Earlier this month, Green Flash Brewing co-founder and CEO Mike Hinkley stated he was in search of investment into his 16-year-old company with the stipulation that an influx of funding allow the craft-beer interest to remain independent. Today, Hinkley announced that he has secured funding from a group of investors who, in addition to providing financial support, will also aid in a strategic overhaul of the company’s operations and distribution. Contraction will be the name of the game where both are concerned.
Hinkley and his partners have made the decision to cease operations at Green Flash’s East Coast brewery in Virginia Beach, Virginia, effective immediately. This will result in the termination of 36 employees at that location. The 58,000-square-foot facility—which opened in 2016 and is outfitted with a brewery, tasting room and beer garden—is currently for sale via Heritage Global Partners. That facility manufactured 22,000 barrels of beer in 2017, helping Green Flash come in as the 43rd largest craft brewing company in the country in terms of production.
“We have faced a host of significant challenges since expanding our operations to the East Coast and, though a rewarding endeavor in many ways, we feel this course-correction is prudent at this time and will ensure the independence, fiscal viability, identity and quality of the Green Flash and Alpine brands,” says Hinkley.
Brewing operations will continue at Green Flash’s headquarters in Mira Mesa. Ditto production of beers in sister-brand Alpine Beer Company’s portfolio from that operation’s original location in its namesake East County community. However, the distribution network for those beers will be significantly smaller moving forward. Hinkley and company will focus primarily on San Diego County and the greater Southwest United States, distributing beers in eight states: Arizona, California, Colorado, Hawaii, Nebraska, Nevada, Texas and Utah. This will result in the elimination of an additional seven positions previously held by members of Green Flash’s East Coast sales force.
“I am very disappointed to stop sending Green Flash and Alpine beer to our East Coast distribution partners, retailers and fans. I have enjoyed so many relationships that I am sad to see come to an end,” says Hinkley. “Our salespeople are best-in-class and I encourage local breweries in their regions to hire them right away.”
This marks the third reduction in force for Green Flash in 14 months. The first came in January 2017, when 25 employees were laid off. That was followed by this January’s elimination of 33 more employees (roughly 15% of the company’s workforce at the time). Hinkley says an unprecedentedly competitive and oversaturated market combined with the significant cost and complexity of bi-coastal operations negatively impacted overall revenue, necessitating the layoffs.
Hinkley is hopeful for the future as a result of he and his new financial partners’ plans to cut back territories in order to better focus on and serve Green Flash’s new eight-state network. Originally, he had hoped to keep the Virginia Beach facility online and compact East Coast distribution to eight states. Prior to that, the company had distributed Green Flash and Alpine beers nationwide.
As for Green Flash’s Cellar 3 facility in Poway, it remains in operation, though at a much smaller scale. Its barrel-aged line of beers are planned to be sold exclusively in Green Flash’s tasting rooms for the conceivable future. Hinkley and his partners are considering selling the facility and discontinuing Cellar 3, but a final decision has not been made.
Last August, the company announced it had purchased the Lincoln, Nebraska brewpub formerly operated by Ploughshare Brewing, with plans of converting it to a Green Flash brewery-restaurant. That project—Green Flash Brewhouse & Eatery—will continue as planned. Hinkley forecasts an April debut for the brewpub, which will produce specialty beers for the Nebraska market and occupy the northeastern-most corner of the company’s network.
“Our new partners are huge fans of craft beer, Green Flash and Alpine. They want to see us succeed as independent brewers,” says Hinkley. “They will help us succeed in what has become a very competitive, mature industry, increasingly dominated by industrial brewers and their craft acquisitions. I am stoked that we have found a way to succeed without selling out to industrial beer.”