Food & Beverage Manufacturing

MANUFACTURING: FOOD & BEVERAGE

THERESA PALMEN

Enlightened Brewing co-owners Tommy Vandervort and James Larson.

Tommy Vandervort, founder and co-owner of Enlightened Brewing Co., talks to a guest in the brewery’s taproom.

THERESA PALMEN Third Space co-founders Andy Gehl and Kevin Wright.

Cans of Third Space’s Happy Place American Pale Ale beer are packaged for consumers at the brewery’s St. Paul Avenue facility in Milwaukee.

Craft beer boom

Local breweries say Milwaukee hasn’t reached its cap for newcomers

BY ASHLEY SMART, staff writer

THERE’S BEEN PLENTY of movement within Milwaukee’s craft beer scene this year, and several newcomers are hoping to carve out their own space in the market.

By the end of 2021, there were 230 craft breweries in Wisconsin, including six new operations that opened from 2020 to 2021, according to data from the Brewers Association. That doesn’t include the spate of brewery openings that happened in 2022, including Torzala Brewing Co., Supermoon Beer Co. and Pilot Project Brewing, all in Milwaukee.

These new openings may leave consumers wondering how it’s possible for so many craft breweries to remain operational. Some of Milwaukee’s best-known and well-established breweries say it’s the smaller size of breweries opening these days that allows for so many operations in the market

“It’s kind of crazy because there’s been so much movement in the industry in Milwaukee in the last six years,” said Andy Gehl, co-founder and president of Third Space Brewing. “It’s a totally different time now versus when we opened.”

When Third Space first opened in 2016, the brewery sought to bring beer styles that hadn’t yet gained traction with local beer drinkers. Most breweries were making European – specifically German – styles of beer. Gehl said Milwaukee did not see the same movement toward “hop-forward” beers other cities did. With its production facility and taproom at 1505 W. St Paul Ave. in Milwaukee’s Menomonee Valley, Third Space aims to make those modern-style beers but in an approachable way.

Third Space has now grown to a size that comes with its own challenges. As the fifth largest craft beer brand in Wisconsin, Third Space must deal with the rising costs of packaging, shipping, labor and equipment. Smaller neighborhood breweries can simply sell their beer over the counter to customers in a glass at a markup.

“I do think we are starting to reach that saturation point. What we’re seeing in other cities and states is there are breweries closing across the country right now,” said Gehl. “The pandemic was a huge hit to a lot of businesses but they, including us, got a lot of relief. Now that we’re past that, but we’re still in an inflationary environment, it’s really putting these business models to the test.”

For the owners of Enlightened Brewing Co. in Bay View, there is a sweet spot for how large they want the business to grow. While microbreweries can sell their beer on-site for a higher profit margin, there is a limit to how much profit they can bring in based on what equipment they have and how much beer they can produce with it. For breweries that decided to grow, equipment costs can become burdensome and retail distribution often enters the equation, causing yet another expense.

“I feel like that pinch from both large and small makes me reluctant to invest in another 100,000 square feet and a couple million dollars in equipment and start that regional distribution,” said Tommy Vandervort, co-owner and founder of Enlightened Brewing Co. “Where we are right now, we still have room to grow. We feel that in this 1,000- to 5,000-barrel production range is kind of a sweet spot.”

Enlightened is now in its third brewery space. The craft brewer’s current home at 2020 S. Allis St. is 14,000 square feet. It is substantially larger than

the brewery’s prior 1,800-squarefoot, ground-floor production site and taproom on South First Street. Enlightened Brewing’s original location was inside the Lincoln Warehouse building, also on South First Street.

Vandervort believes if the city continues to invest in neighborhoods not necessarily seen as “hot spots,” there will be space and buildings for new breweries to move in. Finding available space is an increasingly difficult task in popular neighborhoods like Bay View or Riverwest. He said it’s not an issue of consumers supporting new breweries, but instead a problem of new businesses securing equipment and financing.

“There might be these market conditions that get in the way of people starting out,” said Vandervort. “I don’t think there’s a demand problem. For better or worse, Milwaukee is a thirsty city.”

FINDING A SPECIALTY

One bright spot of so many smaller breweries opening is it forces each one to declare what its specialty strives to be, said James Larson, co-owner and director of operations at Enlightened Brewing. The business has now experienced two craft beer booms. The first took place between 2016 and 2017 and the second is happening now.

“We were never really worried about it back then because it seemed like even if we were creating the same styles as somebody else, we had a different approach to the way that we made beer,” he said. “If you give two breweries the same exact recipe on paper, you’re going to come out with two different beers.”

He said Milwaukee has been underserved by the craft beer market over the past 30 years or so, a lasting impact of legacy macrobrewers’ stronghold. The shift in consumer tastes toward craft beer – and away from the likes of Miller – leaves plenty of room for newcomers to Brew City.

“I think the days of rapid growth and conquering a lot of markets outside of your home territory and being purchased by a bigger brewer are gone,” said Vandervort. “I think that does sort of temper our expectations and give us a better picture of what the sweet spot is.”

For Hacienda Beer Co., which recently changed its named to Hacienda Taproom & Kitchen, a months-long redesign of its business model and menu has allowed the microbrewer to further cement its niche.

“In Milwaukee right now, we see such a saturation (of craft breweries). You can throw a rock and hit a brewery on any corner almost – it feels that way,” said Ashley Turner, chef at Hacienda Taproom & Kitchen. “We just have a lot of folks that are producing a lot of great beer. So inevitably, you learn that you find your niche, or your point of view, and you really have to stick to it … in order to make it clear what you’re doing in the marketplace.”

Hacienda has focused primarily on hoppy beers with higher ABV (alcohol by volume), and experimentation is the name of the game – even if it means broadening the horizon beyond beer. The brewery recently rolled out a selection of seltzer-based cocktails at its bar-restaurant on Milwaukee’s East Side. Made using a neutral-flavored hard seltzer – produced exclusively for Hacienda by Sheboygan-based 3 Sheeps Brewing – and a variety of house-made mix-ins, the idea is to appeal to a wider array of customers, including those who don’t like the taste of beer or can’t drink beer due to dietary restrictions. The new cocktails might be uncharted territory for Hacienda, but the idea is derived from the same emphasis on bold flavor and high-quality ingredients that its customers know and love, said Turner.

“If you don’t have a point of view that’s clearly defined, and you don’t have a client or guest base that’s going to support it or believes in it too, then you’re going to get lost in the wash,” she said. “… If you’re opening a craft brewery today, you really need to have spent the time to consider what you are bringing to the table that your neighbors around you aren’t, and that’s becoming increasingly hard. … Some of the newer guys have had maybe a tougher time getting elbow room and clearly articulating what they’re doing here. But also at the same time, people love craft beer and that’s not going away.” n

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Solar energy supports small business success

By Denise Craig, Marketing Manager, Current Electric Company

THE MILWAUKEE BUSINESS community has a history of innovative entrepreneurship—companies determined to be industry disruptors. Current Electric has embraced being a renegade since its inception.

“We started Current Electric in 1983 to help our neighbors with their electrical needs by providing quality service for a fair price,” explains Chuck Smith, president of Current Electric. “I also dreamed we would be an educational foundation within the electrical industry.”

As small business owners, like Smith, strategize to stay at the top of their industries, they invest in discovering industry best practices and consistent team-building exercises.

“To stay at the forefront, we deeply invest in team training to improve our customer experience,” says Smith. “When discussing the next phase of electrical we speak highly about solar, LED lighting, and backup electrical systems keeping our team members and community energized and illuminated.”

Current Electric started being a renegade solar installer 20 years ago when solar made no economic sense. Now solar energy is a business opportunity that reaps on-balance and off-balance sheet benefits. A solar photovoltaic investment: » Increases the value of a business » Creates tremendous cash flow and EBITDA improvements » Lowers operational costs, and locks rates in for 30+ years » Produces annual dividends between 10% and 20+% » Yields an increased value for a business for sale

It is a great opportunity for portfolio diversification with a significant and steady return on investment. It also serves as a best practices tool for marketing, sales, and recruitment. » Businesses investing in solar grow faster on average. » Mega trends point to customers preferring sustainability minded businesses. » Businesses invested in solar have better employee retention. » Businesses invested in solar have an advantage recruiting new employees.

Smith believes the Current Electric legacy is to create a sustainable future for the community and the environment. As he strategizes ways to keep his small business at the forefront of the electrical industry, he encourages small business owners to evaluate how solar energy can help them excel in their respective industries and support their future growth and success.

Visit currentelectricco.com/solar/commercial-solar to learn more about Current Electric’s commercial solar services.

Quick facts:

• Worldwide total capacity for cold storage was 8.6 million sq. ft. in 2020. • U.S. has 3.7 billion cubic feet of gross refrigerated storage capacity • U.S. cold storage real estate footprint is approximately 225 million sq. ft.

OVERCOMING THE COLD STORAGE DEFICIT

Authored by: Bobby Degregorio Regional Manager

COLD STORAGE construction is projected to reach $18.6 billion in value by 2027 — an increase of 13.8 percent per year, according to Emergen Research. Additionally, reports indicate that the total market for cold storage will reach $212 billion by 2025, yet capacity is only projected to grow by 1 percent per year through 2023.

Some reasons for this cold storage deficit are: • Capacity is strained by transportation backlogs, inflation, and labor shortages; • Additional capacity is needed as stores respond to market demand for fresh products; • Frozen food continues with strong demand, existing capacity will not become available to handle needs; and • 78% of existing facilities were constructed before 2000 and are outdated.

LEASE, NEW BUILD OR RENOVATE?

According to Ken Morris, senior vice president of Brokerage at Morris Southeast Group, the aging infrastructure means demand for newer facilities is great. Food distributors and processors are faced with the decision to lease, build a greenfield site, or renovate.

A refrigerated cold storage warehouse can be just as functional and operational for non-refrigerated use. If designed knowing that, in the future, it may be removed. There are specific design concepts that, if not known, will be applied incorrectly, causing maintenance and operational inefficiencies as well as potentially catastrophic failures. Due to the complex nature of these facilities, it is extremely important to work with an experience and qualified design-build contractor.

BE PROACTIVE

Because the cold chain crisis is expected to continue, and possibly worsen over the next few years – driven in part from spiking demand and a significant supply shortage – it is critical for a company to proactively assess its cold storage capacity needs now so that the capacity is available when needed. This is especially critical given the development timeline of 14 to 24-plus months. Stay informed about the cold storage capacity options in your market to make the right decision for your operations.

We take for granted the importance of food from farm to fork.

§ The health of our community impacts the ability to bring food to consumers.

§ Proper safety measures in the workplace will enhance production capabilities.

§ Well designed and maintained food facilities will stand the test of time.

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