BAYFIELD - Steamworks Brewing Co. is phasing out its Bayfield plant, where about two-thirds of its production takes
"Our intent is to retrench in Durango, which will be done in phases," co-founder and CEO Kris Oyler said Thursday.
"We'll bring most of our operations here."
Sales are not the problem, Oyler said. Month-in, month-out sales this year are up 30 to 40 percent, Oyler said.
Myriad cost pressures, including transportation and the price of hops, which has tripled in the preceding 18 months, are the culprit, Oyler said.
"We're set to do more than $1 million in sales this year," Oyler said.
A news release sent Thursday said the brewery will stay open in "coming months" as inventory gets depleted. It also
said the restaurant will remain open for now, but with limited operation.
"We tried to run a restaurant in Bayfield, but our business model didn't work as we had planned," Oyler said. "On the
other side, our wholesale beer business has grown. ... But it hasn't been enough to counter the additional challenges
that have essentially been out of our control."
The eventual closure of the Bayfield brewery and adjoining restaurant will have a staggering effect on the town, said
Town Manager Justin Clifton on Thursday.
"It's a big loss to a small community that is trying to chart its way into a sustainable and diverse economy,"
Clifton said. "It's a huge disappointment because the brewery is a direct-based business, which means it brings in
new money, from New York, for example. It's not the local dollar that circles and circles and circles until it's
The departure literally snatches money from the town, Clifton said. Bayfield is within weeks of receiving $300,000
from a Community Development Block Grant obtained by Steamworks to offset its impact on the town sanitation system.
"We don't have the grant in hand, but if the brewery leaves, we'll have to return the money," Clifton said. "The
grant was based on keeping the employees on the job."
Steamworks invested a lot of money when Bayfield's wastewater treatment facility outgrew capacity, over time
contributing significant and unanticipated resources to help Bayfield build a new water treatment plant, the release
Steamworks has laid off three of eight brewery-related employees, Oyler said. Management and restaurant employees
were not affected.
Steamworks will be sorely missed, said Russ Szlag, a Vallecito resident who for three years has stopped by frequently
to grab a brew and something to eat.
"They have a regular crowd and a decent menu, although it's changed a lot," Szlag said. "There's live music and a
raffle on Friday nights where you can win a 7Â½-gallon keg, a six-pack or a T-shirt."
Szlag is not quite sure what his next hangout will be - maybe a place in Vallecito.
Brewing and packaging will continue for the time being in Bayfield, where the brewery and restaurant are known as the
Bayfield Beer Factory to differentiate them from the Durango outlet. Liquidation of equipment in Bayfield will be
done in phases, with the final date up in the air, Oyler said.
Steamworks also will have to divest itself of about 2 acres in Bayfield, which includes a vacant lot adjoining the
brewery. The La Plata County Assessor's Office lists the 2009 total actual value of the property at $723,510.
Steamworks opened at East Second Avenue and Eighth Street in 1996 and the Bayfield facility opened in 2004 at 442
Wolverine Drive. Production - 3,000 barrels in 2006 and 4,000 in 2007 - is scheduled to reach 5,600 barrels this
"It's not that we're not selling beer," Oyler said. "It's the cost of production."
The Steamworks flagship brew is Steam Engine Lager. The brewery's market includes Texas, New York, Minnesota, Virginia and Wisconsin in addition to neighboring New Mexico and Arizona and, of course, Colorado.
Oyler said Steamworks now will focus its attention on Colorado, where 55 percent of sales occur.