Mendocino Brewing Company (A)

In 1983, the Mendocino Brewing Company (MBC) established The Hopland Brewery, the first brewpub opened in California after Prohibition. Years later, MBC was still recognized for its contributions as a pioneer in the craft-brew industry. While craft brewing boomed, however, MBC was constrained by its relatively small production capacity. Although the average craft-brewer increased sales by 42 percent in 1992, MBC grew by only 15 percent. Convinced that MBC had to considerably increase capacity, CEO Michael Laybourn undertook a substantial expansion program. This case explores the issues that Laybourn considered as he developed an expansion strategy, including the boom in microbreweries, production practices, marketing, and how to finance his desired expansion.