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Sunday, December 16, 2007

The Dog is Flying East

Some news out of the Flying Dog crew in Colorado that continues to add to the ongoing saga of hops, malt, and growth in the craft beer industry. I've cut back on some of the text to make it a quicker read. You can find the whole letter at their website. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 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 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 ...." ".... 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 ...." ".... 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 ...." ".... 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 ...." ".... 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"

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