Third Space Brewing was expanding, then coronavirus hit

Third Space Brewing in Menomonee Valley. Credit Chalonda White

Third Space Brewing has a tradition in its Milwaukee taproom. Every Friday at 5:45 p.m., the company’s brewmaster gets up on the bar and delivers a toast to kickoff the weekend.

With the taproom shutdown amid the coronavirus outbreak, the brewmaster’s toast will instead happen online as part of Facebook Live stream.

It is just one way the growing brewery is adapting to a new reality. It is also a long way from where Third Space was just a few weeks ago.

On March 2, the company was using its social media to highlight the arrival of three new 90-barrell brewing takes at its 1505 W. St. Paul Ave. brewery.

The new tanks expanded Third Space’s capacity from 12,00 to 15,000 barrels and the company needed them to keep up with its growth plans. Third Space expanded its distribution to northeastern Wisconsin earlier this year and planned to sell around 12,000 barrels total this year, up from 8,700 in 2019 and 5,300 in 2018.

“We were exceeding our sales expectations (in northeastern Wisconsin) in the first few months and so year, we were riding high and very excited about what 2020 was going to bring and a lot of it’s come crashing down,” said Andy Gehl, co-founder and director of sales and marketing at Third Space.

Gehl said the brewery has around 2,000 customers and has seen revenue drop by more than 50% as bars and restaurants are forced to close. Third Space also shut down its own taproom last week and while it has scaled back production, there are limits to what it can do.

“We have cut back, but the thing about brewing that people don’t always think about is it’s not like a light switch, you can’t just turn it off,” Gehl said. “We have a lot of beer in tanks that was brewed two weeks ago, three weeks ago that is coming down the pipeline, so you can’t just turnoff the spigot and it’s done.”

Third Space has transitioned to put some beer planned for kegs into cans as consumers shift to grocery and liquor stores, but that doesn’t make up for the drop in business.

“There’s quite a bit of beer that is going to not be sellable and it will probably get dumped down the drain at some point if we can’t open sooner than later,” Gehl said.

Just as it takes time to slow down production, Gehl said brewers also face the challenge of a delay in ramping up production when customer demand returns along with the need to keep yeast strains alive.

“You need to use them or they die,” Gehl said.

He’s hopeful the setback is temporary and Third Space will return stronger than ever.

“We’re trying to manage cash flow so we can continue to pay employees and continue to keep the business afloat,” he said.

He acknowledged that the quick switch from optimism and growth to dealing with the current challenges is stressful.

“There’s a lot of things to worry about. When you’re a growing business and things are going well, you’re not constantly worried about how are we going to keep the lights on or make payroll, you’re thinking about how do we make the right investments to keep growth going in the right direction,” Gehl said.

“There’s always some stress involved, you always have that weight of managing the company on your shoulders and managing people’s livelihoods,” he added. “We have 30 some employees, we have 14 full-time employees that rely on us and so that’s a lot of weight on you and it gets even heavier in times like these.”

Until Third Space can reopen its taproom and start shipping to bars and restaurants again, Gehl said the plan is to use social media to help customers get through the outbreak. That will include things like the brewmaster’s toast and other posts that offer resources for those stuck inside.

“Beer is all about having a good time with the people you love and so we want to try to continue to create that for people whether we can bring them into our taproom or not,” Gehl said.

 

 

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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