Exciting news!  We have a partnership even better than hops, malt, and yeast. Dorchester Brewing Co. is merging with Aeronaut Brewing Co, one of our favorite local breweries with a shared culture and passion for great, independent craft beer! As two likeminded local brands with similar missions to create the highest-quality craft beer while positively impacting our communities, this partnership will usher in a new era of innovation and support of the local and regional craft beer scene – together, we currently make beer for nearly 20 local and national breweries.

While the brands will continue to function independently, the partnership will operate under a new parent entity called the Tasty Liquid Alliance, which will leverage pooled expertise to elevate and grow the craft beer experiences for both brands and regional growing brands looking to join the merged entity.  

Never fear, the beer you know and love will continue to be brewed and enjoyed by all – both beer brands are staying as is.  For you, our taproom and wholesale customers, nothing really changes on your end! You get to continue enjoying both beer brands at each of our local Tap Rooms and throughout the local beer scene. 

Beginning in January of 2024, we will be moving Aeronaut’s large-scale production to Dorchester, while Aeronaut will continue to brew smaller batches and taproom exclusive offerings, and continue to innovate its own brand at their Somerville location.

We are beyond excited about this partnership and consolidation and look forward to what the future brings! More Beer, and more innovation. More brewing partners and lots of great times with a beer in hand.

Read the press release: https://www.dorchesterbrewing.com/uncategorized/aeronaut-brewing-company-and-dorchester-brewing-company-announce-strategic-merger-to-foster-innovation-and-impact-press-release/

Interested in learning more about brewing with us? 

With the creation of Tasty Liquid Alliance, Aeronaut and DBco will achieve economies of scale in the craft beer industry for their new partnership and other craft beer brands looking to unite

[Boston, MA, December 14, 2023] – Somerville-based Aeronaut Brewing Company, known for its innovative craft beers and community-driven ethos, and Dorchester Brewing Company, a cornerstone in the New England and Tri-State craft beer scene, today announced the intent to merge their two businesses, with the transaction anticipated to close in Q3 of 2024. This marks a significant step in strengthening their positions in the rapidly evolving craft beer industry.

While the beer brands will stay separate and function independently, they will be owned under a new parent entity: Tasty Liquid Alliance. This new Alliance will leverage pooled resources and expertise with the mission of elevating and growing the craft beer experiences for the two founding businesses, along with regional emerging brands looking to unify.

Along with producing their own beer brands, Dorchester Brewing and Aeronaut provide Partner/Contract brewing services for a combined 20 regional and national brands. They plan to continue providing this service, renewing their commitments to these beverage brands without any interruption of service. 

“The merger and partnership with Aeronaut represents an exciting new chapter for Dorchester Brewing and the craft beer community as a whole. By pooling our resources and expertise, we are poised to make a more substantial impact in the industry and beyond,” said  Matthew Malloy, CEO of Dorchester Brewing Co, and future CEO of the combined entity. “We feel the industry is beginning to consolidate and we want to be at the forefront of this landscape shift and work hand-in-hand with other growing breweries as we look to the future while keeping diversity, experimentation and open cultures intact. We look to add other like-minded, growing beverage makers into the alliance in short order.” 

Central to this union is the shared cultural values of both companies. Aeronaut and DBco have long been committed to supporting local communities and the arts. This merger will further this commitment, enabling the joint entity to make even more significant positive impacts in these areas. “It’s a natural pairing and we’re beyond thrilled to join forces with Dorchester Brewing Company”, said Ronn Friedlander, Co-CEO of Aeronaut. “Together, through events and donations we will continue to invest in our diverse teams and community engagement programs that support and enhance the communities we serve. Combined, we will bring more resources and skills to this mission, while also continuing to innovate and serve our loyal customers with an even wider range of exceptional beers and fermented liquids.” 

This merger will consolidate Aeronaut Brewing Company’s production with Dorchester Brewing Company’s cutting-edge facility, phasing out Aeronaut’s Everett production site. This strategic alignment of resources and expertise will not only streamline operations but also foster a hotbed of innovation and creativity while driving significant savings and efficiencies and future high-margin new business. The two companies aim to transition as many Aeronaut production employees as possible to the Dorchester facility. Aeronaut will continue to produce small batch beers for its own brand at their Somerville location, and the Everett Cannery taproom will continue to operate into 2024.

To learn more, visit: https://www.dorchesterbrewing.com/ and https://www.aeronautbrewing.com/ 

About Aeronaut Brewing Company

Aeronaut Brewing Company was founded in 2014 and built on a love of experimentation. Aeronaut brings a scientific approach to traditional, emerging and undefined beer styles to create provocative recipes and brew them to high quality standards. Aeronaut’s Somerville taproom has become a local institution, hosting thousands of people each week, and hundreds of community events throughout the year. Aeronaut beer is sold throughout Massachusetts and in most of New England. Aeronaut’s mission is to share the excitement and enjoyment of adventurous, inspired beer with their community. https://www.aeronautbrewing.com/ 

About Dorchester Brewing Company

Dorchester Brewing Company was founded in 2016 by a team of Boston professionals with an unnatural love of craft beer, to meet production demands for the local craft beer industry while supporting the economic development of Dorchester. In 2020, Dorchester Brewing expanded their Tap Room space to include a 4-season rooftop greenhouse, a game room, restaurant and more, while continuing to help other local and national brewing partners to increase their beer production. https://www.dorchesterbrewing.com/

For small and growing craft breweries, having 2-4 core SKUs in distribution can be an excellent way to build awareness of your brand, and also to diversify revenue streams – but the demand of keeping pace with production of those SKUs, and also maintaining production of taproom-exclusive and creative, passion projects can be a strain on any production schedule. This can be especially true if the velocity and demand on these core SKUs require double or triple brews. 

One of the most productive – and frequent – uses of our partner brewing services has been transitioning core, high-volume SKUs to partner brew with us in order to free up brewing, tank, and packaging resources for taproom exclusive and creative projects, while still keeping up with demand from their accounts to maximize their margin and revenue from distribution.

SCALING PRODUCTION WITHOUT CAPEX

While these core beers are crucial to the financial and brand success of these partners, the additional volume of these beers in distribution can quickly outstrip the production capabilities of many smaller breweries. Being able to scale your production to meet these demands without expanding or incurring significant costs is a key benefit that partner brewing can deliver from day one.   

It also doesn’t usually make sense for many breweries to make the heavy capital investments necessary to expand the brewhouse and cellar just to meet the demands of a handful of their beers. Having the flexible capacity of partner brewing to expand these SKUs into can help breweries meet the velocity and demand on core brands without incurring the (often prohibitive) upfront costs of expansion. We often hear from consultants, successful breweries and industry experts that small and growing businesses should focus their money on sales and marketing, rather than capex that doesn’t deliver benefits over working with a partner brewing facility like Dorchester Brewing Co.  

UNDERSTANDING AND INCREASING MARGIN ON DISTRIBUTION

There’s no denying the important role that distribution can play in the ecosystem for driving revenue, and for helping breweries reach new customers and drive awareness. It’s also no secret that the margins in distribution are tight, given the percentages and markups that go to the distributor and the retail account. This shrinking of a brewery’s margin is even more reason to look at production costs for SKUs going into distribution, since even in cases where the production costs make economic sense for beer going over your own bar or out of your own to-go cooler, they might not facilitate getting onto retail shelves at an accessible pricepoint. 

As covered in detail in our previous Part 1, dropping production costs is another important area of focus in which we’ve helped our partner breweries. While truly understanding and dropping production costs across the board is important for many of our partner breweries, it’s even more crucial in the lower margin distribution channels as you fight to both make your distribution footprint sustainable and profit-generating, while also getting on shelves at a competitive price to keep growing your brand and attracting new drinkers.

CONSISTENCY AND QUALITY OF PRODUCT 

With core beers, consistency between batches becomes even more important – and also something that can be much harder to accomplish when brewing and blending multiple, smaller batches on a smaller system to meet demand. Variance in taste profile, SRM, ABV, longevity, and shelf life can end up creating issues in consistency – which translates to consumer issues in experiencing the beer and brand as intended. 

Scaling up to a larger system will help eliminate the potential for intra-batch inconsistencies (differences between brew days, using multiple, smaller FVs to fit the correct batch size, different packaging runs, etc.), and the investment that we’ve made in our lab and QA/QC program helps address the potential for inconsistencies from batch to batch. Full lab workups and quality reports are a key part of the process for all the partner beers that we produce, to ensure the quality of each and every beer, and also the consistency of beers that we produce multiple times.

CAPACITY FOR TAPROOM EXCLUSIVES TO DRIVE OWN-PREMISE TRAFFIC

Core brands occupying too much of your tank and production schedule also limits what breweries are able to do for taproom exclusives, one-off special releases, and passion/creative projects – all key ways to drive own-premise business. Ultimately, the more drinkers that you’re able to bring to your taproom and serve over your own bar, the more you’ll be able to capture in margin – and one key way to attract both your existing and new fans to your taproom is through taproom exclusive and limited release beers. Freeing up production capacity to create more of these exclusive and limited-run beers – and therefore more occasions and reasons for customers to come to your taproom – can help your business drive more traffic and revenue to higher margin channels and points of sale. 

Even beyond the aid to the business, margin, and bottom line, this also allows you and your brew team to flex the creative muscles and pursue passion projects to show drinkers even more of who and what you and your brewery are truly about.

One of the most important, immediate, and tangible benefits in using a partner brewing facility like Dorchester Brewing Co. is the production savings it can offer without ever sacrificing on quality. Economies of scale in the brewhouse, cellar, packaging array and in sourcing raw materials offer many small-to-medium breweries significantly lower production costs when they move to partner brewing, opening up opportunities for both competitive frontline pricing positions and increased margin to capture both in your taproom and in distribution. 

There are three core reasons that we’re able to deliver efficiency and savings to our partners: economies of scale in ordering, expertise in sourcing, and outsized technology investment throughout the entire facility.

FACILITY & TECHNOLOGY

Since we opened in 2016, our model has always been as a partner brewer – so we built out our brewhouse, cellar, and facility with that in mind. That means a four-vessel 30bbl brewhouse, a centrifuge, a 19 FV cellar from 30-60bbl, a top-of-the-line 24-head digital volumetric rotary fill canning line, a 4000 sq. ft. cold box, and a dedicated lab with full-time QA/QC manager. A four-vessel brewhouse operating at 91-92% efficiency allows us to maximize yield using high-gravity brewing techniques and liquor down, increasing efficiency. Our German Krones canning line also allows for only 1mL of variance by design, meaning that there’s less waste during packaging, while also ensuring the maintenance of quality from brite tank to can. Running all our beers through a centrifuge not only increases efficiency and volume of packaged beer, but also helps create more shelf stable and higher quality products – for example, stable haze in your newest hazy IPA recipe that won’t fall out after a few weeks on a shelf. We also provide a full QA/QC report and guaranteed cold storage after production and until pick-up, ensuring that all the beer that goes into the market with your brand is exactly where you need it to be.  All of these systems and methods were perfected by experienced staff,  world-class integrators (Zajac out of Maine) and only after talking with over 100 breweries about what makes a perfect manufacturing plant for their beer. 

All of these investments, which were developed by looking at every possible point of loss as an area for improvement utilizing lean manufacturing methods, serve to increase efficiency and maximize yield on your beer – meaning more beer that you have packaged to pour and sell. When virtually all of our partners move their production to us, they see an 8-12% increase in their overall efficiency and yield while improving quality and stability.

Most of these capex investments that we’ve made over the years aren’t realistic for smaller craft breweries, whether because of the space and footprint needed, or because of the prohibitive costs and experience needed to optimize and run the equipment. But because we’ve been a large-format partner brewer since our inception, our facilities are outsized relative to [almost all of] our partners individually. We’ve made the investment in the equipment and facilities so that you don’t have to – but can still access and leverage our investment when making your beer.

ECONOMIES OF SCALE IN RAW MATERIALS

On the front end with ordering, there are also economies of scale that we can offer on pricing for raw materials, further dropping ingredient and production costs on hops, grains, yeast, seltzer base materials, fruit purees… all of it. 

We essentially compile orders for ourselves as well as the 10-15 partners that we’re working with at any given time, meaning that our orders and contracts are larger than any one individually. This gives us access to bulk discounts, and also increased leverage in negotiating contracts on raw materials and other inputs. This means lower costs on high quality bulk 2-row, aluminum cans and specialty grains, and high-quality hops – and it also means that during the recent CO2 shortage, not only were we able to maintain the brew schedule for every single one of our partners, it also meant that our costs on CO2 did not skyrocket (and then get passed along to partners) because of the contract volume and leverage that we have with our supplier. 

EXPERTISE IN SOURCING

Going hand-in-hand with our economies of scale in ordering, we also have an in-house expertise and team sourcing high-quality materials. Even with all the recent shortages, price hikes, supply chain issues, and astronomical shipping costs, our production and pricing have remained steady. This expertise translates not only as lower pricing on ingredients like hops, but also in accessing higher quality hops while still cutting production costs for our partners. As just one key recent example, there is a massive difference between 2021 Mosaic and 2019 Mosaic hops – and knowing which one to contract is key to producing great beer.

Ultimately, cost savings in production is an important piece of the puzzle for our partners – but producing the highest quality beer is the foundation and north star. Our experience in sourcing, as well as our economies of scale allows us to do both for our partners, without sacrificing quality just to drop your per-case production costs. We negotiate all of our supplier contracts, but we absolutely do not negotiate on the quality of beer that we produce, whether it’s wrapped in our label or yours. 

THE “COST+” MODEL FOR PARTNER BREWING

All of our partner production contracts are on a “cost plus” model – and we feel all manufacturers should operate this way. This means that it’s not a back-and-forth negotiation where someone will try to get you to agree to as high a price as possible without regard for the material cost and input, nor is it an unsustainably low, seemingly-competitive price that is going to incentivize the producers of your beer or seltzer to cut corners and use low quality ingredients in order to not lose money on production. You should demand full transparency.  

Our commitment to this pricing model means that the benefits of our economies of scale – bulk discounts on raw ingredients and inputs that we get because we’re shrewdly ordering in higher volume than any one individual of our partner breweries – gets passed along directly to you as savings. We bill our partners for materials at our cost for those goods, plus labor and a small breakage buffer of 1-3%. If we’re getting our bulk 2-row for $x per pound, we’re billing it out to our partners at that same price, with a small and transparent surcharge. There are three really important reasons that we have built our partner cost modeling this way:

1. Transparency: We want partners to know where our pricing comes from and the reasoning behind it. Some contract breweries out there will start negotiating price at an artificially high anchor number, trying to maximize their own margin as you winnow and negotiate down. We don’t want our partners to agree to one pricing with us, and then find out that a different partner of the same size, and with a similar recipe is paying significantly less just because they drove a harder bargain. Also, by understanding detailed pricing, our brewing team can also work with you to optimize your recipes for quality, yield, and cost at scale on our system. Many breweries that come to us don’t have complete clarity on what their beer actually costs per bbl to produce. Full pricing transparency and an experienced, invested team that cares about your beer changes that and helps you optimize for both quality and margin.
2. The right incentives: Over the last few years, there have been many small-to-medium craft breweries that have turned to contract brewing as a way to occupy excess capacity that they have due to the softening economy, the impacts of COVID, and a host of other factors impacting their business. Because price is such an important consideration in signing on with a contract brewery, many of these newer, not-built-to-contract brew entries into the market are undercutting with unsustainable negative-margin pricing – which incentivizes them to cut corners on quality to not lose money on every batch of beer they make. Price is important – but if the price you’re quoted is WAY too good to be true, then it might be. Out of desperation, some of these other contract breweries are quoting artificially low price points, and then swapping out quality ingredients for lower cost ones that are going to negatively affect the beer in the can. Additionally, many of these breweries have not optimized their process with the necessary equipment to drive quality and yield on their partners’ beers.
3. Sustainable two-way partnership: We believe that partner brewing is a crucial and important service in the ecosystem of the craft beer industry, and we want all of our partnerships to function sustainably for all stakeholders. We want to help our partners reduce costs of production so that they can build and grow a brand and a business, shifting resources into sales and marketing, rather than equipment. We also want that production partnership to contribute to the long-term health of our own business. The “cost plus” model is the best way that we have found to do this – the way that we know works, and has worked for us and all of our partners since 2016 – allowing everyone to thrive, grow, and keep producing great beer.

To put a couple of specific examples to these costs:

1. Savings can be meaningful – A New England-based seltzer company we are just beginning to work with will see an additional $7000 per 60bbl batch (after included shipping costs) due to savings on raw materials and production costs.
2. A brewery we work with from Massachusetts saw a drop in production costs from $41 per CE to $28 per CE. That’s a 32% decrease in production costs – to be reinvested in competitive frontline pricing, margin, and their business.
3. We have pre-negotiated label pricing that is accessible (though not mandatory, if you have a preferred label vendor) to all of our partners. For many of our partners, this ends up saving 5-6 cents per can, meaning an additional $1.20-1.44 per case in savings. Over a 60bbl batch, this means $750-900 in savings that drops straight to your bottom line as increased margin.
4. Our bulk silo malt is a high quality North American Rahr 2-Row coming in at around 30-35 cents per pound. Most breweries would pay 45-60 cents per pound for this same grain – but we’re able to pass those savings to you.  

The most important piece to recognize about these savings in production costs is that they’re all generated from process improvements and economies of scale that we have in sourcing and running equipment and ingredients – and NEVER from de-investing in materials or the quality of your beer. We price and treat every partner beer as if it was our own, and take great pride in the liquids we produce and package – whether they’re going out into market with our label or under the brand of our partners.