Redhook Ale Brewery

4469 Words18 Pages
Stephen E. Barndt

aul Shipman, Chief Executive Officer of Redhook Ale Brewery, knew that he needed to reevaluate his strategy and its execution. Redhook's rapid growth had ended shortly after it invested in a major increase in production capacity. Operating at about 50% of production capacity, the company suffered a net loss in 1997 that continued into 1998. Redhook brewed only specialty beer, referred to as craft beer. Craft beer is a more flavorful, fuller bodied premium beer. follows traditional old world brewing methods. and uses high-quality materials. The company started as a microbrewery but grew continually and reached national status by the end of 1996. Shipman, one of Redhook's founders, had guided the company from a small
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Shipman started Redhook with a belief that U.S. consumers would respond well to a quality European-style beer made with the best equipment and using the finest ingredients. The company's initial brewing operations were carried out in a converted transmission shop in Seattle. The company did not have a bottling line and all beer that was brewed was packaged in

This case was prepared by Professor Stephen E. Barndt of Pacific Lutheran University. This case was edited for 5MBP 9th Edition. Copyright C 1998 and 2000 by Stephen E. Barndt. This case was published in the Business Case [ourn Summer 1998. Vol. 1. No. t. pp. 53-{}9. Reprinted hy permission,



INDUSTRY NINE: BEVERAGE/FOOD \5.5 gallon kegs. First year production totaled \,000 barrels and was sold to local taverns and restaurants for on-premises consumption. Sales and production grew gradually through the mid 1980s. Redhook sold through its own distribution group and independent beer distributors. The first major increase in production occurred in 1989 when Redhook replaced its first brewery with a larger capacity, stateof-the-art brewery located in a converted electric trolley barn in Seattle. In 1993, the company acquired land east of Seattle in the town of Woodinville where it constructed a much larger brewery. The Woodinville brewery came on line in September 1994, with an initial capacity of 60,000

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