Stone Brewing’s Tale of Three Cities (edit now two)

Stone Brewing’s Tale of Three Cities (edit now two)

Update- I wrote this a week ago and never published it.  There is more I wanted to add.  I am publishing it now because a few friends wanted to see it.  Norfolk is now out of contention.  I don’t know what perks Ohio and Virginia are offering.  Below is just raw data without perks.

 

I have been watching the press releases roll out of Google News Feed ever since Stone Brewing announced expansion to the East Coast.  Then I watch people on news and beer forums start talking about each other’s cities, creating facebook like pages etc etc.  So I sat down last night, had a nice Stone beer, lit a cigar and started making the below spreadsheet.  Probably 1/1000 the size the one Stone is making, but I skim the surface and don’t get paid for this.

Shipping

One of Stone’s biggest expenses is going to be shipping all those kegs and bottles.

Trains– The easiest and cheapest way is by rail, if you have a rail yard.  The location in Richmond could have a rail running through the brewery.  CSX cuts across the back of the property.  But lets look at whats already there: Columbus and Richmond have major rail yards.  Columbus has the only Intermodal Terminal (transfer from truck to train and visa versa).  Maybe trains aren’t an option.

Trucks– Richmond has I81 and I64 cutting through it and is located within a days drive to the entire east of the Mississippi population.  Norfolk and Columbus start getting into two day transit times to various cities.  This adds a major expense to the shipping.  Norfolk’s trucks will be stymied by the Bridge/Tunnels and horrible traffic across the Chesapeake Bay.

Deep Sea Ports are another factor to look into.  Some shipments may be too large for a truck, and may be best floated south to Florida.  Trucking companies charge a lot of money to go into Florida, because they often come back up empty.  But trains solve this problem too.

State Laws

Ohio is one of the states with ABV restrictions.  No beer can be brewed over 12%.  Virginia has no legislation like that.  Stone likes high ABV beers.

On the flip side, the State Excise tax is $.18 in Ohio vs $.26 in Virginia.  Stone’s RFP said they initially will produce 120,000 barrels and then ramp up to 500,000.  The difference between the Excise Taxes are around $300,000 to start and $1,240,000 a year when fully scaled.  Ohio loses on the types of beers brewed, but wins on the Excise Tax.

However, Richmond’s business taxes on equipment and property are far less.  I think this is a carry over from the tobacco days, but RVA does well with low business taxes.  When spending $10s of millions in a production facility, this is a huge savings.

Cost of Living

All of us that live here, love Richmond.  While our cost of living is below the national average, we aren’t as cheap as Columbus.  We are cheaper than Norfolk. However, Columbus loses in property taxes, having some of the highest in the country.

Utilities were hard to peg.  Columbus electricity is run by the government, so seemed kind of a flat rate.  Here in Virginia, Dominion Power has sliding scales for different times of the day and amount used.  Stone will do best to run it’s high electricity machines like bottling lines at night to save money in Virginia.  Of course, it will probably incorporate solar to offset this.

Water was all over the map.   Richmond has good prices on water, but high on waste water.  Stone will have to pay the waste water fee on water not put into it’s beers. Trust me, breweries use a lot of water to clean and sanitize.  There may be a commercial rate I am sure the city could dig up for them.

While talking quality of water, Richmond wins.  Our water is some of the best in the country (probably related to the high waste fees) and the James River flows much cleaner through the state.  If you compare natural minerals in the water, our water fits brewers perfectly as not much tweaking needs to be done to match recipes.  In fact, our water is very similar to the ancient city of Plzen (Pilsen).

Tourism

I think it is agreed that Richmond wins on tourism.  Norfolk may draw a few tourists to make the 40 minute drive away from Virginia Beach, but it is not an easy destination spot.

I honestly don’t remember much about Columbus.  I drove there once to see Ray Charles during my college years.  We went to Papa Joes afterwards and drank beer from a plastic sand bucket.  But unless your child goes to Ohio State, or you are from there, I never hear of anyone marking Columbus as their summer vacation.  It is a lovely city from what I remember.

I think one thing I really want to see in RVA, is Stone Brewing versus Mekong Restaurant in the annual Dragon Boat Race.  I think that would be epic.  Who knows, maybe some of the plans are to put a dock behind the brewery and you can boat to the restaurant/garden.  Why no one has done this in Richmond, I don’t know.  Outdoor Magazine loves RVA, hopefully Stone sees our natural beauty as well.

What did I miss?

As Richmond, Norfolk, Columbus, Ohio and Virginia scramble to make adjustments to laws, zoning, taxes and what not, Stone sits patiently enjoying it’s new brewery in Europe.  All three cities are great in their own way.  I am sure we will not be privy to the tax credits being offered until the deal is inked.

While the taxes are slightly higher in Richmond, the utilities are less and business equipment taxes are lower.  Richmond wins on shipping and closeness to the major cities.  This is important as you ship seasonal products and need quick delivery.  It is a close race on my small spreadsheet.  It will be interesting if Stone discloses what pushed them to their final choice.

A comparison Columbus Norfolk Richmond
Transit
Major Rail Yard 1 0 2
Intermodal Terminal 1 0 0
Number of Interstates 1 1 2
Deep Sea Ports 0 1 1
Distance to Major Cities in hours by truck, with no traffic….
Chicago 5.5 14 12.5
New York City 8.5 6.5 5.75
Washington DC 6.75 3.5 2
Atlanta 8.5 8.75 8
Savannah 10.5 7.25 6.75
Miami 17.5 14 13.5
Nashville 5.75 10.75 9.25
Philadelphia 7.75 5.25 4.25
Boston 12 10.25 9.5
Raleigh Durham 7.75 3 2.5
Charlotte 7 5.25 4.5
Detroit 3.5 11.25 9.75
Richmond 7.5 0 0
VA Beach 9.25 0.5 1.5
Columbus 0 7.5 7.5
State Laws
Max ABV allowed 12% none none
State Excise Tax per Gal 0.18 0.26 0.26
Cost of Living Based against Richmond 14% Cheaper Housing %3 more expensive
Based Against Norfolk 20% Cheaper 3% Cheaper
Based against Columbus 14% More expensive 20% more expensive
Taxes and Utilities Machine/tool tax $3.50/$100 $4.25/$100 $2.30/$100
Water $3.11-$1.70 $4.45 $3.40
Waste water $4.09 $3.83 $6.17
Electricity (Comm KWH) $0.042 $0.042 $0.042
Quality of water Based on purity 2nd 3rd 1st
Based on natural minerals for brewing 2nd 3rd 1st

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