined approach to building around our home markets and doing it in a very stable way,” he said. “We are not in a business model where we are about finding the next new thing. We are building brands that people love and beers that people love drinking and connecting those two things to the local communities.”
CBA’s approach appears to be working, at least in Hawaii. The Kona brand is currently about 8 percent of all beer sold in Hawaii, Thomas said.
“Even though we are doing great on Hawaii, we still believe there is a lot of run room,” he said.
The new brewery will help support Kona’s growth in Hawaii and enable the company to innovate with unique styles and ingredients, Thomas said, adding that CBA’s export and mainland business could also see a bump as a result of the expansion.
“As we develop our export business in China and Asia, you could — emphasis on could — imagine what it might enable us to do,” he said, citing favorable freight shipping lanes.
So what will the new Kona brewery actually look like? Situated on about 30,000 sq. ft. of space, the new brewery will eventually be capable of being scaled past 100,000 barrels, said Scott Mennen, CBA’s VP of Operations. A 20 hL, high-efficiency brewing system that uses a mash filter instead of a lauter tun will be installed, increasing efficiency and improving sustainability, he said.
“Usually you see mash filters in breweries that are in that 5 or 6 million barrel range,” he said. “This is a smaller, scaled down version that enables brewers to use less grain and less water in the brewing process.”
Mennen compared the new brewhouse to a French press, which uses pressure to separate coffee grinds from a filter.
CBA will also keep its original brewpub location – which currently produces about 12,000 barrels of draft beer – and expand the site’s restaurant & taproom components.
A full press release with additional details is included below.
Kailua-Kona, Hawaii (April 23, 2015) – Kona Brewing Company today announced that it will invest approximately $15 million to expand its brewery operations in Hawaii. The expansion project, which will include a new state-of-the-art, 30,000 square-foot brewery, will increase annual production capacity to 100,000 barrels (BBLs) per year. Kona Brewing is currently narrowing its list of possible locations for the new facility, with plans to break ground in the second half of 2015 and be fully operational by early 2017.
“When my son Spoon and I set out to create Kona Brewing Company 21 years ago, we had a vision to reflect the spirit of Hawaii, its people, culture and respect for this beautiful land, through distinctive local island craft beers,” said Cameron Healy, co-founder of Kona Brewing Company. “Kona’s tremendous success today is a testament to the support from this amazing community we started in, and I couldn’t be more pleased to see KBC continue to grow and build on that original dream through investing back in its home.”
Since it was founded in Kailua-Kona in 1994, Kona Brewing has become one of the best-selling craft beer brands in the world, while remaining steadfastly committed to its home through a strong focus on innovation, sustainability and community outreach. In 2014, the company grew sales by 13% overall and achieved a milestone in its home state, selling over one million cases on the Islands for the first time in its history.
The expansion in Hawaii will enable Kona Brewing to meet the increasing local demand for flagships such as Kona Longboard Island Lager, Big Wave Golden Ale, and Castaway IPA, as well as innovative small-batch beers, such as the recently released Makana Series, available exclusively in Hawaii.
“With the new brewery, not only will we have a steady supply of Liquid Aloha for customers across the Islands to enjoy, but we’ll be contributing even more to the local economy via new jobs, tax revenues, and direct spending,” noted Mattson Davis, Chairman of the Kona Brewing Company Advisory Board, who was formerly President and CEO for Kona Brewing and has been with the company for more than 18 years. “Hawaii has been our home and our family for more than two decades, and being able to continue growing and giving back through investments like this is one of the most direct ways we can say ‘thank you.’”
In addition to increasing production capacity, the new brewery will leverage the latest innovations in technology to reduce water and energy usage and support Kona’s commitment to leadership in sustainability. As part of this commitment, the company kicked off its 21st anniversary this year with the Kona Makana Series, a small-batch beer series that helps raise funds for Hawaii non-profit organizations dedicated to restoring, maintaining and protecting Hawaii’s natural resources. All Makana Series beers are available only in Hawaii. More information can be found at www.konabrewingco.com/makana-series.
The expansion to a new brewery site will also enable Kona Brewing to expand its popular Kona Pub, located next to the current brewery and original birthplace of Kona Brewing. The investment in the pub will allow Kona to engage with and serve even more visitors, while offering them the ability to see where Kona started.
The expansion of Kona Brewing in Hawaii builds on the recent announcement from Craft Brew Alliance (CBA), an innovative brewing company that is home to three of the earliest and most respected pioneers in American craft beer. Last week, the company announced that it is investing approximately $10 million to expand its Widmer Brothers brewery in Portland to a 750,000 BBL annual capacity. Together, the Kona Brewing and Widmer Brothers expansions will increase the company’s overall annual capacity by 300,000 BBLs in 2017, which will also offer more flexibility to support the continued growth of all brands within CBA.
About Kona Brewing
Kona Brewing Company was started in the spring of 1994 by father and son team Cameron Healy and Spoon Khalsa, who had a dream to create fresh, local island brews made with spirit, passion and quality. It is Hawaii’s first and largest craft brewery and is best known for flagship beers Longboard Island Lager and Big Wave Golden Ale. The Hawaii born and Hawaii-based craft brewery prides itself on brewing the freshest beer of exceptional quality, closest to market. This helps to minimize its carbon footprint by reducing shipping of raw materials, finished beer and wasteful packaging materials. The brewery is headquartered where it began, in Kailua-Kona on Hawaii’s Big Island. For more information call 808-334-BREW or visit www.KonaBrewingCo.com.
About Craft Brew Alliance
Craft Brew Alliance (NASDAQ:BREW) is a leading craft brewing company, which brews, brands and markets some of the world’s most respected and best-loved American craft beers. The company is home to three of the earliest pioneers in craft beer: Redhook Ale Brewery, Washington’s largest craft brewery founded in 1981; Widmer Brothers Brewing, Oregon’s largest craft brewery founded in 1984; and Kona Brewing Company, Hawaii’s oldest and largest craft brewery founded in 1994. As part of Craft Brew Alliance, these craft brewing legends have expanded their reach across the U.S. and more than 15 international markets.
In addition to growing and nurturing distinctive brands rooted in local heritage, Craft Brew Alliance is committed to developing innovative new category leaders, such as Omission Beer, which is the #1 beer in the gluten free beer segment, and Square Mile Cider, a tribute to the early American settlers who purchased the first plots of land in the Pacific Northwest.
Publicly traded on NASDAQ under the ticker symbol BREW, Craft Brew Alliance is headquartered in Portland, OR and operates five breweries and five pub restaurants across the U.S. For more information about CBA and its brands, please visit www.craftbrew.com.