A Case Study Over the Breckenridge Brewery
Breckenridge Brewery
Introduction
In 1990, Richard Squire opened Breckenridge Brewpub in Breckenridge, Colorado, the first of many he would found. This small establishment, across the street from the popular Breckenridge Ski Area, was able to make 3,000 barrels of beer per year and served the purpose of keeping him and his friends able to live the dream of being able to ski all day, and drink good beer all night. Soon, however, demand outgrew the abilities of the owner and small staff, making expansion necessary. Squire opened his second pub in an old warehouse that he purchased in a rundown neighborhood in Denver. By 1998, that rundown neighborhood had been renovated and become Denver’s new hotspot, helping boost sales for the Breckenridge company. During the mid 1990’s, the Brewpub industry took off, and Breckenridge expanded its operations across the United States to cities such as Buffalo, Birmingham, Tucson, Memphis, and Omaha. Between 1995 and 1997 alone, the company was able to open six new brewpubs and expand its wholesale beer distribution to over 30 states. Currently, however, the company only has full service brewpubs in Breckenridge, Colorado, and in Denver, Colorado and sells its products in 13 other states.
Products
The goal of a microbrewery is to make beer from the purest ingredients and maintain quality and freshness without pasteurization. Breckenridge Brewery accomplishes this by employing brewmasters to create and craft each of its own original recipe specialty beers. Todd Usry, a graduate of the famous Siebel Institute, was at the helm of the beer creation for the company in the 1990’s. He was responsible for recipes, such as their signature beer Avalanche that won the company several distinguishing awards. He was also involved in the creation of their other lines of beer. Breckenridge currently makes the Avalanche Amber Ale, Autumn Ale, Pale Ale, Christmas Ale, Oatmeal Stout, Pandora’s Bock, SummerBright Ale, and their newest creation, Hefe Proper. In addition to these, they also make seasonal beer flavors that change from year to year. Each of these items is sold at one of the brewpubs or is distributed in six-packs of cans, twelve packs of 12 ounce bottles, or by keg or draft.
Background
In 1998, Kyle Craig was appointed the new CEO of Breckenridge Holding Company (the parent company of Breckenridge Brewery). He immediately began reviewing the company’s financial data and related industry data. He found that from 1994 to 1995, craft beer sales industry wide had grown 51%, but by 1996, that growth figure had dropped to 26% and by the end of 1997, growth for the industry was only 3.3%. The large mass-production breweries such as Anheuser-Busch, Miller, and Coors controlled over 90% of the American beer market at the time, and Craig wondered how he would regain market share. He turned to his key management staff for [next page]