Crafted with success

23.03.2008 03:06 Home - Source: JS Online

New Glarus - As the world's largest brewers consolidate and cut jobs, a brewery in small-town Wisconsin is taking a different approach.

New Glarus Brewing Co. is not only building a new brewery, but it also is keeping the original facility open. Both are located in the village (population: 1,290) that provides the company's name. The $20 million investment will help New Glarus Brewing solidify a reputation for high-quality beer that has devotees scattered throughout the country, even though its Spotted Cow, Fat Squirrel and other brews are found only in Wisconsin.

The new brewery also makes New Glarus Brewing unusual among the nation's 1,400 craft brewers - a term for smaller, independent brewers that produce higher-quality beers. The vast majority of craft brewers operate one brewery. The exceptions include brew pub chains, such as Rock Bottom Restaurants Inc. and The Boston Beer Co. Inc., the maker of the Samuel Adams brands and nation's largest craft brewer.

"It's really weird," New Glarus Brewing President Deb Carey said of the company's growth. "It's not what we expected."

Started by Deb and Dan Carey in 1993, New Glarus Brewing last year posted volume sales of 65,000 barrels, compared with about 14,000 barrels five years earlier.

The company's sales pale in comparison to mega-brewers such as Milwaukee-based Miller Brewing Co., which sold just more than 40 million barrels in 2007 and is pursuing a joint venture with Coors Brewing Co. New Glarus Brewing is small even when compared with the nation's 10 largest craft brewers, with 10th-ranked Boulevard Brewing Co. of Kansas City, Mo., selling 130,000 barrels in 2007, according to trade publication Beer Marketer's Insights.

But unlike its larger craft counterparts, New Glarus Brewing sells only within its home state. Still, in 2006, the latest year for which it has data, the Brewers Association ranked New Glarus Brewing as the nation's 20th-largest craft brewer.

"That is remarkable for a company that distributes in one state only," said Paul Gatza, director of the association, a Boulder, Colo.-based trade group for craft brewers.

"It really is coming from the consumer," Deb Carey said of the company's growth. "They really like our beer."

Starting a brewery

The couple's story is irresistible. Fifteen years ago, Dan Carey was a supervisor for Anheuser-Busch Cos. Inc. at its Fort Collins, Colo., brewery. Deb, who grew up in the Eau Claire area, wanted her family to move to Wisconsin to raise their two young daughters and to get away from a corporate lifestyle that had Dan working long hours and Deb kissing up to executive wives.

The craft brewing business was taking off in the early 1990s. So Deb wrote a business plan, bought some brewing equipment at a bankruptcy auction and found an empty factory in New Glarus, about 30 miles south of Madison. The Careys raised $40,000 by selling their Colorado house, leased the future brewery for no rent by providing the building owner with a stake in their business and received a short-term bank loan.

While they were still in the start-up phase, a newspaper article about their venture attracted additional investors, leaving New Glarus Brewing with $375,000 by the time it began selling beer.

The Careys also had Spotted Cow, a tasty ale with a name that pays homage to Wisconsin's Dairyland heritage. The recipe was Dan's, and the name and label were concocted by Deb, who has a graphic design background.

"I just thought it was hysterically funny," Deb said. "I thought it would a huge hit or an absolute flop."

Spotted Cow won accolades and spawned imitators. New Glarus Brewing has twice been named midsize brewery of the year at the Great American Beer Festival.

Largely through word of mouth, Spotted Cow and other New Glarus Brewing beers have grown in popularity statewide. The Careys expanded outside Wisconsin, to Illinois, in 1998. But that venture in one of the nation's largest beer markets was short-lived.

The expansion into Illinois made it more difficult to meet growing demand from their Wisconsin customers. Also, Deb said, Illinois is "a dirty market. Everybody's got their hand out."

So, in an unusual move, New Glarus Brewing pulled out of the Chicago, Rockford and Peoria areas in 2002.

Growth continues

Despite that retreat, New Glarus Brewing continued to grow, leading to the new brewery. It began producing beer late last fall, but portions of the complex, including offices, a gift shop and a warehouse, remain under construction.

The new brewery will produce the company's three most popular brews: Spotted Cow, Fat Squirrel and the newly launched Organic Revolution. The other beers will be brewed at the original brewery. The new brewery also will become the site for tours, with a hillside beer garden that offers views of the surrounding countryside.

The new brewery received $2 million in financing from the Village of New Glarus to pay for road work and a wastewater treatment facility, with the funds to be repaid by the brewery's property taxes. Wisconsin Community Bank, of nearby Monroe, was the project's chief lender.

Some growing craft brewers, including Boston Beer, have hired other breweries with excess capacity to do contract production of their brands. The Careys never considered contract production, believing it would be more difficult to monitor the quality of their beers.

Willingness to pay more

New Glarus Brewing, with 37 employees, expects to sell about 80,000 barrels in 2008. That's a lot of beer to sell just in Wisconsin, which Dan Carey says has annual sales of around 4 million barrels. He attributes much of the company's sales growth to mainstream drinkers' increased willingness to pay more to try better beers.

The craft beer segment's sales increased 12% last year, according to Beer Marketer's Insights. Overall U.S. beer sales, dominated by Anheuser-Busch, Miller and Coors, increased 1.4%.

It also helps that beer wholesalers - independent companies that buy beer from breweries and resell it to taverns, supermarkets and other retailers - have become more willing to carry craft brewers, the Careys said.

Spotted Cow, which typically sells for $7 to $7.50 for a six-pack, compared with $5 for a six-pack of Miller Lite or Bud Light, provides better profit margins for wholesalers, said David Hock, vice president of sales and marketing at New Berlin-based Beechwood Distributors Inc. Beechwood mainly distributes Anheuser-Busch brands but has a growing number of craft brands, including New Glarus Brewing.

The company's growth, including five to 10 additional jobs in 2008, leaves the Careys feeling a bit dazed, albeit appreciative. Deb suggests that God played a role in their success and insists that the couple's goal is to brew and sell great beer, not necessarily to make a lot of money. In a 2002 Journal Sentinel article, she jokingly vowed to quit the business the day New Glarus Brewing hit the 30,000-barrel mark in annual sales.

The company broke through that level three years later. Deb says she's been trying to quit ever since, "but nobody will accept my resignation."

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