Is Your Local Craft Beer From Out of State?

Two years ago, Cigar City Brewing founder Joey Redner found himself running out of beer. To meet demand in Florida, where 95 percent of his Tampa-based company’s craft brew is sold, he had to transfer supplies of his flagship Jai Alai India Pale Ale from the five other states where he distributes. To avoid another shortfall and get real growth, he’d have to add capacity to his five-year-old Tampa brewery at a cost of $700,000. “To meet demand, you just have to go into hock for so long,” Redner says. “Banks will give me money, but … I don’t want that level of risk.”

So Redner turned to Brew Hub, the craft-beer venture that’s majority owned by billionaire investor Ron Burkle’s private equity firm, Yucaipa Companies. Brew Hub lets small fry such as Redner lease temporary space at its big brewery near Lakeland, Fla., but retain control of their manufacturing. Cigar City brewed almost 35,000 barrels of beer last year, and Brew Hub could add 20,000 barrels to Cigar City’s supply in the next year—three years faster than Redner could have on his own. On Sept. 8, two-year-old Brew Hub announced that a St. Louis facility will be the second of its five planned regional breweries. The first opened in August in Florida with four brewers. The total cost of the five plants: $100 million.