Devils Backbone Pumps Millions into Multi-Pronged Expansion

Austin Ray

THE GIST
Flush with cash from Anheuser-Busch InBev, Devils Backbone is investing millions of dollars in various projects aimed at both boosting production and streamlining infrastructure. The company is most notably building out a $3 million distillery in an effort to establish a foothold in the spirits industry. Additionally, Devils Backbone plans to triple the size of its taproom, which currently accommodates about 50 people, while building out its sour program by bringing new fermenters to its existing brewpub.

The expansion effort isn’t exclusive to its home base in Virginia, either. In 2017, the company, marching toward national presence, plans to enter a number of new markets, including South Carolina, Georgia, Florida, Kentucky, Ohio, Pennsylvania, New Jersey, and New York, according to The News & Advance.

WHY IT MATTERS
For all the handwringing, moralizing, and pontificating that grows louder with every sale, one need look no further than this quote from Devils Backbone co-owner Steve Crandall for a succinct justification of corporate alignment:

“We have a partner now in this business that’s funding our dream… We would have had to grow into this expansion that we’re doing, and it would have probably taken us 20 years to do so.”

But the story doesn’t end at Devils Backbone. This is the second news item in as many weeks revolving around an AB InBev-owned craft brand detailing plans to undertake major expansion projects.

Last week, the Chicago Tribune reported that Goose Island was planning new pubs and brewhouses in five different countries, including Brazil, Mexico, Canada, England, and South Korea (not to mention the previously announced Philly location). Goose leadership, too, spoke in explicit terms to the Tribune about the leg up provided by AB InBev:

“The biggest advantage for us, of course, is we are now part of the largest brewing concern on planet Earth,” Goose Island president Ken Stout told the Tribune. “And we have access to these markets.”

How they enter those markets matters, too. And it's not tentatively. AB and other massive players have entered international markets with brands like Stella, a burst of awareness marketing, price cuts, and a play for ubiquity play in contrast to smaller efforts in an attempt to earn status, relevance, and credibility.

And this wave of AB's efforts have one thing they lacked in previous generations of brand building: the founders and breweries of the acquisitions themselves. Time will tell if this is a marketing consideration for the short-term success of the brands in a competitive craft context, or a long-term shift in how AB and their acquired partners see the evolution of beer for the next few decades, what they call their "dream.” But if all that investment in physical infrastructure and hospitality is any indicator, the future for AB's High End brands has a very different model than we've seen in the past with the likes of Shock Top—not to mention profoundly different voices at the collective table.

All of which is to say: if it’s good to be the king, so too is it nice to have a seat at the king’s table. It sure as hell shortens the distance between “dream” and “reality” anyway, whether you're the oldest ally (Goose Island) or one of its newer compatriots (Devils Backbone).

As for the latter, ancillary components to the expansion include the construction of a 50,000 sq. ft. packaging facility, equipment upgrades, and the implementation of a barrel aging system, the News & Advance notes. Furthermore, revenue is up 18%-20% over this time last year, while production is expected to reach 95,000 barrels in 2016 (up from 75,000 in 2015).

—Dave Eisenberg

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Rest of the Story: Anheuser-Busch purchase of Devils Backbone brings expansion to Nelson Brewery [News & Advance]