All Day IPA sales drive $40M expansion of Founders
Grand Rapids — It is the beer that almost wasn’t and now it represents half of the total liquid that Founders Brewing Co. currently bottles, kegs and cans.
All Day IPA, a “session ale” that nearly predates the term, is the force behind the $40 million expansion of Founders this year — the latest growth spurt in a seemingly never-ending series of enlargements for the ascendant beer-maker, which now occupies an entire block of downtown Grand Rapids, according to The Grand Rapids Press.
The beer, a 4.7 percent alcohol by volume India Pale Ale, has become nearly ubiquitous on retail shelves in the 35 states where Founders is sold since its initial introduction in early 2012. Cans of the beer are sold mainly in 6- and 15-packs ideal for drinking outdoors during the summer in a beer-thirsty state.
“We knew we had something extraordinary when we launched it, but I don’t think any of us really could have forecasted its success and momentum,” said Mike Stevens, CEO of Founders. “It’s really hitting an under-served market.
“It’s time was due.”
Stevens and the Founders team are bullish on the possibilities for All Day, which someday soon is likely to be sold in every U.S. state and numerous countries. Founders is now expanding its distribution footprint westward after spending the last few years filling gaps in markets along the East Coast. In October, the brewery will begin selling in New Mexico after reaching Arizona last year.
Other western states are likely to follow as the brewery, which is forecasting a 420,000-barrel output in 2016, marches toward national brand status.
“There’s no gun to our head to expand into new geography quickly,” Stevens said. “That being said, we now have the capacity. With the demand being put on our brands, we are opening those doors.”
That new capacity is 900,000 annual barrels, which the company expects to reach in a few years after building a 56,500-square-foot addition on the west end of its facility at 235 Grandville Ave. SW this summer. The expansion includes a new cellar, new brewhouse, new bottling and packaging line, shipping and receiving areas, grain storage space and other manufacturing facility accruements.
There’s still some contractors running around doing last-minute jobs, but for all intents and purposes, the pricey new facility is up and running. It’s a big addition for a brewery with big ambitions, especially for its new flagship brand.
The love for All Day IPA is represented in its sales as well as in reviews that trumpet a full-flavor beer that won’t put you on the floor after having a few. In that sense, Stevens thinks All Day has a chance of becoming a household brand name across the country the same way Bud Light and Miller Lite are now.
“The Big Three domestic brands will always have a place on the shelf, but can some of these beers like All Day be the next premium domestic light beer in the U.S.?” he said. “I think there’s a good shot of capturing some of that market share.”
Part of that calculation is counting on the maturation of the craft beer consumer — who, like most brewers themselves, began drinking craft beer largely because of the flavor advantage and the higher alcohol content. But people’s palates change over time and a lower alcohol beer appeals to many. Founders built its reputation on big, extreme beers like KBS and Dirty Bastard, so a session ale being its top seller is somewhat ironic, but not surprising anymore.
It took Founders about three years and a few false starts to get the All Day train rolling. Stevens and partner Dave Engbers were going to name it “Endurance” at one point. Founders describes it as having “intense tropical aromatics and complex flavors” one might expect in a hoppy IPA, the most popular American craft beer style.
A year and a half after All Day’s launch, it represented 25 percent of Founders overall sales. The company started canning it in August 2013 — the first beer that Founders ever put into a can.
The brewery was expanding its production space and taproom at the time Stevens predicted 2014 would be “calmer” for the company after a hectic year of shuffling offices and restoring inventory levels.
That prediction was somewhat true. In September 2014, Founders began seeking tax incentives for its latest addition, which “for sure” was driven by All Day sales. A few months later, the brewery added a 30 percent partner, Mahou San Miguel — a major international brewer based on Spain that brought additional growth capital to the company and took some pressure off original investors.
Looking forward, Stevens said Founders is focused on increasing its presence on supermarket shelves over the next three years, a market of which “we’re just scratching the surface.” Given the company’s compound annual growth rate topping 60 percent each year since 2010, “we could be faced with planning for another expansion in the next couple years.”
As for All Day IPA, well, the sky is kind of the limit. Stevens said it’s selling at equally high rates in every market the company enters.
“We’re just getting off the runway with All Day IPA,” he said.
This is an AP Member Exchange shared by The Grand Rapids Press.
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