Founder, Lightning Brewery
Yesterday, news broke that all manufacturing assets of Poway’s Lightning Brewery had been purchased by Santa Ana interest Cismontane Brewing. Lightning owner Jim Crute put his 10-year-old business up for sale last December and had hoped to hand it over to someone who would carry it forward, turnkey style, under its existing identity. After months of meeting with interested parties, he came to the realization that he’d need to go another route. Under the deal, Cismontane gains ownership of brewing and cellaring equipment (the tasting room and brand remain with Crute). A portion of those mechanisms will be installed as part of its new 10,000-square-foot production facility, which is currently under construction in Santa Ana. Cismontane will sell the remaining equipment, and will be holding open-house-style sessions for interested buyers to inspect that equipment on June 9 and 10 at Lightning. On June 17, Crute will host a cellar beer release and tasting featuring taster-sized pours of legacy beers, including Old Tempest Ale, Black Lightning Porter, Ionizer Lager and Electrostatic Ale. We consulted Crute directly for his thoughts on this major development.
What led you to sell Lightning to Cismontane?
I have searched for a partner or outright purchaser of the brewery since December of last year. After seeing many looky-loos and folks that were still “just looking,” I had yet to identify any purchasers. Cismontane is building a new brewery in Santa Ana and needs some equipment to make that happen. Their plan is to resell the [equipment they do not need to earn enough money to] make the overall deal work.
Why was a sale to Cismontane attractive to you and what other types of suitors were interested in Lightning?
We had done some contract brewing for Cismontane last year, so when they came to us about an asset sale [I had already had positive dealings with them]. We have had folks stop by Lightning that run the gambit from brothers looking to get into the beer trade (that did not think through their business needs), to experienced brewers that simply did not have the cash nor the creativity necessary to make something work. In the end, it all came down to cash, and in the beer trade cash is essential.
Is this the end of your brewing career?
During this transition, I am thinking strongly about nano-brewing and selling 100% direct to retail from our location. Of course, I may still be employable in the biotech field or within the broader brewing trade in San Diego.
How satisfied are you with this outcome?
There are pluses and minuses associated with this outcome. We erase our debt, but it’s a shame we have been unable to identify a partner to make the business work as a business.
Do you have any advice for entrepreneurs looking to enter the industry in the midst of its current climate?
I would not open a brewery in San Diego if you are planning on packaging in six-packs or other formats and expect to sell enough beer to make it work. The [retail] space is very crowded, which means it will cost much, much more to have enough volume to be revenue-positive. By much, much more, I would say $5-10 million over a period of several years will be the cost of becoming a new regional brewery.