Cigar City’s Growth Curve

​Growth is still out there for Cigar City Brewing.
Founder and CEO Joey Redner​ along with longtime employee and now COO Justin Clark both have seen the Tampa, Florida brewery grow and thrive since opening in 2009 to an extent that was unexpected for what was the original plan as a niche producer of beer for the Tampa Bay region.
Now, the brewery is set to open a new brewpub on the grounds of its production facility in early 2020 with a look toward connecting with its base consumers.
“As breweries kept coming to the area, they started investing more in their taproom than even in their breweries,” Clark explained. “But the beer always and will continue to come first. We kind of had a taproom that worked. You could come in and it was serviceable, but with all of the competition out there, it was time that we invest in upgrading that customer experience piece.
“Also, people are really looking for alternative venues for weddings, birthdays, meetings, business to business, entertainment. And we didn’t have this space. We were turning down lots of revenue for one. But more important than the revenue was that chance to connect with people as an alternative venue. So I’m really excited for that to open.”
The brewery has also partnered with the NHL’s Tampa Bay Lightning to have a taproom outside on the hockey rink’s plaza as well as inside the arena.
“We will have a presence downtown because downtown Tampa is finally growing and getting people in there, not just from 9-5,” Clark said.
Even though the company has surged forward by being a part of CANarchy — a brewery collective founded in 2015 — being unique and original to the Tampa area is a major key still for Redner. He still stresses the importance of being a local brewery for the Tampa area first. The explosion beyond that is just gravy, but it meant lots of change.
​“​I pivoted a lot mentally​,” Redner said of the changes that Cigar City has made since his initial idea when he incorporated the brewery in 2007​.
​“I was gonna do really specialty, cool-looking ​Imperial Stouts​ …​ things I was really into​,” he said​. ​“I had to pivot a lot and become ​a six-pack brewery, which is a very different setup.
“​Mentally, you have to make the decision if you’re going to go there, and then you have to commit to it because both mentally and emotionally, you’re making the decision to go away from what you ​were setting out to do.​“
Teaming with Wayne Wambles, who is the creator of the brewery’s IPA Jai Alai, Redner saw an instant impact in the sales of that beer as soon as bottling began. Depletions were massive and that’s when the switch needed to flip.
​“You get a beer that is selling well in six-packs and you kind of have to go​: ‘Alright. Well, reconfigure everything​,’ “ he said.​​ “​And​ all of a sudden ​more robust packaging and consistency and quality control has to become way more of your focus.​
“Whereas if you’re doing one-offs, what’s the standard? If that ​Imperial ​Stout is a little different than the last time because now it’s got blueberries and before it didn’t, you don’t have the same standards of consistency. ​Because you’re literally doing a new song​. But if you’re just playing hits, every time you go from city to city, they’re expecting ​it ​to sound like ​they ​heard it on the radio already. You can’t do a rendition and change the timing and everything. So that it takes a lot of change.​“​
And working through rough patches in that growth curve has made Redner cognizant of what is needed for other breweries to focus on early in development as well.
“There’s still a lot of consistency issues going on at the smaller level. And we went through them we weren’t frickin’ immune to that,” Redner said. “You know what? We didn’t execute as well as I would have liked to. People still talk about innovation. That’s still an area you can innovate in. You have a great beer and people love it. Innovate on keeping it exactly the way it is, keeping it locked in and dialed in and innovate on making sure that on your procurement side that you’ve got the ingredients it takes to continue to make that properly.
“There’s still a lot of innovation that can be done, because that’s part of quality control, making sure you have the ingredients.”
Redner added he wished he would have invested in a lab earlier.
“But once we did, I realize there’s nothing worse than having your product out in the wild, as they call it, and it not being right,” he said. “It’s just such a sinking feeling of ‘I have failed to do what I should have done. I haven’t lived up to the promise I made to the consumer.’ It just is a shitty, shitty feeling.
“So it’s something that I think every brewer that is going to put something in a package and send it out of their brewery should really, really invest in. And again, we don’t think of that as innovation, but that is an area where you can continue to be better. And it’s not sexy because it’s not new. But being able to say, hey, I’ve made five times as much as I did last year, and it’s in way more places and it’s all just as good as it would have been if it stayed right here in the tasting room. That’s fucking great innovation. Let’s see some more of that.”
​Looking back to the mid-2000s, it was shocking to ​Redner that a metro area the size of Tampa Bay didn’t have ​any ​sort of an identifiable packaging brewery. ​He did note that ​Dunedin Brewery was doing some large format bottles. ​“​But no one’s making, you know, a six-pack of beer since Ybor Brewing had gone out of business in the late 90s​,” he said​. ​“​And it just was shocking to me that there wasn’t someone doing it.
​“​I just kept thinking someone would do it and no one did it. In that thought process, I was like, well, why are they not doing it? Like, can you not make money doing it? What are the challenges? Is it just is the barrier of entry too high? And in asking those questions and for my own satisfaction in answering them, I kind of built a de facto business plan. I was like​: ‘You can do this. There is money to be made, you can make it profitable.​‘​ I don’t know why anyone hasn’t done it, but I think you can make a go of it. And so it kind of grew out of that.​“​
​Redner worked around beer — writing a beer column for the St. Petersburg Times, owning a pub that carried microbrewed beers and even doing sales for ​​Dunedin, so he had some exposure to the industry.
“I just became convinced that it was ridiculously stupid, that it’s in a metro area pushing 3 million people that didn’t have a brewery that you would identify as that area’s brewery,” he said.
​Redner said his calculations were very, very modest​ in what Cigar City would need to be a success​.
​“If we can do it in 1,500-5,000 barrels a year range​ … that’s sustainable​,” he explained​. ​“​I can cover all my expenses and pay myself a livable salary.​“
​​He wanted to do six-packs, but ​he​ thought the bulk of sales would be a large format, 750 bomber​s​, sixtels and then six-packs could count as a loss leader​.​
​“​I didn’t think that that would be the crux of what the business became, which it did​.​ Jai Alai just sort of took over​,” he said​. ​“There was a pent up demand that no one was filling. And that’s the style that really lends itself, even if your IPA is not quite as good as the guy’s IPA that’s four states over. By the time it gets here, your IPA is better because his is two months old and yours is fresh.
​“​So it’s a style that really lends itself to having a good local option. I think I think we’ve made a very good IPA​.​ Wayne’s recipe was a great recipe. But my point is, when you’re in the market locally, you just have an advantage over someone shipping it in. And I guess I didn’t really fully comprehend what that demand would be because again, I thought, a few thousand barrels, large format, good fat margins. I didn’t set out to be a six-pack production brewery, which is a very different brewery than the kind of brewery I built.​“​
By 2012, Cigar City was large enough to justify switching from bottles to cans, which Redner always wanted to be in.
“I thought about it: ‘Could we lose a lot of business if we’re not in glass?’ But ultimately, if you’re not keeping up and you lose a little business, that’s a good thing, because you have more back stock for the people that are still supporting you. So if I’m out of 10 accounts because they will only carry glass, but I have 100 accounts over here. I’ve just taken ten off the table. I keep them in beer. They’re never running out now. So I looked at that as ultimately a good thing. It made more consistency.
“That never really materialized for us though. We had some people say ‘we’re not going to carry you,’ but was such a minute amount in the grand scheme of things that it never added more product for the existing accounts. We still had trouble keeping up.”
Clark, who joined Cigar City in 2010 in sales and rose to the position of COO, said from an operations standpoint it was much easier to do cans because the canning line they had had a little more automation than the bottling line. The brewery was also an early adapter to PakTech.
Clark added that when local distributors saw that they could move more product faster with cans the switch was easy.
“They saw that they’d get more beer as a result,” Clark said. “So we’re fortunate that and the timing of all of that, it forced us to make that decision and then never looked back.”
​Triple-digit growth kept happening and the idea of being a 5,000-barrel facility with niche products was gone. Redner kept expanding to fulfill orders, which meant more and more money to keep up.
“I got tired of the rat race of you never could feel successful because no matter what you did, it was never enough,” he said. “You gotta take all that profit and then go borrow money on top of that profit to buy more tanks and build more. You’re always building, building, building. And I’m like, hey, you’re successful, but you’re not really, because now you’re sort of trapped.
“You’ve done this. You’ve almost paid off your debt. Now go borrow 30 million, because now you got to build an even bigger facility. And some people have no problem with that. For some people, that works well with the way that they view the world. But it made me feel like I’d put my money down on the blackjack table and I got a blackjack and I won and I went to pull some of my money back. And the dealer smacks me and he goes, ‘No. Not only do you have to leave all your money there, but you have to come up with that amount of money again to put it on the table and keep the bet going.’ And I’m like, ‘fuck.’ It’s not what I set out to do.
“I knew you can’t keep growing like this forever. I saw the market would have to have a slowdown. What I didn’t know is we were definitely one of those breweries that would continue to grow while everyone else was slowing down. We just sort of were in the right place where there was still a lot on the table for us. We hadn’t reached a lot of the states that other breweries that were growing had, there wasn’t a lot more growth that they could get. So I was right, I just was wrong about my brewery. My brewery still had a lot of growth left.”
Redner said people had been calling that were interested in investing or buying into Cigar City.
“And I just was sort of like, you know, I’ll talk about it but I’m not interested,” he said. “Then after we finished this expansion I realized very quickly now that I can do almost 50,000 barrels, it’s not enough. I’ve got to go build another 50 and I can’t do it here because we’re outgrowing the space. So I got to go do something else. Now, we’ve got to maintain this while thinking about building something equally as big or bigger somewhere else and managing two workforces. It just seemed like way more than what I set out to do.
“At this point, I’m just like, yeah, I could probably do it on my own, but it’s going to make me a shitty, miserable person. And I didn’t want to be a shitty, miserable person. So I’m like, well, at this point, someone can come in and help it continue to grow who has the expertise to do that and have shown that they know how to manage and run multiple facilities and keep production going with the level of consistency that I would like to see it be produced at. Let’s start having the conversation.”
That thought process led to CANarchy, forming a brewery collaborative with veterans Oskar Blues through Fireman Capital’s investment firm. That collaborative has grown over the years and stretches across the country with seven breweries and multiple facilities.
“It’s never been done quite this way before. And so there are challenges with that,” Redner said. “There’s definitely other sort of brewery collectives, but they’re much more centrally managed. Now, someone in CANarchy might say, ‘Hey, you know, seltzers are doing really well. You want to do a seltzer?’ And if we don’t think it’s right for the brand, it doesn’t get made here. But maybe Perrin thinks a seltzer is right for their brand. For them, it works. If we don’t think it works, we don’t do it because ultimately they allow you to sort of be the arbiter of what’s right for your brand.
“When the brewery comes in, a lot of money has changed hands. And I always thought it was really important on our end to make sure that you don’t fuck up the thing that you just paid a lot of money for. You can fuck it up and it wouldn’t be worth what you paid for it. So don’t go change Jai Alai. And I’m adamant that way on the other breweries that come into the collective. Three Weavers came in after. If I go in and tweak all the recipes, well then why the hell did we invest in them? What would be the point?
“I don’t want to name any brewery collectives, but, you know the ones that are out there. They’ve done that. They’ve done it and said, well, we can make that same beer cheaper. We’ll pull these ingredients out. Those hops are cheaper than those hops. So we’re going to do that. And then it stops being the thing they bought. What’s the point? Then five years later, the sales of that beer slow down and they’re like, oh, what happened?”
C​lark said the breweries have​ weekly calls where ​they get the leads of all the facilities and different departments together to get ​everyone all on the same page, share best practices​ and such.
​​“Some things are best planned as a collective​,” he said​. ​“​Other things are best figured out independently. But you have such a knowledge base there now, seven ​brands, more than 10 facilities.​ Often we’re doing what we need to get the job done. So it’s not interfered with, but we are all rolled up into one accounting platform, which is a brewery operation software that we’re all the same. We transfer beer amongst ourselves because we’re making Cigar City in Brevard, North Carolina, we’re making Cigar City in Longmont, ​Colorado and some in Austin. So even though it’s the brand that we’re responsible for being made at our sister brewery locations.​“​
There’s constant communication, ​Clark added, to make sure everything’s up to ​everyone’s proper standards and that it’s true to ​each brand​.
“​Logistics is basically becoming a CANarchy function because our hub and spoke model of what the ultimate goal in CANarchy is being able to make the beer closer to where it’s being consumed​,” Clark said​. ​“​​Of course, it saves on transportation, but it’s also better for the beer. It’s a better end result for the consumer. And we see flashes of brilliance in there, but it’s not completely set up yet to be there. We’re still having to ship some beer further than we would like, but it’s all of that constant communication in tearing down the silos of just compartmentalizing everything to one brewery.
​“​We sometimes gotta think bigger, but I think it’s very important​ ​to make sure that brands themselves remain very independent in their identity. People wasted a lot of money if you just came in to take the brands and just make them one brand. So we spend a lot of time keeping that independent. But operations wise, there’s a lot of efficiencies that we’re picking up.​“​
Clark added when a brewery like Cigar City gets to the size that they are now, he feels very fortunate that it is still seeing growth in its flagships.
“We’ve only been in 12 packs for just over a year, really,” he said. “So there are a lot of levers that bigger breweries have already had to pull that we haven’t had to yet. There’s tremendous opportunity in 16 ounces in the state of Florida. And then continuing to innovate. Our brewers and our staff are still excited about finding what’s next and what’s new. So we’re always continuing to play with that. Our taproom is quite the playground for that. So we will continue to innovate.”

Photos: Kevin Stephens

3 Trackbacks / Pingbacks

  1. Cover Story Notebook: Florida's Craft Beer Scene
  2. Brew Review: ​A Hazy Seasonal Adjustment ​— Cigar City Brewing
  3. Crafting Controlled Growth: This Innovation Helps James Howdeshell at HOB Brewing

Leave a Reply

Your email address will not be published.