Western Reserve Brewing

Brewers and bottlers of craft beer proudly made by and for the people of Northern Ohio.

 

On May 16, 1998 Andy was a judge at the Second Annual Western New York Homebrew Competition at the Pearl Street Grill & Brewery in Buffalo, New York.   That night, he was the guest keynote speaker.  These are his notes from that speech.

Leaping into the Abyss:
Homebrewing to Professional Brewing

Introductions
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. Here’s a check for $500,000 to build a brewery." No? Me neither.

By way of introduction, I’m 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 brewery’s 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 Institute’s World Beer Championships earlier this year. It’s 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, I’m 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 I’m certain many of you had: "Hey! There’s a whole world of different beer flavors! I don’t 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 that’s 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 evening’s talk goes, I’m going to speak philosophically about making the jump from being a homebrewer to running a commercial brewery. If you’re hoping for some technical "magic bullet," I’m afraid I don’t have one to offer you. You homebrewers make beer the same way professional brewers do. Certainly, in judging today’s competition, I was treated to some truly excellent examples of the brewer’s art. Rather, I’d 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 else’s brewery, and that’s great. My advice to you is keep studying and learning. Even though brewing is many thousands of years old, there’s 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, you’ll always be in demand.

Others of you want to open your own breweries, and that’s also great. I understand there’s 5 or so in town now, with at least one more in the works. There’s a book I can’t recommend enough to anyone who is thinking about opening their own business of any type. It’s called The E-Myth, written by Michael Gerber.

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 anyone’s ever seen. Maybe they’re 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 that’s a sobering thought.

I encourage everyone who’s 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 who’s actually doing it. I can tell you personally that I don’t spend most of my days making beer.

Okay. Suppose you’ve done the reflection and weighed the sex appeal of running a brewery against the nightmares of running a business and you’ve decided, "I’m going to do it." Great! There are lots of resources about starting a business available, many are specific to brewing, but I’m not going to go into all that here. If you’d like, come find me after dinner and I’d be happy to talk to you about business plans and raising money and so forth, or get my card and call me at some point.

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, we’d make Budweiser, and we wouldn’t 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 that’s excellent, and I hope that someday Cleveland’s numbers approach that, and I’m 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 industry’s pie. But, that is exactly the microbreweries greatest strength. There’s 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 and distinctive.

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 you’re talking about a phenomenally expensive hobby! You may think it’s 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, there’s a lot of ground to cover, and that’s a matter of your personal preference, the number and sophistication of your customers, and the size brewery you’re 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. It’s a specialty beer, to be sure, but it’s not so challenging to the Bud/Miller/Coors/Stroh’s 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. It’s 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.Friday’s 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.

3. Integrity
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 Oak.

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 can’t 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 "What’s the beer going to be like?" And unfortunately, the most common response is "We don’t care – whatever you’d like to do." While I appreciate their faith in my skills as a formulator of beers, it’s the wrong way to go about creating a fine product. I won’t name names, but I’m sure you’ve 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. Don’t give away your beer. That’s a self-preservation measure. Retailers will beat you up all the time for free beer. They’ll say "But XY&Z distributor gives us a free case for every 5 we buy." Or "Joe’s brewery always gives us the first keg free." Fine. Let ‘em. If they’re a big brewery, they’ve got the cash to bury you at that game. And, if they’re a little brewery they’re cheapening their own product. It can be a hard road, but in the long run you’ll 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. That’s not to say it doesn’t happen. We know that we’ve lost accounts because we wouldn’t give away beer. It’s tough. And it’s tough to fight – the retailers aren’t 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. You’ll 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 won’t ever understand. Find the ones that do – they’re out there.

Conclusions
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 you’ve built your brewery and your business. It’s 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!

 

"YOU DESERVE A RESERVE."

This page last modified 08/27/00.