CEO Roundtable: Breweries

Last edited 2:51 p.m., Aug. 29, 2018

Springfield Business Journal Features Editor Christine Temple sits down with Christina Chanter, co-owner of Springfield Brewing Co.; Tyler Hoke, owner of Lost Signal Brewing Co. LLC; Curtis Marshall, co-owner of Tie & Timber Beer Co. LLC; and Derek Shimeall, co-owner of 4 by 4 Brewing Co. LLC, to discuss the craft beer industry.

Brewery style
Christine Temple: In one word, describe the craft brewing industry.
Derek Shimeall: Exciting.
Christina Chanter: Communal.
Curtis Marshall: Accessible.
Tyler Hoke: Changing.

Temple: Tell us about your operation and when you started.
Chanter: SBC opened in 1997. It’s always been a restaurant and brewery. We really didn’t do much distribution at that point. More in the past few years we have been doing a little distribution, but our main focus is in-house restaurant and beer sales.
Shimeall: We opened in December of last year. Our goal is very family friendly, family oriented, a community style, small, intimate taproom. We have just recently started a little bit of distribution, but strictly to the Springfield area. More so that others will know we exist and to move a little bit of product, but not to go to the masses, per se.
Marshall: We opened up in April of this year. We are a 10-barrel brewhouse. All of our beer goes through our taproom. We are located in the Rountree neighborhood and the Pickwick business district. It’s a place that is starting to become a destination of its own, which has really helped us.
Hoke: Lost Signal Brewing opened on Valentine’s Day 2017. We focus on not just the beer, but also we do barbecue. We have a small, limited menu, but we put just as much time and effort into the food as we do the beer. We do have a couple year-round mainstay beers, but everything else is just always changing for the season and whatever we feel like brewing. 

Beer boom
Temple: The Brewers Association estimates there are 6,200 craft breweries across the country. That number has doubled in the last five years, and there’s another 2,000-3,000 breweries in development. We’ve also grown considerably in Springfield the past 18 months. What’s next for the Queen City’s craft beer scene?
Hoke: The first brewery that opened up was Brew Co. and behind it was Mother’s [Brewing Co. LLC] and White River [Brewing Co. LLC] and you had that focus of Mother’s and White River as being more of a distribution brewery. Now, you see more small breweries opening up faster. Springfield is going to get a lot more of those because we can sustain that kind of growth. 
Marshall: It is still going up in the United States, but that growth is definitely slowing. I don’t think Springfield was so far behind the times when we came in, but I don’t think it is slowing here as much. I think there were four breweries when we first started. Now, with Show-Me [Brewing LLC] there is seven. If you want to put a number on it per capita (Springfield could sustain) eight to 12 breweries. We are still at that stage where as long we are making quality beer, people coming to our establishments is helping all of us. I mean are we all competitors? Absolutely. I don’t think we are at the saturation point.

Growing competition
Temple: For SBC, the oldest brewing company in town, how have you noticed business change in the last 20 years, especially considering the competition?
Chanter: It has increased awareness. It has exposed people to more variety that they are willing to try. Because, you have your classic sort of megabreweries, and people don’t want just those brands.
Marshall: How great would it be if you were constantly in an environment where you were constantly trying to one up each other? Ashton [Lewis], the brew master at SBC, has something like 13 medals from the Great American Beer Festival. The bar is extremely high in Springfield, Missouri.

Temple: For the newer breweries, what was the climate like to start a business in Springfield?
Marshall: It is fantastic. It is one of the main reasons I moved from Denver to here and came back home to do it. I couldn’t have bought properties in Denver like that to start a brewery. The key of opening the brewery to us was getting to that first beer.
Shimeall: It was scary before the day we opened. I think, long-run, it proved to be easier than we first thought but way more expensive than we thought. In our situation, there were four partners. We were able to pool some of the personal stuff, as well as just debt with loans. But Springfield made it a lot easier. We are in a good area with an affordable price that allowed us to go to market.
Hoke: Buildings here really are not that bad of a price. I say that, but then I bought a building downtown that’s old, and so it’s really expensive and took more money than anything. For me, the construction on the building was way more than what I had anticipated. The hardest part is getting the city to approve any kind of construction stuff.
Shimeall: To your point, we were told in all of our research to expect it to take twice as long and cost twice as much. And it literally, to the day and dollar, took twice as long and was twice as much.
Hoke: The brewery itself, everyone spends about the same amount. As long as you are buying about the same amount of equipment, you’re looking at about a quarter-of-a-million dollars for whatever size system you do. Then it depends on how many bells and whistles you add onto it.

Supply and demand
Temple: How do you project demand? What is the research that you are doing or are you just kind of flying by the seat of your pants?
Shimeall: It’s a balance. It’s a struggle. We kind of wing it, to be honest. … We have actually implemented a software recently, a brewer’s software, that has really helped, and a brewing calendar. At the end of the day, it’s just hope you don’t run out of beer and keep brewing.
Marshall: We plan as well and schedule. We are brewing as much as we can at this point.
Chanter: We have seen a growth in our distribution, but not as much in-house. I think some of that was because we needed a kitchen remodel really bad. And so we weren’t having so many evening guests. Our lunch was increasing, but our evening guest counts weren’t increasing. As far as the distribution that we do, 30-40 percent [up] maybe from last year. We have nine beers on tap, potential for 10 now. I know that people really like the variety because we have these … routine ones that are on, but people like the fun stuff too.
Marshall: What have you done for me lately?
Chanter: [Laughs] That’s right.
Shimeall: That was my one-word answer when I said exciting. That was kind of my take. What’s new? What’s next? What have you done for me lately? It is an interesting industry, interesting market because of that.
Chanter: It’s a good thing.

Market share
Temple: Craft beer sales, by market share, make up a little under 25 percent of the beer industry. That percentage has grown. What’s the reason behind that? Are taste buds changing? Is it due to more availability?
Chanter: Overall beer sales have decreased, but craft beer sales have consumed part of that. That’s why we’re still having that excitement and fun.
Shimeall: I think the focus is on local. I’ve seen at our small level, the connection with an owner, the connection with who is making what I’m drinking goes such a long way.
Hoke: I’ve seen it with food, too. I think it goes hand-in-hand with the farm-to-market stuff. People are tired of drinking the same beer they have had since the ’70s. And they are tired of eating at the same chain restaurants. People are wanting to try something new.
Chanter: Now that people have a choice, they want to seek out that next new thing.
Marshall: And they’re willing to pay for that choice with higher quality ingredients. That’s why you see craft beer having the 25 percent in dollar share when it’s only 12-15 percent in volume share.

In-house is key
Temple: Many of you mentioned the extras you have at your establishments, like restaurants, live music and distribution. How does your revenue play out among these portions of your business?
Shimeall: It’s taproom only. Distribution maybe will end up at 5-10 percent total.
Chanter: For just distribution, it’s probably 10 percent, 15 percent maybe, and the rest is food and drink in-house. The food sales trump that at SBC.
Shimeall: The margin when you send something out the door is small. We need people in our establishments to survive.
Hoke: We have to legally make over 50 percent in food sales compared to alcohol sales. Distribution sales, which we started in November, I think quantitywise were maybe 2-5 percent, so revenue is probably 1 percent. Our distribution is really just to reach new people. You have to put out tons for it to pay for itself.

Craft drinkers
Temple: Who drinks craft beer? Who are you marketing to?
Marshall: Who doesn’t drink craft beer? When I do Facebook ads, it allows you to choose anybody, and we do 21-55 men and women – and 55 is probably too young. We’re in the Rountree neighborhood, which is quite diverse in the fact that there are mansions next to rentals and teachers next to students. Wealth next to poverty, and all of those people are in our brewery.
Shimeall: I have found, and have been excited to find, that our demographic is considerably older than what we thought. I do think Springfield falls into “it’s a college town” mentality a little too much sometimes. I’m finding a tremendous support from the 30 to the 65, 70 range. We find a lot of the working, happy-hour individual willing to spend money for a beer and enjoy themselves.
Chanter: We don’t track demographics. But for us being open for so long, we have people who have been Mug Clubbers for 20-plus years.

Ale trail
Temple: Derek, you mentioned tourism. The Tap and Pour Craft Beverage Tour, which all of you are part of, is helping bring awareness to craft beverages in the Springfield area. There are several large cities around the country known as beer destinations, such as Portland, Oregon, and Fort Collins, Colorado. What does it take to get Springfield there?
Shimeall: Step one is doing what we did. Getting us on the map so people know. The biggest resounding comment I get is, “I had no idea Springfield had this many.”
Marshall: I would love if we could follow Brew Co.’s lead and start winning some medals.
Hoke: What are you talking about, man? I’ve got two.
Chanter: Congratulations.
Temple: What are the medals?
Hoke: The New York International, the porter won silver, and then the U.S. Beer Open it won bronze. Hopefully, it will get a (Great American Beer Festival).
Marshall: We need to start getting the national media to start highlighting Springfield as a beer destination. The tourists who are willing to travel with craft beer as their main focus, they are paying attention to that kind of stuff.
Hoke: I get a lot of people coming in who are traveling Route 66. It might not be Springfield is a craft beer destination per se, but rather we need to make sure that the travelers are aware that there is craft beer here.
Marshall: A side benefit of that is growing the city, as well. If we became a craft beer destination, which we’re not right now, it would be great for all of us to play in that playground. But how great would it be for the city as well?
Shimeall: The (Springfield Convention and Visitors Bureau) passport book was the big push. I think there definitely is room for more because it’s a huge tourism industry in and of itself.
Hoke: There was a company in northwest Arkansas that does ale trail-type stuff and they were wanting to put one together here. That will help, too, getting those different kinds of programs together. And the beer buses. That’s huge because then those companies do national ads. Getting those extra little companies involved will help us grow, too.

Excerpts by Features Editor Christine Temple, ctemple@sbj.net.