Opening expansion breweries on the opposite coast is a new model for growth among big breweries. Sierra Nevada, New Belgium, Deschutes, and Lagunitas are just a few of the breweries to open new facilities to get their beer in more places. But coast to coast production operations isn’t the only path toward growth. Flying Dog Brewery opened in Aspen, CO in 1990 and, 16 years later, moved to Frederick, MD when the opportunity to buy a bigger building came up. They’ve rebranded as a Mid-Atlantic regional brewery while sticking true to their free enterprise-first philosophy.
CEO Jim Caruso shares his thoughts on how breweries can grow today, and how that growth is dependent on their local market. Ever the free speaker, he also went off topic on the
Brewer’s Association’s recent decision to limit marketing messages they deem offensive. The brewery’s Raging Bitch IPA has been a hot topic and the subject of a previous Paste interview.
Paste: Looking at how the industry has grown and how a lot of the big breweries are opening second or third locations, you did an entire relocation. What inspired the idea?
Jim Caruso: I can’t speak to other people’s strategies; I don’t know what their inner workings are. We’ve been in Maryland for 11 years as of May 1, 2006. To be perfectly objective about this, we are by far a Maryland brewery. We’ve sold far more beer here. We’re the best-selling beer in Maryland.
It started by seeing the industry dominated by these regional players. National breweries have other challenges: the up and comers are facing big challenges these days, but the group of the top 100 breweries – especially the ones with a dominant regional presence like New Glarus, for example – are extremely well positioned. We have superb wholesaler relationships and high quality sales because most of our sales are within an hour and a half drive of the brewery.
It’s worked out so well for us. To put this in perspective, since moving here we’ve tripled our sales and Maryland consumers – just the state of Maryland – is now consuming more beer than we were selling in 48 states and 23 countries seven years ago.
Paste: Was the move about the opportunity for a bigger brewery or was it the regional pull – which I Imagine is less saturated than the Colorado market.
JC: It was a bit of both, but we were (I think) the second largest brewery in Colorado at the time.
When this opportunity became available it was kind of a no brainer for us to jump on it. The bigger move was to concentrate our efforts on the Mid-Atlantic. For us it’s primarily Maryland, northern Virginia, and DC, which accounts for 60-70% of our sales. The majority of our sales are within a couple hundred miles of the brewery. We went from a mile wide and an inch deep to an inch wide and a mile deep.
I pulled people and resources from all over the country and concentrated them here. We only ship to 36 or 37 states now. It’s not because we don’t love those markets. We are selling so much beer in our backyard that it’s hasn’t been possible to expand geographically.
The strategy had a lot of risks but we were convinced that the market was shaping in a way that it would go to the regional guys, not the national guys.
Paste: Why did you close the Colorado space?
JC: We operated two breweries for a year and half. On paper, it looked somewhat efficient, but to have two breweries of roughly 100,000 barrels and 60,000 barrels is grossly inefficient. It’s different if you have a million-barrel brewery and a 500,000-barrel brewery.
Once we got into it, it was very clear that this strategy was doubling expenses and barely increasing production. You end up with two fully staffed breweries at that low volume.
Really, after a couple years, the move was out of mind. We’ve been here so long that if you say we had a brewery in Colorado, many people think you’re kidding.
Paste: How did you approach the move with Colorado fans? Did you anticipate that it might create animosity with some fans?
JC: We didn’t have a strategy for that. It was nice to see that people were disappointed we were leaving. It’s nice to feel like you’re missed. But at the same time, they’re mad at you for leaving.
After a few years all was forgiven. They were eager to get Flying Dog back into Colorado and trying our new styles. Time heals everything. They didn’t speak to us for a while. [Laughs.] But when I would go back in 2010-2011 they would ask me to bring rarities. We’re back to a band of brothers and sisters again.
It would be very different if we left Frederick. Maryland has 65 breweries and I’m pretty sure we do more volume than the other 64 combined. We did a lot of business in Colorado but there were so many other breweries, it wasn’t like the football team that leaves the city and then you have no team. They’re mad at you forever when that happens, like I’m mad at the Cleveland Browns.
Paste: What were some of the lessons from moving cross country?
JC: It reinforced is that craft breweries are artisan manufacturers like you see that in food or clothing lines. The lesson is hyper-connectivity. It doesn’t mean we’re the closest to a bar or beer store, but that we’re connecting with the community. It has tremendous value.
When you get to be too big you’re creating this beer and pushing it into the market. It sounds simple but, in practice, it’s really hard with the variety we offer.
It’s easy to get distracted with going overseas and shipping to different places. Haven fallen in those potholes, that’s my precautionary tale for people. It’s harder, but lean into it and go deep in your home market. That’s the biggest offense of a larger brewery.
As a free enterprise person, I applaud big business, but when you come to Frederick or Baltimore it’s hard to outperform Flying Dog, just like it is when you go to Atlanta or Kansas City or Wisconsin where they have these dominant regional breweries.
Paste: In our off the record conversation today, you’ve been adamant about Flying Dog’s free speech philosophy, namely as it relates to the Brewer’s Association ruling.
JC: Our identity has always been freedom of expression and enterprise. It truly defines who we are in a way that other businesses are uncomfortable standing up for. So, when the Brewer’s Association comes up with their censorship policy you can bet that we’re on the forefront of challenging it.
It’s like kicking kittens. It’s disturbing that they are so sure of what’s good for consumers that they want to step between breweries and their consumers and second guess the consumers…The Brewer’s Association is here to serve us and somewhere over time they came to think that the brewers are here to serve them.
Paste: Are you still a member of the Association?
JC: I am…I don’t contribute to organizations that are anti-free speech and anti-free enterprise, so we’ll see how it is going forward.
When you win a medal, you won’t be able to say it’s from the Brewer’s Association. The day this came out I introduced my own policy that we are forbidden to associate ourselves with the BA. We are so offended by anybody that is so averse to free speech that we cannot mention their name, so when we mention our medals we’ve won, it’s a gold medal for our beer awarded to us by an anonymous association.
I have a good time with what I’m doing.