Matthew Osterman's contract brewery could produce more than 30,000 barrels of craft beer in its first year of operation.
Sleeping Giant is the first contract brewer west of the Mississippi and maybe the first focused on craft beers in the U.S. It has already attracted clients from the East and West coasts, as well as from Colorado and other landlocked states, says President Matthew Osterman.
"We are locked in or essentially locked in with about 15 clients," he says. "We're actively brewing for a little over a third of that."
The company offers its clients numerous services that breweries can't find many other places. That includes the ability to produce their beers to specifications, but also the opportunity to add more SKUs via cans, kegs, or bottles, giving client breweries a less expensive option than building out their own canning or bottling lines. Sleeping Giant also is relatively unique in offering pasteurization.
However, Osterman can't offer a full list of clients because of non-disclosure agreements and he finds that those clients that Sleeping Giant hasn't yet produced beer for aren't as open to announcing their partnerships. "Once they're live and we're into production with them, then we're finding that they're proud of working with us," he says.
Sleeping Giant is growing quickly, but Osterman says he is focused on growing intelligently. Roughly 20 percent of Sleeping Giant's space is currently in use, but the plug-and-play nature of the brewery and its brewhouse is a key feature. In 2016, production could hit 60,000 barrels. By 2020, it could reach capacity and produce as many as 200,000 barrels a year.
"I would like to grow with these clients as opposed to adding new people everyday," Osterman explains. There is a lot of demand, he says, but "what's important for us is to have a portfolio we can manage. We're not going to have 30, 40, or 50 clients if we can't manage them and, at 60,000 barrels, we can't manage 50 clients."
Instead of a conventional lauter tun, the company uses a mash filter press. "A lot of brewhouses might be 80 percent or 90 percent efficient at processing grain, some smaller ones might be 70 percent efficient," says Osterman. "We've been averaging 100 percent efficiency." He says the only other company to employ the technology in Colorado is Coors.
"If I'm scaling a recipe for a 75-percent-efficient brewhouse, I can lop off a quarter of their grain bill," Osterman says. It helps mitigate some of the surcharge for brewing through a contractor, he adds, and it's also a lot faster. "Each batch is 50 barrels but the speed at which we can brew makes it as if we were a 125-barrel brewhouse."
It's all part of Osterman's smart growth strategy. "Our packaging is oversized, our space is oversized, our brewhouse is oversized," he says. "It's really just the fermentation tanks that are our constraint right now." Originally the brewery planned on having additional fermentation tanks by the first quarter of 2016. "We're going to be adding them well before that."
Investors adore Sleeping Giant's plans. Says Osterman: "Our proposal was pretty attractive. We were able to do it with a small circle of silent investors."
The company also has a loan with Guaranty Bank. "They were excited about the model. They said, 'If you were presenting this as just a brewery or brewpub, then no way in hell would we give you the money you're asking for!'" he quips.
Favorite beers: "I've been drinking a lot of sours, barrel-aged beer, and a lot of hoppy lagers," says Osterman. "That new trend of the hoppy lagers is one I'm fond of."
Challenges: Scaling up rapidly, Osterman says. "Our bottling line is getting commissioned on Monday. Our conveyance is getting commissioned this week. We have new stuff coming all the time and given that this is an active production facility. The biggest challenge is balancing that."
Opportunities: Growth. "As the craft market grows, it's a given that the contract market will grow linearly, but I actually think that it will grow exponentially because people are identifying contract brewing as a very cost-effective way to grow and the stigma around contract brewing is essentially gone," says Osterman.
Needs: More equipment. "It's coming, it's just a question of how fast. It's not hard to get but hard to get it quickly," Osterman says.