E-Malt.com News article: USA, WA: Poulsbo’s Sound Brewery embarks on expansion project

The most popular beer from Poulsbo’s Sound Brewery is a strong Belgian-style ale called Monk’s Indiscretion. With a 10 percent ABV (alcohol by volume), it’s big and bold, rather like the expansion the brewery is undertaking, The Kitsap Sun reported on February 6.

Owner and founder Mark Hood and his partners are assembling an entire new brewery in a former truck repair building on Viking Avenue, just across the street from the small business park where Sound Brewery’s production facility and taproom have been for four years.

The new facility that will give Sound the capacity to produce 10 times as much beer will utilize a mash-filtration brewing system that’s not typically found at small-scale craft breweries.

“We’re the first ones in Washington state to use this,” Hood said during an interview at Sound’s taproom. “It’s a fairly old technique for giant breweries, but it’s brand new, like two years old for small breweries.

“It’s a completely different way to brew beer.”

The closest brewery using a mash filter is Full Sail, one of the Northwest’s foundational craft breweries founded in 1987 in Hood River, Ore. Named Craft Brewer of the Year by Beverage World Magazine in 2014, employee-owned Full Sail produces about 120,000 barrels a year, vastly more than Sound’s current output of about 1,350 barrels.

However, Hood said his small brewery will realize the same operational efficiencies of installing a mash filter, as Sound expands to keep up with growing demand.

“This (current) system does seven barrels in about five hours,” Hood explained. “The new brewhouse will do 15 barrels in two hours. So in an eight-hour day, we can do four different beers, all 15 barrels, or we can do one big, giant 60-barrel batch” of one of Sound’s top-selling beers such as Humulo Nimbus Double IPA.

That flexibility is especially helpful for a brewery like Sound that has a roster of a couple dozen beers, and likes to experiment with a variety of seasonal brews.

“The other advantage is efficiency and being green,” Hood said of the mash filtration system. “This thing uses way less water, way less power, and it gets 98 percent extract out of the malt. Right now the best we can get is about 80… so it’s extremely efficient.”

And while Hood plans to add three employees in the brewery and one in sales, the new system’s efficiency also will significantly reduce the per-barrel labor cost of producing beer.

Sound’s mash filter was shipped from Belgium to Victoria, B.C., where a company called Specific Mechanical built the brewhouse — the kettles, piping and other components of the system.

The Canadian company also built the brew-house that Hood bought four years ago to start Sound Brewery, and he said Specific Mechanical has provided exceptional support for the system even though Sound was not the original buyer. So when Hood decided he wanted a mash filtration system for the new brewery, he and head brewer Brad Ginn — an engineer who formerly worked for the city of Bremerton — collaborated with Specific Mechanical “to figure out what we could do to make this system ourselves,” Hood said.

The result was a big savings over the $500,000 price to buy a complete, ready-to-install system.

The whole investment in the brewery expansion, including the $450,000 purchase of the former Clark’s Diesel Repair property, is about $1.3 million, which is being financed by an SBA loan through Liberty Bay Bank in Poulsbo.

“They’re a local bank, and they’ve supported us from day one,” Hood said. “Without them this never would have happened.”

It originally happened in Poulsbo and not Bremerton — where Hood lives and first looked for a location to start his brewery — because one of the founding directors of Liberty Bay Bank, Gary Anderson, became Sound Brewery’s landlord.

“He’s really why we moved into Poulsbo; he worked with us on getting this going,” Hood said.

Anderson — who’s no longer a bank director and retired last year as chief financial officer of Paladin Data Systems — said he owned a commercial building and faced a challenge finding someone to lease it when the economy was still grim several years ago.

“Coincidentally, at the same time I was looking at a five-year refi on the property,” Anderson recalled. “I’ve been a CPA and an entrepreneur all my life, and I figured the only way to get that done was to help somebody get started in business.”

He structured a five-year lease for Sound Brewery with free rent for an initial period, then gradually increasing payments.

“The whole process there was trying to find a way for somebody to get started,” Anderson said, “and let them hang on to their capital to do what they need to do to get their business going.”

Sound’s success that is fueling its expansion gives Anderson a lot of satisfaction.

“As it turns out, Mark’s got some of the best beer we know of, so it’s going to do fine,” he said. “I’m very proud of all of that. That’s something that a person can feel good about; when you help a small business get going like that, it’s good for the community.”

Even when Sound’s new facility is operational, hopefully by this summer, the existing brewery and taproom will remain part of the operation. Hood and his brew crew love to get creative and will use the original brewery for specialties like barrel-aged beers, and the taproom accounts for a significant portion of their draft beer sales.

Sound’s revenue is derived about 50-50 from sales of bottles and kegs, although about 75 percent of the beer currently produced is for draft.

“But out of that 75 percent that’s draft, believe it or not, 25 percent of it goes right out of here,” Hood said of the taproom that has only 27 seats. “We sell 35 barrels a month through here.”

That’s 70 kegs’ worth of beer, since a 15.5-gallon keg is called a half-barrel in brewery jargon. Taproom sales include beer to go, sold in kegs, growler fills or 2.5-gallon “party pigs.”

Along with the brewery expansion, Hood’s also looking to open at least one more taproom. Washington allows three off-site taproom locations for each brewery, and Sound’s second one is likely to be in Seattle, where Hood is looking at sites in the Pioneer Square and South Lake Union areas.

But he has a lot more than another taproom in mind for distributing all the beer Sound’s new brewery will produce.

“There’s very few (Washington breweries) that really try aggressively to sell outside the state,” he said. “We’re one of them. We sell in the four western provinces in Canada,” as well as shipping a few dozen kegs a month to Japan. In Tokyo, Sound brews are found at pizzerias and other trendy spots that serve American craft beers.

“We just had the biggest order we’ve ever had from Canada,” Hood said, and he expects shipments to Japan will soon increase to about 100 kegs a month. He’s also developing channels to ship to Europe.

The big jump in sales and distribution, however, will be closer to home, where Sound’s domestic market currently extends only to Oregon and Idaho.

“One of the biggest opportunities for growth outside the state is through the megachains — BevMo, Total Wine, Whole Foods, those kind of places,” he said. Those retailers already sell his beer in the Puget Sound area, and that’s important because the 22-ounce bottles of a premium beer like Monk’s Indiscretion that sell for $9 in stores have a much higher profit margin than kegs that bars and restaurants buy.

Sound Brewery raised its industry profile when it was one of three Washington breweries invited last year to Savor, a prominent food/beer pairing event held annually in Washington, D.C.

“When I was there, the head buyers for all Total Wine stores, and for Whole Foods and for BevMo all came up to me and said ‘when are we going to get your beer in California?’” Hood said.

That’s the reason for the new brewery, and if it eventually produces its max capacity of 13,000-plus barrels a year, Sound could be the big dog on the peninsula. The combined production of all Kitsap breweries in 2013 was more than 11,000 barrels, according to a Kitsap Sun article last summer on the region’s thriving craft brew scene.

Hood, who kept his job as a video game designer during Sound Brewery’s first two years in business, thinks a reachable goal would be to produce 4,000 barrels in the new brewery’s first full year of operation.

“That’d be really nice,” he said. “It wouldn’t be that hard with the new system.”


13 February, 2015