Growth brewing for beer business

Jim Jeffryes, head brewer and co-owner of Kannah Creek Brewing Co. explains the operation of the bottling line at the new Edgewater Brewery in Grand Junction. Kannah Creek Brewing recently contracted to distribute two of its best-selling beers to a growing, but competitive, market for craft beers in Colorado. (Business Times photo by Phil Castle)

Phil Castle The Business Times

Jim Jeffryes expected at first to make beer mostly for the customers of the brewpub and restaurant he helped open in Grand Junction nearly eight years ago.

But as demand grew, plans changed and the operation at Kannah Creek Brewing Co. evolved from brew pub to brewery. After opening a production facility in May and contracting with a national distributing company in August, Jeffryes now makes beer for a market that soon will extend statewide and perhaps ultimately even farther.

While there’s a lot of work ahead in competing in what’s arguably the red hot center of a rapidly expanding craft beer universe, the head brewer and co-owner of Kannah Creek remains optimistic. “I’m crossing my fingers over my blisters,” Jeffryes joked.

Kannah Creek Brewing Co. contracted with Republic National Distributing Company (RNDC) to distribute two of its best-selling beers in Colorado: Lands End Amber and Standing Wave Pale Ale.

So far, each shipment to the distributor of six- and 12-packs of bottles as well as kegs has been larger than the one before, Jeffryes said. “Each order is getting bigger, so good things are on the horizon.”

Kannah Creek beers are available at more than 30 local liquor stores as well as outlets in Delta, Montrose, Ouray, Ridgway and Rifle, he said.

RNDC plans to quickly expand sales into other Colorado markets, starting with mountain communities and Denver, then moving into Colorado Springs and Fort Collins.

Jeffryes said Kannah Creek has worked with RNDC for nearly eight years in purchasing products, so it made sense to continue working with the company in selling products. Moreover, RNDC offers more frequent deliveries than other distributors, he said. The company bills itself as the second largest alcoholic beverage distributor in the United States with operations in 19 states.

Jeffreys said he considers Kannah Creek lucky to develop a partnership with RNDC.

Scott Klug, manager of the beer division at RNDC, returned the compliment. “Kannah Creek has developed a great reputation on the Western Slope, and RNDC is very excited to join in partnership with them to get their great beers into the hands of consumers across the state,” Klug said.

With a distributor in place, Jeffryes expects production at the newly opened Edgewater Brewery to increase. The facility should produce between 2,500 barrels and 3,000 barrels of beer this year and 5,000 barrels to 6,000 barrels next year, he said. A barrel is equivalent to 31 gallons.

With about 10,000 square feet of space for brewery and bottling operations, the facility is large enough to accommodate additional equipment that could increase annual production to 9,000 barrels, he said.

In addition to Lands End Amber Ale and Standing Wave Pale Ale, Jeffryes plans to distribute seasonal beers, starting with a winter ale in October.

Jeffryes said he didn’t initially plan to go into the brewery business, but the operation evolved out of the brewpub business.

Jeffryes and his wife, Bernadette, joined with their daughter and son-in-law, Ahna and Ross Adair, as well as Eric and Tina Ross in opening a brewpub and restaurant on 12th Street in October 2005.

The operation soon earned a popular following, along with awards, for its beers. Lands End Amber and Standing Wave Pale Ale have both received medals at the Great American Beer Festival and World Beer Cup, a feat that’s been compared to winning an Olympic medal.

In addition to brewing beer for customers, Jeffryes also filled kegs to sell to local restaurants and hotels. Demand continued to increase, he said. “People kept asking for more and more and more, and we couldn’t keep up.”

That’s when plans to build a production facility and bottle beer for a bigger marketplace were developed, he said.

Using land near the Colorado River Jeffryes had purchased 15 years ago for what he initially envisioned as a brewpub, construction began in 2012 on a combination brewery and restaurant. The Edgewater Brewery opened in May 2013.

With operations under way on 12th Street and Struthers Avenue, Kannah Creek Brewing Co. now employs 70 people, Jeffryes said.

Kannah Creek has expanded in the midst of rapid growth in the craft beer industry, particularly in Colorado.

According to the Colorado Brewers Guild, a trade association promoting the industry, as of March there were 188 licensed breweries in the state with 50 more in the planning stages. Colorado ranks second among the 50 states for most breweries overall and most breweries per capita.

Jeffryes described competition as nothing short of fierce. But in carefully managing continued growth, especially cash flow, he’s believes Kannah Creek will fare well. “We’re excited.”