Flying Dog Migrates East

The People’s Republic of Flying Dog is now in session. It’s happy hour at Flying Dog Brewery, so here is your latest dose of irreverence.
Message From Flying Dog President Eric WarnerTo the People’s Republic of Flying DogAs some of you may have heard, Flying Dog Brewery announced on Tuesday that we are embarking on the next step in our illustrious, 17 year history of crafting remarkable beer by concentrating all of our brewing and production to the brewery in Frederick, MD, where 70% of Flying Dog Beer is already being brewed. This move will take place in January and we are working to ensure that our entire production team will be able to make this move over to Maryland. Accounting, sales, marketing and other administrative functions will remain largely unaffected by this change and our HQ will remain in Denver.

We decided to make this proactive move as it has become increasingly important to be extremely nimble in today’s business environment. Only those who can quickly adapt in the hyper-Darwinian economy will survive and in today’s craft brewing landscape. We are facing unprecedented cost pressures due in large part to the tremendous hop and malt cost increases. We have also lost some of the contract brewing business we had, thereby decreasing capacity utilization at both breweries (I actually found out AFTER the announcement that one of our largest contracts was going to switch their production to a lower cost producer, thereby diminishing our capacity utilization at the Denver Brewery even further). Concentrating our brewing operations to one facility will help us become more efficient while maintaining our exceptionally high brewing standards. This is a smart, proactive move for our growing company and will allow us to most efficiently use our resources. This idea was conceived in late summer, and once we understood the magnitude of the price increases we are facing it became apparent that this was a necessary step to remain strong. Like most other craft breweries our costs are going up at least 25%, and we are only going to be passing on a 15-20% price increase. We expect some relief on raw materials costs in 2009. Obviously, a huge focus for the production teams in 2008 will be to discover and implement new ways to be more efficient, without sacrificing the quality of our award winning line up.

The Frederick facility is a state-of-the-art brewery that has already been producing great beer for Flying Dog and we look forward to ramping up production and growing our business even more than the +20% trends we are experiencing in 2007. The bottling line in Frederick has lower oxygen uptake at filling than the one in Denver, which translates to better flavor stability and longer shelf life. It also kicks out bottles at twice the pace of the line in Denver. The brewhouse in Maryland is also capable of brewing a wider range of recipes than the one in Denver. Finally, the brewery in MD plans on substantial capital expenditures and plant upgrades (close to a million bucks in 2008 alone) to continue to brew better beer in an efficient and environmentally friendly way. It was very important to me, the management team and the owners of the brewery to take care of the employees who might be impacted by this change. Everyone in production was offered an opportunity to make the move to the brewery in Maryland. I’m proud to say that almost half of the brewing and bottling line staff is interested and we will be taking a group trip out to MD in early January so they can see if Frederick is a place they would like to relocate to. For those that don’t make the move, we will be offering a severance package and outplacement assistance. 14 employees in production are impacted by this change. When we broke the news Tuesday everyone handled it pretty well, and as a brewery we decided to go out in style and still have our holiday party this Friday. Although some could argue the timing was a little close to the holidays, we also considered that some employees might be more upset that if they were told after the holidays, having spent more money than otherwise having not known they were going to potentially be laid off. There is truly never a good time for such news.

We are a family here at Flying Dog and as such it’s been a rollercoaster of emotions the last couple of days. Although no one, myself included, would have chosen to write the script quite this way, everyone understands this chapter, why it makes sense and why it’s good for the future of the brewery. The good news for the People’s Republic is that the Flying Dog beers will still be available wherever you are used to purchasing them.

Cheers,
Eric Warner
Interview With EricThis turn of events doesn’t deter me from fulling my promise of giving away free shit. Here are the answers to our three winning questions from Tom Wethern of Allston, MA, Mary Capps of Austin, TX and Tony Rockwell of Boise, ID. Your Ralph Steadman signed bottles of Gonzo Imperial Porter are on the way. Here are the answers to our three winning questions.

“Although the Maryland brewery wasn’t “Green Built” part of the reasons for the move is it is a newer, more efficient facility. As alternative energy sources become more accessible and cost effective we will look to tap into those as well. Like most other craft breweries, right now we are most focused on the staggering disruption in the malt and hop markets so our biggest challenge is getting the highest yields out of those products without compromising product quality. As breweries achieve this it is in itself more eco-friendly saving on energy use in transportation and production.”Last Chance For Holiday ShoppingJust in time for your Holiday shopping we have created new gift packs. Give your friends and family something they actually want this year. Check out the Flying Dog Apparel website for all our merchandise. We also have new Gonzo Posters so get your hands on them before they are all gone.

Till next time, cheers

Chris