Flying Dog relocating craft brewery to Md.

By Roger Fillion, Rocky Mountain News (Contact)

Wednesday, December 12, 2007

Colorado's No. 2 craft brewer plans to stop brewing beer in Denver next month and will relocate all of its beer-making operations to a larger, state-of-the-art brewery it recently acquired in Maryland.

Flying Dog Brewery will maintain its corporate headquarters in Denver, keeping administrative, sales and marketing staff here. The company's beer also will continue to be distributed in Colorado.

Flying Dog CEO Eric Warner said increased costs for raw materials such as hops, malt and glass prompted the relocation of all of the company's brewing operations to Frederick, Md., about 45 miles northwest of Washington, D.C. The company sells more than 60 percent of its beer east of the Mississippi River.

Warner also cited the loss of contract business under which Flying Dog brewed beer for smaller craft-beer makers.

"By concentrating the brewing operations in Maryland, we will become a more efficient business, which is very important given the extremely competitive conditions in the craft beer industry," Warner said in a statement.

In an interview, Warner said the brewer is "just trying to be smart about our business," given the increased cost pressures facing all brewers - pressures that will prompt Flying Dog to boost its price of a six-pack by $1 next year.

Other craft brewers are expected to do the same.

Flying Dog is on track to produce about 45,000 barrels this year, with about 15,000 of those barrels brewed in Denver. The rest is brewed in Maryland, where Flying Dog began brewing beer in 2006.

The 16-year-old Flying Dog employs about 35 people in Denver and 40 in Maryland. Warner said the Denver brewing staff will be offered the opportunity to relocate and will be given a relocation package.

"A lot of them are interested in making the move back to Maryland," Warner said.

Flying Dog's brewing operations in the East, dubbed Wild Goose Brewery, already are paying dividends.

Ryan Fox, the brewery's manager, recently said it used to cost Denver-based Flying Dog about $2,500 to ship a truckload of cases to certain East Coast markets.

With the new brewery, those costs are down to $1,000.

The No. 1 craft brewer in the state is New Belgium Brewery in Fort Collins.