Yesterday, we dropped news that Green Flash Brewing Co. was closing up and selling its newly minted East Coast operation in Virginia Beach, Va. (that destination brewery that cost around $20 million and just opened in November 2016). We reached out for a comment from Green Flash and folks, and they sent over this press release explaining the big changes. The three main factoids that caught our attention are: Green Flash will cease all East Coast distribution; it’s taking on new financial partners (it’s not clear who); and it’s laying off 36 operational employees and seven sales employees.
It’s a sign of the challenges medium- and large-sized craft brewing brands are facing in today’s ultra-competitive beer market. Here’s some insights into the financial situation from a Brewbound article.
A teaser document sent to potential investors earlier this year revealed that Green Flash had revenue of approximately $27 million in 2017, down from more than $29 million the prior year. The company also reported an adjusted EBITDA loss of $112,000 last year, despite earning more than $3.1 million in 2016 and more than $5.2 million in 2015.
Despite all of this, Green Flash still plans to open a brewhouse and eatery in Nebraska next month. In the press release, Green Flash puts a positive spin on the situation.
Green Flash Brewing Co. is excited to announce a transaction involving a new investor group committed to maintaining Green Flash’s status as an iconic independent craft-brewing interest. With this new financial backing and focus, Green Flash will return to its Southern California roots, while consolidating distribution of its beers and those of sister-brand Alpine Beer Co. to San Diego County and the greater Southwest.
As a part of this strategy, Green Flash Brewing Co. will cease operations at its production brewery in Virginia Beach, Va. Over the past two years, the company has been under significant pressure due to the cost and complexity of bi-coastal operations. With a stabilized financial position and streamlined operation, the focus will be on brewing exceptional beer, connecting with customers and building the brands in the core markets of Arizona, California, Colorado, Hawaii, Nevada, Texas, Utah and Nebraska.
“We have faced a host of significant challenges since expanding our operations to the East Coast and, though a rewarding endeavor in many ways, we feel this course-correction is prudent at this time and will ensure the independence, fiscal viability, identity and quality of the Green Flash and Alpine brands,” says Green Flash Cofounder and CEO Mike Hinkley. “That said, I am deeply saddened to close our Virginia Beach facility and say good-bye to 36 employees who worked hard to make our amazing brewery, tasting room and beer garden a special place. I hope another brewery will move in and operate this wonderful facility with and for the people of Virginia Beach.”
Distribution into all East Coast markets will also be discontinued, resulting in the elimination of seven sales positions. “I am very disappointed to stop sending Green Flash and Alpine beer to our East Coast distribution partners, retailers and fans. I have enjoyed so many great relationships that I am sad to see come to an end,” says Hinkley. “Our salespeople are best-in-class, and I encourage local breweries in their regions to hire them right away.”
The Green Flash and Alpine breweries will continue to operate in San Diego and Alpine, respectively. Meanwhile, the Green Flash Brewhouse & Eatery in Lincoln, Neb. will open as scheduled in April, and will brew specialty beers serving the state of Nebraska. This brewery will serve as the model for future customer connection points in the Southwestern United States.