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Brews from the members of Oskar Blues' Canarchy Collective. Photo courtesy of Oskar Blues

Are Brewery-to-Brewery Partnerships the Future of Craft Beer?

In a state with almost 400 operating breweries, smart brewers are teaming up to get ahead.

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From the outside looking in, Colorado’s beer scene is stronger than ever. According to the Brewers Association (a non-profit trade organization based in Boulder), Colorado ranks third in the nation for sheer number—nearly 400!—of craft breweries, roughly 70 of which call Denver home. And more than 150 forthcoming breweries are currently in the concept, planning, or construction phases.

But while craft beer in Colorado is still standing on solid ground, the landscape is changing. Nationwide, the trend of “big” beer (think AB InBev and MillerCoors) buying out small craft breweries continues. (At the local level, for example, Avery Brewing Co. sold 30 percent of its business to Spanish company Mahou-San Miguel in 2017; Breckenridge Brewery was sold to Anheuser-Busch in 2015.) The amount of capital—not to mention marketing, sales, and distribution support—that goes to bought-out craft brewers has put smaller, independent operations at a significant disadvantage. As a result, craft beer’s recent unchecked growth has leveled out. And over the past two years, almost 30 Centennial State craft breweries have shuttered.

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Add in the newly implemented Senate Bill 197 that allows Colorado grocery and convenience stores to sell full-strength beer and you’ve got a new distribution challenge for the small guys. Sure, the bill opens up an-other avenue of opportunity, but retail shelf space is typically awarded to larger breweries with the means to fulfill production requirements for an entire chain of grocery stores. And the more that consumers spend their dollars on beer at grocery stores as opposed to locally owned liquor stores, the more likely it is that these independent bottle shops—many of which have long championed local craft brewers—could go by the way-side.

But Coloradans are resilient, and resourceful: For several local breweries, success has come as two or more small businesses forge partnerships in order integrate resources and minimize costs—without “selling out.”

In 2017, Fort Collins’ Funkwerks—a 10-year-old niche brewery specializing in saisons and sours—announced a partnership with Brooklyn Brewery of New York and 21st Amendment Brewery out of San Leandro, California. Funkwerks co-owners Gordon Schuck and Brad Lincoln knew they had to take action to continue to grow their business without allowing outside investors to profit from their hard work.

“We recognized that if they don’t purchase you, they’re going to purchase your competitor and capitalize on your competitor, and then your competitor is going to run you under,” Lincoln says. “We knew that there was no way that we were going to be able to grow how we wanted to grow on our own.”

Brooklyn Brewery’s financial support allowed Funkwerks to purchase a state-of-the-art lab and a new packaging line, and Lincoln credits an integrated sales team and access to an established distributor network as the biggest gain of the brewery-to-brewery partnership. “Without having a proper sales team, you can’t expand,” he said. The three breweries now share one large sales team as well as multi-state distributor networks. Funkwerk’s numbers are up about 15 percent from the previous year, and the brewery is preparing to enter markets in four more states in 2019.

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Over at Longmont-based Oskar Blues Brewery, owner Dale Katechis took the brewery-to-brewery partnership concept and hit the accelerator. After twenty years of intense growth, Katechis realized that it would take more innovation and a new approach to continue to stay relevant in an increas-ingly competitive industry. So, in 2015, the Canarchy Brewery Collective—a collection of seven breweries located across the U.S.—was born.

Katechis’ Canarchy Collective includes Perrin Brewing Company, Three Weavers Brewing Company, Squatters Craft Beer, Wasatch Brewery, Deep Ellum Brewing, and Cigar City Brewing. According to Katechis, benefits of being part of the Collective include the sharing of an integrated sales and marketing team as well as raw materials, such as hops and cans, which are often only sold in bulk quantities.

“We knew the days of Oskar Blues growing at high double and triple digits year after year was going to come to an end,” Katechis said. “The next phase of craft beer is going to require a lot of great thought around innovation.”

In the case of Denver-based Wit’s End Brewing Co. and Strange Craft Brewing Company, partnering together was an effort to combat high real estate prices and reduce overall operating costs. Both breweries originally opened with taproom-only models, bypassing packaging and focusing on creating welcoming customer experiences instead. By 2017, both businesses were struggling in Denver’s saturated craft beer market. So, in 2018, both breweries moved in together into a shared co-taproom space at 1330 Zuni Street. The move enabled Wit’s End and Strange Craft to keep their doors open and to create a fresh new concept in the process.

As more breweries prepare to open their doors in Colorado, the future of the state’s craft beer industry will likely continue to become even hazier (Hazy IPA pun intended). One thing is for sure—keeping it all in the family is proving to be a great way to stay independent and keep good craft beer flowing from taps throughout the state.

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