Challenges face world’s top brewery


(Munster, IN) – Demand grows and a brewery struggles to meet it. The life and times of a leading craft brewery in 2010 . . .

In light of my recent posts around the “Tipping Point,” here is an interesting topic that has taken off over the past few days on Beer Advocate. Three Floyds, named the best brewery in the world by RateBeer, can’t keep up.

Several retailers in Illinois and Indiana are expressing their discontent over not getting the same allocations of Three Floyds beers that they used to and customers are “angry” and “ticked off” according to a couple of the posters in the thread.

A few comments floating out there from retailers. . .

From Indianapolis-based Kahn’s Fine Wines: “This has been a hotbutton issue with me for several weeks. I used to sell 30 to 40 cases of Three Floyds products a week. Now I can sell 8 if I’m lucky. We also helped promote the fact that they were the best brewery in Indiana. i dont do that anymore. I tried several times over the past year to get Lincoln down here to do a tasting but the dozens of phone calls and e-mails were never returned. They cant even return a phone call! This is how they treat one of the best retailers in the state. We are not some ho-hum corner booze store. We are the best store in Indy. World Class Beverage (our distributor) has been super cool and communicative with us during this entire ordeal. It’s pretty crappy of Three Floyds to put them in that spot. I now focus on true Indiana breweries that are aimed on producing high quality beer and keeping my shelves full and mainatianing a positive business relationship. i.e. Sun King, Upland, Bee Creek, Barley Island, Mad Anthony and Oaken Barrel. Expect to continue to pay high prices for Three Floyds until they wake up and ship me what I can sell.

From Chicago-based Archer Liquors back in July: “Can we stop talking about the 3F drought now that it’s been 3 months of seriously limited quantities? Somebody please post whether or not this stuff can be found anywhere. In this week: no Alpha, no Pride, no Robert, no Dread. One case of Gumball. Cheers. I wonder aloud whether once they get their act together, if anybody will care. You take something away for that long, folks are bound to move on (except me, of course, who can’t let the issue go). I predict that by the time we get as much as we want in a given week, we’ll sell half of what we did a year ago when there wasn’t an issue getting product. Or who knows, maybe they’re geniuses. He’s to hoping we find out someday.

Three Floyds is growing quickly, evidently too quickly, as demand is far outweighing supply at this point. Sales grew 43% in 2007, 25% in 2008 and 47% in 2009 according to the Brewer’s Association. The growth has catapulted Three Floyds into the top 100 craft breweries in terms of production. Bob Mack of Indiana-based World Class Beverages, a leading distributor for craft brands, notes, “For the future, Three Floyds appears to be on track to produce about 3 times the amount of beer in 2011 than they did in 2009.” The Munster brewer seems to be committed to meeting the demand the best that it can going forward.

That said, one may be compelled to question Three Floyds’ moves over the last couple years. In a separate post from yesterday defending the brewery, Mack throws a softball out there, “Over the past several years demand has continued to increase faster than the brewery can produce beer.” If this is the case, why did the brewery re-enter the Wisconsin market in early 2009? Why did it expand distribution to Kentucky in December? It’s likely that relatively little supply is allocated to these markets but the fact that beer is going to these markets at all doesn’t help matters in Indiana and Illinois. Keeping everyone happy is a balancing act.

Complicating things for the local fanbase, Three Floyds has also been shipping beer over to Japan and Denmark. In Japan, depending on when you visited over the past several months, you may have been able to find Alpha King, Dreadnaught or even Dark Lord (all at the same bar I believe). In Denmark, Olbutikken keeps a list of Three Floyds beers that are in stock with Behemoth and Admiral Lord Nelson currently among those listed. As with Kentucky and Wisconsin, it’s probable that relatively little goes to these markets.

No one said that running the world’s “top brewery” would be easy. It comes with a lot of challenges and great responsibility. As the saying goes, “this too shall pass” for Three Floyds, a world-renowned brewery that will probably not see much long-term damage over the current situation. For the hundreds of breweries opening up for business in 2010 and over the next couple years, however, there is a lesson to be learned here.

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14 thoughts on “Challenges face world’s top brewery

  1. I posted a bit about the costs of expansion on the “Tipping Point” blog response on Dogfish dropped $9 Mil, New Glarus spent $21 Million on expansion projects and thankfully both have been able to continue creating new beers outside of their “base line” of beers. But, in a recession, a title given by Beeradvocate doesn’t help get the loans from banks or investors that see new breweries popping up all over the place. So, what choices does that leave breweries:

    1) Cut back distribution (Potential for contract penalties)

    2) If you have the space and can qualify, Get a loan, put your neck on the line and face being behind the ball on production for a while until the expansion is complete.

    3) start expanding early and hope distribution picks up to that point.

    Definitely not an easy choice, but some social interaction could help ease the tension. As a hoosier, I wish the guys all the luck int he world.

  2. Japan & Denmark can get 3 Floyds, but Michigan (a neighboring state!) can’t?!?

    Their priorities are messed up.

    Learn from Michigan breweries like Founder’s, New Holland and Bell’s about how to run a successful brewery.

  3. Thank God for people like New Glarus who wants to just stay within their state and only try to meet that demand.

  4. Here are some comments from Ladies of Craft Beer on twitter:

    From @PJDeckert: I’ve felt the lack of FFF- last time I was in Chicago and asked for gumballhead, I got laughed at. Bummer.

    From @sfgirl: I think 3F have prob learned a lesson in business planning. Problem w/new businesses is that it’s hard to anticipate growth
    but that you still need to have a plan & make smart business decisions. def something for all new craft brewers to consider…

  5. Awesome comment, Jake. You make a great point about loans and how the ugly side of business can force the hand of a brewery (which is why I try to present and point to links out there in a neutral manner). With the barrage of great news about craft beer growth, my hope is that discussions will give pause to brewers who are thinking about diving into the profession without the proper skills and training in all managing facets of the business.

  6. On the same note, hopefully bringing this to attention will help calm drinkers who are complaining to retailers in the area and will give drinkers in areas where FFF [or insert brewery X] is currently unavailable some perspective in these times of crazy craft beer demand.

  7. This will be the big challenge for all craft breweries moving forward. As demand grows will they be able to keep up or will they just have too many issues. These are issues with breweries and quality control as well which may be linked to high demand. Let’s hope that this issue will be resolved.

  8. Anyone complaining about the availability of any brewer needs to have their head examined, these people are stupid f****** r****** that deserve a*** r***.

  9. I see where you are coming from as a consumer. 10 or 20 years ago, consumers didn’t have the same beer selection as we do today. But you could say there are a lot of things that we didn’t have 10 or 20 years ago that we do today. Consumers still have a right to complain when an expectation, in general, is set and not met.

    If you’re saying that a retailer or distributor shouldn’t complain, I can’t speak to that. I’m not quite inside enough to know how distributor deals and contracts and retailer-brewer relationships work.

    And I hate to censor but kind of had to there…thanks!

  10. I can tell you from first-hand experience, FFF is a lot of hype and not worth the bother. You have a very similar flavor profile across the board. Alpha King is glorified homebrew. It is not bad but the hype is incomprehensible. And the attitude of these people isn’t far behind. They’d be out of business if they were in California – believe me. They’d need more than tattoos to make it in Berkeley.

    Two Hearted Ale blows their doors off. I understand Larry Bell has a somewhat small fan base but the beer is priced reasonably.

    To all those that love to stand in line wating for a bottle of beer (Dan – the man!). Have fun and I hope it rains

  11. Pingback: Cronache di Birra » Three Floyds, o delle oscure ripercussioni del successo

  12. 3F makes exceptional beer. They have a nice brew-pub, try to spread the wealth a little, and I enjoyed DL day this year. (We thought it would rain but it didn’t) Distributors and vendors need to be more agile, bring in other beers, and stop complaining. It’s beer people.

  13. Bell’s is actually much larger than Three Floyds so I think you can safely say that Larry Bell actually has a much larger fanbase.

  14. I just want to point out that it’s a stretch to say that Three Floyds is available in Japan. There is ONE bar that carries some of their products (Craftheads), the owner of which has cultivated relationships with numerous American Craft brewers in an effort to promote the beer overseas. When 3F ships beer to Japan (and Denmark), we’re talking about small amounts to one shop in each country. This hardly impacts distribution at home.

    BTW, Craftheads is a great place 🙂

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