PORTLAND – Shipyard Brewing Co. took delivery of new equipment Thursday as part of a $1 million expansion of its plant on Newbury Street.

The new equipment will enable the company to brew 180,000 barrels of beer yearly, up from its current capacity of 140,000 barrels, said Alan Pugsley, Shipyard’s master brewer.

He said Shipyard has been running at full capacity recently and scrambling to fill orders.

“We were unable to make any more beer . . . and we were not achieving all our orders on a timely basis,” he said.

The new equipment includes stainless- steel storage tanks and three fermentation tanks — two that can hold 300 barrels of beer and one that can hold 100 barrels. A barrel holds 31 gallons.

The expansion, which will also include a new malt silo, is expected to be completed by Memorial Day.

Pugsley said the equipment will let Shipyard brew five batches of beer every day, up from four. The added capacity will help meet demand during the busy summer and fall months, when Shipyard brews its popular Summer Ale and Pumpkinhead Ale.

Shipyard has hired five new production and administrative employees as part of the expansion.

The company has about 65 employees and yearly revenue of “about $20 million,” Pugsley said. Its sales jumped about 20 percent in 2010 and 20 percent during the first quarter of 2011.

Pugsley attributed that growth to the taste and consistency of Shipyard’s beer and the effectiveness of the company’s sales and marketing efforts.

Greg Mitchell, Portland’s economic development director, said Shipyard’s expansion shows that public-private partnerships can have long-term benefits.

He said that a few years ago, the city invested in Shipyard through a tax increment financing agreement.

“This is further evidence of a good working relationship leading to future investments. It strengthens our business base by entering these partnerships,” Mitchell said.

According to the Boulder, Colo.-based Brewers Association, Shipyard is the nation’s 19th-largest “craft brewer,” based on 2010 sales. The company ranks 28th on the association’s list of all U.S. brewers, which includes industry giants Anheuser-Busch and MillerCoors. No other Maine company made the association’s lists.

Revenue in the craft beer industry grew 12 percent in 2010 and 10 percent in 2009, according to the Brewers Association, which estimated the retail value of the sector last year at $7.6 billion.

Craft brewers are those that make no more than 6 million barrels annually.

Paul Gatza, director of the Brewers Association, said new, innovative, high-quality and consistent craft beers have driven the growth, as have the efforts of wholesalers and retailers who have finally realized the sector’s sales potential.

“They see this as a growth area for their business. They have educated themselves and learned a lot about beer,” he said.

Gatza said this is an “age of exploration and discovery” for beer drinkers, in which there is no shortage of new products.

“Beer is being redirected in this country,” he said. “It’s not the standard lager and light lager anymore.”

Shipyard brews about 15 types of beer under its flagship brand and about 10 under its Sea Dog brand. The company also has contracts to brew beer for other companies.

Shipyard’s top markets include Maine and New Hampshire, though sales have been strong across New England, Pugsley said.

The company’s beers are sold in 35 states.

Staff Writer Jonathan Hemmerdinger can be reached at 791-6316 or at:

jhemmerdinger@mainetoday.com