Focus Your Business Model For Future Growth

Adapting to conditions presented and knowing what role in the business market a brewery wants to go are keys to building success said new Heavy Seas CEO Dan Kopman.

“Right now it is about knowing who you are and matching your expectations to that potential,” he said.

Kopman, who was named CEO on May 1, 2017 of the Baltimore-based brewery, was a co-founder of St. Louis’ Schlafly Beer in 1991 before stepping down from his role in late 2016.

“I believe it is safe to assume that most brewers will adopt a model that is more a ‘vertically integrated hospitality business’ (VIHB) rather than a large CPG (Consumer Packaged Goods) business,” he explained.

He further noted that a VIHB will build a really successful business on a direct to consumer model, such as tap rooms, while a smaller number of larger scale brewers will follow the CPG business model and have the scale to be profitable with sales to wholesalers.

In other words, local will matter most while those that have grown to a proper scale will have a further reach. The VIHB will sell beer through wholesalers locally or self-distribute locally.

“They will not have to invest in scale sales and marketing capacity,” he said of the industry’s future as a whole. “This will keep their selling costs down and allow themselves to maximize the profits from their direct-to-consumer business.”

Kopman feels that Heavy Seas has made the investments necessary to distribute high quality, shelf stable beer, further out than the Baltimore market. It was something he noted that the brewery early on struggled with but was able to fix.

“The big question will be how far and how deep,” he added, noting market territories. “We will have to be really good in making choices and [be] a bit lucky as we do not have the resources of the “captive craft brewers” owned by multi-nationals.”

He said independently-owned craft brewers will be challenged versus the ability of those that have been purchased by larger conglomerates.

“I am very happy for colleagues in our industry who have been able to sell and realize fantastic financial gains for their families and shareholders,” he said. “However, to say that nothing has changed is untrue. I listened to a panel of ‘captives’ at the BI meeting a few weeks back and when one said that nothing has changed but then said that they are spending $2 million on a digital campaign on their flagship brand, I wanted to raise my hand and ask if they had a spare $2 million that I could spend on a digital campaign for Loose Cannon IPA.

“I just smiled and said nothing.”