Steve Rehbock, owner of Saddlebock Brewery, was recently interviewed by a local news station to get his take on the growing trade war and its impact on local businesses. The surprising takeaway from that interview was that the brewery — which opened in Springdale in 2012 — is for sale.
The premise of the story by KNWA was that tariffs on Chinese aluminum and steel were too much for Saddlebock to overcome. “This is a high volume low margin industry and if we have to pay a few cents more a can that’s our profit right there,” Rebhock is quoted as saying.
Rehbock later fired back in a post on Saddlebock’s Facebook page. “This has been in the works for a while,” he wrote. “The tariffs were just one more factor.”
Saddlebock was one of the first in a wave of breweries that opened in Arkansas in the early part of the decade. It is more of a destination brewery—it was named in Trip Advisor’s “14 Brewery Tours in the US You Need to Experience”—than it is a champion of retail accounts, but Saddlebock has certainly staked its claim as a pioneer in Arkansas beer. News of its intended sale is therefore significant.
A classified ad on industry website ProBrewer.com lists a 15-barrel brewhouse, five 10-barrel fermenters, eleven 30-barrel fermenters, a canning machine, and a bottling machine as a part of the deal.
Rehbock intends to keep the building and the land, and will require the buyer to continue brewing operations at the current location. A kitchen and restaurant across the road from the brewery are listed as options, but Rebhock’s intent is to use them to supply a new onsite wedding event center that is currently in the planning stage.
Rehbock recently sat down with the Fayetteville Flyer to discuss his reasons for selling the brewery. He also reflected on the six years he has spent running his out-of-the-way brewery on Habberton Road.
KNWA’s reporting suggested you are selling the brewery because of higher costs associated with steel aluminum tariffs. Is that true? What other factors are influencing your decision?
It was more of an opinion on how tariffs are going to affect the industry. It wasn’t the driving force. About a year ago I started thinking about it. It basically started when both my parents came down with stage four cancer and I began to reflect on what I’m going to do for the next twenty to thirty years. I’m going to be sixty years old on my next birthday, and these are the years I have left in my life. I’m spread so thin and I’m not doing the best job because it’s only me. I’ve been looking for a partner but really haven’t found anyone to come in with me, so I decided, well, it’s just time for me to move on in one way, shape, or form.
Exactly what is for sale?
It has been an evolution for me. The first ProBrewer ad I put out there about a year ago listed everything. I’ve come to realize that the price tag of all the land, the residential homes, the warehouse, the Airbnb, restricts the number of buyers substantially. So, I’m realizing it’s really an asset sale of the business—equipment and inventory. I’m basically throwing in the brand and Facebook and all of that. It is making a profit, so somebody who has the wherewithal and wants to brew will have a really good opportunity to get into this business. It’s a turnkey opportunity for somebody or a group of people. The location is really fantastic. There’s high growth out here.
Are you currently entertaining any offers?
I’ve had discussions with a local broker who approached me several months ago. He said he thought he might have a buyer or two in pocket. One potential buyer has gone through the financials. The whole package was what I was selling then, which was way more than he could afford. In scoping it down he decided not to go forward. I do have some other buyers who have requested funding from a bank and are really interested right now. I’m not sure if their funding is going to go through or not. It’s about 50/50.
Photo: Brian Sorensen
How do you value the business?
Right now, the value of the equipment and all of the inventory—at cost instead of retail—
comes in between $700,000-$750,000.
Talk about your production levels. How many barrels did you produce last year, and what are you on pace for in 2018?
We made less than a thousand barrels in 2017. When we stopped distributing statewide our numbers went down. We briefly went into Kansas but the distributor there was small and I don’t think they renewed their license this year. We’re going to do the same number of barrels this year because the numbers inside Northwest Arkansas have risen to take the place of outside sales. The potential here is fantastic. [According to Rehbock, the production capacity of the brewery is roughly 4,000 to 5,000 barrels per year with the existing brewhouse and fermenters.]
What has been the biggest surprise since opening Saddlebock in 2012?
The biggest surprises for me were probably more personal than business related. For me, running a taproom, I’ve seen some of the darker sides of people that drink. There were two people that had come out [to the brewery] and then [later] committed suicide. I’ve been in relationships with a couple of people that turned out to be heavy alcoholics. So not having anyone in my family or anyone that I was close to having to deal with that, it was kind of an awakening for me, that side of alcohol.
Those are the exceptions, of course. Most people that come out are reasonable. Although I’ve never had any personal issue with alcohol and it has never affected my personal life or job, I did stop drinking. I have not had any alcohol in several months. It has been fun seeing if anyone would notice if I had stopped drinking. I didn’t make a proclamation about it or anything, I just decided to do it quietly and on my own. I haven’t told anyone really but my head brewer, who didn’t even notice.
What has been the biggest challenge?
The biggest challenge for me over the last few years is how thin I had to spread myself. I’m capable of doing anything in the brewing industry, but I’m not capable of doing it all. That realization has come to me because I’m not being effective; I’m not doing the best job I can do at any particular thing. I’ve compensated in part by hiring people who are very independent and capable. In the brewhouse, not counting sales and marketing, there are four people working with me now.
What has been most satisfying?
Seeing my product out in the marketplace and getting feedback from people who enjoy it. And to have employees who have been there since the beginning that are raising families and enjoy having a solid job and income has been very fulfilling too.
Has owning your own brewery met the expectations you had going in?
I tried not to set too many expectations. My expectations were pretty small. I wanted to see my product in the marketplace and make good beer, and that’s all I really had.