Fast Growth at Rhinegeist

It was the day after a huge celebration. We met up with Rhinegeist Brewery co-founder Bryant Goulding to talk about the first five years of the Cincinnati brewery’s staggering and meteoric climb to becoming the country’s 39th largest craft brewery in America with over 86,000 barrels produced in 2017. Hitting 100,000 barrels is a reality for 2018, which could catapult the brewery into the Top 30 of America.
The celebration was just the brewery’s fifth birthday party. A dinosaur is perched at one end of the taproom while brewers are already churning out another batch on the other side of the facility. In between is the clean up crew.
It’s a little bit of controlled chaos. In fact, it’s chaos the brewery has been controlling for all five years really. Knowing and understanding that they could have easily broke apart at the seams with all the fast growth — most coming from just sales in the state of Ohio — is what Goulding sees now as a rallying point for the brewery that he and his partners started in June, 2013.
“The Cask line was running basically around the clock for two plus years,” Goulding said. “[We put] more than 30,000 barrels though that. But that’s not good for morale basically. I think we got to a point where we’re almost overheated. It’s not fun when it’s growth at the expense of support and process and leadership.
“I think that was a really critical time for us when we took a deep breath and said let’s not overheat this much again. Let’s get all the parts we need. Get corrective maintenance. Let’s put leaders in place that know how to run things better and to really support the team.”
Goulding said that eventually they want employee ownership for Rhinegeist.
In 2017, they implemented a degree of profit sharing for the company.
“If you’re running a militant operation it can be successful but that erodes morale,” he pointed out. “We want people to speak truth to power and feel like they’re engaged in the outcome. And I think that’s been a shift that we worked pretty hard on in the last couple of years to figure out what’s the right balance — not entitlement where you can’t tell employees anything — but the right amount of guidance and leadership so that you get the most out of employees and they want to be here.”
Touting a “90-plus percent” retention rate among employees, the staff at Rhinegeist has grown, but with little turnover since opening.
“We’ve been really lucky to be in a state where there’s a lot of talent,” Goulding said. “So we hired great people that have been able to advance and all that institutional knowledge is still here. But you can’t grow just to grow.”
The brewery sticks to a six-day brew week only and everyone gets a “weekend” (two consecutive days off) even if those two days are in the middle of the week.
“That’s what those guys need to do to decompress, spend time with the family and do whatever they need,” Goulding said. “Growth isn’t an outcome, it’s not the goal. Even though that’s what we all talk about.”
Goulding said what was learned has been that they needed to focus on what’s better: improve both the quality of life and quality of output.
“Last year we had some serious frustration,” he said. “Some guys said the production lifestyle is not for me and ended up leaving to go open up another brewery locally … which is something that will happen.
“But what we didn’t recognize in this was the same guys that got us to 30,000 barrels were headed towards 80,000 barrels and they hadn’t spoken up much. When you’ve got a full tank — not like this morning but in the next 45 minutes, then do it again and again and again without a layer of support there, something’s got to break.”
So what the brewing team did is they brought in two other leaders — one from the brew team and another from a different department — and they decided on adding an assistant.
“A brewer-in-training of sorts,” Goulding explained. “That way we always have two people working, even overnights, so you have someone to troubleshoot with or problem solve.”
Adding a brewer’s series on the calendar every quarter was another way to help spurn creative energy.
“Almost every brewer has gotten to brew a beer,” Goulding said. “Stryker, Pure Fury. We’ve been able to keep great people and they care a lot about each other and that’s why when things go wrong, guys can get together and are willing to respond. These guys have made us successful.”
Growing up, Goulding’s parents ran small business as chiropractors and nutritionists.
“My brother and I saw how hard that was and [I] went off into the business world,” the University of Connecticut economics graduate explained. “I was interested in business and the world out there.”
Goulding wrote his thesis on the economics and evolution of craft beer because he noted that it was one industry that instead of consolidation in the market it was more idiosyncratic and meritocratic.
“Thousands of different brands were all existing and lumped into big categories like what you were seeing in wine which we’re seeing more of that now,” he said. “But even so, there’s an independent streak and a lot of breweries that I think will remain.
“Beer was always fun and the ability to bring people together and throw a party and you didn’t need much: you just need some beer and a nice place. So I think that’s an itch to bring people together.”
He began consulting and moved out to the West Coast.
“Beer was on a different curve compared to Connecticut,” he recalled. “So I got really intrigued and was volunteering at festivals and got to know some people in the industry. It made it all the more compelling to want to go in that direction versus consulting where you’re delivering projects that may or may not ever see the light of day.
“And that felt bizarre to me. Like I couldn’t see a 10-year plus trajectory with stuff that you just dropped off and hoped it made an impact versus something that you could see and feel the impact.”
So after stints doing sales for Anderson Valley, Dogfish Head and Golden Road, he and Bob Bonder discovered and opened up an opportunity. Bonder had already dug into Cincinnati with coffee, so Goulding said he had the comfort zone of pitching investors.
“He had done [it] so for his coffee business and he ran all the financial modeling,” Goulding said. “He had initially performed a geographic location analysis of what city to do this in, and narrowed it down to three — Raleigh/Durham, Louisville and Cincinnati — which was most poised for a third-wave coffee bloom.”
The timing was tough for Bonder, opening in late 2005 and with the economy crash in 2007-2008, but he succeeded until the brewery was opened in 2013. Bonder closed his coffee shops around 18 months into the opening of Rhinegeist.
“But it was really his balance on the business side. And then Jim [Matt] and Luke [Cole]’s balance on being able to brew beer is what made this opportunity really amazing. We could feel if someone could make great beer, [Bob and I] knew we could make sure it was great. I knew I could get out and sell it.”
Goulding thinks what attracted him to this opportunity was the knowledge that he reported to Bonder and they worked really well together.
“The confidence that we could work well together as a team and also having experienced a handful of ways breweries have been run … to know that we had the passion and energy to make it happen in a significant way,” Goulding said. “I think the ambition to make a business serve its employees as much as the employees serve the business and maybe more.
“I joke that I’m not a Communist which I don’t know if you can be these days. But the fact that we can use our success to invest in people that have helped it become what it is and not just laugh our way into the sunset on a yacht. Because that’s never really been the goal.
“There’s a real power and satisfaction to watch people grow and blossom as you give them the challenge to grow. And also the opportunity to step into. That’s been richly rewarding beyond our greatest imagination.”
They looked west for inspiration after starting with a 20-barrel brewhouse that they got “a screaming deal” on and built the business plan around that with 40-bbl tanks.
In 2012, Goulding said there were about 13 breweries in the Cincinnati area. Looking at a similar-sized region, San Diego was a good place to look, which in 2012 had around 80 breweries or so.
Finding a classic brewery building in the heart of the artistic district of Cincinnati (Over the Rhine) was also helpful to estimate that the brewery could build to 25,000 barrels by the end of Year 5.
“So it wasn’t outlandish by any means,” Goulding said. “That number seemed very reasonable.
“Our plan was not growth just from profitability and to run a good business, but to be a good partner in Cincinnati and hope Over the Rhine could grow as well. And I think we underestimated each of those parameters. We did 30,000 in about two and a half years and now five years in, we’re approaching 100,000 so we knocked it out of the park in terms of expectations.”
He said it was really a balance of energy and passion.
“And Cincinnati is growing, there are new accounts opening up all around and in other cities in Ohio as well,” Goulding said. “So we hit the right part of the country at the right time and just hiring people and finding that balance of growth versus creating too much pressure and riding that wave.”
Goulding also pointed out that other self-distributing breweries in the area “had set a pretty low bar,” so Rhinegeist was able to change the game for what self-distributing meant for a brewery in its region.
“Hold us accountable the same way that you hold Miller-Coor and AB distributors accountable and make us fix mistakes,” he said about what they told draft accounts. “And I think that connection and self-distribution and that sort of feedback on what’s working out there and how we work in the business has helped us build a reputation for following through and execution. Not just whimsy and innovation. At the end of the day if you can’t count on us coming with our beer on your tap or to fill your shelves, you’re going to erode confidence and be sensitive to that.”
When Goulding worked a desk job in a cubicle he would think about working in a brewery and it was some sort of fantasy land.
“I would get to drink beer all day hang out with my buddies and it’s in this cool space and there’s a lot of that romance that is real,” he said. “But it’s also the responsibility to deliver as a business. Our shareholders are basically ourselves and a handful of investors, but to responsibly make the right strategic decisions to grow brands for the long run and not just grab for early gains.”
They have tried to be intentional and Goulding said they will remain intentional to build Rhinegeist into a brand that means something more than just the beer or just the brewery building.
“I think … we’re lucky in that opportunity that all the people we touch, we get to really mean something,” he said. “Whether you love the history of this city, whether you love the resurgence and what Cincinnati has become. Whether you’re proud of the brewing heritage in the Midwest or just like innovation, I think we can kind of stand for a lot of that.”
That said, Goulding believes in 2019, growth will be slower after such a rocketship pace.
“It’s really competitive out there and we’re not just trying to put numbers on the scoreboard,” he said. “We’re really trying keep it fresh, keep the innovation exciting and keep the staff excited to be here.
Goulding said Rhinegeist isn’t looking to be a ‘million-barrel national brewery.’
“I don’t think anyone is interested in that. We’re seeing growth in all towns across the country of other little breweries, which means our niche there is less,” he said. “So we’re just going to kind of double down where we are and really keep building a great relationship with our accounts in the places that we are. Maybe add a city a year and overall just kind of maintain our prowess in our backyard.”
He will point out that their growth in Cincinnati is slowest out of everywhere because they have saturated the area.
“There has been this outcropping of a lot of other self-distributed breweries,” he said. “So it’s one of those scenarios where it can be death by a thousand paper cuts and the best beer will remain and people will come back to it. But there’s a lot of beer out there now.”
He compared it to the game of Risk.
“You can make a run for it and wipe somebody out,” Goulding said. “But you’ve stretched yourself thin. There are breweries now everywhere and everyone is growing. But the reality is, is it siphons whatever beer is out there.
“We’re also seeing this phenomenon towards healthier living. Beer didn’t grow last year as a total category. Wine and Spirits grew. But we aren’t drinking as much alcohol as a country than we did before. So people are kind of thinking more health conscious and eating algae, seaweed or Kombucha and so a lot of these trends are can prove challenging as we look forward.
“We have people that feel like they’re taken care of and machines that are active and have maintenance and we make decisions slowly and agile. A few years ago, plans were bigger. We thought 500,000-600,000 barrels could be possible.”
Goulding sees that one buyer for a bar could see 20-30 brewery reps of all the independent brands whereas they may only have to see four distributor reps in a day.
“So what’s tenable and what’s realistic? How much can on-premise manage?” he questioned. “And then there is a lot of breweries that see they need more volume in package.
“You really need buy-in from your customers; which are bars and people going to bars. So I believe we have been really sensitive to that feedback loop just in general as a personality trait.”
Also with a taproom right in the main brewery, Goulding said if people don’t like it they know pretty quick.
“We’re getting that feedback on a daily basis which is very cool,” he said.
Being able to pivot and adjust scheduling in the brewhouse comes down to flexibility. A former co-worker at Golden Road, Cole Hackbarth joined Goulding at Rhinegeist about a year after it opened and is now its Brewing Operations Manager.
With three core beers, Rhinegeist runs an additional 100 brands of seasonals and limited rotations in a year. Some just go draft, but many are packaged.
“There is a lot of risk if we brew too much of a seasonal before we even launch it,” Goulding said “So what we end up doing is trying to flag batches late in the schedule so that we can pivot. If we launch a beer, and we expected it to perform “X-Y-Z” in the first three weeks and it’s less than that, we can immediately knock off brew batches.”
Each week they meet — from sales to operations to brewing. And they all make sure that they are calibrated properly.
“That’s a really intimate piece for us, where sales can get their voice in and be able to say if we are hot or cold,” Goulding said. “It kind of has to be filtered by operations because they can’t pivot the way that our promotions move. It’s a really a strong hand-off that we work really hard to have transparency both ways.
“We might be able to sell a seasonal beer after its out of season, but they can only be so agile. Our focus is on communication and transparency and we flag batches when we put them on our schedule so that we know it’s going to be a conversation piece in a meeting.”
At the end of the day, the collective thought process for Rhinegeist has collapsed a bit.
“I don’t think being a national brand is attractive to us,” Goulding said.
“We can be Cincinnati based and create excitement and bring awareness to this part of the country. We can play in other kind of markets what we consider to have relevance like Pittsburgh … Indianapolis to Chicago.
“But will a Cincinnati brand belong in a city like Los Angeles? I don’t know. And yet great beer could sell anywhere. But why? When I got to L.A. I want to drink beer that’s fresh there. I was traveling this weekend to Portland. I was at Great Notion. They’re making great beer. Does Portland really need Rhinegeist beer?”

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