Our report earlier this week on the extreme supply crunch at Russian River Brewing provoked a lively debate in our comment section and at other sites. Some beer fans applauded the position by owners Vinnie and Natalie Cilurzo that there are some things more important than expansion, things like quality of life, financial stability, and the intimacy of a small business.
Other commenters, however, seemed vexed that the Cilurzos seem to have no particularly interest in expanding.
“That’s cool that they don’t want to expand, but it is starting to get annoying seeing their beers become less and less readily available in shops,” one user wrote on one of several discussion threads on BeerAdvocate.com generated by the article.
So the question is, do breweries have some sort of obligation to the public to expand to meet demand?
The interesting thing is the two opposite answers to that question occur right here in Sonoma County, just a few miles apart. On one hand is Russian River, advocating the slow, prudent, carefully-planned approach.
Just down the road lies Lagunitas, where owner Tony Magee has been engaged in a pell-mell rush to expand almost from the first day he opened. When I talked to him about this issue for an article back in April, Magee admitted that growth is hard, but seemed less than sympathetic to breweries that were unwilling to grow to meet demand.
“Thing is when you grow fast, it’s very very painful,” he said. “All sorts of [stuff] goes wrong. The finances are dreadful unless you want to continuously bring in outside capital, which means as the guy who started I own less and less and less every day … in order to kind of maintain some control, there is a lot of pain. And I Think those breweries just didn’t want to go through that pain.”
He was particularly critical of breweries that expanded into some markets and later had to pull back because demand exceeded supply. He wasn’t specifically talking about Russian River, but that brewery was among a number of prominent breweries – including Dogfish Head and Three Floyds – that had actually pulled back from certain markets in the face of tight supply in recent years.
“It’s kind of like bad faith, you went to those markets you bragged about your beers in those markets, people believed in you and picked it up and they you just turn around and walk away from it,” he said. “If we were just selling widgets nobody would care. But beer is this other sacred thing between humans.”
Tony’s position can, it seems, be summarized in a paraphrase of the old Doritos tag line: Drink all you want, we’ll make more.
On the other hand, the Cilurzos seem to view things in less expansionist terms. When I visited with them this week, Vinnie and Natalie said that they had deliberately built their brewery to hit the 14,000 barrel a year capacity. They didn’t expect or ask for the kind of cult-status that their beers have attained, sending demand into an absolute frenzy. It’s not that they don’t want more customers, or appreciate the love beer drinkers show, but rather it seems as if they fear that the buzz won’t last, and they don’t want to dig themselves in a deep financial hole only to find it was all just hype after all.
“I think we’re relatively conservative when it comes to business decisions. We don’t want to be overly leveraged, especially right now,” Natalie said. “Everybody’s opening a brewery, everybody’s expanding. It’s like when is there going to be a market correction? When are things going to slow down? When will there not be enough shelf space or tap handles, then everybody’s going to be competing for the same space. We don’t want to be $20 million in debt when that day comes. It will come; it’s just a matter of when and how bad.”
Based on the comments on our site and elsewhere, it looks as if lots of beer fans understand Natalie’s caution, and the couple’s desire for a good quality of life.
“Nice to know they still have their priorities straight after all their success,” one BeerAdvocate reader wrote.
What do you think?
– Sean Scully