Smuttynose Project Still Brewing in Hampton

After Delays, Smuttynose's Egelston Confident of 2013 Opening in Hampton

By Michael McCord

Hampton Union, Friday, September 16, 2011

[The following article is courtesy of the Hampton Union and Seacoast Online.]
Hampton to be home to a $16 million brewery and restaurant.
[Deb Cram Photo.]

HAMPTON -- The construction of a new $16 million Smuttynose Brewery and restaurant in town remains solidly on track.

"We are coming into the homestretch," said owner Peter Egelston, who updated Seacoast Media Group about progress on the project that has been in the works since 2004.

Smuttynose recently went before the Hampton Planning Board to get an extension for its site plan on Towle Farm Road, and Egleston said moving the farmhouse and barn currently on the land will take place later this year. Full construction is now expected to commence in the spring.

"We plan to begin moving in beginning in late 2012 and open in early 2013," he said. "I'm very confident of that."

Egleston said the site plan extension request, the second the company had made, was "a precautionary move" because "a lot of things are happening simultaneously" for the project. Egelston said the educational process to find a location, finance and construct a new Smuttynose brewery has been equal "to going to Harvard for 20 years."

Delays and detours are nothing new since Egleston and partner Joanne Francis purchased the land in 2008 to build the 42,000-square-foot brewing facility and restaurant. In July 2009, financing issues during the height of the recession's credit crunch led to a major construction delay, pushing back the project to its current status.

While the new brewery project has proceeded at a snail's pace, Egleston said Smuttynose continues on a major growth spurt that is exceeding its capacity to keep up with demand.

"It's a blessing and a curse," Egleston said about the "organic" double-digit increase in sales despite not expanding its distribution or marketing efforts in more than a year. In particular, Egleston cited the continued 20 percent growth in the New Hampshire market, which reflects the company's strengthening and growing brand since its founding in 1994.

The ability to produce more beer while reaching productive capacity led to the farming out of some production of its old Brown Dog Ale brand to a Utica, N.Y. brewer. Even as Smuttynose begins to gear up for the move from its location in Portsmouth to Hampton, he said the company will expand its brewing production at its Heritage Avenue facility with new fermentation tanks that will occupy 5,000 feet of former warehouse space. The goal is to begin bringing back as much of the outsourced brewing as possible.

"It's a great problem to have, but it's not an ideal situation," Egelston said about the cost and potential quality control issues that come with outsourcing production. Ultimately, the new Hampton brewery will allow Smuttynose to double its brewing capacity from 30,000 to 60,000 barrels annually.

The quest for a new Smuttynose brewery has made headlines in the Seacoast region since 2004. After a potential relocation to Newmarket fell through, he hoped to build in a new brewery and restaurant on Lafayette Road in Portsmouth. But strong neighborhood opposition and shaky political support led to the shelving of that plan when the City Council denied a zoning amendment application in 2007.

"That was an expensive civics lesson," Egelston said. The town of Kittery, Maine, also courted Smuttynose, but Egelston said he found the right piece of land and great cooperation with the town of Hampton. While that combination made the process politically pleasant, it has not made it any easier to finance.

"People ask me, 'Why the hell this is taking so long?'" Egelston said. "In a word, it's money." He admits to taking responsibility for being "naive" about the financing of a project of this scope. He saw the project as a business expansion, while lenders and their appraisers have seen it as something much different.

"They view this as real estate development," he said. "I am not a real estate developer."

Egelston said lenders don't care for the company's desire to build a more than $1 million waste treatment system or the more than $2 million investment to become a Leaders in Energy and Environmental Design certified facility.

Egelston said the company's perseverance through the detours and delays has proven fruitful. He has found a local bank willing to be a major finance partner and compliments local organizations such as Rockingham Economic Development Corporation and Coastal Economic Development Corp., which have been crucial in helping secure tax credits, loans and grants for the various aspects of new brewery project.

"I am happy to say that we are moving forward," Egelston said. "I go down to Smuttynose and walk in the door and see how hard everybody is working and what they are doing. It's very gratifying and has made this process worth it every single day."