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From Brooklyn to the world: How America’s 10th biggest craft brewer built its empire

By Hal Conick+

17-Dec-2015
Last updated on 18-Dec-2015 at 15:42 GMT2015-12-18T15:42:22Z

Building up beers: Brooklyn Brewery. Pic: Flickr / Jeff Egnaczyk
Building up beers: Brooklyn Brewery. Pic: Flickr / Jeff Egnaczyk

With craft breweries selling for as much as $1bn, Steve Hindy, Brooklyn Brewery co-founder and chairman, said the “thrilling” show has allowed him to “dream a little”. But does he plan on getting in on the action?

“We’re not into selling our company,” Hindy said, speaking at Beverage Digest Future Smarts in New York this week. “I like my independence.”

Constellation’s recent $1bn acquisition of Ballast Point Brewery and Heineken’s purchase of a 50% stake in Lagunitas  have been fun to watch, but that’s where it ends for him.

“Obviously the big guys can produce beers like the beers we sell, but we believe there’s a quality,” he said of what Brooklyn Brewery offers craft beer fans. “[That’s] the real factor that is important for our consumers. That’s what we’re betting on at Brooklyn Brewery.”

Building interest over three decades

In the 31 years since Brooklyn Brewery opened, Hindy said he’s have seen three generations of craft beer go by, with not much interest from the outside world (or perhaps more importantly, distributors) for years.

“It was tough,” he said. “No one knew what we were up to. No one understood our product. We had to do a lot of sampling, a lot of tasting, [and] a lot of talking.”

Even with all the groundwork, Hindy said wholesalers didn’t become interested in the brand until 2004.

Now, the narrative is different for Brooklyn Brewery. Hindy said 2015 sales are projected to reach 290,000 barrels, making them the 10th largest craft brewery in the US, 20 spots ahead of the billion-dollar Ballast Point, per 2014 rankings from the Brewers Association .

More than half of the company’s production is its Brooklyn Lager, with the other half seasonal brews and specialty beers, such as barrel-aged and sours. Hindy said this allows Brooklyn to appeal to customers who walk into a beer shop and ponder “What’s new?”

Roughly 45% of Brooklyn Brewery’s sales are still on-premise at restaurants and bars, which Hindy is “how we built the Brooklyn brand”.

“We went after high end restaurants in New York, then all the others and told them about the placements we had,” he said. “That’s where you get sampling, that’s where you garnish your image by being in the right places. We believe in that approach. That’s what we do across the world.”

From Brooklyn to Japan

Times are different for craft beer in 2015 than when Hindy started Brooklyn Brewery. Then, he said imports and craft combined for 2% of the market, with the other 98% being mainstream beer. Now, imports have grown to 14% of the market, with craft at 12% to 13%. Craft brewers have a goal of taking 20% of the market by 2020, according to the Brewers Association.

“I thought we were competing for that 2%,” Hindy said. “We really have changed the game in America.”

Even so, the popular New York-based brewery only sells its product in roughly half the country. So how do Hindy and company make their money?

“We’ve had very good fortune exporting our beer,” he said. “That began with people coming to us and telling us they thought the beer was very unusual and they’d like to sell it in Japan or Sweden. I said ‘You got to be kidding me, I can’t sell this here in New York.’”

After years spent building relationships, international sales for Brooklyn Brewery are now 40%, or 120,000 barrels, of their business. The company has partnerships with brewer and distributor Carlsberg in Sweden, as well as Norway's E.C Dahls Brewery, among others. 

Hindy said they have about 60 tankers going back and forth between the US and Europe, with all brewing done in New York. This helps Brooklyn get kegs of beer into bars two weeks after shipment to ensure peak freshness.

Education leads to craft beer explosion

The big multinational players in the beer world are getting into the craft beer segment thanks in large part to the groundwork of education the second and third generation of craft brewers, such as Brooklyn Brewery and Dogfish Head, according to Hindy.

“We’ve all been educating Americans about craft beer; we’ve been telling our stories,” he said. ”Most of our marketing, with exception of Sam Adams, is word of mouth advertising. Most of us are doing it one customer at a time. I think that’s a very special relationship with the beer drinker.”

The advent of social media has been a “godsend” for craft brewers’ word of mouth strategy, Hindy said, as he said you can now start a brewery “in the middle of nowhere” and gain a following itching to try your beer before even opening. This speaks to the fanaticism of the craft brewery fan, something that has helped take the industry from less than 2% of the market to its goal of 20%.

Fanaticism and interest in craft beer is not localized to the US. 

“This is going to happen all over the world,” he said of the craft beer revolution. “I think the big guys know it and they’re looking to get a handle on it.

“I think the interesting numbers to look at in the next decade will be independent craft versus big company-owned craft beer. We’ll see how that plays out. We’ll see if independence really matters to the consumers.”

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