California Business - Spring 2014 - San Diego - 8

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appeal of craft beer has expanded, it has spread to other
age demographics and to those who enjoy drinking beer
outside of a bar, pub or restaurant setting.
to tap new markets, the chapmans knew they needed
to expand the reach of their products, which meant adding a distribution arm to their business.
"People over 40 have historically been domestic beer
drinkers, but we've found they're becoming a bigger
demographic for us," Rick chapman says "We've also seen
more and more women gravitating toward craft beer, even
women who don't tend to like beer or don't view beer as
a feminine drink. With that expanding customer base,
we've been expanding our distribution and developing
new beers. It's kind of the 31-flavors concept - different
flavors for different palettes."
the chapmans added fermenting tanks in the formative years of the business, eventually building enough
capacity to launch a formal distribution arm in 2004. but
moving into the distribution space meant revising the
entire business model.
the brothers had been brewer-restaurateurs, but in
the span of several years, they had moved into running a
full-fledged brewery and beer distribution outfit with an
ancillary restaurant business. they had moved from the
world of managing menus, bartenders and wait staffers to
overseeing a sales force and negotiating wholesaler contracts. but first they needed to figure out how to grow this
new aspect of the business.
"We decided to take care of our own backyard first,
then spread out as we were able to line up contracts with
wholesale distributors," says Ron chapman. "first and

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8 * California Business

foremost, we have focused on growing our customer base
in the san Diego area, and in southern california in general. southern california accounts for about 80 percent of
our volume right now. from there, we have branched out
into surrounding states, and our biggest markets outside
of california are arizona and nevada."
even with an intense focus on local growth, coronado
brewing has found a market for its beers on an international stage. after a little more than a decade in the
distribution business, the chapmans have expanded their
footprint to 14 states - as far east as ohio, Pennsylvania,
new york and florida - and seven countries, including australia, new Zealand, Japan, Denmark, brazil and
canada. they are looking at other countries, as well,
including south Korea.
the next level
last year, coronado brewing produced about 17,000
barrels of beer, or the equivalent of about 200,000 cases.
this year, the case-equivalent is projected to jump to
nearly 300,000. In other words, the chapmans grew
beyond the capacity of their restaurant brewery quite a
while ago.
In 2012, they went a long way toward remedying their
capacity issue with the opening of a new production
center on Knoxville street in san Diego. the facility,
which includes a tasting room open to the public, is the
reason that coronado brewing will be able to ramp up
its production so dramatically from this year to next. the
28,000-square-foot facility opened in august 2012, and
once it reaches maximum capacity, it will be able to produce about 80,000 barrels a year.
but at its current rate of growth, the company is
already surpassing the facility's storage capacity, and the
chapmans acquired another 12,000 square feet of cold
storage up the street from the new facility to keep up
with demand.
even though the chapmans want to carefully and
selectively grow the business, focusing on regional markets
and working their way outward, they still want to seize opportunities when they come their way. as the popularity of
their beers has increased, coronado brewing's reputation
has begun to precede it in outer markets, leading to more
demand for the brothers to take coronado brewing into
new markets.
"the type of wholesalers we can find, and the deals
we negotiate with them, are the factors that generally
determine where we expand," Rick chapman says. "there
are a number of states that want us, but we've had to backburner them because we simply don't yet have the assets
to manage those relationships properly."

California Business - Spring 2014 - San Diego

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