Dec

11

Message from Eric Warner

As you may have heard, Flying Dog Brewery recently announced that we are embarking on the next step in our illustrious, 17 year history of crafting remarkable beer by concentrating all of our brewing and production to the brewery in Frederick, MD, where 70% of Flying Dog Beer is already being brewed. This move will take place in January and we are working to ensure that our entire production team will be able to make this move over to Maryland. Accounting, sales, marketing and other administrative functions will remain largely unaffected by this change and our HQ will remain in Denver.

We decided to make this proactive move as it has become increasingly important to be extremely nimble in today’s business environment. Only those who can quickly adapt in the hyper-Darwinian economy will survive and in today’s craft brewing landscape. We are facing unprecedented cost pressures due in large part to the tremendous hop and malt cost increases. Concentrating our brewing operations to one facility will help us become more efficient while maintaining our exceptionally high brewing standards. This is a smart, proactive move for our growing company and will allow us to most efficiently use our resources.

The Frederick facility is a state-of-the-art brewery that has already been producing great beer for Flying Dog and we look forward to ramping up production and growing our business even more than the +20% trends we are experiencing in 2007. The bottling line in Frederick has lower oxygen uptake at filling than the one in Denver, which translates to better flavor stability and longer shelf life. It also kicks out bottles at twice the pace of the line in Denver. The brewhouse in Maryland is also capable of brewing a wider range of recipes than the one in Denver. Finally, the brewery in MD plans on substantial capital expenditures and plant upgrades (close to a million bucks in 2008 alone) to continue to brew better beer in an efficient and environmentally friendly way.