By Eric Peterson | Sep 07, 2020
Fort Collins, Colorado
Beer, wine, and kombucha
Founders Doug and Wynne Odell were living in Seattle when they decided to launch a brewery in the late 1980s.
The husband-and-wife team thought the Pacific Northwest was getting saturated with craft suds, so they decided to relocate to Colorado to start the brewery with Doug's sister, Corkie Odell.
At that point, there were exactly zero breweries in Fort Collins, but Odell was the third by the time it opened. Now there are more than 20 breweries in the city, but only CooperSmith's has been in business longer than Odell.
With a forecast for 130,000 to 140,000 barrels for 2020, Odell Brewing Company has emerged as Colorado's largest independent craft brewery in the wake of the sale of New Belgium and considering Oskar Blues' out-of-state parent.
The COVID-19 pandemic has altered the market. "A lot of our business has shifted obviously to off-premise -- grocery chains and liquor stores and whatnot," says Smith.
A 60/40 packaging/draft split has quickly become "closer to 80/20 off-premise versus on-premise," he adds, noting that Odell was evenly split between the two for "longer than most breweries" due to a strong presence at restaurants and bars in Colorado.
Odell now distributes to 20 states, up from 11 in 2015; Texas, Arizona, and Minnesota are the leading markets. The same fraction -- 65 percent -- goes to in-state accounts as it did five years ago, says Smith.
The brewery entered California just as the COVID-19 stay-at-home orders took hold in the spring. "We'll have to do a relaunch in California," he notes. "We foresee that being one of our larger markets because of the population size."
Smith says working in the grocery channels in Texas, Illinois, and other states helped when Colorado supermarkets began selling full-strength beer in 2018 . "Some of the states we opened before that happening solidified our expertise working with chains," says Smith. "The independent channel is still important for us locally, but I think in our overall footprint, chain business is approaching 45 percent of our overall business."
The vast majority of Odell's beer is canned following a pivot from bottles in 2018. "A few states will still take some bottles -- Wyoming will and Arizona will -- but the majority of our states have shifted to 100 percent cans," says Smith. "Some of our flagships like 90 Shilling and IPA are still in bottles here in Colorado."
Sippin' Pretty Fruited Sour has emerged as the top seller for summer 2020. "That brand continues to be very strong for us, even showing up on national data as one of the top three sour SKUs in the nation -- and we're only in 20 states. Some of the brands we compete against, Dogfish Head and Sierra Nevada, are in 50 states with their sours."
Odell IPA is a close second. "We foresee IPA and Sippin' Pretty being one and two," says Smith. "We've never been a one-brand brewery. We've always had a portfolio, but this can shortage has forced us to focus in on fewer brands."
After a forward-thinking expansion in 2013, the brewery has added fermentation tanks but little else to the brewhouse. The brewery has "room to grow" at the facility, says Smith.
It focused on two taprooms in Denver instead: RiNo opened in 2018 and a Sloan's Lake location is set to start pouring beers and making pizzas in early 2021. "That'll be a new foray for us, getting into the restaurant business, and we're excited about the opportunities that will bring," says Smith of the latter.
Two spots in Denver emerged after a vetting process that evaluated numerous possible locations, he adds. "We had looked at other states, other cities. Population density's important. We obviously didn't want to open another one in Fort Collins. I don't think the year-round population is enough to look into the mountains."
Back in Fort Collins, the new OBC Wine Project will have a new home next door to the brewery in 2021 as well. The line of four canned wines hit the market in spring 2020; bottles are due later in the year. "It's under Odell Brewing, but it is a separate license," says Smith. "We're blending in that facility now and packaging in cans, and that's where we'll have the taproom in the spring."
The concept of an Odell winery had been developing for several years. "It was born from our internal incubator," says Smith. "We had some passion from a number of individuals." It didn't hurt, he adds, that their hop supply comes from great grape-growing regions in the Pacific Northwest. "Many of our hop growers grow grapes right alongside the hops."
The launch was stymied somewhat by the pandemic, but the brand has gained a fast following. "It's been a great response so far," says Smith. "The independent retailers have embraced it, first locally in Fort Collins and then expanding into Denver. We'll go into Arizona at the end of this year ."
Canned wine "continues to be one of the fastest-growing segments in wine. It's a small percentage of the overall wine industry, but the canned business really continues to grow." The taproom will allow for smaller batches with Colorado-grown grapes, he adds.
The brewery isn't stopping with wine. By the end of 2020, Odell's catalog will also feature two varieties of Allkind Hard Kombucha: Super Berry and Tropical Turmeric. "It's more of a packaged offering with limited draft," says Smith. "We're excited about that opportunity to expand our fermentation just like we did with the Wine Project."
The diversification is part of a broader strategy. "We've always had that evergreen, slow-growth philosophy," says Smith, citing an annual target of 2 to 5 percent. "That's what we have in the works for this year." After a three-month slowdown, June and July were "some of our biggest months ever."
Favorite beers: "I lean towards the hops," says Smith. "I like the Drumroll, the hazy pale ale."
When he's not at his home brewery, he likes to drink like a local. "I'm excited to try the beers you can't get in our market. That's what I really seek out."
Challenges: "The can shortage is the biggest challenge we have right now," says Smith. "We're getting a third to about half of what we should be getting from our suppliers."
"The last few weeks, we've definitely had to limit the SKUs we're focusing on, down to two to four SKUs" -- Odell IPA, 90 Shilling, Mountain Standard IPA, and Sippin' Pretty. Less established beers like Witkist White and Good Behavior Crushable IPA have moved into bottles where possible "for maybe a six-month period. . . . Our hope is consumers will understand the can shortage and pick up some of our brands in bottles."
COVID-19 has made it difficult to launch new products. "People have reverted back to what they know and what they like and what they're comfortable with," says Smith. "We benefit on that as well with Odell IPA. We have seen tremendous growth."
Opportunities: Allkind Hard Kombucha. Smith says California currently accounts for about 85 percent of the nation's hard kombucha consumption, but Odell's aiming to change that as the first major brewery to make a play in the market.
While he also sees OBC Wine Project as a driver for future growth, Smith projects Allkind will have higher sales in the long run. "We feel like we're definitely an early entrant into this," says Smith. "We see kombucha growing in other big cities [not on the West Coast]." He sees potential to go into more states and big urban markets where Odell is not distributed with Allkind as a standalone brand.
Smith also sees e-commerce as a big opportunity, especially for wine and hard kombucha. "More people are ordering everything they get online, from clothing and consumer products to now alcohol."
Needs: More employees. "We're hiring right now," says Smith. Odell is currently looking for people in production, packaging, and sales.
"Our keg line could be manned by one individual. Since that volume has shifted to packaged beer, it takes four to five people to run those lines. We're running 24/7 almost on those packaging lines, so we've had a need for more people."
Smith also highlights the need for a return to normalcy. "A big part of our business was venues and festivals, Pepsi Center and Dick's Sporting Goods Park and Mission Ballroom and things like that." "We're really anticipating the opening of some of that. If all that comes back in the spring of 2021 and next summer, that'll be a big opportunity for us to grow."