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On The Scene: The Beer Business

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On the Scene
Thursday, June 10, 2010

The Oregon Entrepreneurs Network holds a PubTalk every month. But last night’s topic was particularly apropos: the business of beer.

Backspace was packed with entrepreneurs wanting learn about the "Seeds of Suds"

The panel included Irene Firmat of Full Sail Brewing, Jamie Floyd of Ninkasi, and Charlie Devereux of Double Mountain. Oregon’s craft beer industry brings $2.3 billion into the state’s economy annually and employs 4700 people.

There are 37 craft brewing companies in Portland alone, the highest number of any city in the world.

The beer entrepreneurs spoke to an audience of eager ears: when moderator Lisa Morrison of KXL’s Beer O’Clock asked who in the audience was thinking about starting a brewing company, more than half of the hands went up. But how does one go about this venture?

Each of the entrepreneurs had a different story. Firmat started Full Sail in 1987 when the biggest challenge for a craft brewer was finding a market.

“People really didn’t understand why we needed to start a small brewery when there were three breweries already here: Anheiser Busch, Miller, and Coors.” Now, Full Sail is a well-established company itself, far beyond startup status.

In 2006, Lloyd started Ninkasi in a market that understood the value of craft brews. Lloyd has an almost spiritual view of the value of beer (Ninkasi is the name of the Sumerian goddess of fermentation), and chose the location carefully.

coaster“I really thought Eugene deserved an identity piece.”

Ninkasi’s dedication to Eugene paid off; much of its funding came from the city's government. And the company has expanded: a questioner at the PubTalk congratulated Floyd and asked him how it is that he sees the beer "everywhere."

Devereux opened Double Mountain just three years ago, after years of dedication to beer brewing and a failed brewery opening on the east coast. Now Double Mountain has a successful brewpub and 200 retail accounts.

Every story is different, but there is advice aplenty for everyone thinking of going into the industry.

“We are a very capital intensive business,” said Devereux. “If you want to grow you’ve got to spend.”

The entrepreneurs all agreed on this point. In such a capital-intensive industry, risk exposure is huge.

"The hardest thing to prepare for is success, so plan for it," said Devereux. "All you have to do is stop and you drop the ball."

Other challenges come from the regulations in the industry.

“It’s basically the most regulated industry there is,” said Floyd. “If you aren’t a political person, it might make you pull your hair out how much that effects the bottom line.”

The relationship between an investor and a brewer is frought with problems. Perhaps this is why Firmat has gone to an employee-owned business model, and Floyd is heading that way.

If you do deal with investors, though, be careful.

"Connect on a soul level," said Floyd. And if you're looking to invest, "make sure there's someone on the other end who knows what to do with your money."

"Invest in good people," added Devereux. "We're all making good beer."

“There are a million different ways that people have found to make it work,” said Devereux. “Don’t get hung up on making it work a certain way. This is the best market for beer in the world.”

Angela Webber is web editor for Oregon Business.
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