Five years after opening its first East Coast brewery in Richmond to much fanfare, California-based Stone Brewing Co. is planning to add more production capacity at its Richmond plant and introduce several new beverage products to the market.
The planned addition of new brewing tanks at the company’s brewery in Richmond’s Fulton Hill neighborhood comes as the company — along with numerous other craft breweries — continues to pull its way out of numerous coronavirus-fueled problems that have disrupted the craft beverage industry last year and this year.
Maria Stipp, who was named Stone Brewing’s CEO last September, says the company has come through the pandemic so far in good shape.
“I call it a win when we can look at how we performed in 2020, because there were so many people that really struggled,” Stipp said during a recent interview at the Richmond plant on Williamsburg Road.
When the COVID-19 pandemic forced numerous restaurants, bars and other businesses to close last year, craft breweries lost a huge chunk of one major source of revenue: on-site sales of beer from brewery visitors. Supply-chain disruptions caused by the virus also have led to a shortage of aluminum cans for the industry, while sales at retail stores remain highly competitive as craft brewers introduce a constantly shifting bevy of products.
Craft breweries adjusted to closures from social distancing rules by shifting to curbside pickup and beer deliveries last year.
Breweries like Escondido, Calif.-based Stone Brewing also have focused on building distribution to retail stores, where competition for shelf space is intense, and on introducing new products such as milder-flavored beers and seltzers that are aimed to appeal to a wider customer base.
Most of Virginia’s 297 craft breweries have managed to survive the pandemic. Only a handful of breweries have gone out of business, while expansion plans have been canceled at several others, said Brett Vassey, president and CEO of the Virginia Craft Brewers Guild and the Virginia Manufacturers Association.
“Considering the shutdown and the limitations on tasting room sales, really all of last year and most of this year, we were expecting really dire consequences,” Vassey said. “We were projecting that if we kept tasting rooms closed, over 20% of the industry would have failed by the end of last year.”
The ability of breweries to do curbside or pickup sales really helped, he said.
“It is not a bad outcome, considering,” Vassey said. “We don’t want any closures, but it was far better than it could have been.”
So far in 2021, craft breweries nationwide appear to have regained about half of their volume lost in 2020, according to the Brewers Association, a national trade group for more than 5,400 craft breweries, retailers and suppliers.
The second quarter of 2021 was stronger than the first, and while it’s probably unlikely craft beer will fully get back to its 2019 volume levels this year, “it may get close” unless there are more economic and consumer confidence setbacks due to a surge in the new COVID-19 variant, said Bart Watson, chief economist for the Brewers Association.
Overall sales have recovered better than visits to craft breweries. “Early summer data suggests that sales have recovered to or even slightly surpassed where they were in 2019, though visits are still down a bit,” Watson said.
Stone’s operation in Richmond, which employs about 70 people, has seen steady growth since it opened because the brewery produces and supplies all of the company’s distribution points east of the Rocky Mountains in the United States.
In addition, the company has been expanding its export market, which now serves 51 countries. Most of that export supply is being shipped from the Richmond brewery, including all of its European sales.
“Every time we get new points of distribution, it helps this [Richmond] brewery in terms of meeting our capacity from here,” said Stipp, who traveled from California to visit the Richmond brewery the last week of July.
The Richmond plant has become more important for exports since Stone decided in 2019 to sell its first major venture into Europe — its Stone Brewing World Bistro & Gardens in Berlin — to a Scottish craft brewer.
Since the company exited the Berlin brewery, Richmond “is now the primary export brewery,” said Sean Monahan, the company’s chief operating officer.
The company has placed orders for four additional tanks — two fermenters and two brite tanks — that are expected to be shipped to the Richmond plant early in 2022.
“Once again, we will have tanks coming up the [James] River” to be installed at the plant, Monahan said.
The new tanks “will give us about a 25% to 30% increase in capacity,” he said, adding that right now the brewery is producing about 150,000 barrels a year. The new tanks will take capacity up to 200,000 barrels, or about 6.2 million gallons.
Since the pandemic shut down much of the on-site business in 2020, the number of visitors to the Stone taproom in Richmond is now recovering, Stipp and Monahan said.
Stipp said the on-site part of the business has recovered this year to about 87% of where it was in 2019, before the pandemic hit.
“So it has come back, not all the way, but we are close,” she said.
Further recovery may depend on whether there are any more mandatory business shutdowns or reduced capacity rules at public gathering spots because of a new spike in COVID-19 cases.
“I really hope not,” Stipp said. “I hope we are through that.”
To help draw more customers to the brewery’s taproom, Stone is planning to introduce its own food truck at the brewery soon. The Stone Food Truck will serve food to brewery visitors full time during taproom hours, while the company may bring in independent food trucks for special events.
“We have had a lot of success on the weekends with bringing in different food trucks, but now there will be one here full time,” Monahan said.
The Stone Brewing World Bistro & Gardens project in Richmond is still hazy, though.
The company first announced plans in 2017 to open a 700-seat restaurant and taproom at the Intermediate Terminal Building on East Main Street along the James River in Richmond’s East End.
A year later, Stone sought permission from the city to demolish the 30,000-square-foot building, departing from the company’s original plans to renovate the former warehouse space. The company cited an engineering report that found “structural deficiencies” that made the building unsuitable for renovation.
The outlook was muddied in March 2020 when a report by another engineering firm said the Intermediate Terminal Building could be renovated.
Richmond’s Economic Development Authority and Stone Brewing said at the time that they were weighing options for the property at 3101 E. Main St. Leonard Sledge, the city’s economic development director, and EDA Chairman John Molster could not be reached for comment for an update.
The pandemic brought further uncertainties to the project, but Monahan said recently that Stone is still hoping to open a restaurant in Richmond.
“The opinions of what can and should be done with that building vary widely,” Monahan said.
“We are working with the city ... as well as some developers, to ask, ‘How do we solve some of the problems that have been discovered with that building?” he said.
Monahan suggested that Stone may now consider a more scaled-down version from its original “grand view” for a bistro in Richmond. He said the original restaurant plan would have been the most expensive-to-build restaurant outside of Las Vegas, based on the structural issues that would have to be resolved to renovate the building.
“Richmond is a great city, but it is not quite Las Vegas,” he said. “We are trying to find something that brings more people to the waterfront and this part of of town, makes it a destination, and creates jobs and investments.”
Stipp, a brewing industry veteran, joined Stone Brewing last September, one month after former CEO Dominic Engels abruptly left after four years with the company.
Stipp previously worked for five years as CEO at California-based Lagunitas Brewing Co., the third-largest craft brewer in the U.S. During her time at Lagunitas, Stipp oversaw the brewery’s expansion into multiple international markets as well as its sale to Dutch brewing giant Heineken in 2017. Stipp left Lagunitas in March 2020 and joined Stone later that year.
Stone is the ninth-largest craft brewer in the United States. It has close to 900 employees companywide.
“Learning about the craft beer business before coming here [to Stone] has been helpful,” she said. “It is certainly more complex than it might look like from the outside.”
“It is a very competitive space,” she said, adding that there are now more than double the number of craft breweries in the U.S. since she joined Lagunitas in 2015.
There were 8,713 active craft breweries in the U.S. at the end of July, up from only about 1,795 breweries in 2011, the Brewers Association said.
The explosion in the number of breweries means that competition for shelf space at retail stores “is as hard as I have ever seen it,” Stipp said. The marketplace for alcoholic, craft beverages also is constantly being disrupted by new entrants and new products.
Stipp is leading Stone Brewing, which has built a reputation for offering strong-flavored, powerful, hoppy beers such as IPAs, as it introduces some new products aimed at appealing to a customer base with wider tastes.
Within the IPA category, the company this month is introducing is Stone Hazy IPA, an effort to capitalize on what Stipp called a “haze craze” for IPA beers that have a less bitter taste, a more “juicy” flavor, and a hazy appearance when poured.
“We obviously are known for IPAs, and this fits right in our sweet spot,” Stipp said.
Stone also has entered the market for the more traditional lager-style beers with its Buenaveza Salt & Lime Lager, a Mexican-style lager that came out last year as a pilot product and was released nationally in January.
“You wouldn’t think that Stone would be a lager-driven brewery, but it turns out that we project it now to be our largest draft beer across the portfolio,” Stipp said. “It has a faster rate of sale nationally than our Stone IPA, so it is really moving. Now, it is all about growing the distribution of it and getting chains to pick it up.”
A growing market is hard seltzer beverages, and Stone has decided to enter it with the introduction of its Buenavida Hard Seltzer, expected to be available nationally by early next year, though it is now available at Stone Brewing locations, including the Richmond taproom.
Watson, the economist with the Brewers Association, said research shows more small brewers pursuing alcoholic beverage opportunities outside of their core beer sales. Those include seltzer and a wide range of products such as wine, spirits, cider, hard kombucha and mead.
“A lot of people are making seltzers now, and you can’t ignore the category,” Stipp said. “It is going to be larger than the craft beer category this year. Our first question was whether we should make a seltzer, because we are really known for IPAs and big beers. It was a stretch to imagine this, but our brewers are so good, they came up with this in about four months.”
“You can’t just be successful as a national or global craft player without really flexing,” Stipp said. “You can’t just stick to what you used to do, but you need to really open your mind to what you can make and what your brewers can do. These breweries can make anything, but it is matter of really thinking about it.”