"It's not our goal to be a 30,000-barrel brewery, and the day I hit 30,000 barrels, I quit," Carey stated. "Our goal is to make world-class beer and pay the bills. And that's it."
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Smaller Is Better
Wisconsin Brewery Reins in Growth
New Glarus Brewing Company in Wisconsin was confronted by a major problem this past summer: Sales were soaring out of sight, as reported in Milwaukee's Journal Sentinel. Normally, this is considered a good thing in just about any business, but for owners Deborah and Dan Carey, it meant trouble producing enough beer to fill orders, even while running the brewery at full throttle. Hiring another brewery to contract-brew the beer was out of the question, so Deb Carey did something that most small-business owners intuitively avoid: She cut back.
[an error occurred while processing this directive]Carey decided to reduce the brewery's marketing range, pulling her New Glarus Brewing products from Illinois in order to better focus on Wisconsin. In doing so, she sacrificed sales and profits in one of the country's largest beer markets.
"It is a tough decision," said Carey, president of New Glarus Brewing. "But to me it seems really clear that the strength of the brewery is local support."
Carey continued, "We're not big enough to take care of the business we have in Wisconsin. And that's important to me." As a result, the company's brands will no longer be found in liquor stores and other retail outlets in the Chicago area, Rockford and Peoria, meaning that once current supplies sell out, no more New Glarus beers will be available in Illinois markets by mid-2003. Carey acknowledged that the brewery's withdrawal may also make it difficult to return to those markets in the future, as distributors may no longer be interested in carrying the New Glarus beers, and customers may find alternatives.
New Glarus, which started brewing in the early 1990s, took the approach of many small Wisconsin specialty brewers by expanding in 1998 into Illinois, the nation's sixth-largest beer-consuming state. Illinois, which includes the huge Chicago market, bought 125 million cases of beer in 2001, compared with 66 million cases sold in less populous Wisconsin, the nation's 12th-largest beer market.
Illinois has a long tradition as a major market for many Wisconsin brewers, ranging from giant Miller Brewing Company, America's second-largest brewer, to tiny specialist operations like New Glarus Brewing. Through September 2002, New Glarus Brewing produced 10,403 barrels; of that amount, 9,730 barrels were shipped to Wisconsin wholesale distributors. The remaining amount, making up 6.5 percent of the brewery's production, went primarily to Illinois wholesalers -- a significant amount for a small business like New Glarus Brewing with 20 employees and revenue of about $2.5 million in 2002.
Carey said the move was necessary in order to guarantee a steady supply to New Glarus Brewing's Wisconsin customers. The company was struggling to meet demand due to the increased popularity of its beer in such markets as Milwaukee, Madison, La Crosse and the Fox Valley. The company's production through September was up more than one-third over the same period in 2001, according to tax records. That growth outranked other well-known Wisconsin specialty brewers such as Capital Brewing Company, Lakefront Brewery Inc. and Sprecher Brewing Company.
New Glarus Brewing completed a $500,000 expansion during the summer of 2002 with a new bottling line, bigger warehouse and other improvements, but Carey said the company still couldn't handle the increased demand from its wholesale customers.
Carey called the situation "horrible." She added that "everybody is screaming for beer. All of these are people who supported us by providing shelf space and tap lines." She said she never considered hiring another brewery with excess capacity to produce her brands under contract, comparing such a practice to sending kids off to boarding school. "Why have them if you don't want to raise them?" said Carey.
Instead, she ordered the retreat, acknowledging that the company's Illinois wholesalers were not thrilled with her decision. Steve King, who operates Specialty Import Distributing Company in Peoria, said he was unhappy but understood why New Glarus Brewing would stop shipping beer to his company in January 2003. King said that the New Glarus beers will be missed: "New Glarus has a very nice following." He added that the brewery's beers would be welcomed again if it ever chose to return to Illinois.
Other liquor store operators and retailers are likely to be more reluctant to give New Glarus Brewing another chance, according to Mark Rodman, a consultant to beer distributors. Rodman said that retailers might not want to take the risk that New Glarus Brewing would again withdraw from the market.
Carey and her husband, Dan, started New Glarus Brewing after the couple decided they wanted their own business. Dan had worked for other specialty brewers and was a supervisor at Anheuser-Busch's Fort Collins, Colo., brewery. Deb, who had a background in graphic design, had operated her own small businesses -- a graphics and marketing firm and a furniture importer. The Careys were tired of the corporate grind, with Dan working long hours, including many evenings and weekends. Deb, who grew up in the Eau Claire area and met Dan while attending college in Montana, wanted to move back to Wisconsin to raise their two young daughters. "I wasn't really anxious to start a brewery," Carey said. "But I was desperate to return to my home state."
Deb wrote a business plan and decided the Madison area, with its well-educated population, would be a good location for a start-up specialty brewer. The Careys found an available, affordable building in New Glarus, a small town about 30 miles south of Madison.
Carey said she's not interested in growing her company just for the sake of being bigger. "It's not our goal to be a 30,000-barrel brewery, and the day I hit 30,000 barrels, I quit," she stated. "Our goal is to make world-class beer and pay the bills. And that's it." -- From BeerWeek. Visit www.beerweek.com for more information.
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