Santa Fe craft brewers have growth on tap - Luna Capital Advisors
Luna Capital offers Commercial Brokerage · SBA and Conventional Financing · Analysis and Planning · Commercial Loan Servicing and Escrow · Insurance Planning · Debt and Equity Solutions
luna capital, Commercial Brokerage, Financing, sba, Commercial Loan, Insurance, Planning, Kris Axtell, Kristopher Axtell, Brandon Fitzpatrick, Sydna Mariani, Tiphini Axtell, Kenneth Dobbs, Ken Dobbs, A.J. Martinez, AJ Martinez, luna capital, luna capital advisors, luna capital realty, luna capital mortgage, luna capital servicing, commercial brokerage, SBA financing, small business, commercial loan servicing, debt, equity, SBA 7(a), SBA 504, permanent financing, construction loan, mezzanine debt, bridge loan, HUD financing, santa fe brewing, bosque brewing, vinaigrette
post-template-default,single,single-post,postid-2004,single-format-standard,bridge-core-1.0.4,qode-quick-links-1.0,ajax_fade,page_not_loaded,,qode-title-hidden,qode_grid_1300,footer_responsive_adv,qode-child-theme-ver-1.0.0,qode-theme-ver-19.6,qode-theme-bridge,qode_header_in_grid,wpb-js-composer js-comp-ver-6.1,vc_responsive

Santa Fe craft brewers have growth on tap

For smaller and midsized breweries, including those in New Mexico, growth is still on the agenda.


Brewers in Santa Fe are growing on their own terms despite an overall slowdown in the craft beer market the past two years.

Competition, saturation, changing tastes and the acquisition of successful craft brands by large, multinational brewers like Anheuser-Busch InBev and Molson Coors contributed to a statistical slowdown in the craft brewing industry starting in 2016. The Brewers Association, a trade group, defines a craft brewer as one that produces 6 million barrels of beer or fewer annually.

John Rowley is brewmaster and part owner of Rowley Farmhouse Ales, which opened in 2016 and expects to crack the 500-barrel mark this year.

Prior to 2016, craft brewers regularly posted double-digit growth in production and sales, year after year. Craft brewers in 2015 had expanded sales by 16 percent and production by 13 percent over the previous year, according to the association. In 2016, they generated 10 percent more in sales but expanded production by 6 percent. Last year, production was up by 5 percent and sales by 8 percent.

Some of the largest craft brewers took note and started scaling back planned expansions. However, for smaller and midsized breweries, including those in New Mexico, growth is still on the agenda.

“Just in New Mexico, we’re seeing a significant market penetration with our larger breweries,” said Brandon Fitzpatrick, chief operating officer for Luna Capital Advisors, a financial firm in Santa Fe that works with 10 breweries in the state, including Santa Fe Brewing Co. and Tumbleroot Brewery and Distillery. “Our top three breweries are on the cusp of 20 to 40 percent [growth] right now.”

Will Higgins (left) and Mario Garcia (right) cheers each other at Rowley Farmhouse Ales at 1405 Maclovia St on January 10, 2018. Gabriela Campos/The New Mexican

Microbreweries, those that produce fewer than 15,000 barrels annually, contributed 60 percent of the growth in craft brewing production last year, according to the Brewers Association. That category includes Rowley Farmhouse Ales in Santa Fe, a brewery and pub that produced fewer than 500 barrels of ales in 2017, its first full year in operation, said brewery partner Jeffrey Kaplan.

“We haven’t seen a slowdown; we’re seeing a big uptick now,” he said last week.

The brewery, which switched distributors in March, is selling beer in bottles all over New Mexico but has yet to reach the capacity of its relatively small seven-barrel facility on Maclovia Street, Kaplan said. The brewery is producing about 20 percent of what it’s capable of, he said, but its goals are modest. The brewery opened in September 2016 and expects to crack the 500-barrel mark this year.

“We want to produce a little more than what we’re producing now within our current footprint,” Kaplan said. “We like where we are; it’s a niche we’re trying to fill: the boutique, handcrafted, artisan ale.”

Michael Lovoto monitors the sparge while brewing Santa Fe Brewing Co.’s Pilsner at its facility at 35 Fire Place, south of Santa Fe.

More than 6,000 breweries defined as craft were in business last year in the U.S., up from 2,400 five years earlier. The number of craft brewers in New Mexico grew from 40 in 2014 to 67 last year, according to the association. The best performing are brewers that operate taprooms and produce fewer than 15,000 barrels annually. They are taking advantage of opportunities to sell more beer from their taps or find new markets for wholesale distribution, according to the Brewers Association.

Tumbleroot Brewery and Distillery, which opened in April, sells most of its beer “across the bar,” said Jason Fitzpatrick, a partner in the firm. He said the pub on Agua Fría Street accounts for 90 percent or more of the company’s sales. Tumbleroot has plans to eventually can its products for wholesale distribution, said Joseph Haggard, front-of-the-house operations manager.

Sales at craft pubs and brewpubs accounted for between 2.5 million and 2.7 million barrels of beer in 2017, an increase of about 400,000 barrels over the previous year, wrote Bart Watson, chief economist for the Brewers Association, in a March 28 blog post. Those 400,000 barrels made up a third of overall growth in craft brewing last year, he wrote.

Tumbleroot’s Honey Hibiscus Wheat, one of the beers featured at its taproom. Craig Fritz/ for The New Mexican file photo

Tumbleroot’s business plan includes growing its sales at its pub and its brewery tasting room on Bisbee Court, but also growing its distillery operation, Fitzpatrick said. Distilling is the next phase of growth in craft beverages, he said. Tumbleroot expects to brew 1,500 barrels of beer this year and distill 1,000 gallons of spirits, he said.

The oldest brewery in New Mexico and one of the largest, Santa Fe Brewing Co., produced about 24,000 barrels of its products in 2017, and expects to increase that by another 4,800 barrels this year. Sales were up by 48 percent in the first quarter compared to first quarter 2017, said Brian Lock, owner of the 30-year-old business.

“Last year was a good year for us. We outpaced the industry average by a good percentage. Most of our growth was in the wholesale side of the business; in our distribution off-premises (grocery stores and liquor stores) we were up quite a bit,” Lock said.

Independent, regional breweries producing more than 15,000 barrels a year, the craft brewing category that includes Santa Fe Brewing Co., posted an average 1 percent growth last year, most of that by brewers of 30,000 barrels or less, Watson wrote. By comparison, Santa Fe Brewing increased its production by 18 percent last year and expects to continue growing this year, Lock said.

Santa Fe Brewing plans to install a 75-barrel brewing system capable of seven times its existing capacity, or 200,000 barrels annually, he said. The company had expansion in mind at its founding, he said, so the new equipment will fit into the existing brewery.

“He’s pretty near capacity now, he’s juggling production,” Kris Axtell, CEO of Luna Capital, said of Lock.

To concentrate on New Mexico and its core markets in other states, Santa Fe Brewing hired a new sales and marketing director, Jarrett Babincsak, “who’s done a tremendous job identifying areas of growth and going after those opportunities,” Lock said. The company also pulled its distribution in Louisiana and Nevada last year, according to Axtell and Brewbound, an industry news site.

Last summer, the company rolled out a new IPA, 7K, demand for which pushed Santa Fe Brewing to its limit, Axtell said. Lock expects 7K to match sales of its flagship IPA, Happy Camper, this year. And sales of Freestyle Pilsner, normally a seasonal beer, grew so fast that Santa Fe Brewing started making it year-round, he said.

“That product has really been exploding” in popularity, Lock said. “We were actually out of stock for four weeks.”

From Santa Fe New Mexican:

Tiphini Axtell