Clarity in Thinking: Lucid Brewing on Growth and American Sky Acquisition

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Opening a brewery isn’t easy. Between the up-front capital needed to purchase equipment and learning the ropes as you go, just like any startup business there’s a lot of uncertainty and risk involved, which is why Lucid Brewing Company’s alternating proprietorship model seems to make sense: why go it alone when you can throw in with other companies working toward the same goals and encountering the same challenges as you?

Lucid opened in a shared space under this model in 2012, splitting operational costs with Badger Hill Brewing Company and Bad Weather Brewing Company. The plan was always for the three to find their own paths and that plan is coming to fruition this year.

Lucid Messier

Lucid Brewing co-founder Jon Messier

“We were expecting three years per tenant,” says Lucid co-founder Jon Messier. “The plan was to get them out. It’s cool that it worked.” Last December, Badger Hill moved its operations to its own space in Shakopee and Bad Weather will be opening in St. Paul later this summer. Pryes Brewing is currently operating out of Lucid’s Minnetonka facility, but owner Jeremy Pryes is actively seeking his own space. It’s likely that come fall, Lucid will, for the first time, be empty nesters. So what does this mean for the alternating proprietorship? Is Lucid getting lonely?

Hardly. In fact, they’re currently taking on more equipment and juggling resources to maximize their own potential. The alternating proprietorship has always been about what’s best for all the breweries involved. Right now that means holding off on adding any new brewing tenants and focusing their attention on growth and establishing a taproom.

“We’re limited on what we can produce and we always have been,” Messier says. “We like to be as close to capacity as possible all the time so right now we’re not taking on any other breweries.” When Badger Hill left, Lucid purchased a bottling line and three tanks from them and they’ll use that equipment to help grow Lucid’s brewing capacity. “We needed capacity, they needed a new spot,” he summarizes. “It’s working out great.” As Lucid adapts, they will re-examine partnership opportunities down the road.

For now, the only new tenant at the building will be brewing something a little different from what’s been brewed there before: Blackeye Roasting Company will be brewing and kegging cold press coffee in Lucid’s building. “It’s a nice fit there and it doesn’t require a huge equipment changes for us,” Messier says, though technically they’re separate from the alternating proprietorship because it is not an alcoholic product.

Lucid’s primary focus is on establishing a taproom in a location separate from its production facility. “We’ve been fortunate enough that we can sell enough beer through bars and restaurants and liquor stores that we haven’t really looked at it, but we think there’s a good opportunity to grow our brand,” says Messier. “We’re like the only brewery left who doesn’t have one,” he adds.

Lucid_8553_13Lucid will follow the “Fulton approach” of production in one building with small batch beers and a taproom in another. Besides giving Lucid a more public face, a non-shared facility would allow for beers that aren’t feasible in Minnetonka, such as lagers or sours. At the moment, Lucid’s taproom awaits regulatory changes in an unnamed municipality. They’re tight-lipped on where the taproom will be, as they don’t want to jinx its progress.

Meanwhile, they’re getting familiar with the tap handles in another taproom at the newly-acquired American Sky Brewing in Hudson, Wisconsin.

While the move may surprise local beer fans, Messier says it’s a fit because it allows both American Sky and Lucid to grow as separate brands. With American Sky’s founders unavailable to fully commit to running the business, they found a purchaser in Lucid, who will now have a chance to learn about Wisconsin distribution and take over American Sky’s taproom, The Hangar, which will continue to sell American Sky beers exclusively.

On the Minnesota side, Lucid will begin bottling American Sky beer at its Minnetonka facility, with the goal of eventually distributing it in the Twin Cities. It will also begin selling growlers of American Sky from its Minnetonka facility. Lucid will remain for sale only in-state. “Right now,” Messier says, “we’re focused on producing good beer and building our home markets and distribution.” Another advantage that comes with the purchase is the ability to purchase supplies in larger quantities to lower costs, Messier notes.

The Hangar

American Sky’s taproom, The Hangar // Photo via American Sky Brewing’s Facebook

Part of Lucid’s mantra has always been “Clarity in Thinking,” and that expands to embracing change. While they’ve lost the in-house resources of Badger Hill and Bad Weather, it offers other new opportunities. “Now the tables will have turned,” Messier says, happy for the success of their former partners. Badger Hill will eventually brew and produce cans for Lucid in Shakopee, and other partnerships are certain to happen.

In the first generation of the business model, the three breweries grew and learned together. Phase 2 is different, requiring a new role for Lucid whenever a new brewery comes aboard. To coordinate the sharing of resources it will require a coaching role, which is another drain on limited resources. “There’s only so much you can do in a day. We just need to focus on our own brand, which is growing at a good clip anyway. We’re not saying no to people, we’re just making it a bit harder to do,” Messier explains. After the taproom addition, Lucid will look toward fitting new partners into their busy schedule.

Just like when the kids move out after graduation, the Badger Hill and Bad Weather moves haven’t signified the end of a relationship, but new opportunities. Alternating proprietorship is still a great model, Messier stresses. “I’m surprised no one’s copied it to tell you the truth.”

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