New Belgium Brewing Company, Inc.

views updated

New Belgium Brewing Company, Inc.

500 Linden Street
Fort Collins, Colorado 80524
U.S.A.
Telephone: (970) 221-0524
Toll Free: (888) 622-4044
Fax: (970) 221-0535
Web site: http://www.newbelgium.com

Private Company
Incorporated: 1991
Employees: 185
Sales: $45 million (2003 est.)
NAIC: 312120 Breweries

New Belgium Brewing Company, Inc., is one of the largest regional specialty brewers in the United States, producing about a dozen distinctive beers which are distributed to fifteen states in the West. Its brands include top-seller Fat Tire Ale, Sunshine Wheat Beer, and Abbey Belgian Style Ale, as well as seasonal offerings like Biere de Mars, Transatlantique Kriek, and Two Cherry Ale. The environmentally-friendly firm uses wind-generated electricity as well as heat and energy derived from byproducts of the brewing process. Founders Kim Jordan and Jeff Lebesch hold controlling interest in the company, which is partly owned by their employees.

Beginnings

The New Belgium Brewing Company (NBB) was founded in 1991 in Fort Collins, Colorado by the husband-and-wife team of Jeff Lebesch and Kim Jordan. Lebesch, an electrical engineer, had taken up the hobby of brewing beer at home a decade earlier, and had later volunteered at breweries in California to sharpen his skills. He became interested in founding his own brewery after going on a bicycle tour of Belgium, where he visited a number of breweries and acquired a special strain of yeast to bring home.

Although Belgian beer was not as well known in the United States as its German and English cousins, the country had its own distinctive approach to brewing, with a long tradition akin to that of winemaking in France. Belgians were particularly fond of adding flavors, like spices or fruit, to their brews, and also produced barrel-aged beers with a higher alcohol content.

After working up a business plan during an Easter Sunday hike in the mountains, Lebesch and Jordan, a social worker, decided to start a brewery in the basement of their home, and took out a $60,000 second mortgage to finance the endeavor. The company's initial offerings were the flavorful Abbey Trappist Style Ale and the lighter Fat Tire Ale, which was named after the bike Lebesch had toured Belgium on. The first bottles were capped in June 1991, and featured a neighbor's watercolor paintings on the labels.

Having persuaded a few local stores to carry their beer, Jordan, who handled the marketing, delivered it in the family station wagon. During their first year, the couple turned out 3,300 cases of 22-ounce "bomber" size bottles. Lebesch's Fat Tire Ale was especially well-received, and as its popularity grew its size was switched to the more standard 12-ounce bottles.

With sales climbing steadily upward, Lebesch and Jordan quit their day jobs to brew beer full time. In the fall of 1992 the company's operations were moved into a former rail freight warehouse in Fort Collins, and distribution was gradually expanded to cover much of the state of Colorado and a few outstate metropolitan areas. By 1994 NBB's annual output had grown to 28,000 31-gallon barrels, and the firm had begun offering public tours of its plant.

A New Brewery Opens in 1995

In November 1995 NBB opened a new $5 million brewery down the street from its existing location. By now the firm's beers included several additional varieties, including Old Cherry Ale, which was flavored with fresh berries. The company employed 50, with Lebesch serving as vice-president and head of brewing operations, and Jordan as president and CEO.

The so-called "microbrewery" segment of the marketplace was now experiencing tremendous growth. In 1994 Colorado had less than forty breweries and brewpubs (bars or restaurants which brewed beer on the premises), but just two years later the number had increased to more than sixty. Fort Collins was a hot spot, with one brewery per 12,000 residents, more than four times the statewide average of one per 51,000. In addition to NBB and several other small breweries and brewpubs, the city was also home to a major Anheuser-Busch plant.

In 1996 NBB experienced a minor controversy when it received a cease-and-desist letter from a small group of Belgian and Dutch Trappist Abbeys that objected to the use of the term "Trappist" in one of its beers' names. The firm complied with their request and changed the name to Abbey Belgian Style Ale. For the year, NBB brewed 57,000 barrels of beer and had sales estimated at $11 million. Jeff Lebesch had recently decided to step back from overseeing brewing operations, and the firm hired Peter Bouckaert from Rodenbach Brewery of Belgium to serve as its head brewer. NBB was now brewing a total of nine beers, which were distributed to Colorado, Wyoming, Kansas, New Mexico, and Arizona.

At this time the micro- and craft brewing industry was entering a long-anticipated period of retrenchment. Although the number of brewpubs continued to increase, fewer small breweries were opening and some were going out of business. Distributors and stores had begun limiting their stock to only the more popular craft beers, and the industry was also impacted by the newly-aggressive marketing campaigns of beer importers, the declining beer consumption of Americans (from 23.7 gallons per capita in 1985 to 22.1 in 1995, according to the Beer Institute), and the successful efforts of the distilled spirits industry to rekindle interest in their products, which took market share away from beer.

NBB was largely able to transcend these obstacles, however, as it had by now grown beyond the ranks of tiny microbreweries or mid-size craft brewers to the level of established regional brewer. Its output was dominated by Fat Tire Amber Ale (75 percent of sales), with other popular varieties including Abbey Belgian Style Ale, Trippel Belgian Style Ale, and Saison Belgian Style Farmhouse Ale.

The firm was already beginning to outgrow its new plant, and a two-year, $4.2 million expansion program was undertaken to add an additional 12,000 square feet of warehouse space, 8,000 feet of fermentation space, and 5,000 feet of utility space. Eight additional $100,000 fermentation vessels were also added to boost capacity to 150,000 barrels per year. NBB was now ranked among the top 25 beer-makers in the United States.

The company's rapid success was attributed in part to Lebesch and Jordan's systematic approach to the business and their focus on maintaining quality and consistency. Lebesch had created computer programs that monitored brewing processes, temperature, and ingredient flow, and the company also took such measures as using metal pipes rather than hoses to transport beer through the brewery, which yielded greater efficiency and sanitation. Six teams of laboratory testers were employed to ensure that each batch of beer met quality standards.

Growth in the Late 1990s

Over time NBB had gradually expanded its distribution area, and by 1998 its beers were available in ten states. Recent additions included Montana, Idaho, Washington, Texas, and Missouri. The firm's offerings were increasing as well, with new varieties including Sunshine Wheat, flavored with coriander and orange peel; 1554 Brussels Style Black Ale, based on a recipe from the sixteenth century; and Blue Paddle Pilsener, a lighter Czech-style beer. To help promote these brews, the company had expanded its marketing department to eighteen people, whose work included meeting with store owners and attending promotional events and beer festivals. For 1998 production jumped to 104,000 barrels, nearly a third higher than the year before.

1999 saw NBB make headlines when it signed a contract with the city of Fort Collins to buy only wind-generated electricity to operate its plant for a ten-year period. As a result, a new wind turbine was installed near Medicine Bow, Wyoming to produce the 1.8 million kilowatt-hours of electricity the plant consumed per year. The company would pay a 26 percent higher rate for the power, which would reduce emissions of carbon dioxide associated with coal-fired electricity. NBB's 105 employees had voted in favor of the move, which was financed in part by reducing their annual bonuses.

In the fall of 2000 NBB sponsored a promotional six-city "Tour de Fat," a traveling festival that offered community bike rides, a Cruiser Bike Olympics, and a children's activity area. Proceeds were donated to local non-profit and bicycling organizations. The year also saw the introduction of the citrusy Biere de Mars, which was sold in the late winter and spring.

In 2001 the company introduced a new cherry-flavored beer. It had discontinued Old Cherry Ale in 1998, but enough requests for another cherry brew came in that the firm decided to re-formulate it. Two Cherry Ale was lighter than its predecessor, but contained the flavor of whole cherries added during the fermentation process. The seasonal brew was made available from late summer through fall. A dark, wood-aged French-style beer, La Folie, was also introduced during the year and sold on a seasonal basis. 2001 proved another record year for the firm, with production increasing to more than 230,000 barrels. In the fall, NBB began another expansion of its brewery to triple production capacity.

Company Perspectives:

Long before New Belgium had a marketing department, it was just Kim and Jeff traveling to festivals, sampling out beers and talking to folks. These days it's the same idea but a little further flung. Now we have Beer Rangers who travel throughout the west talking to people, hosting events, and generally ensuring that all our beers are top quality from the draft line to your glass.

Dealing with rapid growth in a small business could sometimes be difficult, and Lebesch and Jordan developed several creative strategies to increase worker satisfaction. When the owners' salaries became the subject of speculation and rumors, they opened the books so employees could see what they earned along with the firm's expenses and profits. They also decided to place a third of the company in a trust which would dispense shares to workers' retirement accounts. Every employee was given a case of beer a week, and after a year they received a $400 fat-tired cruiser bicycle. After five years, a trip to Belgium was awarded. The firm's plant included many "fun" touches as well, like a playground slide connecting the third- and second-floor offices for those wishing to descend in a hurry.

In addition to taking care of its employees, the company continued to be a conscientious steward of the environment. Along with using wind-generated electrical power, the firm recycled heat from brewing to warm parts of its plant, lit its warehouse with sunlight, had a comprehensive recycling program, and built a $4 million wastewater treatment plant, from which methane gas was extracted to generate additional electricity, and solid wastes were sold to farmers for use as fertilizer. NBB also gave $1 for each barrel it brewed to charitable organizations. The company, which employed a "sustainability outreach coordinator," saw its environmental efforts highlighted on NBC television's Today Show in July 2002.

Increasing Emphasis on Seasonal Beers in Early 2000s

NBB was now making six year-round beers and four seasonal varieties. The latter were proving increasingly popular, and a new one was introduced every few months. The light, kaffir leaf-flavored Loft was introduced in August 2002, and early the next year the company announced that it would import a two-year aged Belgian beer to be blended 50/50 with a brew of its own. The result, Transatlantique Kriek, was issued in the fall.

NBB was also selling products emblazoned with its logo including hats, t-shirts, beer glasses, frisbees, and even a Sunshine Wheat lip balm. Over the years the company had won many awards for its beers, and it had been named the best mid-sized brewery in the United States at the Colorado-based Great American Beer Festival for several years running.

By now, half of NBB's production was sold in Colorado, with the rest shipped to a dozen neighboring states, including the recently-added Nebraska. Explaining the firm's regional focus, in 2003 CEO Kim Jordan told Mother Earth News, "we're not looking at aggressive marketing strategies right now because quality of life—for ourselves and our employees—is important, too. If sales become the only focus of a business, and you're constantly hiring new staff, you may lose track of the original goals: to have some fun, maintain a great working environment and produce an excellent product that doesn't have [negative] impacts on the environment." While she continued to lead the firm, her husband Jeff Lebesch now served on its board of directors and as a technical consultant. Jordan was a well-respected leader within the industry, and had recently served as chairman of the Brewers Association of America.

In 2003 output increased yet again, to 285,000 barrels. NBB was producing half the amount that leading craft brewer Sierra Nevada did, but its distribution was more limited, and it had a higher annual growth rate than the larger firm. The company was now one of the top ten employers in the Fort Collins area, and also hosted 80,000 visitors to its plant during the year.

In 2004 NBB was awarded an Environmental Achievement Award by the U.S. Environmental Protection Agency for the firm's efforts to reduce energy and water consumption at its plant. Ten percent of its power was now being supplied by methane derived from waste, and this amount was expected to increase over time.

The fall of 2004 saw distribution expand to Southern California, two years after sales had begun in the northern part of the state. NBB introduced its beers into a new market only after establishing a solid foothold in the last one, starting with the popular Fat Tire Ale and gradually adding the rest of its line. The company's beers were now available in fifteen states west of the Mississippi, with Iowa and Minnesota slated to be added next.

In just over a decade, New Belgium Brewing Company, Inc., had grown from a home-based brewery into one of the largest regional "craft" brewers in the United States. The firm's success was built on quality products, strong leadership, a dedication to its employees, and a deep respect for the environment. With more than two-thirds of the United States still untapped, its growth looked assured for years to come.

Principal Competitors

Sierra Nevada Brewing Co.; Boston Beer Co.; Odell Brewing Co.; Flying Dog Brewery; Breckinridge Brewery; Rockies Brewing Co.; Left Hand & Tabernash Brewing Co.

Key Dates:

1991:: Jeff Lebesch and Kim Jordan begin brewing beer in their basement.
1992:: New Belgium Brewing's operations move to renovated freight warehouse.
1995:: Company moves into a new $5 million brewery.
1996:: A Belgian brewmaster hired.
1998:: Production tops 100,000 barrels for the first time.
1999:: Firm begins to use wind-generated electricity.
2001:: Expansion of plant to triple capacity begins.
2004:: Distribution is expanded to Southern California; New Belgium beer is now sold in 15 states.