Hawaii’s largest craft brewery, Maui Brewing, has transitioned production of some of its products to Denver, Colorado, following multiple supply chain constraints.
Maui products for mainland distribution — which covers 23 states — will be produced at Denver-based Sleeping Giant Brewing, while Maui explores options for its own facility. The first batches of Maui’s hard seltzer brand produced at Sleeping Giant started Monday, while production of the brewery’s other beer offerings will begin in the first quarter of 2022.
“We have to now think about the supply chain of not only getting our items, but now once we’ve created beer, getting a booking for a boat, getting a container for that boat, and getting it onto that boat in time and having no issues at the ports,” Garrett Marrero, Maui co-founder and CEO, told Brewbound. “It is quite emotional for those of us who’ve been around Maui Brewing since inception, but as the world changes around us, we have to respond to those changes.”
Sales from the mainland of the United States and internationally make up about 18% of the Kihei, Hawaii-based craft brewery’s total sales. Because of this, Marrero said the company hasn’t focused too heavily on growing outside of Hawaii. But supply chain issues — including two separate weeks last month in which the brewery shut down due to no carbon dioxide (CO2) in its bulk tank, and up to 26-week lead times for malt container shipments — have forced it to reevaluate.
“The handling of COVID, and the supply chain breakdown post-COVID is kind of forcing our hand to look at how do we continue to grow as a company and do our job to make sure that our team has pay and benefits and the bank notes paid, and all of those wonderful things that are very important to us to make sure our family is taken care of,” Marrero said. “It’s not to say we won’t have challenges producing in the mainland, because some of the same challenges exist there. However, on a far, far lighter level than they do in Hawaii, and response time is a lot quicker once situations are rectified.”
With the transition to mainland production, Maui is increasinging its overall growth plan. This year, the brewery is on track to produce around 65,000 barrels of beer and hard seltzer, up from 43,000 barrels in 2020 — in which 12,000 barrels were just the newly launched hard seltzer — and 59,000 barrels in 2019, according to Marrero. In 2022, he said the company is targeting 100,000 barrels.
“We’re not planning on opening any new markets as of right now. It’s just merely meeting the demand that we already have in the current markets we’re in, which is probably a three-fold increase over what we sell there already, if we could just get them their beer fast enough,” Marrero said.
Prior to the transition, increased sales from the mainland “gutted” the brewery’s margins due to increased shipping costs. Now, the brewery will absorb the costs and will be able to “give that right back to [its] fans.”
“We’ll be able to deliver more beer and seltzer faster, and at a better price point,” Marrero continued. “And overall, at a much, much fresher code date and with a lower carbon footprint. So it checks all the boxes that I think our fans want.”
Additionally, the brewery is exploring direct-to-consumer shipping, which is prohibited in Hawaii.
“We believe that all small craft brewers should have the right to reach their customers, especially in a world of distributor consolidation,” Marrero said. “If you look at the SKU proliferation of even the big brands, these small brands that are sub-5,000 barrels are tough to find a distributor who’s willing to give them the time of day. And in some cases, it doesn’t make sense due to the ridiculous franchise laws to distribute through a wholesaler who then you’re beholden to for the rest of your life. So being able to reach a small customer base of fans, through the mail, I would think is a smart business decision.
“And for us, we’d be able to reach those markets that we don’t have the desire right now to invest in heavily by putting sales reps and full marketing forces behind them. So I think it’s a win-win for beer and for beer lovers,” he continued.
Marrero acknowledged previous criticism he’s expressed of breweries claiming to be “island brands” but producing on the mainland. Because of this, Marsha Hansen, Maui director of marketing, told Brewbound the brewery is making a large investment in new packaging for its mainland products. The “Island Brew” label will be removed from offerings produced outside of Hawaii, and it will be “very clear if you’re drinking it here, this is where it’s been made.”
“One thing that will set us apart though is making sure that we are abundantly clear and transparent about where that beverage you were drinking is coming from,” Marrero said. “We would never try to hide where our beer is coming from, because we believe it’s our fans’ right to know and right to vote with their purchase where that beer comes from.
“If it’s really important to them that it comes from Hawaii, well, we welcome them to come to Hawaii to drink. But if it’s just that they love Big Swell IPA, or Bikini Blonde Lager, or Sunshine Girl, etc. and they want to get it more readily available and at a lower price point, then I think they’re gonna win overall.”
Over the past several months, Maui has appointed new members to its leadership team, including 26-year industry veteran Chris McJunkin as its new chief sales officer, and former Wormtown Brewery GM Scott Metzger as its chief operating officer. Both new hires will be responsible in part for overseeing sales growth and market expansion.