Dogfish Head planning 3-yr $45 mil expansion, investment by top craft brewers may exceed $250 mil


(Milton, DE) – Dogfish Head is the latest to throw its hat in the ring of big investment announcements.

(Photo Credit: mattohara on Flickr – creative commons)

The industry was abuzz late last week with the news that Dogfish Head plans to invest $45 million over the course of three years. The project could help push the brewery closer to a half million barrels annually. All that the brewery has said for now is that the expansion is part of The Brewers Association’s plan to achieve 10% market share. Expect to see more about both of these ‘plans’ in the coming weeks and months.

How is Dogfish getting there?

In a video interview with Eater Magazine this past March, Founder and President, Sam Calagione, championed growing independently without the aid of big brewers. The company has been a thriving example of such growth.

Revenue has grown from $3.6 million in 2003 to $12 million in 2006 to $28 million in 2008. As of December, revenue projections were $41 million for 2010 and $52 million for 2011.

Dogfish Head’s growth plan is only one of several in the works for the nation’s top regional craft brewers…

Stone Brewing announced a $26.6 million project just last week. A portion of that investment will push annual capacity to around 500k barrels.

Last fall, Bell’s Brewery announced a $52 million project that will take place over the course of several years.

Lagunitas Brewing is undergoing a $9.5 million expansion that will increase capacity to 600k barrels.

With Minnesota’s governor signing off on law changes this week, Surly Brewing can now pursue building its $20 million dream brewery.

Sierra Nevada Brewing is searching for an east location that, according to the brewery’s Bill Manley, could lead to around $70-75 million in investment.

New Belgium Brewing is also looking for an east location though it hasn’t made any formal statements on the search.

If all of these projects go through as planned (and when tallying these with other projects by Shipyard, Smuttynose, etc.), we are looking at more than $250 million in investment by the nation’s top craft breweries in a relatively short timeframe.

That kind of investment may be the best argument that breweries can make as they lobby for a reduction in excise taxes, an effort that is ongoing.

On the flip side, what does this mean for the future of startup breweries and small microbreweries? As has been brought up before, some distributors face obstacles in handling the proliferation of brands. It’s certainly more manageable to handle a smaller portfolio of established brands, each of which can consistently provide a lot of product to sell.

Meanwhile, Mercury Brewing President, Rob Martin, predicts a shakeout of some of the smaller breweries, citing the perceived need (and challenge) to reach 10,000 barrels production annually. Whether or not you agree with that assessment, as larger craft breweries spread their distribution further across the U.S. and deeper into existing markets, it will likely expedite the inevitable shakeout.

That said, we could still be a ways away from that point. Though there are some ‘mature’ markets where craft’s share of beer sales is already well above the 5% national average, there are many more under that marker. Smaller crafts may have some difficulty gaining traction in these mature markets in the future but under-served areas like the Southeast provide a lot of potential.

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7 thoughts on “Dogfish Head planning 3-yr $45 mil expansion, investment by top craft brewers may exceed $250 mil

  1. Good news. At The Weekend of Compelling Ales and Whatnot a few weeks ago, two of the things Sam mentioned were a second bottling line in Milton – one for 12 oz bottles and one for 750 ml. This will save them the trouble of down time while switching back and forth.

    Also, they are renovating the Rehoboth Beach brewpub and moving the distillery to a new location. They are adding open fermenters to the brewpub for sour beers.

  2. Re: the shake out, I think it will just be more likely we won’t see the meteoric rise of many brewers in the future, but when combined with the push to buy local, as well as many communities realization of the money in alcohol-based tourism, we’ll just see many more breweries that never try and get big, just provide a regional, local or even hyper local market.

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  4. Dogfish is very likely the worst beer I’ve ever had over the past 52 years of my adult life.

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