Tiny Brewery Is Braving Some Stout Competition
The ingredients in a good beer are simple: water, malted barley, hops and yeast. Making money at making a good beer is more complex.
Just ask Richard Belliveau, manufacturer turned master brewer. About three years ago, Belliveau had a great idea. Why not brew his own gourmet lager or ale in small batches and sell it to demanding beer lovers?
“Nobody’s doing it here. I’m going to get rich,” Belliveau remembered thinking. “That was my first mistake.”
His Angeles Brewing Co. in Chatsworth opened in 1986, but he has yet to make a profit. The first year, the company’s equipment, which cost $175,000, was idled while Belliveau sought a zoning variance. He finally started brewing in early 1987. Sales have grown from less than $25,000 in 1988 to what he estimates will be nearly $100,000 this year, when he hopes to break even.
150 Microbreweries
But there are many problems. For one thing, so-called microbreweries such as Angeles have spread like dandelions. Seven years ago, six microbreweries were in business nationwide; since then, 150 have opened, said Charlie Papazian, president of the Assn. of Brewers, based in Boulder, Colo.
Daniel Bradford, the association’s marketing director, compares the growth of microbrewing to the boom in yuppie-style premium ice creams and wines.
And all those microbreweries are chasing after a mere one-tenth of 1% of the 187.5 million barrels of beer bought in the United States last year. The problem is that microbrewers cater to the small part of the beer-drinking population that wants to be different and actually cares about the authenticity of its suds, said Robert Weinberg, a beer industry analyst and professor at the John M. Olin School of Business at Washington University. Weinberg said, “I’m sure that if you took the beer of the most successful microbrewer and one of the big brewers marketed it, it would fail.”
Still, Belliveau has avoided the fate of about 30 microbrewers who have gone out of business in the United States since 1978. In part that’s because he brews beers for other companies, which slap their labels on his product. About 70% of his business comes from that line; the rest is from direct sales to restaurants and bars.
Not Much Attention
But to keep growing, he needs to buy more-efficient bottling equipment. Then he hopes to sell his brand directly to liquor stores. So far, Angeles has not attracted that much attention. And Belliveau admits that “marketing is not my strong point.”
Papazian said new microbreweries are often under-financed and lack a marketing plan to distinguish their beers from the dizzying array of brands at liquor stores.
The Liquor Barn in Canoga Park recently offered more than 60 imported beers on its shelves as well as offerings from smaller U.S. brewers, including Maui Lager Beer (Hawaii), Red Tail (Hopland, Calif.), Dixie (Louisiana), Cold Spring Export (Minnesota), not to mention the better-known California microbrews such as Anchor Steam and Sierra Nevada.
Belliveau’s venture traces back to 1962 when he was stationed in Germany in the Army; there he first developed a thirst for German lager. But it took him almost 25 years to realize that the answer to his longing might be microbrewing.
In the meantime, he built up his small Canoga Park engineering company called R-B Engineering (about $250,000 a year in sales), which makes parts for defense contractors and high-performance car makers. When he decided to go into the beer business, he rounded up 10 investors to form a limited partnership that contributed about $35,000 of the original start-up costs for Angeles. The remainder of the $175,000 came from Belliveau.
Ginger Beer
Belliveau’s offbeat private-label customers include a company that takes a lager he brews and renames it “Shams,” selling it to Iranians in Southern California; an oil-refinery designer turned herbalist who sells a natural ginger beer to health-food stores in Santa Monica and Venice, and the owner of a trendy restaurant that offers several upscale microbrewed beers.
Belliveau’s first customer was McGinty’s, a Santa Monica pub that was looking for microbrewers and which Belliveau frequented with fellow members of his running club. McGinty’s was so committed to selling microbrews that it set aside a tap for Angeles Amber Ale even when Belliveau’s company was stymied by the zoning process.
James Mowlavi, the head of marketing for Shams Enterprises in North Hollywood, said his company is trying to reach the more than 300,000 Iranians in Southern California with a four-month radio campaign. His selling point: Shams will please the Iranian palate with a richer, more bitter taste than American Pilseners. Shams started selling its beer in June at 25 restaurants and liquor stores.
Another Belliveau customer is Chris Reed--an engineer who helped design oil refineries until he became interested in herbs. Reed’s company, Vital Foods in Santa Monica, has been selling about 70 cases per month of its non-alcoholic Original Ginger Brew at nine stores and restaurants in Santa Monica and Venice since June. Reed believes that ginger is good for the digestion.
