Work begins on latest expansion at Santa Fe Brewing Co. - Luna Capital Advisors
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Work begins on latest expansion at Santa Fe Brewing Co.

Development of a dirt lot that separates Santa Fe Brewing Co.’s brewery from its warehouse, cooler and canning facility is the next step forward for the 30-year-old business.

The lot is destined to become the site of a three-story building with 10,000 square feet of office and retail space, and a new taproom. Outside, plans call for a lush beer garden with room for games and three or four surrounding food trucks, said Brian Lock, the brewery’s president. The company held a ceremonial groundbreaking Friday.

The building, designed by McClain+Yu Architecture & Design of Albuquerque and to be built by Lockwood Construction of Santa Fe, is expected to open in spring 2019, he said. The outside beer garden will be planted with mature trees from Santa Fe Brewing’s hop farm in Rinconada and watered with recycled water treated on site.

An architect’s depiction shows the interior of a taproom to be built at the Santa Fe Brewing Co. on Fire Place south of Snata Fe.

“So, literally, this whole space will be like a jungle in the desert,” Lock said Wednesday. “It’s obviously environmentally conscious, that’s kind of the biggest point. We’re in a desert and water’s precious, so to reuse all the wastewater and irrigate with it is just great from a marketing standpoint, too.”

The construction is part of a third phase of development at Santa Fe Brewing’s home base on Fire Place just south of Santa Fe off N.M. 14. The next step is to expand the brew house from its 30-barrel capacity to something that can handle the 42 percent growth Lock said the brewery experienced in the past year. Rather than expand outward, the company is looking first to fill empty spaces on its home turf.

“I think there’s still quite a bit of room to grow in New Mexico and we haven’t tapped everything yet in this state,” Lock said. “We’re doing a good job this year; we’ve gotten a lot more distribution and a lot of distribution points in the chain world, but there’s still some room here, I think.”

Santa Fe Brewing, which pulled its distribution from Nevada and Louisiana, is available in Arizona, Colorado, Texas, Kansas and Missouri. Outside of New Mexico, Texas and Colorado are strong markets for the company, Lock said.

The company, which produced about 30,000 barrels of beer last year, is positioned as a regional brewery between smaller competitors that are still growing and much larger companies like Anheuser-Busch InBev that have greater resources available for marketing and advertising, according to a May market analysis from Luna Capital Advisors. The Santa Fe firm advises Santa Fe Brewing Co., Marble Brewing Co. and Bosque Brewing Co., among others.

“There are a couple of things going on,” said Luna Capital CEO Kris Axtell on Monday. First, with taprooms, craft brewers are capitalizing on the experience aspect of their industry. Taprooms are the growth sector for craft brewers somewhat smaller than Santa Fe Brewing, but the company has also benefited from the trend, he said.

The Bridge, the concert venue and taproom across the parking lot to the south of the brewery will remain in business after the new taproom opens, Lock said.

The second aspect of the company’s growth is its ability to pull back and “concentrate on brand awareness in New Mexico,” Axtell said. In addition to its relatively new 7K IPA, the brewery is introducing some new, fruity beers to meet consumer demand. He said the brewery sales and marketing director, Jarrett Babincsak, is doing a good job of marketing Santa Fe Brewing products.

“He is probably the biggest driver of Santa Fe’s growth recently,” Axtell said.

Lock said he will continue to pursue a conservative growth strategy, one that ensures demand is in place before he commits to expansion. As for new markets in-state, Las Cruces and Albuquerque still have potential, he said.

With the opening in spring of the Brakeroom on Galisteo Street, Santa Fe Brewing Co. reached its state-imposed limit on taprooms for the time being. Over the horizon, Lock said a Santa Fe Brewing taproom in El Paso could be a possibility.

“It’s a live-and-learn kind of thing,” Lock said. “You see other regional breweries … that are now struggling and going up for auction and having some trouble because they overextended themselves.

“My theory, just observing all of it, has been I want to stretch this thing to the very max. When we cannot make another drop out of this system, then it’s time for the next brew house.”

 

 

From Santa Fe New Mexican: http://www.santafenewmexican.com/news/business/work-begins-on-latest-expansion-at-santa-fe-brewing-co/article_37c3d5db-51c3-5190-a888-789b3400f11d.html

 

Tiphini Axtell
tiphini@luna.capital