ARCHIVED  June 1, 1997

Local microbrewers expand distribution

Brewers seek new markets for beers

The business of brewing has for the first time in its young history entered a cycle of oversupply.

Experiencing an over-capacity of microbrew, as well as challenges from major national breweries, the industry is at a turning point that will determine which micros will remain and which won’t.

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Still, because success is dependent on selling the product, many microbrewing companies continue to look for new markets.

Microbrewers are distinguished from brew pubs by the fact that they are not combined with a restaurant.

“A lot of savvy brewers, or those careful about expanding geographically, go by the axiom that they shouldn’t go too far without having sales people in that area,´ said David Edgar, director of brewing studies at the Association of Brewers.

That means relationships with distributors must be very strong in order for a microbrewery to be satisfactorily represented in the markets in which it sells.

And that can be difficult because larger brewers such as Anheuser-Busch Cos. Inc. and Adolph Coors Co. basically control the major distribution companies. Thus, it’s much safer for microbreweries to distribute themselves or work with companies that strictly distribute mircobrew.

Among microbreweries seeking to expand their market is Odell Brewing Co. in Fort Collins.

Almost 8 years old, the firm has defined its market primarily as Colorado and adjacent states. For the past few years, Odell brew has been throughout Colorado and in every city in Wyoming.

“Last year, we entered Kansas and Kansas City, Mo.,´ said Wynne Odell, co-owner of the microbrewery.

The Nebraska state line was crossed in November. And in January, Arizona became part of the Odell map.

“We’ll go to New Mexico,” Odell said, “but not before next year.”

In 1996, Odell Brewing Co. produced 15,600 barrels of beer. The previous year, that number stood at 10,300. The comparison is skewed, however, by the fact that prior to 1996, Odell’s produced strictly draft beer. Last year, the company began bottling its brew.

“That accounted for 100 percent of our growth,” Odell said.

While it was a significant capital investment to install a bottling line, the decision was a smart marketing move.

“We’re definitely glad we did it,” she said.

Odell officials are keenly aware of the shift in the microbrewing cycle.

“Growth in the industry has been monumental for the past six or seven years,” Odell said. “Now, the big ones are trying to get bigger and for the first time, there’s an over-capacity in the industry. The really small players stand to lose.

“We feel fortunate that we’ve been in business for as long as we have,” she said.

Like Odell’s, New Belgium Brewing Co. of Fort Collins became established in Colorado and Wyoming prior to going into other markets.

“We went into Kansas seven months ago, and into Arizona and New Mexico this year,´ said Greg Owsley, marketing director at New Belgium.

“Part of our belief and mission is that we don’t want to see a whole lot of fossil fuels under our beer,” he said.

Owsley said 6-year-old New Belgium had to find a distributor in Arizona and New Mexico and train its people in “brand standards,” or how to properly handle New Belgium’s beers.

Company officials feel strongly about the standards.

“We won’t ship anywhere we can’t send a full truck,” Owsley said. “It’s a detriment to craft beer when someone just throws a pallet of their beer on a truck (and never follows how it’s handled).

“It hurts the entire category of microbrewers if you don’t ship enough to support the product and if you don’t follow up,” he said.

The national average for microbrewery sales has 85 percent of a brewery’s product being sold in its native state and 15 percent out of state. On the other hand, regional brewers – those that produce more than 15,000 barrels a year – typically sell 53 percent of their product in-state and 47 percent out of state.

New Belgium produced 57,000 barrels of beer last year and is aiming for 80,000 this year.

“I think they are poised to be a very strong regional brewery,” the Association of Brewers’ Edgar said. “As far as New Belgium entering new markets, now is probably an appropriate time because they have a very strong home-base following.”

Brouwer Brewing Co. of Loveland., a small, but growing business, handles the distribution dilemma by hand-delivering its products.

The 2-year-old company at one point used a Denver-based distributor that carried several microbrews. After it went out of business, Carl and Jana Brouwer began distributing their beer. The ability to meet face-to-face with the store owners who sold their product eventually changed the way they marketed their beer.

“When we talked to the people who carried our beer,” Carl Brouwer said, “they overwhelmingly said that if we wanted to survive, we needed to be in the 12-ounce market.”

Prior to that feedback, Brouwer’s had packaged everything in 22-ounce bottles.

Admittedly one of the smallest, if not the smallest, microbreweries in the state, Brouwer Brewing Co. sees its market as Larimer and Boulder counties, with an occasional foray into Greeley.

“We hope to make Denver and the mountain West, and possibly Colorado Springs, our growth area,” he said.

“The biggest problem we continue to face is name recognition,” Brouwer said. “But we find that those who try the beer really like it. We are making headway.”

The company produces German-style lagers and pilsners.

Brouwer continues to work at a full-time “day job” that he says he loves.

“If I hated my job, it would probably make this easier,” he said. “This is a little more than a pilot project, but it’s not a full-blown endeavor yet.”

Even if it does take off, Brouwer doesn’t see his company becoming huge.

“Our current capacity is 150 barrels a year, and we’re not there yet,” he said.

He said he’ll be pleased if his company gets to the point that Odell’s and New Belgium were at just after they started.

One Fort Collins brewer in a more varied market is H.C. Berger Brewing Co. Owner Peter Davidoff said that in addition to Colorado, the company is in New Jersey, Texas, Ohio, Michigan, Wyoming, Kentucky and Kansas. Some of the growth is fairly new.

“Every state is different,” Davidoff said. “In some places, we have to have an agent. Typically, we look for a small distributor dedicated to micros.”

H.C. Berger is producing 7,500 to 8,500 barrels of beer a year.

“It’s like any young market,” Davidoff said. ” There are a lot of upstarts. Those that focus on marketing and good beer will do better than those that don’t.”

Brewers seek new markets for beers

The business of brewing has for the first time in its young history entered a cycle of oversupply.

Experiencing an over-capacity of microbrew, as well as challenges from major national breweries, the industry is at a turning point that will determine which micros will remain and which won’t.

Still, because success is dependent on selling the product, many microbrewing companies continue to look for new markets.

Microbrewers are distinguished from brew pubs by the fact that they are not combined with a restaurant.

“A lot of savvy brewers, or those careful about expanding geographically, go by the axiom that…

Christopher Wood
Christopher Wood is editor and publisher of BizWest, a regional business journal covering Boulder, Broomfield, Larimer and Weld counties. Wood co-founded the Northern Colorado Business Report in 1995 and served as publisher of the Boulder County Business Report until the two publications were merged to form BizWest in 2014. From 1990 to 1995, Wood served as reporter and managing editor of the Denver Business Journal. He is a Marine Corps veteran and a graduate of the University of Colorado Boulder. He has won numerous awards from the Colorado Press Association, Society of Professional Journalists and the Alliance of Area Business Publishers.
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