2beerguys beer blog

Expansion in Virginia at Legend Brewing Company

Expansion will allow Legend Brewing Company to distribute in 12oz bottles. The expansion plans include adding a bottling line, fermenters and storage tanks. Plans to introduce six-packs are part of a push to gain more retail sales beyond the roughly 50-mile radius from Richmond, where Legend sells its beer at stores and restaurants.

It’s always great news to hear.

Sean
2Beerguys.com

Drink Craft Beer, You’ve Earned It!!!

Legend brewery to expand
By John Blackwell

Fans of locally brewed beer have at least one good thing to look forward to in 2009.

Even with the economy in a downturn, managers at Legend Brewing Co. in South Richmond say they are forging ahead with plans to add production capacity at its brewing operation adjacent to its pub on West Seventh Street.

The microbrewery, which is celebrating its 15th anniversary this year, sells its beer at retail stores in 22-ounce bottles now. But in the next few months, Legend is planning to start selling at least some of its beer in six packs of 12-ounce bottles.

Asked what the recession means for the business, Legend President Tom Martin had a straightforward answer: “There is a lot of bad news in the economy, but people still need to live, and they still want to have a good time.”

Consumers typically keep hoisting the beers during a downturn, according to industry observers. The Nielsen Co., a consumer research firm, considers beer one of the most recession-resistant consumer products.

The Brewers Association, an industry trade group, reported that sales of craft beer — beverages made by more than 1,400 regional, independent breweries in the U.S. — were up more than 6 percent by volume in the first half of 2008, after growth of about 12 percent for all of 2007.

Alcoholic beverage sales have been “relatively resilient in the face of economic challenges,” analyst Judy Hong of Goldman Sachs wrote in an October report, which predicted overall U.S. consumption of alcoholic beverages was likely to grow 1 percent to 1.5 percent in 2008. Hong said beer sales were expected to hold up better than wine or spirits.

Not that the outlook is entirely peachy for small brewers, whose sales also depend on how often consumers go out to celebrate.

“The bars and restaurants are having a tough time right now,” said Mark Stepanian, president of Loveland Distributing Co. in Richmond, a third-generation family business that distributes more than 200 brands of beer to bars, restaurants, convenience stores and grocery stores in central Virginia.

“I would say we are more resilient to [a recession], but there are no islands in the stream,” said Stepanian, who said business slowed in the third quarter last year. He thinks it will improve by summer.

“It is still an affordable luxury relative to many other items,” he said. “I think that is what will sustain us until we sort this [economic] mess out.”

At Richbrau, a popular down town Richmond brewpub, President Mike Byrne is more concerned about food sales than beer sales. “Beer aside, the hospitality industry is going into 2009 in very precarious conditions,” he said.

In Virginia, pubs and bars must offer food to sell alcohol. Food and fuel prices rose much of last year, and when combined with a downturn in business as the economy soured later in the year, restaurants have suffered, Byrne said.

“Beer is probably the staple thing, in the sense that pretty much everybody will go out and drink a beer,” he said. “But spending $20 on lunch or $30 on dinner, or having a retirement party for someone at work, those are the things that are uncertain.”

The beer industry saw some turmoil in 2008. A worldwide shortage of hops, along with rising costs for other ingredients such as malted barley, forced many brewers to increase prices. Also, many fans of domestic beer were shocked when Anheuser-Busch Cos., the nation’s top-selling beer company with the Budweiser brands, agreed to be acquired by Belgium-based InBev SA. Anheuser-Busch reported that its U.S. beer shipments grew through the third quarter of 2008 compared with the previous year.

For microbreweries such as Legend, the outlook for 2009 depends a lot on whether consumers feel good enough about the health of their wallets to keep buying their favorite craft beers.

“We’re optimistic,” said David Gott, Legend’s sales manager. The brewery’s management team says sales were up about 10 percent in 2007 and about 6 percent in the first 10 months of 2008. The company is expecting growth in 2009 but was not specific with a prediction.

The expansion plans include adding a bottling line, fermenters and storage tanks. Plans to introduce six-packs are part of a push to gain more retail sales beyond the roughly 50-mile radius from Richmond, where Legend sells its beer at stores and restaurants.

As the economy slumped last year, the Brewers Association noted that consumers were shifting their purchases away from on-premises, bar and restaurant drinks, to buying for home consumption, a spokeswoman for the association said.

“A 22-ounce bottle is a nice package,” Gott said. “But Americans are conditioned to a six-pack of beer. That is really the package that retailers and wholesalers are set up for. In order for us to expand any further, six-packs are the way to go.”

Link to article.