The tap runs dry

What’s the deal with Butte Creek Brewing Co.?

HOME BREW NO MORE <br> With the Chico facility closed, Butte Creek’s beers are no longer brewed near their namesake—they’re made at Mendocino Brewing Co. in Ukiah.

With the Chico facility closed, Butte Creek’s beers are no longer brewed near their namesake—they’re made at Mendocino Brewing Co. in Ukiah.

Photo By Meredith J. Cooper

Crafty business
In 2008, The U.S. craft beer industry made $6.3 billion. Of that, 14.5 percent was from contract-brewed beer.

It’s been nearly six months since the “official beer of planet Earth” has been brewed here in Chico. Butte Creek Brewing Co., which opened its doors in 1996 and changed ownership about five years ago, shut those same doors for the last time in January, but barely a peep has been heard about it until now.

Walking up to the front of the once-bustling brewery on West Second Street that was well-known for its organic brews, one feels a sense of emptiness. Sure, Chico still has Sierra Nevada. But Butte Creek held a special place in the city’s heart. After all, beer and organics seem to run through Chico’s veins.

“It’s a shame,” said Roland Allen, one of the brewery’s founders. He left the company four years ago, a year after it was bought by John Power, who lives on the coast and did not answer attempts to contact him. The operations then were placed under the umbrella of Golden West Brewing Co., which is publicly traded.

“I think it’s at about 8 cents a share right now,” said Ben Kirby, who has been working in some capacity or another with the company since its inception. The Chicoan still does the books for Golden West.

Just because the production part of the operation left Chico doesn’t mean the brand is lost, however. The beers are now being contract-brewed by Mendocino Brewing Co., which finished its first batch of Butte Creek brews in March.

Interestingly enough, despite no public announcement, the partnership was created back in December, according to Securities and Exchange Commission reports. The contract agreement calls for the contractor (Golden West/Butte Creek) to place an order with Mendocino Brewing Co. each quarter. The contractor retains the rights to the recipes and the branding, and must supply the hops and labels—Mendocino just has to do the heavy lifting.

Mendocino Brewing Co. is in Ukiah—about three hours away, west of Clear Lake. “It’s actually not that uncommon,” Kirby said of contract brewing. “Lots of people don’t know that Samuel Adams is contract-brewed.”

In fact, for a while, Butte Creek Brewing Co. was contract-brewing for two other beer makers: Mataveza and, more important, Bison Brewing Co., whose contract ended Dec. 31, 2008. Bison accounted for almost 20 percent of the brewery’s business.

The contract with Mendocino is for three years. According to its business plan filed with the SEC, assuming it attains more working capital, Butte Creek still hopes to brew its specialty Revolution X® Organic Imperial IPA, Trainwreck Organic Barley Wine, Organic Helltown Hefeweizen and Sustainable Harvest Organic (Fresh Hop) IPA. As of now, it’s sticking with its four mainstays: a pilsner, a pale ale, an India pale ale and a porter.

And, yes, they’re still available in Chico. “I had one at Duffy’s a week or so ago,” said Kirby.

Back in 1996, when the brewery first opened, it had a goal of offering organic beverages, putting it way before its time, as just now major breweries such as Anheuser-Busch are trying to offer the same.

The place, small when compared with its behemoth local rival Sierra Nevada Brewing Co., was known for being a laid-back, relaxing place to work. There was always music blaring from somewhere and, come bottling time, a bunch of temporary workers would fill the place, along with the sounds of clanking glass, working for minimum wage and vouchers for beer and other brewery goodies.

Despite being a small operation—the company had a skeleton crew of about seven employees—Butte Creek Brewing Co. bottled an average of 6,000 cases and 220 kegs a month and shipped to 20 states. In 2006, the brewery took home a gold medal for best German-style pilsner at the Great American Beer Festival in Denver.

But lately, with a gloomy economy and the price of hops skyrocketing, the operation just stopped being profitable. In fact, the company went into default on its rent and was sued by its landlord, according to SEC filings. An agreement has been met, as all the equipment—which is for sale—is still in the building, though Golden West/Butte Creek still owes upwards of $14,000.

That’s almost petty cash compared with what else it owes. As of Dec. 31, 2008, the brewing company owed almost $80,000 to the IRS and more than $1.9 million to creditors.

The SEC filings went so far as to say there is no assurance that Butte Creek will continue to operate, considering all its debt, if it can’t find a way to grow. Closing the Chico plant eliminated a lot of operating cost, as well as employee costs.

“Running a brewery is very expensive,” Kirby said. “Chico has one brewery.”