One prominent Sunshine State craft brewer is considering a major expansion, but he’s worried that an ongoing legislative wrangling over the state’s growler-fill laws might actually force him to move the project out of the state.
Joey Redner, the founder of Cigar City Brewing in Tampa, Fla., told Brewbound that the company is unable to grow at its current location and is looking into the possibility of building a new 120,000-barrel brewery before 2015.
“We came to the realization last week that adding another 50,000 – 60,000 barrels per year in our current facility wasn’t going to work,” he said.
But part of a bill currently being considered in the Florida House of Representatives would limit the number of manufacturer-owned vendor licenses (a permit to function much like a retailer and sell beer on site) to two. According to Redner, that could run counter to Cigar City’s business model, as the company derives a significant portion of its revenue from brewery sales. According to Redner, the changes would restrict his ability to realize that revenue at a new facility.
Cigar City’s current facility on West Spruce street is capable of churning out about 50,000 barrels annually, but Redner said that’s not enough to fill the current demand for the company’s products in Florida.
“I think we can sell between 150,000 — 175,000 barrels annually in Florida within the next five years,” said Redner. “We wanted to expand at our current facility but there isn’t much room to grow. There are no loading docks and our parking lot is used for tasting room visitors.”
Redner said he’s already looked at one potential location in Tampa and is also gathering information for sites outside of the city.
The company is looking to spend upwards of $4 million on new brewery equipment, including a 60-barrel brewhouse. The entire project, depending upon building and construction costs, could total $8 million, and would be financed through a combination of cash flow and bank debt, Redner said.
But Redner maintains that the project may face an extra obstacle in House Bill 1329, which is legislation intended to broaden the state’s growler fill laws.
Recent amendments made to the bill, sponsored by Rep. Ray Rodrigues, would legalize the sale of any size growler. But according to Redner, they would limit a carve-out that allows breweries to sell beer directly to consumers.
The bill would modify the state’s policy on vendor licenses, limiting the number that could be owned by a brewery to two. Breweries would be able to open taprooms at a manufacturing facility, but at least 70 percent of the beer for sale would have to be made on the premises, and the taprooms would only be allowed to sell pints of beer and growlers to-go, not pre-packaged bottles or multi-packs. Redner said he considers the existing vendor license laws — which allows him to sell all packaged products and pints — to be an important piece of the Cigar City business model.
“The carve out that currently exists allows us to act as a retailer and a producer,” said Redner. “It has been around for longer than I have been alive. Now that people are using it grow their businesses is when it needs to be changed?”
The ability for Cigar City to sell beer at its own taproom is critical because about 10 percent of the company’s annual production is currently sold directly to consumers, Redner said. Cigar City already sells beer using a vendor license at two locations — a production facility tasting room and a brewpub. But because he’s unsure if the company will be allowed to sell beer at a third location in the way that he would like, it has forced him to place the expansion project into a holding pattern.
“It’s hard to go making plans, moving dirt around and building a brewery when you aren’t sure that the business model that you have based your entire plan on is not going to exist in six months,” said Redner.
And although HB 1329 is currently considered unlikely to pass, Redner said, he might still consider moving the project outside of Florida.
“My concern is the general legislative uncertainty,” he said. “What will they come at us with next? At the end of the day, moving out of state is not the greatest option but it is something I have to consider.”
In the meantime, Redner said he’s looking forward to about 20,000 barrels of additional capacity coming online via an alternating proprietorship arrangement with Lakeland, Fla.-based Brew Hub. Production is expected to begin in June.
“We wanted to get going (with the expansion) in about four months,” he said. “We wanted to start making purchases but now we have to wait and see what happens legislatively.”