A 61% increase in sales of Shipyard Brewing Co.'s seasonal Pumpkinhead Ale over the last year is the impetus behind an expansion that will see the Maine company extend its brewing operations to a plant in Memphis, Tenn.
The expansion will also allow the nation's 15th largest craft brewery to latch onto the growing industry trend of craft canned beer, a move that can help reduce shipping costs and spoilage while appealing to the "active lifestyle" market, according to Fred Forsley, president of Shipyard.
"Our primary goal is to meet existing demand, but in the long term it might help us to have our beers in spots where we haven't before: facilities like marinas, golf courses and sports arenas," says Forsley.
As the third-largest craft brewery in New England, Shipyard has had a hard time keeping up with fervent consumer demand that saw a 31.7% increase in sales from 2010 to 2011, according to Tami Kennedy, director of communications for the brewery.
Shipyard has leased space from Memphis-based City Brewing and installed three 1,000-barrel tanks. The first batch of Shipyard Export, the brewery's flagship ale, was made there in June by Shipyard master brewer Alan Pugsley and will be available in Maine this week, according to Kennedy. The company's Portland brewery is at full capacity.
In an effort to maintain quality and consistency, Kennedy says the Memphis operation will use the same equipment, ingredients and methods as in Portland, including its open-top fermentation brewing process.
Despite only being available for three months of the year, Pumpkinhead, the brewery's autumn seasonal ale, accounts for nearly one quarter of all sales.
"Pumpkinhead is a cult phenomenon," says Kennedy. "There are now a lot of pumpkin beers on the market, but ours continues to catapult in sales. We had a hard time keeping up last year, so that was the driving force for us making decision about how and where to expand production."
Memphis-brewed Shipyard will be easy to distinguish from its local counterpart as it will be in cans. Kennedy says the brewery will start by canning Export, with Pumpkinhead following suit in the fall and Summer Ale making its first appearance in aluminum by next year.
"We're not the pioneer in cans, but there was demand from both consumers and distributors, so we took the clue," says Forsley.
Long the domain of cheaper, mass-produced domestic beers, the aluminum can has seen a resurgence in recent years within the $8.7 billion craft beer market as other large breweries in the region, including Vermont's Long Trail and Magic Hat and Boston-based Harpoon, embrace the trend.
"We are perceived as a leader in the industry, so we really have to look at [a trend] like this seriously. Our sales guys are on the frontlines saying "Long Trail has cans, are you guys going to have them?'" Kennedy says.
Case sales of canned craft beer have risen from 40,000 in 2008 to 358,000 in 2011, with sales in dollars rising more than 800% from $1.23 million to $11.52 million over the same time frame, according to a study from the Colorado-based Brewers Association. More than 200 breweries across 46 states now brew some or all of their beer in cans.
"Shipyard played it smart and waited to see how people accepted cans to make sure it's a good financial move," says Russ Phillips with CraftCans.com.
The high cost of purchasing a canning line was one of the early impediments to craft brewers embracing the can. "When it started, it was a big financial hit for a small brewery to invest in a canning line," says Phillips. "Now you can get a fairly cheap canning apparatus because there are a lot more companies making them."
Luke Livingston, the founder of Maine's first brewery to latch onto the craft can trend, says the Shipyard announcement was welcome news. "I'm honestly surprised it took somebody else this long," says Livingston, president of Baxter Brewing Co., a craft brewery in Lewiston that has been canning its product since it was founded a year and a half ago.
Belfast-based Marshall Wharf also has plans to start offering its brew in cans as part of a soft launch "probably by the end of this month" according to founder David Carlson. A small but renowned operation, Marshall Wharf will can only 200 gallons a week, or about 70 cases, and center distribution around the midcoast region.
Livingston says he's not worried about Shipyard eroding the market niche Baxter has carved out. "I think people still know we were the first ones to do it."
If anything, Shipyard's recent move stands to benefit the burgeoning brewery. "Any time a more recognizable brand puts their beer in cans, it adds some legitimacy to the package. If [consumers] see somebody as well known as Shipyard doing it, they may be more likely to try our beer; it only helps our segment of the market," he says.