Cover Story

Hip Hops

Berkshire Brewery Drafts A Success Strategy
Cover 8/1/05

Cover 8/1/05

Berkshire Brewing Company Inc. has been growing by hops and bounds since its inception in 1992. Growth has been so quick and profound that principals Chris Lalli and Gary Bogoff now find themselves at a crossroads. Do they want to remain a local brewer or take that next big step?

Hops, like those climbing the brick walls of Berkshire Brewing Company (BBC) in South Deerfield, are plants essential to creating a great beer. They typically survive for decades, plant deep roots where they grow ‚ and grow rapidly.

The life of a hop vine as a metaphor for their own business isn’t lost on BBC founders Chris Lalli and Gary Bogoff, who grin up at their own decorative hop plants and shake their heads at how fast they spring up the side of the building. Then they turn to look at a recent expansion of their brewery, and do the same.

BBC just completed its third expansion since opening its offices and brewery two years after the business began in 1994. The company also has a satellite warehouse operating in West Boylston, Mass., and is planning a third location in Enfield, Conn., to meet the sales and distribution demand that is steadily expanding its reach across the Northeast.

As Bogoff puts it, the company is currently in a situation where the "tail’s wagging the dog." Sales are healthy, growth has been steady, and local and national respect for BBC’s products ‚ 14 beers, nine of which are produced year-round ‚ has created a momentum so brisk that Bogoff and Lalli have to hustle to keep pace.

Any CEO will tell you that a pressing need for expansion based on growth, rather than in an effort to foster it, is a good problem to have. But the principals of BBC agree, however, that the company’s success has now brought them to a critical crossroads, and they must now decide which way to turn.

"We always wanted to be a local brewery, and we have worked very hard to establish ourselves," said Bogoff. "Now that we have, the big questions is: What’s the next step?"

Never before, he explained, have he and Lalli been in a position to choose how big BBC gets. Now, they must decide whether to graduate from ’local brewery’ and become a ’regional brewer,’ which would necessitate shipping to states outside of the company’s current service area and piercing the national market ‚ essentially, becoming a different kind of business.

"Before, it was a simpler world," Bogoff said, harkening back to the early days, when the duo brewed their first few barrels together in a basement in Springfield. "There was always plenty of room for us to grow. Now, it comes down to a choice. Whatever we do, we want to stay profitable and efficient. But microbrew means small business, and we don’t want to forget that, which is easy to do when you start doing battle in the national marketplace."

Indeed, the national market is not so distant a destination for BBC as it once was. Of the 1,500 microbreweries and pubs brewing their own beer across the country, BBC rates 67th in terms of production volume. Herein lies the quandary that Lalli and Bogoff find themselves mulling more and more often, though, in terms of how large the company’s scope should become: in spite of that stellar rating on the national scale, 99% of the company’s beer is sold within a 60-mile radius of the South Deerfield brewery.

"What we’ve done is based very much on customer service, quality, freshness, and catering to the local market," Lalli said. "We’re very cautious about expanding; we’re respected in this marketplace, and we have established our niche. So, is bigger necessarily better?"

A Stout Following

Still, Lalli and Bogoff concede that the consumer-driven success of their products is an ongoing trend that cannot be ignored. The various strategies they employed to get their company going and to maintain good sales are now what is pushing the co-founders to entertain options for growth and change, starting with a simple business plan and some Yankee ingenuity.

Already, BBC beers can be found on tap or in the coolers of liquor stores across Western Mass. and, increasingly, across the state, as well as in parts of Connecticut, Vermont, and Rhode Island, making them some of the most prominent microbrews in the Northeast. But the partners are quick to point out that microbrews don’t just go head to head with each other to win space behind the bar; they also have to face the behemoths of the beer world ‚ Budweiser is the first name on their tongues ‚ that spend 60% of their revenue on national marketing.

"When we started, we definitely began at the bottom of the learning curve," Bogoff explained. "We were going to do draft business only, forging relationships with local bars, with no marketing budget whatsoever. We didn’t realize how competitive the beer industry actually is. We met with a lot of closed doors."

Lalli and Bogoff were forced into bottling just to make ends meet, and in the process, they stumbled upon a few marketing ploys, reminiscent of the success of Ben & Jerry’s ice cream, that helped create a brand and a hook for the small company.

For example, they put themselves on the labels of their beers, smiling out from 22 oz. bottles with frothy mugs and toothy grins, and coined a number of pithy phrases that now accompany every case and keg they ship, including "Things are looking up!" and the company’s mission statement, "It’s all about the beer."

But in order to compete in what is quite literally a saturated market with sparse marketing dollars, the brewers decided to continue to focus on offering good service and great products, though with a twist: they made a conscious effort to brew an ’American ale,’ a light-bodied drink with mass appeal, that might even impress the Bud drinkers who represent 50% of the market.

The tactic worked ‚ that American ale, BBC’s Steel Rail Extra Pale Ale, was a hit, and eventually spurred the results that the owners had been looking for. Whereas most breweries glean the bulk of their profits from bottling, Lalli explained, BBC is now doing a majority draft business, about 65%.

"Steel Rail is also about 65% of our business," he said, noting that BBC continues to pay attention to the market, offering popular styles of beers such as India pale ales, seasonal brews, or flavor-infused ales. "And our market is the most unique you’ll see anywhere. It crosses all social lines; our fans are new drinkers and they’re old agers, and our beers are in the finest restaurants, and in VFWs."

Local Watering Hole?

Lalli and Bogoff also attribute BBC’s success to its constant attention to its identity as a locally owned, locally loyal entity. Lalli said it translates into good business to create a following not only through a great product, but a great reputation for partnering with other local businesses and organizations in an effort to support the regional economy. Norse Farms in Whately, for instance, provides the raspberries for BBC’s Raspberry Strong Ale. Dean’s Beans in Orange provides the coffee beans for the Coffeehouse Porter, and 10% of the sales of Shabadoo Black and Tan Ale, named after a friend who passed away, go to help the Western Mass. Food Bank.

"We would be nothing without support," Bogoff said, "so it’s important, but it also makes a whole lot of sense, to give back and keep collaborating with other people."

Other such partnerships have been forged with Franklin County and, specifically, the town of South Deerfield, which played a key role in getting BBC off the ground at its flagship location, a former cigar manufacturing plant on Railroad Street.

The two partners said they were turned away by several communities in the area, and were getting frustrated in their search for a home when South Deerfield "embraced them," as they put it. And that support has remained strong through several expansions of the brewery.

The brewery first included a seven-barrel system and a handful of employees brewing and bottling by hand around the clock. BBC now uses a 20-barrel semi-automated system and employs 24 people, all of whom are dwarfed by the brewery’s massive fermenters, grain silos, conditioning tanks, and other contraptions.

"It used to be brutal, back-breaking work," Lalli said. "Now the new system takes a lot of that grunt work out; we’ve been able to create a comfortable workflow. Without the expansions that we have been allowed to take on, I don’t think our growth would have been nearly as good as it has been."

And over the past decade, the company has yet to see a year that hasn’t produced a healthy increase in sales over the previous year, usually between 8% and 12%. Last year, BBC’s production topped 10,000 barrels for the first time, and that was in the midst of a somewhat disruptive expansion project, Lalli explained.

He and Bogoff expect to sell at least another 1,000 barrels above and beyond that figure this year. That strong history of growth has brought BBC to where it stands today: firmly rooted in Franklin County, but able to enjoy notoriety as one of the most well-known, profitable, and more importantly oft-enjoyed microbrews in New England.

Ale’s Well that Ends Well

The question is, with so many people regularly enjoying a pint or more of BBC brew in their own backyard, how many more people do Lalli and Bogoff want to add to their fan base?

"We’re going to keep doing what we’ve done," Bogoff offered. "We’re going to keep putting products out there that we’re proud of, meeting the demand, and providing the best service we can. We’re customer driven, and the demand is there, so we’ll definitely keep an eye on what is coming down the road. But we’re happy just to be on someone’s ’top five’ list of beers when they sit down at the bar. It’s all about the beer."

Jaclyn Stevenson can be reached at[email protected]

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *