Yards Brewing Co. is selling enough beer -- nearly 42,000 barrels in 2015 -- that it is running out of space, with 22 200-barrel steel fermentors now crowding the tasting room-restaurant, office, warehouse and research lab at the 40,000 sq. ft. plant it opened on Delaware Ave. a few blocks north of the Ben Franklin Bridge in 2007.
Partners Tom Kehoe and Trevor Prichett tell me they are looking for an 80,000-100,000 sq. ft. new home, and want to remain in the city, close to its heaviest users. "We are scouting sites. We hope to start building in six to 12 months," and open by 2018, said Kehoe. He opened the original Yards in Manayunk, moved it to Kensington, then settled in the current larger site in 2007 after splitting with partner Bill Barton, who went on to cofound Philadelphia Brewing Co.
Unlike the factories and warehouses that continue to leave Philadelphia looking for cheaper space, labor and transport access, Yards is growing with its local customer base. "We would love to be as close to Center City as we can, and we would love to be in a neighborhood, and it's important to a lot of our employees to be able to bike to work," Kehoe told me.
Even on this frozen January morning several of the 70 plant employees have hung their commuter bikes on the pegged rack at the loading dock entrance.
City officials and industrial property brokers have been helping Yards review locations "that can help support their continued growth" without leaving town, John Grady, president of the Philadelphia Industrial Development Corp., the city/chamber of commerce partnership that controls key industrial sites, told me. The city has an inventory of big-enough buildings available at the Navy Yard, though that's not quite a neighborhood, nor bike-friendly. Private brokers have suitable plant sites, Grady said.
For industrial properties that size, "there's not a lot. The inventory is pretty thin" in Philadelphia, and there are limited sites for new buildings, said Sean Durkin, a broker at industrial real estate agency Roddy Inc. He said warehouse demand in the city has picked up in recent years, making it harder to find suitable properties.
Where do Yards drinkers live? "I just look for the hipsters," Kehoe said, laughing. "That's lots of places. Like for example Northern Liberties, and Fishtown, and Kensington, and Fairmount, where I live. We're on tap at the Ukie Club" and a long list of local bars.
Philadelphia is thirsty, but the market "is not an easy sell" for new brews, Kehoe added.
Remember Red Bell and Independence beers? As I wrote back in 1997, those were among the best-funded of the craft brewers then reviving a local beer tradition that had seemed to dead-end in the 1980s with the closings of Schmidt's and Ortleib's. Echoing successful new craft beers like Boston Beer (Sam Adams), they targeted yuppie bars in Center City and the South Philly sports venues, and charged premium prices.
But most of the 90s brewers didn't develop staying power with a lot of distributors or corner taverns in the city's vast beer-drinking rowhouse neighborhoods. Funded by local investors and loans guaranteed by the U.S. Small Business Administration, they were among hundreds of U.S. brands that cut back and closed in the early 2000s. Regional brewers like Victory in Downingtown and Dogfish Head in Delaware won cult followings with muliple brands. Still, there are a lot of neighborhood bars where only Big Beer-owned brands are on tap.
To enter and stay in the market, Prichett says, it's not enough to offer seasonal flavors and creative ads. "You have to be part of the community," which means, for example, giving away beer for Ronald McDonald House events, beer for breast-cancer fundraisers, beer for parish carnival "Baskets of Cheer." "Last year we donated three tractor-trailer loads of beer," affirmed Prichett.
"We try to be as Philly-based as we can," said Kehoe, a Haddonfield native who used what he learned about beer as a Lehigh student, contacts from suburban distributor Kunda Beverage, and backing from Royal Bank in Narberth, to help launch Yards in 1994.
"We sell over 70 percent of our production within a 100-mile radius," Prichett told me. Equipment includes one machine that did service at the former Ortlieb's brewery in North Philadelphia. "We want to control the growth and make sure we are prepared. When they overextend, breweries don't do well -- they struggle," as tastes change, said Prichett, a city resident with a Wharton MBA..
In the U.S., "beer as a category is flat, but people are drinking more craft beer," notes Kehoe. But who is a craft brewer anymore? The venerable Pottsville-based Yuengling brewery has added a Florida plant and enjoys top market share in several Eastern states. Boston Beer is similarly national. Other craft names have been purchased or develped by the big multinational browers like AB InBev, MolsonCoors, SABMiller.
Prichett credits Pennsylvania's arcane alcohol sales system, which relies on independent beer distributorships instead of the discount, grocery and chain sales more common in many states, with giving small and upstart brewers more access to shelf space so adventurous drinkers can try them. "New Jersey still has liquor stores, too. For a small producer that's good. Of course that's in the early days. At this point we are a known brand." Pennsylvania also allows the tasting room and restaurant (opens daily at noon) right in the brewery.
Local beer is one business that doesn't feel threatened by digital replacements. "Beer is heavy. The farther you ship it the less margin to share with the wholesaler and the retailer," Prichett said. "Craft beer will be the real deal for the rest of our lifetimes."
