Justin Carson and Paul Benner plan to transform the graffiti-strewn building on Vega Avenue into a production facility designed to serve nomadic or space-strapped brewers.
CLEVELAND, Ohio - Beer could flow again late this year at a once-venerable Cleveland brewery, under plans fermented by local entrepreneurs.
Justin Carson and Paul Benner, the minds behind the small-scale Platform Beer Co. on Lorain Avenue, have found their next project in the former Leisy Brewing Co. bottling plant less than a mile away. Playing off steady growth of the craft-booze business, they plan to transform the graffiti-strewn building into a production facility designed to serve nomadic or space-strapped brewers.
A small but growing field, contract brewing essentially allows producers to outsource the labor. Such facilities, where brewers might pay by the barrel, can be a boon for new or growing businesses that can't afford equipment, staff and other infrastructure costs. Some companies, such as restaurant chains with private-label beer brands, outsource every step of the brewing process. Others just need a bit of wiggle room, or a lower-risk way to tap into a new geographic territory.
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A lithograph shows the Leisy Brewery Co. facility on Vega Avenue in Cleveland, after an 1884 expansion. Very little of the once-sprawling, German-influenced cluster of buildings remains. Enter the Gypsy Brewery - the new identity for the old Leisy plant, at 3506 Vega Ave. in Cleveland's Ohio City neighborhood. Carson bought the five-story brick building in August, for $125,000, and is working with a local investor group to launch a two-stage, $7 million to $9 million redevelopment.
He and Benner chose the "gypsy" moniker - an alternative to "contract" - to give the project a more intimate, adventurous feel. They picked the building, long neglected, for its bones, its layout and its history.
"This was the largest brewery in Cleveland at its height," said Benner, who also runs a homebrewing shop in Ohio City. "It was three times the size of Great Lakes right now. They were doing 600,000 barrels."
The 90,000-square-foot Leisy building, north of I-90 at Vega and Fulton, is a lingering remnant of a much larger operation. Launched in 1873 by brothers from Iowa, Isaac Leisy & Co. grew to encompass a handful of production and bottling buildings, a family mansion and a life-size statue of King Gambrinus, known as the patron saint of beer.
Leisy (pronounced Lye-see) operated until the 1950s, though the plant shut down for a stretch during Prohibition. Most of the buildings were razed in the 1970s, but the bottling and storage facility on Vega avoided the wrecking ball. For decades, it served as a production house for trade-show displays, designed for companies including Cleveland-based Sherwin-Williams Co.
For roughly a decade, though, the building has languished, appealing only to trespassers toting cans of spray paint and real estate investors seeking income from a large billboard on the property.
Carson was the first buyer who didn't care about the billboard, said John Wagner, the real estate broker who handled the recent sale. The sellers, a private investor group, kept the billboard. Carson and his partners focused on the beer.
"We had a lot of interest, but everyone was calling on the billboard," said Wagner, the owner of Green Bridge Commercial Real Estate in Cleveland. "We had apartment developers look at it, but it just wasn't the right zone. You're kind of on an island out there for apartments. (Carson's proposal) was the best use and the best deal."
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The Leisy property in Ohio City included Isaac Leisy's mansion, next to the brewery. The family also had an estate on Cleveland's east side, at the top of Fairhill Road. Gypsy will provide a growth outlet for Platform, a pint-sized brewery that works with home producers ready to graduate from the basement to a professional operation.
This year, Platform will pump out between 2,500 and 3,000 barrels of beer. With added capacity at Gypsy, the company could more than double that yield next year, Benner predicted.
He and Carson won't identify their other potential clients, but they've talked to a half-dozen brewers interested in the Gypsy model.
The investors hope to start renovations next month in the oldest section of the building, with a $2 million phase-one budget and the goal of producing 10,000 barrels during their first year. The full redevelopment might take a few years.
"This is true manufacturing, where we're talking about creating 50-plus jobs over three years," Carson said.
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A rendering shows the renovated Leisy Brewing Co. building on Vega Avenue, refashioned as the home of Gypsy Brewing. The city of Cleveland is considering incentives, tied to the revival of vacant properties and investments in manufacturing equipment, for the project. Carson said he's also exploring potential funding, related to job creation, through Cuyahoga County and the state. Private money could come from KeyBank, along with a group of supporters that includes Aaron Cornell, a local tech executive; doctor and real estate investor Rafid Fadul; Regan Gettens, a vice president at Fairmount Properties; and Benner's brother Greg, who is a financial advisor.
"This is a great building in rough shape, in an area that has not seen a lot of development," Tracey Nichols, the city's economic-development director, wrote in an email. "This development group sees a diamond in the rough and is willing to take the risk. ... Most developers in town see a lot of opportunity in more established areas and aren't focused in the areas that this new group (is) pursuing."
The choice of building, with tiled walls and floors that slope down to drains, makes sense. So does the location, in an industrial area where there's no need to have a street-level retail presence.
As for the business model, well, contract brewing remains a rarity in the craft-beer community. But trade groups expect the sector to grow.
"There's more demand than supply in the marketplace for most brands available," said Julia Herz, craft beer program director for the Brewers Association in Boulder, Colorado. "If you look at the top 50 craft-brewing companies, more than 40 of them are in expansion modes. Brewers are going to look at viable ways to market. In some cases, it's not easy."
Contract brewing isn't without controversy. Some brewers scoff, for example, at private-label brands created by companies that have no hand in recipe development or production. And the prospect of outsourcing, to any degree, can be anathema to an industry with an artisan bent.
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A rendering shows the inside of the Gypsy Brewery after the first phase of renovations. But cutting overhead by contracting is the only way that some brewers, who struggle to secure traditional loans, manage to grow. High costs, financing challenges and consumers' seemingly endless thirst are prompting companies like the St. Louis-based Brew Hub to announce plans for a nationwide network of rent-a-breweries.
"We don't have a formal study of who, exactly, is offering these services," Herz said. "But you could certainly say there's a handful of breweries doing it."
In 2013, contract brewers accounted for 1.5 percent of nationwide craft-beer production, according to the Brewers Association. They were responsible for 240,242 barrels - or nearly 7.5 million gallons - of beer.
Sure, that's small.
But so was Leisy when another group of beer-minded entrepreneurs decided to buy up real estate on Vega Avenue nearly 150 years ago.