Brewbound: Brew Talks GABF: The Importance of Financial Stability and Maintaining Culture (Video)

“Executives from three mid-size craft breweries stressed the importance of building financial stability while also creating and maintaining their brewery cultures at a recent Brew Talks meetup, held during the 2017 Great American Beer Festival in Denver, Colorado.

During the panel discussion, hosted at Great Divide Brewing Company, John Bryant, the owner of No-Li Brewhouse, along with Wormtown Brewery managing partner David Fields and Great Divide senior director of finance Bryan Slekes, agreed that a strong balance sheet would help small beer companies avoid compromising their integrity.

“If you can get your balance sheet as strong as possible, it allows you to make the intelligent decisions you know to make,” Bryant said.

One path to establishing a strong financial base is through taproom sales, suggested Fields, whose brewery has built its business through local distribution.

“If you’re in a position to sell 100 percent of your beer in your taproom, do it,” Fields said. “Don’t worry about distribution just yet because you’ll get a really strong balance sheet really quickly if you don’t have to worry about managing a distributor relationship because it is a business within a business.”

Slekes echoed those suggestions, and argued that brewers should resist the urge to chase volume in faraway markets, even if they took on debt to scale their operations. He added that brewery owners should continually articulate those plans with investors and wholesalers.

“If that means I write a couple more bank memos every once in awhile, so be it,” he said.

Slekes also admitted that Great Divide had a “tough” 2016, but said the company is now on pace to sell about 40,000 barrels of beer this year. 60 percent of those sales will occur within the brewery’s home state of Colorado, he added.

In addition to distribution strategies, the group also discussed the importance of maintaining price integrity and earning mindshare with wholesalers through premium pricing.

“You’re one line item on probably 150, and you’ll be ranked on the dollars that you bring in and the percent black or red that you’re trending,” Bryant said, suggesting that brewers maintain strong margins and dollars on every item they sell to distributors.

Fields, meanwhile, urged brewers to build strong relationships with wholesalers, noting that they are ultimately a beer manufacturers largest customer. To make his point, Fields recalled a time in 2012 when he had to work to strengthen a relationship with Boston’s Burke Distributing, who has since become Wormtown’s top beer distributor.

To do so, Fields said he asked Burke’s vice president of sales how the brewery could be a better partner. Here’s what he heard: “You are ruining relationships with some of our biggest customers because you cannot get us the beer we need.”

“That was an aha-moment for me,” Fields said.

At the time, Wormtown was only selling Burke about 50 cases of beer for off-premise accounts, and it wasn’t enough to satisfy demand from the wholesaler’s largest customer, who was accustomed to buying thousands of cases from larger brands.

After weighing the option of pulling back distribution from the market, Fields said Wormtown constructed a growth plan that would create more consistency for Burke.

“That was a challenge, and it was expensive to figure out how to make that happen, but we ultimately did,” he said, noting that Wormtown is on pace to produce about 27,000 barrels of beer in 2017.

Meanwhile, Bryant said he has worked to not only build No-Li into “a craft beer epicenter for the state of Washington,” where 90 percent of the company’s beer is sold, but also into “a cause.”

“If I don’t believe it’s a cause, then I shouldn’t get out of bed because it’s too much damn work,” he said. “You have to believe that it’s a cause and that because you exist in this room, the world’s a better place or craft beer is a better place or your community is a better place.”

No-Li’s path to 14,000 barrels of annual output hasn’t been without struggles, Bryant added. But his message for brewers was to keep taking risks.

“You’re either going to fight like a son of a bitch and figure it out, or you’re going to give up,” he said. “Don’t give up that strength.”

Click here to read the full article and watch the talks.

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