When Peter Zien took over AleSmith in 2002 from founder Skip Virgilio, he had not dipped his feet into the business of craft beer yet. An accomplished homebrewer, Zien — who is the focus for the AleSmith cover story for January/February 2022 print issue — took what was a 220-barrel per year brewery that was doing some contract brewing as a source of income and created a premium brand with benchmark brands like Speedway Stout for other breweries to shoot for.
“Going from five gallons to 17 barrels a batch … that was a big jump for me at the time,” Zien said about his move into becoming a brewer/owner for AleSmith early on. ”There’s a lot of dangers in a brewery that are not in your home. There are all sorts of ways to kill yourself: caustic chemicals, steam heat. I was learning at a slow pace.
“A lot of the business before me, he was brewing beer for other people and putting it in their name. So it wasn’t really building the brand. It was paying bills and I understand why Skip did it. Believe me, I felt the pain right away too.”
Zien said there were some low-revenue beers in the AleSmith portfolio that even though the distributor asked for them, ”sometimes you have to say no.”
Zien explained it as such: “I did a little simple math in my head, and I took our lowest grossing beer and I said what if we brew this 52 weeks a year and sell all of it and I found the figure to be relatively low … a couple $100,000.”
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He took the Horny Devil, Wee Heavy, and Speedway Stout brands’ price points and popped them into the same formula.
”The number was $2.2 million,” Zien said. ”There the light bulb went off and for me and I thought okay, I need to mix this lineup up.”
Having $10 bottles at the time was shocking to some consumers, but — and Zien says this lovingly — the beer geeks clamored for it.
”And to Skip’s credit, he decided to do an experiment in 2000 and put Speedway Stout into Bourbon barrels,” Zien said. ”It was a new concept. The Speedway Stout that came out of those barrels quickly went up the ranks on RankBeer.com. In fact, the 2002 version, right when I took over, I give credit to Skip for brewing, and aging it, but it was released on my watch.”
So with those beers, Zien said it could make things work, but it was going to take time.
”The revenue dipped at first, and then we went on a steady climb. And by 2008, I had my break-even year, and then 2009, we made money and more in 2010 and 2011,” he said.” At some point, the gross profit at the bottom was a very large number. We were making money and that’s what enabled us to move.
”But I had a lot of payback to do. I put my life savings into this thing. And to date, I’ve put my life savings in it three times. It’s paid me back twice. I got one more to go here.”
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