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April 11, 2016

Growth in craft beer market turns local brewers into leaders

Edd Cote The three Hendler brothers (from left: Jack, Sam and Eric) initially divided their responsibilities for the operation of Jack's Abby Craft Lager to play to their strengths of beermaking, sales and finance.

Breweries are the epitome of startup businesses, growing out of the passion of a brewer focused on the product’s quality. However, the enormous potential within the craft beer industry can mean year-over-year increases in the triple digits once things take off. With such accelerated growth, founders of the company can be left reeling to keep up with their shifting responsibilities.“For over a decade I was concentrating on being a brewer and starting a business. My strength really came from being able to brew beer and source local ingredients,” said Ben Roesch, brewmaster and co-founder with Tom Oliveri of Wormtown Brewery. “Then everything expanded so fast.”

Worcester’s Wormtown Brewery has grown its production from 2,800 barrels a year in 2014 to an estimated capacity of 18,500 in 2016. Demand is so high the brewery still has not expanded distribution outside of Massachusetts and is looking for a 50,000-square-foot warehouse space in the city to expand its brewing even further.

Wormtown isn’t alone, similar growth is taking place at Jack’s Abby Craft Lager in Framingham. This year, brewing was moved to a new location with a beer hall serving food. Production growth is up, expanding to 19,000 barrels of beer in 2015 and on track for 30,000 in 2016.

Even established brewers like Wachusett Brewing Co. in Westminster deal with more growth than can be found in other industries. The company has expanded production by more than 100 percent every year since 1996, hitting 46,750 barrels in 2015.

A booming beer market

This kind of exponential growth is something breweries across the nation are dealing with, said Bart Watson, economist for the Colorado-based Brewers Association, which represents the craft brewing industry national.

Craft breweries now represent 12.2 percent of all beer produced in the U.S., up from 5.7 percent in 2011, according to the association. The nation is home to 4,225 craft breweries who sold $22.3 billion worth of beer in 2015 – a 16 percent increase from the previous year.

Once a brewery hits it big, the growth can be difficult to manage. The issues associated with triple-digit growth encompass everything from needing to tweak recipes to account for larger brewing systems, difficulty sourcing raw materials, hiring sprees and the need for human resources investments.

“Some [breweries] are choosing to artificially slow their growth so they can meet these challenges at a slower pace; some are looking for other business partners; and some are dealing with it as they go,” Watson said.

A primary goal of craft breweries during these periods of fast growth is maintaining quality, Watson said.

No matter what the response is to growth, the founders of a brewery face a transformation from jack-of-all-trades entrepreneurs to managers and executives of a growing firm, Watson said.

From beermakers to executives

Roesch has undergone this transformation at Wormtown Brewery. Until the company’s expansion in 2015 to its new 72 Shrewsbury St. location, Roesch was really concentrating on the beer and managing a small group of three employees. Now he has 25 employees and had to greatly shift his role.

“In the last year I have grown as a leader and a people manager. It’s something that I’ve never had the opportunity to do because I worked for small breweries, but it’s also something that doesn’t come naturally to me … but we’ve gotten to a point where I’ve been able to lay out a vision for the company,” he said.

This meant relinquishing some control and putting even more trust in Wormtown’s employees, Roesch said. A general manager and a two-person finance department have been part of solidifying the company.

At Jack’s Abby, Sam Hendler is one of three brothers who founded the brewery in 2011 and has always handled sales for the company. Initially dividing up the business responsibilities into sales, brewing and finances played to each brother’s strengths. As the company grew from 30 employees to 85 in March, all three brothers had to grow quickly.

“You have to delegate and giving up that control can be really hard, but in the end if you don’t, you’re never going to get anything done,” Hendler said. “With small businesses, you are a generalist and do everything. You will just throw your own time at it and even if you don’t do a good job at it, you will get it done because you are relentless.”

Emblematic of giving up that control was hiring a manager for the beer hall. With none of the brothers having experience running a restaurant, bringing someone in who could handle this new aspect allowed the brothers to continue their individual focuses, Hendler said.

Becoming a true beer geek

Guiding Wachusett Brewing Co. on a high level has been a reality for co-founder and president Ned LaFortune for so long that he had to walk back into the past to reflect on his own personal growth as the company was first expanding.

“In 1994, I was driving a delivery truck, and I was our only sales and marketing guy; and the two other founders were doing the brewing… but then it was only a year or two until I had to step away from production and into an administrative role,” LaFortune said.

That shifting role in the beginning took its toll, said LaFortune, who began questioning whether he was right for the position after about 10 years.

Even though he loved beer and the company, he questioned whether he was a true beer geek. Yet, LaFortune strengthened his resolve on the realization the company needed direction to be able to grow. It was around that point LaFortune planned a way forward for the company involving canning and diversifying by brewing for other companies.

“I realized early on that it isn’t about management, it’s about leadership. I have plenty of managers now, but I don’t have a lot of leaders,” he said. “You have to be the one to have the vision, and you have to work back from the vision.”

Backing up that vision is the role of those you hire, said LaFortune, whose main suggestion to any growing brewer is to make a good investment in employees. The best people for the job will cost more, but as you grow you must hire the people that will keep the company moving forward and your quality up.

“The quality of your people is the most important thing, so you have to try and find the best you can,” he said “Just do the best you can to find the best people. They come at a price.”

Culture and benefits

Chief among the concern for Jack’s Abby and Wormtown has been maintaining company culture.

With a sales team spread throughout Massachusetts, New York and Pennsylvania, Jack’s Abby has made a concerted effort to build connections between everyone.

“Building a sales team culture with people across the Northeast is a whole different can of worms than dealing with people that are in the brewery three times a week,” he said.

Wormtown went to the lengths of bringing in a consultant to firm up its company culture. When a company is growing, it is necessary to be more deliberate and plan towards the culture the brewery wants to cultivate, Roesch said.

“It isn’t just the people at the top saying what the people down below should do and them supporting the company. It’s the leaders giving people the resources they need to do their jobs,” Roesch said. “We’re letting them do their thing and not micro-managing, and it’s exactly what we need to support this kind of hundreds of percent growth every year.”

While all of this has been deliberate and difficult, Roesch isn’t looking back to the simpler times, but reveling in the steps that Wormtown has taken and looking forward to continued growth in the future and the benefits – such as health insurance and a 401(k) for the first time – that come with it.

“You’ve got people with kids and mortgages who are relying on the company to make a paycheck every week and put their lives together. To be able to say we have that, and to put benefits on top of it, is the thing I am most proud of,” Roesch said.

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