Steamworks Brewing Co. restructuring business model

Economic climate requiring downsizing of Bayfield Beer Factory

 

            DURANGO, Colo. – In response to an extended series of financial challenges, Steamworks Brewing Co. is restructuring its business plan, reflected primarily in a downsizing at the Bayfield Beer Factory, with future consolidation dependent on changes in the economic climate.

            The brewery in Bayfield will remain open in coming months, brewing the award-winning craft beer that has continued to grow in demand across the country. Inventory will be depleted, with repurchase considered on a case by case basis.

            The restaurant side of the Bayfield operation will have limited operation, but also remain open for the foreseeable future. Steamworks has been steadily downsizing the restaurant, converting it to primarily a tasting room in May 2009.

            “We tried to run a restaurant in Bayfield, but our business model didn’t work as we had planned,” said Kris Oyler, Steamworks CEO and co-founder. “On the other side, our wholesale beer business has grown – more than 30 percent thus far this year. But it hasn’t been enough to counter the additional challenges that have essentially been out of our control.”

            In addition to losses at the restaurant, exacerbated by the decline in the town of Bayfield’s economy and construction industry, Steamworks’ brewing operation in the past several years has met with dramatic increases in expenses, including a tripling in the price of hops – a primary ingredient in beer. Steamworks also was forced to invest heavily when Bayfield’s waste water treatment facility outgrew capacity, over time contributing significant and unanticipated resources to help Bayfield build a new water treatment plant.

            “We were willing to make the investment to make Bayfield work,” said Oyler, who noted that regular double-digit growth in Durango had helped mitigate costs. “Now with the worst economic downturn this country has seen since the Great Depression, the Durango brewpub and our wholesale beer sales can’t carry the Bayfield operation.”

            Steamworks opened the Bayfield brewery in 2004 specifically to grow its wholesale beer division. The demand is present, with the Bayfield Beer Factory steadily growing into its brewing capacity. Steamworks expects to end the year having exceeded annual projections in Bayfield alone, brewing some 5,600 barrels.

            In coming months, though a date has not been determined, Steamworks anticipates a likely asset sale in Bayfield, including the brewing equipment, facility and the land in Bayfield Center. The Steamworks brand, identity and beer recipes are not for sale, as Steamworks will continue in full operation at the Durango brewpub.

            “We’ve got beer in the tanks in Bayfield, and inventory to keep brewing, which we plan to do,” said Oyler. “By no means is Steamworks going away. We are merely making some tough decisions in a down economy to ensure that we can withstand these economic times and emerge even stronger on the other side of them.”

The original Steamworks Brewing Co., opened in 1996, is located at 801 E. Second. Ave., Durango (970.259.9200). Steamworks’ Bayfield Beer Factory is located at 442 Wolverine Drive in Bayfield Center, Bayfield (970.884.7837). For further information, visit www.steamworksbrewing.com.