He quickly outgrew his first brewing location in the back of a grocery store and was forced to relocate to a bigger plant. 3 years later, LBC grew their production from 600 to 10,000 barrels annually and showed no signs of slowing. Growth was quick and steady as Magee added tanks and fermenters one by one. Growth provided LBC and Magee with much opportunity, but they quickly ran into financing issues because very few banks believed the craft beer market was a good investment. In 1997, the craft beer industry hit a major road block when banks refused to lend. Many breweries were forced out of business. Magee states "I counted 23 serious brands that had recently been important brewers and were now gone from the market. There was beer running in the streets. Distributors started getting tired of all the brands, retailers were just numb, beer fans were more than a little bowled over. But, it was also a good time to be buying used equipment for the same reasons" (c-94).
LBC used these hard times to their advantage. While other breweries were going out of business, LBC was thriving. Magee purchased new equipment for a fraction of the price because so many breweries were exiting the market. He used his resources to phase in a new production facility that contained a 30-barrell brew house. Magee needed money to keep growing and he wasn’t going to get it from banks, so he sought private equity to provide financing. He was successful in acquiring capital from both old and new friends. However, in 1998, he had run out of options and decided to sell stock worth
You've reached the end of your free preview.
Want to read all 3 pages?
- Fall '18
- Prof Jack
- Brewing, Brewery