From Bibles to Brewskis: A Long and Hoppy Road for Two Craft Brewers
Mike Reinhardt and Nate Watson, both 31, met 10 years ago as undergraduates at Central Bible College, a school of 650 in Springfield, Mo., that "train[s] ministers and missionaries for tomorrow's Church." The friends first met when Watson walked by Reinhardt's dorm room and noticed him listening to the Smashing Pumpkins.
"The school we went to was really conservative," says Reinhardt. "You kind of got a reputation of being a bad boy for listening to music that wasn't, shall we say, spiritually uplifting."
From there, the two eventually discovered a shared interest in beer, which was forbidden on the dry campus. "Occasionally, we'd sneak out to a beer bar," recalls Watson. "The only one we had in town was Cousin's Pizza." The pizzeria eventually closed, but by then Reinhardt had acquired a home-brewing kit and, with Watson's help, was experimenting with double-chocolate stouts.
The two men graduated and parted ways. Reinhardt moved to Indiana, where he completed a master's degree in biblical studies before settling in California. Watson also completed a master's degree, then spent three years as the executive director of a Christian nonprofit before transitioning to financial services.
A Slowly Fermenting Plan
Over the years, both men maintained their interest in beer, swapping tales of their respective adventures in home brewing and brainstorming ways to improve. In 2008, they launched a blog, thankheavenforbeer.com. "Once we started writing together, we began brewing copious amounts," explains Reinhardt. "At times, I brewed six or seven times in a single week."
At the same time the two friends were devoting more free time to brewing, they were also experiencing professional crises. In California, Reinhardt was bouncing between jobs, first at Lowe's (LOW), then part-time at a brewery, then at Whole Foods (WFMI), before finding himself unemployed for five months and landing a project manager position at a strategic communications company last July. Similarly, in 2008, Watson, like so many others employed in the financial services, lost his job.
"I was unemployed for well over six months, and I had a hard time finding a job," says Watson. "I understand that we are in the middle of a recession, but to me, not being my own boss and having to depend on other people for my well-being, it felt like there was more risk in doing that, in depending on a company that could possibly lay me off, than starting my own thing."
Watson eventually found a job in the admissions office of a private university, but by then he'd begun talking to Reinhardt about teaming up to start a brewery. Reinhardt explains, "I was debating doing a Ph.D. and was coming to the crunch time when I had to do my applications and I said, 'You know what, I think I'd rather do something with beer.'"
"I look at a company like General Motors (GM), and these guys and women who were working there for so long and are now worried about pensions, worried about their retirement," Reinhardt continues, "and it becomes difficult to believe that a job you're in for 20 years will be able to provide you with retirement. It's like you can take a chance with someone else's business or take a chance on yourself. I know who answers for that. I don't want to be a victim of circumstance when it comes to a job."
The men agreed that they would continue working full time while laying the groundwork for their Wilderness Brewing Company. Later this summer Reinhardt will move to Kansas City, where Watson currently lives, so that they can launch the business.
A Better Time Than You'd Think to Start a Brewery
Opting to start a business during the long slog out of the Great Recession may sound crazy, but a surprisingly large number of entrepreneurs have done just that. According to the Kauffman Foundation, U.S. entrepreneurial activity rose in 2009 to the highest rate in 14 years, "even exceeding the number of startups during the peak 1999-2000 technology boom." Carl Schramm, the foundation's president and CEO, explains the phenomenon. "Challenging economic times can serve as a motivational boost to individuals who have been laid-off to become their own employers and future job creators."
Which makes sense, but doesn't address the glaring question of funding. At a time when financial institutions are infamously reluctant to lend, where do newbie entrepreneurs find the cash to open a business? Reinhardt and Watson turned to Kickstarter, a website that aggregates small individual donations to support creative endeavors. They hope to raise $40,000 by Aug. 4. "We're trying to avoid bank loans at all cost," explains Watson. To that end, the duo has drafted a business plan that excludes all but the fundamentals. "The plan is for us both to work full time for the first year," says Reinhardt. "We won't be taking salaries from the brewery."
"Unless something crazy happened and it just went nuts," interjects Watson. "It would be awesome to not have to do our other jobs."
Craft Brews Surge Ahead
Watson and Reinhardt have selected a good industry for their foray into entrepreneurship. Sales of craft beer -- brews produced using traditional methods, usually by smaller breweries -- are rising even as overall beer sales are declining in the United States. According to the Brewers Association, the trade group that represents the majority of U.S. brewers, "small and independent craft brewers saw volume increase 11% and retail sales dollars increase 12% over 2009," while the larger beer market shrunk 1% during the same period.
The growth of the craft beer market is even more spectacular in light of the tough economy. Julia Herz, craft beer program director at the Brewers Association, cites multiple factors for the boom. "Craft brewers have come of age in the last 30 years, and they are resurrecting Old World styles, packing them with experimental and traditional flavors, focusing on ales. That variation in beer styles has been a very positive thing."
Steve Hindy, co-founder and president of Brooklyn Brewery, the nation's 15th-largest craft brewery, agrees. "When I started in business 23 years ago, there were fewer than 50 breweries in the United States. Today there are about 1,750 breweries in the United States ... and another 600 that are on the drawing board." His company has benefited from the explosion. "Brooklyn Brewery has grown by 20% each of last two years. This year we're pacing above 30%."
Herz also credits the "buy local" movement.
"In the same way people want to buy locally-produced food, they want locally-produced beer," she says. "Many beer lovers are interested in supporting the brewery down the street because that beer has traveled the least amount and because they are very intimate with the story of that brewery."
Erin Biles, public relations manager at Maryland-based Flying Dog Brewery, concurs. "So far this year our sales are up 48%, and the really cool thing for us is that in our local markets, which we consider the mid-Atlantic region, they are up 72%."
Reinhardt is not surprised by Americans' growing enthusiasm for independently produced beers even in the midst of a tough economy. "If there is an admonition of a recession, and the rhetoric of small business in America is believed by people, I think the way to get out of it is to have strong, local business and strong local economies. I would say maybe it's an imperative time to have small businesses flourish. I'm not seeing it as negative, that we're starting one in the recession. I'm seeing it as maybe helping a local economy to get out of one."
Loren Berlin is a columnist at DailyFinance.com. She can be reached at loren.berlin@teamaol.com. You can follow her on Twitter @LorenBerlin, and become a fan on Facebook.
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