The plan

Contract Brewing is an arrangement in which a company produces beer on equipment that it does not own. This concept gained prominence in the United States through the success of the Boston Beer Company, known for their Samuel Adams Boston Lager. By utilizing the production facilities of other breweries, the Boston Beer Company was able to invest heavily in their brand and implement a successful sales and marketing strategy.

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From 2010 to 2021, the number of craft breweries in the US increased from approximately 1,800 to over 9,200. During this period, contract brewing was not highly regarded for a variety of reasons. Craft breweries were expanding rapidly, leaving little excess capacity for contract brewing. Additionally, the few contract breweries that did operate were not known for producing high-quality beer. There was a prevailing belief that a "real" craft brewery needed to have its own facility and maintain control over all aspects of brewing, packaging, sales, and distribution.

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However, the perception of contract brewing has shifted over time. With the current surplus of brewing capacity in today's market, and the establishment of several contract-only craft brewing facilities across the country, the stigma associated with not owning a facility or equipment has diminished. Both brewers and beer drinkers have begun to focus more on the quality and consistency of the beer itself, rather than the physical location or ownership of the brewery. In fact, one could argue that contract brewing facilities established by experienced brewers with significant capital may produce higher-quality beer than many startup breweries.

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Contract brewing arrangements can vary significantly. Some involve minimal interaction between the contracting brewery and the host brewery, with the host brewery providing a generic recipe using generic ingredients. In such cases, the contracting brewery functions primarily as a marketing company, focusing on branding and executing a sales and marketing strategy. On the other end of the spectrum, there are hands-on partnerships where the contracting brewery is heavily involved in every aspect of production, from specifying and sourcing ingredients to implementing detailed standard operating procedures.

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Dynamite Beer Company has chosen to pursue a close partnership with Sleeping Giant Brewing Company in Denver, CO. This collaboration will involve Dynamite Beer Company designing all the recipes and specifying every detail of production, from water chemistry to packaging. A Dynamite employee will regularly be present at Sleeping Giant, overseeing all processes and ensuring compliance with standard operating procedures (SOPs), including quality control testing in the on-site laboratory.

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Contract brewing offers significant advantages for Dynamite Beer Company. By contract brewing, the company can immediately establish a brand and begin selling its own high-quality products from the inception of operations. If Dynamite Beer Company were to build its own brewery, it would require a substantial investment of at least $2,000,000 in equipment and building improvements, and it would likely be several years before we could enter the market. Contract brewing provides the opportunity to create a successful brand, build a high performing team, and profitably sell beer before committing to the time and energy required to construct our own production facility.

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Sleeping Giant Brewing Company, with its current capacity of 75,000 barrels and future capacity of 175,000 barrels, is well-equipped to support the growth of Dynamite Beer Company. Their Denver facility is designed to accommodate future expansion, ensuring that Sleeping Giant can keep pace with Dynamite Beer Company's production needs, regardless of how rapidly we grow.

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Furthermore, Sleeping Giant offers a wide range of packaging options, including in-house canning, bottling, and kegging lines. This enables them to efficiently package our products into 12oz and 16oz cans, as well as 1/6bbl and 1/2bbl kegs.

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One notable aspect of the brewing process at Sleeping Giant is the use of the first MEURA Craft Jr. mash filter press brewhouse in the world. With over 170 years of production history, MEURA is a trusted name in the industry, and their equipment is used to produce more than 25% of the world's beer. Additionally, Sleeping Giant's facility boasts state-of-the-art packaging equipment, including a KHS keg line and a pharmaceutical-grade clean room that houses a Leibinger rotary counter-pressure can filler.

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Working with Sleeping Giant significantly reduces supply chain risks for Dynamite Beer Company, providing valuable support in today's environment. By leveraging economies of scale, Sleeping Giant can eliminate the labor required for Dynamite Beer Company to source raw materials and packaging supplies, saving money in the process. They offer a turnkey solution, able to assist with every aspect of our supply chain needs.

Quality control is of utmost importance at Sleeping Giant. From wort production to packaged goods, every batch undergoes rigorous quality control and analysis. The in-house laboratory is equipped with advanced technology, including GC/MS for analytical testing, PCR for biological sensitivity, and a full suite of Anton-Paar equipment for physical uniformity. This provides assurance that our products are within specification and free from microbial contamination, backed by QA/QC reports from every step of the brewing and packaging process.

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Finally, the flexibility provided by the MEURA mash filter press and the dedicated contract facility at Sleeping Giant is essential for our business. The speed of the MEURA system allows Sleeping Giant to accommodate both small seasonal runs and the production volume needed to keep up with demand for our widely distributed core beers.