Canned beer is cool now, but it wasn’t always the case. Not long ago, cans were largely viewed as a vessel for cheap-costing and cheap-tasting beer.
In November 2002, Dale Katechis, the founder of Colorado-based Oskar Blues Brewery, took a bold step and became the first craft brewery in the country to put craft beer exclusively in a can.
Now Katechis has company. More than 200 craft brewers are canning 600 different beers this year, Craftcans.com says. And last year, nearly 53 percent of beer consumed in the U.S. was served in an aluminum can, according to the Beer Institute.
The benefits of beer in a can include reduced costs for the brewery, increased portability and easier storage for the consumer as well as the ability to protect the beer by blocking out harmful sunlight.
Consumer Nation recently caught up with the founder of Oskar Blues, Dale Katechis, to discuss the growth of Oskar Blues, craft in cans and the future of the craft beer industry.
When he started, Katechis used a tabletop machine to create a hand-canning line that sealed one can at a time. From that humble beginning, Oskar Blues has grown to become the largest American craft brewery to exclusively package beer in cans. The brewer produced 59,000 barrels of beer last year, and is on pace for 90,000 barrels this year.
The brewery also has posted seven years of consecutive double-digit growth, a trend which has catapulted it to become one of the three “Biggest Momentum Gainers” on the Brewers Association's annual list of the top 50 craft brewers.
Oskar Blues is expanding to the East Coast with a brewery and taproom opening in Brevard, N.C., in December. The 30,000-square-foot brewery will include a separate restaurant and live music venue, and will expand its brewing capacity to nearly 140,000 barrels in 2013. (For more: North Carolina Crafts a New Beer City, USA)
In the first six months of this year, Oskar Blues' revenue is up 53 percent, and the company recently announced plans to enter the Chicago market. In short, the only thing hotter than the trend of craft beer in a can may be the brewery that started it all.
CN: Many of the craft beer pioneers, like Boston Beer’s Jim Koch or Sierra Nevada’s Ken Grossman, had to educate consumers, retailers and distributors on concept of craft beer. You had to do some of that, but you also had the additional challenge of having to convince people that you could have a great beer in a can. Take me back to when no one was putting beer in cans. How hard was it to convince people that a canned beer wasn't a bad thing?
DK: Well rewinding back to that time, everyone involved — from the retailer, consumer, distributor — everyone involved could never really conceive of a quality beer in a can. Our original fear was that people would think [craft beer in a can] was a gimmick. We knew it wasn't, but how do we convince them? We needed to put the beer in front of them and educate them. So we knew we had to be the ones to deliver the beer to retail and literally drove it one by one to the stores so we could stand there in front of them, get them to try it and look them in the eye when we said, “Hey, would you buy my beer?”
CN: You had to win them over twice. First about the beer on the inside and then about the container itself.
DK: Well once they tasted it, they said, "Hey, this is great." It was a little surreal, I guess, that there is a multidimensional and fully flavored craft beer in a can. But we felt like we were one up on everyone else especially once we began to educate them on the benefits of the package. So we didn't really need to convince them, we just needed to get the beer in from of them. Then we had the opportunity to educate them on the benefits of beer in a can and it became a no-brainer.
CN: It’s an interesting way of looking at it, not that you had to educate people, but that you were given the opportunity to educate them. Basically what some people would see as a potential problem, you actually saw as positive thing?
DK: It was to our benefit. I mean I never had the desire to be a beer salesman. It wasn’t on the list of things I thought I would do. (laughing) But we were able to become consultants in a way and educators and not someone who was trying to sell snake oil. So whether you call us “can-bassadors” or “the first guys to do canned beer,” we were way out in front. I imagine there were other brewers who understood the benefits of cans, but weren’t willing to risk or sacrifice their brands on this niche because it was a gamble and it could have gone one way or the other. Luckily, the can in itself being a legitimate package, was able to stand up to the scrutiny.
CN: A big part of the Oskar Blues brand is its association with the outdoors. You’re an avid mountain biker, to the extent you’ve even created your own bicycle company. What made the light bulb go off to put your two passions together?
DK: Those two aligned not by accident. I didn’t really set out to start canning beer in order to align it with the outdoor industry, but it was an obvious arena and we felt like we could market our beer based on its portability. I've always been an entrepreneur and a risk taker and someone that lives by the moment. Life is short and we might as well have a good time while we’re here. I tend to have some of my best moments, or be most fulfilled, when I'm outdoors on two wheels on a mountain bike. So once we started to align marketing efforts with both parts of my life, it just made sense. So it was a conscious effort to say let’s drive this and put these two together and go out and do the things that we love to do.
CN: Brevard [N.C.,] just happens to be a pretty good place to mountain bike…
DK: That truly is 100 percent the initial reason and the thought behind putting a brewery in Brevard, N.C. It’s not really an epicenter of shipping or on a major thoroughfare. (laughing) It’s a place where I have come to retreat and it is some of the most pristine mountain biking in the country. I thought if I’m going to be away from home, maybe I can bring my kids to a place where I can also get some work done and we’re able to save on the cost of shipping beer to the East Coast.
Profit vs. Life-Balance
CN: So you were willing to sacrifice some of the bottom line in order to strike a better life balance?
DK: I wouldn’t call it a sacrifice, but would it have made more sense to put the brewery in some other place like Pennsylvania? Sure it probably would have saved us millions but it’s not really the driving force behind our decisions. I believe that there is a connection that resonates with our customers that our driving force isn’t really 100 percent for the sake of profit. It’s that we’re real guys who like to do real things and we like to have a good time and we’re going to grow a business along the way.
CN: The Brewers Association estimates there are now more than 2,000 craft breweries operating in the country and more than 1,200 in the planning stages. So obviously the fight for shelf space and for tap space is more competitive than it’s ever been. What are your thoughts on where the craft beer industry is heading?
DK: To me, it’s overwhelming to see how many people are getting into the segment. I can't even keep track of even the ones in Colorado alone that are opening. It’s a little scary because I guess we’ve learned a little bit along the way and we’ve learned that draft beer doesn’t make you any money. The entire industry knows that. Then I hear of a guy that is a home brewer and is going to cash in his 401k and open a little craft brewery and start delivering kegs around town. Well, it’s not my place to call him and say, "you're crazy," but there is going to be some fallout, but I don’t think I'm in a position to say who it will be. I will say it makes me want to get up a little earlier each day and work a little harder so that somebody doesn’t pass me by.
CN: It’s a common thought in craft circles that a rising tide lifts all boats, but it’s getting to the point where there are whole lot of boats in the water and not all are going to rise with the tide. But the huge increase in competition doesn’t seem to have impacted what seems to be a real sense of cooperation among craft brewers.
DK: I think there will be some fallout. But I do hate it when I taste a competitor's beer and it’s not good. No one likes to taste a competitor’s bad beer. It’s bad for the whole industry because I think we have this window to let people in and the trends are showing that customers are turning to craft, and I think it’s important we all do a good job. So I think that’s one of the reasons we’re all extremely helpful with each other, whether it be trade secrets or just helping each out. It's not a big fake front that we’re all this big happy brotherhood. We truly do get along real well and we help out when we can. It's real and I think we all understand that outside of the fact that we all got into this business for a lot of the same reasons, I think we understand that it benefits us all if we can stay together, not try to beat each other up.
CN: For a long time, Oskar Blues was able to stand out as the "craft beer in a can." It was easy to spot and easy to market. Now that cans have become a hot trend and are more commonplace do you feel you've lost any sort of competitive advantage?
DK: I think there is two answers to that. Even though we were the first one, through the years we’ve watched other breweries get on board and we’ve opened our doors and helped as many people as we can. I think we’ve helped anyone who has called and said, “hey, I want to do this, what do you think?” That is our attitude to this day, that the more people that get into this category and help the category and do a good job, the better off we’ll be because it will legitimize what we are doing. The other side of that, do I think people are picking up cans of Sierra Nevada or other beers in a can other than mine? Sure, of course. But our trends are up 50 to 60 percent every year and that's enough for us. I don’t need to rule the world, and I don’t need to be the largest brewery in the world, and I don’t even need to be the largest canning brewing in the world. We just want to build a good, sustainable business that’s fun and I think that’s our mission, our goal.
-By Tom Rotunno, CNBC Senior Editor