Groundswell moves to Santee after failed Twisted Manzanita Brewing

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Grantville-based Groundswell Brewing Co., only three years old and a minor player in San Diego’s booming craft beer industry, stepped up its game recently by buying most of the assets of failed Twisted Manzanita Brewing Co.

While President Kevin Rhodes declined to reveal the price paid for Twisted Manzanita’s beer making equipment, he was definitely thrilled about the prospects of greatly expanding his brewery’s operations.

Grantville-based Groundswell Brewing Co., only three years old and a minor player in San Diego’s booming craft beer industry, stepped up its game recently by buying most of the assets of failed Twisted Manzanita Brewing Co.

While President Kevin Rhodes declined to reveal the price paid for Twisted Manzanita’s beer making equipment, he was definitely thrilled about the prospects of greatly expanding his brewery’s operations.

“This was an opportunity that came up that is going to push (its growth) a lot faster,” he said.

From his company’s modest production of nearly 1,000 barrels this year, because of the expanded capacity he estimated next year’s level should come in between 2,500 and 3,000 barrels, he said. Also in the cards for the facility at 10151 Prospect Ave. is selling his beer in cans, and expanding sales beyond San Diego.

“Our one to two year plan is to go into Southern California, and maybe push into Central California, and possibly Arizona,” Rhodes said.

Rhodes was already familiar with Twisted Manzanita, having brewed 70 to 80 percent of his beer there, essentially leasing their tanks. Yet he never saw any inkling that things were going downhill, he said.

According to its Chapter 7 filing in federal bankruptcy court, Twisted Manzanita Ales Co., owned by Jeffrey Trevaskis of Jamul, listed total assets of nearly $230,000, but had total liabilities of $892,000. It had 91 unsecured creditors who filed claims totaling $511,000.

The brewery, whose bottles and cans could be purchased at many local outlets, reported generating gross revenue of $1.4 million last year, up from $1.3 million in 2014, according to its April bankruptcy filing.

Along with the increased production he gets, Rhodes said he would expand his staff by five to seven workers to bring the total to at least 15. The new positions include a brewer, two cellar workers, an operations and events position, and a tasting room person.

The brewery will maintain its tasting room at 6304 Riverdale Street in Grantville but brew all its beer at the Santee location.

While most of the renovations to the Santee brewery are cosmetic, visitors will see a distinct change when it reopens in mid-January, said Christianne Penunuri, Rhodes’ wife.

For one thing, the tasting area will be much lighter, and inviting, especially to women and, families, she said. “It’s important to me as a woman that our tasting rooms are comfortable, that they’re family friendly, dog-friendly, that everyone, including women, feel comfortable,” Penunuri said.  

To that end, Rhodes is getting rid of a smoking area outside the brewery, converting it into a garden. There will also be loads of games, including a giant Jenga set to keep folks engaged. “We want to create a place that families can bring their kids, and where they can hang out,” he said.

The expanded tanks (it will have six) gives Rhodes and his new head brewer Callaway Ryan, formerly of Stone Brewing, more room to get creative with beer styles. Groundswell’s flagship beers are Hubba Hubba Double IPA, and Undulation White IPA but it has six core beers including a Hefeweizen, Rhodes said.

Eventually, Groundswell will also get into the making of spirits, which was a side business of Twisted Manzanita. Currently Rhodes is in the process of obtaining the proper licenses for that business.

Rhodes said the company had to borrow funds to complete the brewery purchase, but he’s seeking investors to help him grow at a quicker pace. He plans to sell 10 to 15 percent of the company’s equity to raise between $500,000 to $600,000, which would value Groundswell at least $5 million.

Twisted Manzanita’s failure wasn’t the only brewery contraction this year. El Cajon’s URBN St Brewing stopped its brewing but continues as a restaurant. Recently, Stone Brewing, the area’s largest by far and with more than 1,000 employees, laid off 60 workers, prompting the obvious question as to whether the local industry has reached over saturation.

Rhodes says no and that there’s plenty of room to grow.

“I believe there will be more consolidation but that’s part of every industry,” he said. “The interesting thing is that there’s only been about two to three recent closures. If you look at the restaurant industry, there are consolidations and closures happening all the time.”

In a related Santee beer story, the big Karl Strauss project that was supposed to be underway at the corner of Cuyamaca Street and Town Center Parkway by this time still hasn’t broken ground.

Yet the company must be serious since it purchased the 10-acre site for $5.4 million in January. According to Santee senior planner John O’Donnell, the brewer is talking with Preserve Wild Santee about concerns the environmental group has with the project.

Plans revealed by Karl Strauss last year show three buildings at the site, including a brewing house, a tasting room, a restaurant, office space, and a warehouse building. Initial employment at the company’s planned headquarters was estimated at 100 to 150 people, but would eventually grow to about 300, according to co-founder Matt Rattner who spoke to the Santee City Council about a year ago.

Rattner did not return a request for comment for this story.

Karl Strauss has been in an aggressive expansion mode in recent months, opening breweries/ brewpubs in downtown Anaheim and Los Angeles. It now has 10 breweries/ restaurants including five in San Diego County. Last year it was ranked the 46th largest craft brewer in the nation with sales of about $50 million.

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