[MKOB] Flying Dog

[HArtzog]

Interesting but sounds like they have both a sound business and brewing
philosophy.  hope they make I aloe like their beers
  -----Original Message-----
  From: mkob-announce-bounces at swampgas.com
[mailto:mkob-announce-bounces at swampgas.com]On Behalf Of Russ Clayton
  Sent: Friday, December 14, 2007 5:32 PM
  To: mkob-announce at swampgas.com
  Subject: [MKOB] Flying Dog


     A few months ago we were discussing the increase in price for hops and
malt this year.  I subscribe to the Flying Dog newsletter, mainly because I
like the beer.  But I found this kind of interesting and thought I'd share
the letter from the breweries' President.


  Message From Flying Dog President Eric Warner
  To the People’s Republic of Flying Dog

  As some of you may have heard, Flying Dog Brewery announced on Tuesday
that we are embarking on the next step in our illustrious, 17 year history
of crafting remarkable beer by concentrating all of our brewing and
production to the brewery in Frederick, MD, where 70% of Flying Dog Beer is
already being brewed. This move will take place in January and we are
working to ensure that our entire production team will be able to make this
move over to Maryland. Accounting, sales, marketing and other administrative
functions will remain largely unaffected by this change and our HQ will
remain in Denver.

  We decided to make this proactive move as it has become increasingly
important to be extremely nimble in today’s business environment. Only those
who can quickly adapt in the hyper-Darwinian economy will survive and in
today’s craft brewing landscape. We are facing unprecedented cost pressures
due in large part to the tremendous hop and malt cost increases. We have
also lost some of the contract brewing business we had, thereby decreasing
capacity utilization at both breweries (I actually found out AFTER the
announcement that one of our largest contracts was going to switch their
production to a lower cost producer, thereby diminishing our capacity
utilization at the Denver Brewery even further). Concentrating our brewing
operations to one facility will help us become more efficient while
maintaining our exceptionally high brewing standards. This is a smart,
proactive move for our growing company and will allow us to most efficiently
use our resources. This idea was conceived in late summer, and once we
understood the magnitude of the price increases we are facing it became
apparent that this was a necessary step to remain strong. Like most other
craft breweries our costs are going up at least 25%, and we are only going
to be passing on a 15-20% price increase. We expect some relief on raw
materials costs in 2009. Obviously, a huge focus for the production teams in
2008 will be to discover and implement new ways to be more efficient,
without sacrificing the quality of our award winning line up.

  The Frederick facility is a state-of-the-art brewery that has already been
producing great beer for Flying Dog and we look forward to ramping up
production and growing our business even more than the +20% trends we are
experiencing in 2007. The bottling line in Frederick has lower oxygen uptake
at filling than the one in Denver, which translates to better flavor
stability and longer shelf life. It also kicks out bottles at twice the pace
of the line in Denver. The brewhouse in Maryland is also capable of brewing
a wider range of recipes than the one in Denver. Finally, the brewery in MD
plans on substantial capital expenditures and plant upgrades (close to a
million bucks in 2008 alone) to continue to brew better beer in an efficient
and environmentally friendly way. It was very important to me, the
management team and the owners of the brewery to take care of the employees
who might be impacted by this change. Everyone in production was offered an
opportunity to make the move to the brewery in Maryland. I’m proud to say
that almost half of the brewing and bottling line staff is interested and we
will be taking a group trip out to MD in early January so they can see if
Frederick is a place they would like to relocate to. For those that don’t
make the move, we will be offering a severance package and outplacement
assistance. 14 employees in production are impacted by this change. When we
broke the news Tuesday everyone handled it pretty well, and as a brewery we
decided to go out in style and still have our holiday party this Friday.
Although some could argue the timing was a little close to the holidays, we
also considered that some employees might be more upset that if they were
told after the holidays, having spent more money than otherwise having not
known they were going to potentially be laid off. There is truly never a
good time for such news.

  We are a family here at Flying Dog and as such it’s been a rollercoaster
of emotions the last couple of days. Although no one, myself included, would
have chosen to write the script quite this way, everyone understands this
chapter, why it makes sense and why it’s good for the future of the brewery.
The good news for the People’s Republic is that the Flying Dog beers will
still be available wherever you are used to purchasing them.

  Cheers,
  Eric Warner

  ------------
  ~russ~
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