BRISTOL, Va. — The owners of Studio Brew say they might close the Bristol location unless the city of Bristol, Virginia releases them from a 2015 performance agreement.
Erich and Pam Allen, who opened the craft brewery at 221 Moore St. in 2015, are asking to be released from the deal a year early, after meeting other stipulations. The Allens said outside investors are interested in helping them create a non-alcoholic soda product but want to own the property outright.
“Unfortunately, the craft beer industry has taken a unique turn, and it’s oversaturated,” Erich Allen told the BVU board. “People are backing off of craft beer but also going after hard seltzer and sodas. Being in business, we’re actually pivoting and going after these avenues of opportunity to rebrand into soft drinks and things of this nature.”
In fiscal 2018, the U.S. craft beer industry experienced its slowest growth since the craft beer boom began in 2015, according to International Wine Spirits Record, a London-based alcohol market analysis firm. At the same time, 1,252 new craft breweries opened when total U.S. beer consumption declined 1.6%, according to IWSR.
In 2015, the city agreed to donate the former fire museum building while the city, IDA and BVU Authority mutually agreed to provide $150,000 based on the Allens investing $2 million into the business and having 14 full- and part-time employees. Funds came from BVU’s economic development account. The building is currently to transfer to the Allens after the business has operated for five years, or in 2020.
The couple pleaded their case and secured approval from the BVUA board of directors last Friday, following a nearly hourlong debate. The matter is expected to go before the city’s Industrial Development Authority on Monday and City Council on Tuesday.
The Allens said they have invested $2.35 million and met or exceeded the 14 employee figure in every quarter except one since shortly after the agreement took effect. The business has generated more than $60,000 in meals taxes for the city and consumed more than $100,000 in utility services from BVU since opening, Pam Allen told the BVU board.
“In order to have future growth, we’re asking the lien and the building be turned over to us,” Erich Allen told the authority board. “By doing so, we’ll have the opportunity to work with these potential investors.”
Studio Brew is based in Kingsport, and Allen said a no vote anywhere along this process could force them to close the Bristol location.
“These other investors are very interested but said if you don’t own the building, then that is a concern. Since we started in June [talking to city leaders], their [investors] patience is wearing thin. We met with the city and IDA and, after meeting with them, they’re in favor of moving forward,” Erich Allen said. “If the vote is no, we’ll report back to our board and the investors and, I’m afraid that may be the end of Studio Brew in Bristol.”
City Manager Randy Eads said the city urged the Allens to secure BVU’s approval first.
“Based on preliminary conversations with council and IDA, I believe there is an appetite to do something to help the Allens out so that Studio Brew can survive and stay in Bristol,” Eads said. “At the end of the day, I don’t need another empty building downtown. I want a business there that allows citizens to come enjoy themselves and produces tax revenue for the city.”
Bristol has a long history of incentivizing retail development, from the Red Lobster, Cracker Barrel and Home Depot projects near Interstate 81’s Exit 7 to funding construction of the Cabela’s building at The Falls.
Former city officials developed the “no net loss” agreements currently in use, where businesses receive rebates from tax revenues generated once the business is operating. The current council recently approved that type of agreement for a developer to build two Pizza Huts in the city and another to help secure chain restaurants Barberito’s, McAlister’s Deli and Popeye’s Chicken in the Euclid Avenue Shopping Center.
“I’ll be the first one to say I’m not a fan of these performance agreements,” Eads said. “I think, at the end of the day, you are trying to pick winners and losers, I don’t necessarily agree with them.”
Eads said the Studio Brew deal is a “remnant from years past.”
“The city has about five remaining agreements in place. I think it will be very difficult in the future for us to approve other performance agreements,” Eads said.