Kannah Creek expansion: Heady times for GJ brewing company
Local brewery stands to benefit south downtown, riverfront
Fourteen years ago, Jim Jeffryes bought roughly 3 1/2 acres of barren ground at the intersection of High Potential and Sobering Reality, envisioning a brew pub in a neighborhood historically dominated by junkyards and radioactive mill tailings.
Next month, the co-owner of Kannah Creek Brewing Co. will ceremonially break ground on a $4.2 million expansion that should lead to the Grand Junction-based brewery’s two most popular beers hitting the shelves of liquor stores here and elsewhere in Colorado by this time next year. The goal is to eventually push the craft beer into neighboring states.
Kannah Creek’s anticipated growth from a local pizza-and-beer joint to a regional beer producer and bottler is not just a success story for the 7-year-old business at a time when many companies continue to ride out the slow-to-recover economy. It’s expected to provide a shot in the arm for Grand Junction’s south downtown, an area that clings to its gritty industrial origins, but also counts amenities such as the Colorado River and the future Las Colonias Park.
“No one wants to be down there. It’s got a reputation for junkyards, and you have that transient population. Nobody wanted to be the first down there, but here we are,” Jeffryes said.
Jon Schler, president of the board of directors for the Western Colorado Botanical Gardens, said he’s excited to welcome a neighbor just to the east of the gardens and eliminate a longtime eyesore.
“We think that’s part of the new development down here,” Schler said of the brewery, noting he hopes to partner with Kannah Creek in efforts to draw more people to the area.
BOTTLING THE MOST POPULAR BEERS
Touted as the Edgewater Brewery, the blueprints for a 14,000-square-foot brew pub, production facility and bottling plant at 905 Struthers Ave. illustrate the growing number of locals and tourists tipping a pint of one of Kannah Creek’s seven regular beers and its seasonal brews.
In 2006 — its first full year in business at 1960 N. 12th St. — Kannah Creek brewed 450 barrels and grossed $800,000 in food and beverage sales. By the end of this year, it expects to brew 1,000 barrels and pull in $2 million in revenue, according to Jeffryes.
In its infancy, the brewery limited beer sales to the restaurant and kegs sold at retail price. But as its popularity grew, people began asking for beer at local restaurants and hotels. So two years ago, Kannah Creek began distributing kegs at wholesale price. When Jeffryes and his five business partners — wife Bernadette, daughter Anna Adair and her husband, Ross, and husband and wife Eric and Tina Ross — reached the point where they were selling nearly everything they could produce at the 4,000-square-foot restaurant, they decided it was time to expand.
The new facility, scheduled to open May 1, will feature a patio similar in size to the 12th Street location, a beer tasting room and a limited menu. Most of the building will be dedicated to production and bottling of Kannah Creek’s two best-sellers: the Standing Wave Pale Ale, which won a gold medal at the World Beer Cup in 2008 and bronze at the Great American Beer Festival in 2008, and the Lands End Amber Ale, which won gold at the World Beer Cup in 2010. Seasonal beers also will be brewed there. That will free up slots for two new beer varieties at the restaurant.
Edgewater will boast four 60-barrel fermenting tanks (five times the current capacity at the restaurant) and two 60-barrel conditioning tanks (about 30 percent more capacity), where the finished beer will reside until it’s ready for packaging.
Jeffryes said the pale and amber ales should be available in Grand Valley liquor stores by next summer, and he’s in contact with a distributor to sell the product elsewhere in the state, including Denver and the Front Range. The beer should be available in both bottles and cans by the end of next year.
Jeffryes expects to brew 4,000 to 5,000 barrels of beer in the first year of operation at Edgewater, which will have a 6,000-barrels-a-year capacity with the equipment currently in place. The facility won’t turn a profit, though, until it can brew 9,000 barrels annually — a level Jeffryes believes the market won’t support for a couple of years. The 14,000-square-foot brewery ultimately can accommodate 20,000 barrels a year.
THINGS LOOKING UP IN SOUTH DOWNTOWN?
The brewery may not give Riverfront Trail walkers and bikers a reason to pass through the area — the river and the trail do a good enough job of that on their own — but it may serve as an impetus to visit more often or hang out longer. It should open about the time trail users are fully emerging from their winter hibernation.
“There’s an incredible amount of traffic, a lot of pedestrians in that area. I think (the brewery) could make a great difference,” Schler said, noting there currently is no venue for food or beverages along the entire Riverfront Trail system.
This is the kind of development city officials believed Riverside Parkway would spark when the 7-mile-long beltway was completed four years ago. The recession and resulting cratering of the real estate market have stunted any sort of south downtown transformation. Only one other bricks-and-mortar project, the construction of building materials supplier ProBuild, 2773 Riverside Parkway, has been completed along the parkway since it opened.
“This is an area where the Riverside Parkway was the most significant improvement we’ve seen in a while,” said Lisa Cox, planning manager for the city of Grand Junction. “We were kind of hoping that might be a catalyst.”
FROM HOME BREWER TO BREWERY OWNER
Jeffryes, who initially lived in the valley in the late-1970s and early-1980s before being ushered out by the oil shale bust, might never have reached this point if not for a turn in his health.
The 58-year-old California native became hooked on brewing beer in 1990 after a friend gave him a home brewing kit. He entered amateur brewing contests and picked up a few awards. It could have been nothing more than a fun hobby, since he had a good-paying job as an equipment engineer for Xerox Corp. But in 1994 he was diagnosed with multiple sclerosis, an autoimmune disease Jeffryes figured couldn’t support his stress level at work.
So, living on long-term disability, he returned to the valley in 1997. He became certified by the American Brewers Guild, performed an apprenticeship in Denver and worked for a brief time at the Palisade Brewery. All the while, he was thinking about the parcels at Ninth and Struthers.
Jeffryes began trying to build a brewery in south downtown in 2003. But each time he filed a plan or was granted a planning clearance, a hurdle popped up: the discovery of mill tailings at the site, the installation of utility lines, the beginning of the Riverside Parkway project.
One day, after leaving the Ninth and Struthers location, he noticed a for-lease sign in front of the former Prime Cut steakhouse at 12th Street and Orchard Avenue. He called the Realtor and asked to look around. He signed a lease in the spring of 2005, compiled a business plan and leased some equipment. Then he won an exemption from the city to sell liquor within 500 feet of then-Mesa State College and “threw the doors open and crossed our fingers,” knowing he was doing so in close proximity to competing brew pubs Breckenridge Ale House and Old Chicago.
The success Jeffryes and the other owners built at Kannah Creek Brewing Co. allowed him to return to the location along the riverfront.
“This was a really great stepping stone to make that bigger project happen,” Jeffryes said.
WHAT’S ON TAP
After much coaxing and number-exchanging, the bank recently signed off on a $3.7 million loan to Kannah Creek, which contributed $500,000 cash to the expansion project. While that elicited a collective sigh of relief, Jeffryes knows the real work begins now.
A company that, for the most part, has shunned advertising to this point must hire a sales manager to secure a spot on shelf space that’s at a premium and create a voice for Kannah Creek on the uber-competitive Front Range, but without forgetting its origins.
“We have to make sure our local market is our best market,” he said.
Jeffryes and his team must also walk a fine line between producing too much beer, thereby compromising the freshness of the product, and not producing enough after committing to a new market.
“You don’t want to get into a market and run out because people lose their loyalty,” Jeffryes said.
After focusing the last seven years on production and the restaurant side of the business, Kannah Creek now adds distribution while trying to ensure the first two business elements don’t slip in quality.
To that end, Jeffryes said he has to make sure he surrounds himself with good people — people who are living the ownership group’s dream or living their own dream through the expansion. He has hired a couple of brewers and trained them in the last few years and expects to hire another 20 employees in the first year.
Kannah Creek has a ways to go before its production reaches another Colorado craft brewer — the Fort Collins-based New Belgium Brewing Co., which sold more than 700,000 barrels of beer in 2010, the most recent date on the company’s website. But it’s already come a long way since Jeffryes took a chance on a mill tailings-infected plot 14 years ago.