First, by show of hands, how many of you out there make beer? How many get paid for making
beer? How many are thinking about becoming professional brewers? How many are thinking
about opening your own brewery? How many have friends who have said, "You should sell
this beer." Does anybody have friends who have said, "You should sell this beer.
Heres a check for $500,000 to build a brewery." No? Me neither.
By way of introduction, Im Andy Craze, President and Head Brewer of Western
Reserve Brewing Company. Western Reserve is a manufacturing-only microbrewery in
Cleveland, Ohio. We opened our doors last July, after about 2 years of intensive planning,
and about 4 years of just dreaming about it. Our brewerys beers have been critically
acclaimed, having taken a bronze medal at the Great American Beer Festival just 3 months
after we opened, and three medals at the Beverage Testing Institutes World Beer
Championships earlier this year. Its still too early to call it a business success,
but our growth is strong, and we are on track to break even before too long.
Personally, Im a Cleveland native, but started homebrewing in
Seattle almost ten years ago. I cut my teeth drinking microbrewed beers on the West Coast,
and had the same epiphany that Im certain many of you had: "Hey! Theres a
whole world of different beer flavors! I dont have to drink the generic stuff the
major industrial breweries are pushing!" So, when I started a job in Seattle, and ran
into some homebrewers there, I was primed for the next step: "I can make beer that
tastes any way I want it to!"
After that, I was pretty much hooked. I stayed in Seattle about six
years, homebrewing as often as I could manage it. My current business partner and I were
roommates for one of those years, and thats when the idea for Western Reserve
started. Almost 3 years ago, I returned to Cleveland, started writing the business plan,
and enrolled at the Siebel Institute for their diploma course. I took some time off to get
married and spent a wonderful honeymoon in Germany.
As far as this evenings talk goes, Im going to speak
philosophically about making the jump from being a homebrewer to running a commercial
brewery. If youre hoping for some technical "magic bullet," Im
afraid I dont have one to offer you. You homebrewers make beer the same way
professional brewers do. Certainly, in judging todays competition, I was treated to
some truly excellent examples of the brewers art. Rather, Id like to touch on
3 "big picture" topics about the making the change to commercial brewing.
1. The E-Myth
Some of you want to be professional brewers and work in someone elses brewery, and
thats great. My advice to you is keep studying and learning. Even though brewing is
many thousands of years old, theres always something new going on. New styles, new
equipment, new techniques and methods are being developed constantly. If you always are
trying to refine your craft, youll always be in demand.
Others of you want to open your own breweries, and thats also
great. I understand theres 5 or so in town now, with at least one more in the works.
Theres a book I cant recommend enough to anyone who is thinking about opening
their own business of any type. Its called The E-Myth, written by Michael
The E-myth stands for the entrepreneurial myth, which goes like this:
Typically, small businesses are started by "technicians." That is to say, a
person who makes an item or performs a skill that, in turn, a business can sell. Often the
person is an excellent technician they make the best damn widgets anyones
ever seen. Maybe theyre a brewer and they make terrific beers. Frequently they love
what they do. The technician then says, "Hey, why should I work for someone else
doing this? I can start my own business, do what I love, make my living at it, and not
have interference from my boss/my other job/etc." The problem is that when you open a
business, you not only have to make what the business makes. (Beer.) You also have to run
the business itself. All of a sudden you have to market and sell the beer, answer the
phone, take the orders, order the materials, deliver the kegs and bottles, do the books,
sweep the floors, and everything else that needs to be done for the whole business.
The important question here is, "Do I want to make beer, or do I
want to run a business?" A brewery is a complex enough operation that running one
generally means hiring someone to do at least part of the job that you loved initially
-making the beer. Pardon the pun, but thats a sobering thought.
I encourage everyone whos seriously thinking about opening a
brewery, (or any business, for that matter,) to give some serious thought to what their
life as a business owner will really entail. Talk to someone whos actually doing it.
I can tell you personally that I dont spend most of my days making beer.
Okay. Suppose youve done the reflection and weighed the sex appeal
of running a brewery against the nightmares of running a business and youve decided,
"Im going to do it." Great! There are lots of resources about starting a
business available, many are specific to brewing, but Im not going to go into all
that here. If youd like, come find me after dinner and Id be happy to talk to
you about business plans and raising money and so forth, or get my card and call me at
2. Walking a Fine Line
As a microbrewery, we have to walk a fine line. We have to make a beer that some
people will like, but not a beer that everyone will like. I have a saying I like to use:
"If we made beer that the absolute maximum number of people would like, wed
make Budweiser, and we wouldnt make it nearly as well as Anheuser-Busch makes
it." I heard a statistic recently that in Oregon, about 24% of the draught beer sold
is craft-brewed beer. I think thats excellent, and I hope that someday
Clevelands numbers approach that, and Im sure that you hope the same for
Buffalo. But the other side of that number is that over 70% the vast majority
is still beer produced by the major industrial brewers.
So realistically, microbreweries have to content themselves with a very
small slice of the beer industrys pie. But, that is exactly the microbreweries
greatest strength. Theres an inverse relationship between popularity and
distinctiveness. To please the most people, you have to go with a
least-common-denominator. (An excellent choice of name for a mass-produced dopplebock, by
the way.) But if your target market is smaller, you can go further afield in being unique
There is another extreme, however. As a homebrewer, you can make a beer
tuned specifically to your own palette a beer that only you like. As a professional
brewer, this is a recipe for disaster. You have to make a beer that will sell well enough
to keep your doors open and your lights on, or youre talking about a phenomenally
expensive hobby! You may think its the greatest thing since the Reinheitsgebot,
but ask yourself objectively, is there a market for 7X triple-decoction quintuple-malt
extra-hopped Imperial Belgian-style smoked mint beer in a 40-oz. cast bronze bottle?
Within those limits, theres a lot of ground to cover, and
thats a matter of your personal preference, the number and sophistication of your
customers, and the size brewery youre planning. Two examples of breweries that have
made these tradeoffs extremely well are Sam Adams and Hair-of-the-Dog Brewing. Whatever
you may think of Jim Koch and Samuel Adams Boston Lager, he got the equation right. He
obviously wants to be the major player in the craft beer market, and his flagship product
reflects that vision. Its a specialty beer, to be sure, but its not so
challenging to the Bud/Miller/Coors/Strohs drinker that they cower in fear of it.
Boston Lager pushes the envelope enough to be different and not much more.
The other end of the spectrum is Hair-of-the-Dog Brewing Company in
Portland, Oregon. Their flagship product is Adambier, which is quite heavy, rich, complex,
and has healthy doses of both kettle and aroma hops. Its not a beer for the
faint-of-heart. But, Hair-of-the-Dog is a tiny brewery located in the backyard of some of
the most sophisticated beer drinkers in the U.S., if not the world. Adambier will never be
on draught in every T.G.I.Fridays restaurant in the U.S., and their brewery and
business reflect that. They have set their eyes on being a very small brewery, making
truly distinctive beers for a local market.
There is certainly no lack of integrity in the homebrewing world. Many, if not
most homebrewers border on zealotry in their intensity to make their beer "just
so." They research and match historical styles, they tinker to the nth
degree with water chemistry, they bring back yeast from faraway places. They attack these
problems with and almost fanatical enthusiasm. Homebrewers can discuss for hours the
relative benefits of keeping a stock ale in casks made of European Oak versus American
This, I think is one of the greatest things that homebrewers bring to
the world of commercial brewing. There are at present too many ordinary or even marginal
beers hiding behind specialty marketing campaigns. I cant tell you how many people
have come to us since our brewery opened, asking us to do a contract brew for them. And
they make a pitch like this: "We want to sell a beer with an outer-space theme, in a
tall thin blue bottle, called Comet!" or something like that. For many,
this is the whole concept, but others come armed with market projections and profit margin
breakdowns and so forth. The first question I ask them is "Whats the beer going
to be like?" And unfortunately, the most common response is "We dont care
whatever youd like to do." While I appreciate their faith in my skills
as a formulator of beers, its the wrong way to go about creating a fine product. I
wont name names, but Im sure youve seen them ordinary light lager
in a fancy bottle, or with a fancy label, at a super-premium price.
These products do a disservice to all of us who know and love quality
beer. They misinform the public. And their very nature is that they survive by marketing,
so the whole point is to misinform as many people as possible. If you go into the brewing
business, I urge you to bring the integrity you put into your product and apply it to your
marketing as well. Sell beer on its own merits: flavor, freshness, quality, purity. There
are already way too many bikini girls and wanna-be grunge types selling way too much crap
in the United States today.
Integrity extends to the way you run your business as
well. Dont give away your beer. Thats a self-preservation measure. Retailers
will beat you up all the time for free beer. Theyll say "But XY&Z
distributor gives us a free case for every 5 we buy." Or "Joes brewery
always gives us the first keg free." Fine. Let em. If theyre a big
brewery, theyve got the cash to bury you at that game. And, if theyre a little
brewery theyre cheapening their own product. It can be a hard road, but in the long
run youll achieve the respect of the retailers for you, your business and your
products. Not to mention the fact that in most states, giving away beer is illegal.
Thats not to say it doesnt happen. We know that weve lost accounts
because we wouldnt give away beer. Its tough. And its tough to fight
the retailers arent exactly beating down the door at the State Department of
Liquor Control to turn in the suppliers that give them free beer. But if you have faith in
your beer, others will too. Youll find the ones who bitch the loudest about free
beer are often the ones who deal with the major brands most; and just like the consumers,
a significant percentage wont ever understand. Find the ones that do
theyre out there.
So what does all this boil down to? Well, you can think of these three issues as
points along a roadmap of getting your brewery open. The E-Myth speaks to making the
decision about whether you want to go into business for yourself at all. If you decide the
world of small business is for you, the next item is writing your business plan. I contend
that every moment you are working on your plan, you are defining the way in which you will
walk the line between maximum popularity and maximum distinctiveness. Every other facet of
what your brewery will be follows from how you decide make this tradeoff. Lastly,
integrity addresses following your plan once youve built your brewery and your
business. Its how your vision becomes a real thing, and how everyone deals with you
and your business, from your hop and malt vendors to the people who order, buy and drink
your beer, sees a reflection of you.
Thanks very much for having me here, and keep up the great beers!