Since 2015 we have been excited and privileged to serve the craft beer community in Chattanooga, and proud to have expanded the brand into a tri state distribution area. Our success is not only due to hard work brewing delicious and award winning craft beer, but also to the loyal support of our fans, customers, and especially our dedicated staff. The people responsible for all facets of our beer are invested in the success of Hutton & Smith by extreme degrees. They are the friendly faces you see in the taproom, but also the brewers, warehouse personnel, and sales team that work behind the scenes, dedicating themselves to quality, craftsmanship and a belief in the brand.
From the beginning, we always believed in growing into a production facility. We started with a business plan that included a microbrewery and taproom on MLK, with plans to expand into a much larger production facility within 3 years. 6 months into operation, the brewery was at capacity. We were a little shocked by such early success, and when friends and patrons started asking “What’s next?” way ahead of our original schedule, we decided to start planning an expansion. So, two years ahead of schedule, after being granted an SBA loan for funding, we began the move into the production facility at 3108 Riverside Dr. After an expansive and personally involved (lots of sweat equity) build out, our 30 barrel system (4.29 times larger than our small system, 425 12oz cases per batch) was operational. Very soon after, Hutton & Smith was rated by The Brewers Association as one of the 50 fastest growing breweries in the United States two years in a row: #50 in 2018, and #16 in 2019.
That meteoric growth came to a grinding halt during pandemic. As a result, we began to adapt the business model to respond to a changing economy, and the loss/layoff of our sales force outside of Chattanooga – which resulted in a decline in growth and sales. Two years of subsequent continually changing economic conditions, and efforts to adapt to them, quickly depleted the capital that was in reserve for growth at the beginning of the pandemic. These conditions have resulted in a production brewery that is breaking even at half capacity. During this economic hardship, we have relied completely on our own, using all our resources, with no outside equity investment.
Now that the economy has somewhat stabilized, Hutton & Smith has a need for additional capital to resume growth, through a new business model and strategy adapted to current economic conditions. This capital will be used in four main areas:
- Establishing brewing contracts for unmet capacity,
- Diversifying the H&S portfolio to include canned cocktails
- Equipment upgrades necessary to facilitate these new goals, including a new canning line
- Hiring additional sales team members to increase sales in outside markets. This final investment is a much-needed addition since losing most of our sales positions at the beginning of the pandemic. Increase current salaries by 10% for employee retention.
The reality of achieving these goals is out of reach for us on our own, however, we can reach them with additional capital. This would allow us and the valued staff to continue to grow a much-loved brand, maintain creative control of Hutton & Smith’s identity, and continue to serve the craft beer scene in Chattanooga and beyond.
Our goal is lofty but not out of reach. Operating a brewery of this size is expensive! The new canning line is our main equipment expense. The current line is inadequate and has been a continual burden to operate. The new Codi line we plan on purchasing is expandable and exponentially more reliable, resulting in much less loss than the current line. The increase in a sales force is the other main expense, that will increase sales dramatically outside of Chattanooga.
The reason that we are reaching out to you, our fans and loyal beer lovers, is that we have exhausted all other options. For the last year and a half we have sought professional financial advice, conferred with our lenders, implemented adaptations to the business model, and found that without an infusion of cash, we cannot achieve the goals that would make the business sustainably profitable. Heavy hearted, we listed the brewery for sale – we love the beer business and what we do, but because of our situation, we had to explore this option as a way to continue with our passion. Unfortunately, even in the event of walking away with zero profit, there has not been an opportunity we could accept.
We want to thank Chattanooga and all our fans for the support that we have received. The experience of growing this brewery from a two-person operation to two locations, and a tri state distribution area has become our identity – we have loved every minute of it and want to thank you and our entire team. Truly, you are the reason for all of our success, and we are grateful to have your support and dedication.
Cheers!
Melanie and Joel Krautstrunk
