Humm Kombucha has cancelled plans to construct a $10 million production facility in Roanoke, Virginia, telling the city that improvements in production and distribution capabilities at its Bend, Oregon headquarters made an East Coast expansion unnecessary.
Roanoke officials announced at a City Council meeting Monday that Humm has ended construction on the proposed 100,000 square foot facility. In addition to upgrades to its Bend headquarters, the company also cited “challenging market conditions” as a reason to end the project, according to city leaders.
In a statement sent to BevNET, Humm co-founder and CEO Jamie Danek said “major changes” to the company’s supply chain have allowed the company to ship nationwide “in a more efficient manner,” making an East Coast facility redundant.
“Considering these major advancements in our production and supply chain, we no longer have a need for a brewing facility on the East Coast now or in the near future,” Danek said in the statement. “We have and are working with the City of Roanoke to make this transition as smooth as possible.”
However, Roanoke city manager Bob Cowell told The Roanoke Times on Monday that he believed Humm was not making enough money to expand, suggesting increased competition in the kombucha category as one reason.
Plans for the new facility were announced in November 2017 when Humm purchased 12 acres of land in a Roanoke industrial park with a promissory note for $943,400. The agreement would have allowed Roanoke to forgive the price of purchase over time for each year the facility was operational, based on its economic performance. The facility was expected to create at least 46 jobs.
Humm was given no cash incentive from Roanoke, but was slated to receive a $150,000 grant from Virginia’s Commonwealth Transportation Fund upon meeting employment requirements. The city will return the grant to the state in the coming weeks.
The city will also reconvey the land and begin marketing it to other businesses shortly.
Reached by phone on Tuesday, Roanoke manager of economic development Rob Ledger told BevNET that Danek informed him in May that Humm wanted to back out of the deal. Humm and the city had established performance agreements in 2017, allowing for the company to end the project at any time before completion without money exchanging hands.
According to Ledger, Humm had closed on the property in December 2017 and was slated to begin construction by December 31, 2018. The facility was obligated to be operational by the end of 2019. Humm did break ground on the facility last year, including purchasing material for the building. However, Ledger said the company only created a construction entrance and did not begin erecting the building itself.
“Fortunately they didn’t get far in the construction process,” Ledger told BevNET. “Had the building been erected we would have been stuck with a predescribed structure. In this case the building has not been erected, so we will take back the building-ready site … and it’s ready to go for some other user that doesn’t have to get in there to worry about what was built on it before.”
Humm will pay $100,000 to Roanoke as compensation for holding the land for more than a year-and-a-half, a price Ledger called “appropriate.” Though the company will recuperate the initial cost of purchase, it has spent an undisclosed sum on planning, as well as building materials which it could potentially resell, Ledger said.
“I just appreciate the whole Humm team,” Ledger said. “They’ve always been a pleasure to deal with and I’m sorry this didn’t come to fruition. But that’s the way it goes sometimes. You win some, you lose some and we hope to find another occupant for that property soon.”