THE GIST
DEYA Brewing Company has broken ground on a 35,000-square-foot brewery expansion that would allow the Cheltenham, U.K. brewery to increase production almost 10 times over within the next decade.
DEYA will max out at nearly 3,000 barrels (3,500 hectoliters) in 2019, and the expansion into two units next door will allow for as much as 25,550 BBLs (30,000hl) of annual production at full capacity. It’s a big jump for a business that’s only four-years old. However, widespread acclaim for DEYA’s Steady Rolling Man New England-style Pale Ale and seasonals like High Planes Drifter (a top-50 U.K. beer on Untappd) has founder Theo Freyne intent on keeping up with demand.
Taproom sales have been key in getting DEYA to this point—something Freyne learned while traveling and working in the U.S. There, he saw first-hand the value of an own-premise model, an invaluable business tool for American breweries. Today, about 50% of the brewery’s revenue is from on-site sales, with just a handful of accounts getting deliveries of 16oz cans of Steady Rolling Man, core IPA Into the Haze, and seasonals like Invoice Me For the Microphone and Saturated in Simcoe. A 10-year lease on the facility right next to the brewery’s original site will include seating for 250 throughout a 4,000-square foot taproom, with additional outside space.
“I don’t think we’re going to come out the gate and just ramp straight into massive production,” Freyne says, “but doubling in size in [2020] is easily achievable and [we can] gently grow from there. There is so much demand but we don’t want to flood the market or in any way make that growth detrimental to the [quality of the] beer.”
Freyne believes his American-inspired taproom model will remain key to his growth. He considered raising money through crowdfunding, but was able to get what he needed from family and friends, noting his sales to-date have stoked confidence in a business format inspired by breweries the likes of Hill Farmstead or The Alchemist. Freyne wouldn’t share the cost of the project, only noting that he sold less than 10% of his company to fund it, leaving himself and his parents as the owners of over 90%.
With a new, 34-BBL system, Freyne will be able to crank out far more Steady Rolling Man, which comprises 40% of DEYA’s total production. Freyne hopes to have the new brewery up and running in time for Christmas.
WHY IT MATTERS
DEYA has quickly become one of the most talked-about breweries in the U.K., and this expansion is proof that Freyne’s business model is working. As one of the first to embrace the New England IPA trend in Britain, DEYA has led the way in experimenting with different approaches to running a small brewery since 2015.
At a time when most new U.K. breweries focused on one-off canned beers to generate buzz and encourage repeat custom, DEYA dedicated a large portion of its brew schedule to its core beers, and focused exclusively on draft. Once Freyne installed his own canning line in early 2018, he doubled down on on-site sales, which now represent 50% of the brewery’s revenue—an American model not yet adopted widely in the U.K.
Even now, with over 10 times the fermentation capacity in the works, Freyne is keen to stress that a large part of the move is to increase the flexibility of the brewery rather than its volume. Instead of focusing purely on growth, Freyne will expand the range of beers he puts out by moving his old single-infusion kit and smaller fermentation vessels over to the new site. There, the equipment will be used to produce small-batch seasonals, as well as ramp up the brewery’s new mixed-fermentation and barrel programs.
While the new brewery will have a larger on-site taproom, the expansion will mark a shift towards wholesale. Draft and notably cans will be more widely available, but only to independent retailers.
“We don’t ever want to be in supermarkets,” he says. “While that’s a ceiling we’re going to hit at some point, for our style of beer it makes zero sense to sell to them. From a philosophical point of view as well, we’re definitely going to service independent bottle shops more as we grow. We haven’t been able to do that as much as we’d like because we’ve focused on our own on-site business just to survive and remain competitive.”
While a reluctance to sell to supermarkets isn’t unusual for a U.K. brewery, it will be exceptionally tough to grow to 25,550 BBLs (30,000hl) without the huge off-trade sales volume they offer. With more than 14 pubs closing every week, and many of the surviving ones tied to their brewery or landlords, there is only so much growth available in the on-trade to the U.K.’s 2,000 breweries. Instead, Freyne clearly sees direct sales from his new taproom and webshop as pivotal to his brewery’s financial health. Sales of his canned beer account for 70% of his on-site volume and he sells out every week, implying strong demand in the fast-growing drink-at-home sector, which has seen several plays from AB InBev this year.
“We’re not trying to change what we’re doing, we’re just making it bigger,” Freyne says. “If we can scale the model we have to 20,000 or 30,000hl over the next 10 years, that would be cool. If not, we still remain flexible—our 40hl brew length isn’t crazy and we are building a massive taproom.”
Export will also be a lucrative avenue if U.K. growth isn’t there, and Freyne intends to target larger European craft beer markets like Scandinavia, Italy, Germany and Spain either way. With the likelihood of a no-deal Brexit increasing, the fall in the Pound makes export ever more attractive to breweries still hoping to outpace the British market.
It’s worth noting that beer sales across the U.K. are on the rise, and DEYA is far from alone in its ambitious plans. Verdant Brewing Co. also recently broke ground on its new 14,400-BBL (17,000hl) site, Lion’s investment in Fourpure has culminated in an expansion and huge South London taproom and, on a more traditional note, Wandsworth’s Sambrook’s Brewery has announced it is moving to the historic former Young’s site in Wandsworth.
[Disclosure: the author formerly worked with Verdant Brewing Co. on a freelance basis.]
Despite strong internal and external pressures on the industry, the U.K. craft beer market keeps on rolling on—but all eyes will be on DEYA to see just how far it can go.
Words by Jonny Garrett