New deal could help small brewery topple Goliath

Mike Snider | USA TODAY

Toppling Goliath Brewing, one of the Davids of the U.S. beer industry, just got a bigger slingshot.

The northeastern Iowa brewery makes highly sought-after beers — several of its brews, including Kentucky Brunch Brand Stout, have top ratings on popular consumer rating sites BeerAdvocate.com and RateBeer.com, But up until now, Toppling Goliath could produce only about 3,200 barrels annually.

A new partnership with Lakeland, Fla.-based Brew Hub, to be formally announced this week at the Craft Brewers Conference in Portland, Ore., is likely to up production of its beers to about 15,000 barrels within the first 12 months.

Brew Hub is already brewing Toppling Goliath's Dorothy's New World Lager and PseudoSue American pale ale. The first batches will be packaged in early May and sent back to Iowa. The increased production will allow the brewery to meet in-state demand and fill orders in Illinois and Wisconsin.

Eventually, distribution will be expanded to Minnesota. Two other Toppling Goliath beers, Golden Nugget IPA and Rover Truck Oatmeal Stout, are being produced on Brew Hub's smaller pilot brewing system before large batches are made. Brew Hub plans to make Toppling Goliath beers available in Florida by September.

"We are going to be making a lot more beer," says Clark Lewey, who opened Toppling Goliath in Decorah, Iowa, a town of about 8,000, in 2009.

Brew Hub, which opened a 63,000-square-foot facility in Lakeland, Fla., in August 2014, plans to begun construction this summer on its second brewery in St. Louis. Brew Hub can produce 75,000 barrels, or more than 1 million cases, annually. When the St. Louis brewery opens next year, it will double that capacity.

Its $100 million plan, backed by billionaire Ron Burkle, founder of The Yucaipa Companies, envisions five breweries across the nation. Small and regional breweries can partner with Brew Hub and increase the reach of their creations without the costly outlay of additional equipment and distribution.

Partner breweries include Tampa Bay's well-regarded Cigar City Brewing, and Huntington Beach, Calif.-based BJ's Restaurant and Brewhouse chain, which has more than 155 restaurants in the USA.

The company sees itself as integral to helping the Brewers Associations' stated goal of craft brewers attaining 20% of U.S. beer produced, by volume, by 2020. In 2014, U.S. small and independent brewers produced 22.2 million barrels, or 11% of share by volume.

To essentially double the production of craft beer would be impossible if small brewers such as Toppling Goliath were left on their own, Brew Hub CEO Tim Schoen says.

Partnering brewers can brew at Brew Hub themselves or monitor the brewing process remotely. Brew Hub also makes its own beers on its smaller pilot system and makes its beers and partner beers available in its tasting room.

Toppling Goliath will be the first partnering brewer at the new St. Louis plant.

The deal with Brew Hub will get Toppling Goliath's beers into cans as well as bottles — without shelling out for an expensive packaging line — and free up Toppling Goliath to continue experimenting and brewing new beers, Lewey says.

The brewer knows there is a tendency among craft beer lovers to criticize business deals, such as Goliath-size Anheuser-Busch swallowing up craft brewer Goose Island. "There's some people who might dismiss this relationship without seeing it," Lewey says.

Having seen the Brew Hub team at work, he predicts "this is going to be one of the best craft brewing teams in the future."

There's some irony in the idea of a brewery called Toppling Goliath coming to the city known as the home of Anheuser-Busch and Budweiser. Schoen says not to worry.

"It's not us, it's the consumer that is toppling Goliath, and they are changing the industry," says Schoen, himself a former Anheuser-Busch exec. "Guys like Clark and myself ... all we're doing is trying to stay on top and reach the demand and get the consumer what they are calling for."

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