Targets 300,000 barrels for 400 percent growth
COVERDALE — The microbrew industry has matured into an iconic craft beer market as local entrepreneurs, like Bear Republic Brewing Company, Inc., have taken the category to higher levels of consumer acceptance and loyalty with a variety of popular hand-crafted brews, including full-bodied India pale ales featuring robust, “hoppy” and bold flavors.
Bear Republic (bearrepublic.com) remains on a fast track with its Racer 5 IPA brand, one of America’s most medal-winning IPAs, along with its initial Red Rocket Ale, Hop Rod Rye Ale and Big Bear Black Stout.
In all, Bear Republic markets six bottled products available in eight 22 oz. bottles, five six-packs of 12 oz. bottles along with cases and kegs.
This year, Bear Republic will produce 75,000 barrels with plans to ramp to 125,000 barrels in the near term. With the expansion of its production facilities, the firm is targeting a goal of 300,000 barrels — an increase of 400 percent over current output.
Already on the drawing board are plans for a new building on an adjacent 1.5-acre parcel the company owns to house a larger production facility, a retail center and tasting room, aimed at making it a visitor-friendly destination brewery.
Meanwhile, the firm has occupied all of the remaining unused bays of the building it purchased in Cloverdale, home of its Factory 5 Brewery at 110 Sandholm Lane.
The company also owns the brewpub and restaurant at 345 Healdsburg Ave., Healdsburg.
Founded in 1995, Bear Republic acts more like a startup than a seasoned industry veteran as it continues to maintain double-digit growth.
Sales in 2014 are estimated at between $20 million to $25 million, which would be 15 percent higher than those of 2013. Sales increased 18 percent last year and 21 percent in 2012. In the first eight to 10 years, Bear Republic grew by more than 40 percent annually.
After nearly 20 years in business, the company’s brews are now available in 35 states and seven countries.
“We had to slow down a bit one year when we ran out of qualified people for operations, maintenance and QA, as well as those needed to staff our own lab,” said Richard R. Norgrove, president and CEO.
The only other limiting factor has been the water supply.
“We had to pull out of 15 markets and redline distribution to stay within our capacity to deliver, while we kept our key customers including craft-centric bars, multitap rooms and certain special events clients,” Mr. Norgrove said.
The company has a Type 23 license for wholesale and retail sales, and works with distributors for all but about 5 percent of its major customers, so the firm can keep its finger on the pulse of business by servicing its own accounts.
Mr. Norgrove learned from the city of Cloverdale that $80,000 would be needed to explore new water options. He quickly wrote them a check to show his resolve — which they immediately returned.
About six months later a public-private agreement was reached with the city when Bear Republic contributed $466,114 to cover the cost of a new well, pipes, pump and related materials. This water source is expected to start producing by mid-summer.
In the beginning, Mr. Norgrove would drive his own delivery truck and make on-site collections.
“They didn’t know who I really am so I’d tell them I could not go back to the boss without their payment — it usually worked,” he said.
The company keeps a close watch on customer inventories.
“We are perhaps the only firm that prints a ‘best when served by’ date on our bottles,” Mr. Norgrove said. “If we find customers with out-of-date product, or who don’t keep it at the right storage temperature, rotate stock, etc., we take back our inventory. It’s important to control distribution to ensure consistent quality.”
Before establishing Bear Republic, Mr. Norgrove spent 20 years at Optical Coating Laboratory as a business unit manager in a high-tech manufacturing environment. He understands what just-in-yime delivery is all about, as well as best practices and continuous process improvement to maintain efficiency and the quality of raw materials — grain, hops, yeast, spices and especially the water.
The company has just finished beta testing and will install a $2 million Cambrian Ecovolt water treatment system to process wastewater and create methane gas to fuel the brewery’s boilers. From 40 percent to 60 percent of used water is recycled. This pilot test site for Ecovolt will become permanent when new equipment is installed this year. While most breweries use six gallons of water to produce a single gallon of beer, Bear Republic does this with only half that amount.
Bear Republic is a family business, with Richard Norgrove Sr. in charge of sales and his wife serving as corporate secretary. His son Rich is brewmaster and chief operating officer in charge of manufacturing and marketing and daughter-in-law Tami Norgrove is chief financial officer. The company has many family members filling multiple functions from brewing and packaging to secretarial roles. The firm is moving toward an almost carbon neutral status with a solar array on the roof, and when volumes increase, will also recycle CO2. Processed grain and hops are sent to farmers for animal feed or fertilizer.
The company has 148 workers and will add six more during the coming build out.
“We don’t spend a lot of money promoting ourselves, but we do go to 35 beer festivals a year,” Mr. Norgrove said.
The brewing company uses social media to connect with bloggers who help support the business.
“We go out pounding the pavement to maintain our highest summer sales level during the winter when beer consumption tapers off,” he said. “We’re also looking at strategies deployed by others — such as Lagunitas, Sierra Nevada and New Belgium — that have built plants on the East Coast to minimize shipping costs.”
Mr. Norgrove would like to see more local manufacturers for the things he buys from suppliers far away, such as bottle caps and cardboard boxes.
“I would love to team with them, invest in their businesses and even help form a manufacturers symposium in Sonoma County that could work on common issues and bring more jobs to our region,” he said. “We still have a lot of growing to do.”
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