Weyerbacher Brewing’s Long Road To Bankruptcy

Weyerbacher, Weyerbacher Brewing’s Long Road To Bankruptcy

The week began with sobering news…that Weyerbacher Brewing had filed for Chapter 11 bankruptcy. It was a cruel wake up-call for many in the industry and one that may have come too late for the Easton PA-based brewer.

According to The Morning Call Weyerbacher Brewing announced on Monday that “it has finalized a partnership with 1518 Holdings LLC, a Philadelphia private investment group that will take a 55% ownership stake in Weyerbacher.

And in an effort to clean up its debt and jump-start profitability Weyerbacher has filed for Chapter 11 bankruptcy as part of that restructuring.

The news, which was first reported by Breweries in Pennsylvania and smartly detailed in Brewbound, was yet another blow to craft beer’s collective psyche, one that was already reeling from Stone’s failure in Berlin and a cooling of craft beer’s momentum in general.Weyerbacher, Weyerbacher Brewing’s Long Road To Bankruptcy

According to the bankruptcy filing, Weyerbacher has between 100 and 199 creditors, with estimated liabilities between $1 million and $10 million.  And Weyerbacher’s  Chief Operating Officer Josh Lampe, who will become president as part of the turnaround, told Allentown’s Morning Call “that restructuring will allow Weyerbacher to accelerate certain projects, including opening additional taprooms and growing its lineup of spirits.”

So how did this 24-year-old heritage brewer end up in such dire straits?

They built a new $2 million brewery five years ago… and bet on a craft beer future that never arrived.

As Jon Harris reported when Weyerbacher upgraded its brewing operation in 2014, the craft beer biz was booming and its potential was seemingly unlimited…

“US craft brewers experienced an 18% increase in volume, a 22% increase in retail dollars and, for the first time, reached a double-digit (11%) volume share of the beer market. There were 3,464 breweries operating across the country.”

“Seeing those figures — craft volume also increased 18% in 2013 — many breweries decided to bet big on the future and add production capacity.”

Fast forward to 2019 and craft beer’s landscape had shifted profoundly…

The number of breweries operating in the US is now north of 7300 and craft beer fans are abandoning heritage regional brewers such as Weyerbacher in favor of small and nimble uber-local breweries, many of them who sell directly to the consumer via their taprooms.

And even though craft beer’s volume is still growing (4% in 2018) retail patterns are changing and the multi-state distribution models that led breweries such as New Belgium, Stone and Sierra Nevada to open new breweries in the east seem less the like sure bets they once were, and more like unsustainable burdens.

In the end Weyerbacher’s road to bankruptcy was one, that like so many, was paved with reasonable projections and good intentions.

But they bet on a craft beer future that never arrived.

And although the company has vowed to turn things around through restructuring its debt, contract brewing and building out additional direct-to-consumer taprooms, Weyerbacher’s future remains in the hands of the gods…

All image credits: Weyerbacher

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