Do you Need to Be a Debt-Free Brewery?

In the upcoming May/June issue of Brewer, Tomme Arthur of The Lost Abbey shared a lot about the branding and decisions behind each brand that the Port Brewing/Lost Abbey company has — along with its The Hop Concept and Tiny Bubbles lines. He also shared what business decisions the company has done that he would caution newer breweries to avoid, like trying to be debt-free or trying to achieve that goal.

“We spent a lot of time trying to become a debt-free brewery, which was sort of a badge of honor and pride thing, but, you know, it gets expensive to be able to put all your money back into assets,” he told Brewer for the cover story. “I think for us, the lesson was … what’s the right amount of borrowing? I think when we built the brewery, we thought that the relationship to the market would just naturally continue to grow. And we’ve actually not grown the last few years. So we may have over-purchased.”

So Arthur said what he tells new brewery owners and managers is to maximize their efficiency.

“New tanks are sexy, but they also are expensive,” he said. “I’ve learned a lot in that regard, in terms of what it means to try to manage your cash, and running a business is difficult.”

Arthur also shared that he feels that the amount of money that has been put into the industry is helping several breweries stay open, especially during the pandemic.

“I think there would have been a lot of businesses that probably would have closed if it hadn’t been for the pandemic,” he said. “There’s been a lot of places I think that managed to get through the pandemic because a lot of money hit their books and that’s been kind of good on some levels because closings don’t help anything. But it does mean that when we come out of it, it’s gonna be — if not as competitive — probably more competitive because there will be less restaurants and bars than there were before.”

Arthur said his view certainly changed when the pandemic hit because he feels that the industry was expecting to have a leveling of the field.

“There was going to be a reckoning of sorts, and that the better-run companies would be the ones that kind of got through it,” he said. “But now it’s kind of interesting to see what happens with all this free cash.”

Photo courtesy Port Brewing/Lost Abbey