Kevin McGee of Mendocino County’s Anderson Valley Brewing wins Wine, Beer & Spirits Industry Awards brewery CEO category

The winner of the brewery president and CEO category in North Bay Business Journal’s beverage alcohol industry awards says the pandemic has been a time to strengthen the company’s staff.

How did you get into the industry? And what has been your career track since?

I suppose the point-of-no-return was in 2007 when I turned my garage into a bonded commercial brewery (the Healdsburg Beer Company) and started turning out 30-gallon batches of beer.

My family bought Anderson Valley Brewing Company in December of 2019 and while I’ve only been at AVBC for a year I’ve spent the past 13 years single-handedly operating the one-barrel brew house I designed and built and selling small batch cask ales out of my car to local bars and restaurants.

The super small production meant that every pint was extremely important and forced me to focus on attention to detail and the quality of the beer and was an effective crucible in developing my brewing skills.

My career has taken a winding path but in retrospect it feels like I had been spending the last few decades preparing for my family to acquire AVBC. I’ve been working in alcoholic beverages for just about 20 years now and when I founded Healdsburg Beer Co.

I was spending my days working at Jackson Family Wines as Jess Jackson’s consiglieri and spending my nights and weekends brewing.

I’m an attorney and initially worked as a prosecutor in San Francisco and San Mateo counties where I specialized in and taught gang violence prosecution trial tactics and law.

When I left to enter civil practice, I developed a number of wineries as clients and started learning the business aspects of alcohol production and marketing.

Jess Jackson hired me to join Jackson Family Wines as his personal legal counsel and business strategist, which was an intense and irreplaceable education, and Jess also sponsored me through the Executive Program at Stanford’s Graduate School of Business.

Following Jess’ passing I developed a dynamic consulting and operating partner business, during which time I served as CEO of a wine and hospitality focused private equity firm with businesses and employees spanning three continents. My consulting work focused on generally fixing business problems and crisis management, mergers & acquisitions, corporate development and strategizing and executing growth strategies so they don’t become problems that then need to be fixed.

My family’s acquisition of AVBC was the product of a long search and an even longer effort to find something that the family could hold as a long term, multi-generational business.

Over the years I was fortunate to have a few opportunities to work with my father on some projects of his and conversations would often evolve into the kinds of business that we’d like to be involved in and why and in 2018 we began a more formal process.

Craft beer was really attractive to us and after looking at a number of breweries we closed the purchase of AVBC in December of 2019. AVBC was precisely what we were looking for – a pioneering craft brewery with deep authenticity and a long history of producing top quality beer.

And now I’m happy to say that my winding career path ends here - this is my last job and I plan on doing this for the next 25 to 30 years and then passing the business along to another family member.

How have you or your company influenced the industry in the last five years? What are key accomplishments?

AVBC is a true pioneer and its influence goes back well more than the past five years.

Founded in 1987, Anderson Valley Brewing Company has a long history of being really good at making beer, which was the most important factor we considered in purchasing the brewery and I’ve long admired this strong history of quality, innovation and authenticity.

It’s not often you find a pioneer of an industry continuing to be innovative and AVBC has helped define craft brewing and doing things like introducing goses and kettle sours to the U.S. The brewery’s strong history of commitment to community, philanthropy and environmental stewardship continue to influence the values of a generation of brewers.

One of our big accomplishments this year is in further developing what we think of as “Leave No Trace Brewing.”

All the water we use for production and the property is sourced from 10 on-site wells and we treat and discharge all our waste water, meaning we have zero-impact water usage.

For power, we’ve been a partially solar-powered brewery for just about 20 years and we’re going to be expanding our solar array to increase our power generations to cover 100% of our power needs.

We recently installed a nitrogen generator which harvests nitrogen gas from the ambient air and allows us to use it in place of CO2 for production gas. This replaces 70-80% of our CO2 usage and eliminates usage of a greenhouse gas.

All spent grains and yeast are sent to local cattle as feed and our barrels are repurposed in the community after we use them.

For our packaging in 2021 we are moving to 100% aluminum packaging and eliminating all plastic from our packaging, which is making our products 100% recyclable and reducing our cardboard usage by 60-70% and will reduce the carbon contribution from shipping our packaged products to 30 – 40% of what it is today.

What changes have you noticed in your industry in the last five years, and how have you and/or your company moved to capitalize on or adjust to those changes?

The last five years in craft beer have been extremely dynamic. We have gone from an environment of runaway growth to a highly competitive environment with far more breweries competing for the craft beer consumer.

The way this developed means that consumer connection and communications are more important than ever and we’re working overtime in these areas. We’re in the tail end of a comprehensive revision of our packaging and have been developing comprehensive marketing assets and capabilities.

During the time of COVID we’ve also worked to strengthen our staffing and staff and have actually added headcount, most notably adding four new sales staff and making good on our commitment to maintain all our employees and their compensation and benefits at pre-COVID levels.

Further, we’re also in the process of renovating our tap room and grounds and will be re-opening as a family and dog friendly 30 acre beer park, with further improvements to our 18 hole disc golf course.

How have you responded to growing competition from craft spirits and alternatives such as hard seltzer?

The short answer is that we’re not that concerned with beverage alternatives like seltzer. We are a craft brewer making flavorful craft beer and our beers don’t actually compete with the seltzer products.

At its core, seltzer is basically made to be a minimal-flavor-impact-alcohol-delivery-vehicle. Consumers who reach for that kind of beverage are looking for something different than what we offer, which is fine.

It doesn't mean that's not a consumer we can reach, it just means that’s not our occasion. The craft spirits movement is actually something we look at as a great trend.

The impetus there is the opposite of seltzer – here the consumer is looking to an artisan, flavorful product with an elevated qualitative difference. We share a lot of synergy with that perspective and more momentum it gathers the better off breweries like ours are.

How has the pandemic affected your business? What has been the impact of restrictions on visitors, closure of restaurants and bars, surge in online shopping, and rise in digital consumer experiences and marketing?

Clearly, this was not how we anticipated our first year owning AVBC would go, but like all businesses, we have pivoted and pushed forward.

On one level or another I’ve spent my entire career doing one form of crisis management or another, and although I hoped to be done with all that this background has come in very handy and we’ve been able to make some significant strides and improvements at AVBC despite the quarantine environment.

Similar to tasting rooms and bars, our tap room in Boonville was shut down in March. The shutdown obviously significantly disrupted both the craft beer and Northern California hospitality industries.

We recently re-opened for to-go sales on the weekends but we’ve taken it as an opportunity to revamp the current tap room and brewery facilities and make new plans for how we’ll host visitors at our property once things become safer.

The closure of restaurants in the early part of the pandemic was probably the biggest hit for craft beer as tap sales are a huge part of the craft beer business.

We definitely used the spring and summer months to focus on reaching our customers digitally -- we launched a brand new website, hosted weekly zoom happy hours and created campaigns such as our popular #GoesWithGose to help offer inspiration on ways to crack open a good beer.

How have you responded to the challenges and opportunities of the virus-influenced economic downturn? How much are these measures making up the difference in sales?

2020 has been an unprecedented year, to say the least, but like all businesses, you figure out a path to survival.

Our main focus this year has been expanding our distributor relationships and staffing up our sales team in the Western parts of the country, which has resulted in a 34% YTD increase in off-site sales.

We have also focused on promoting key products, shifted our company culture through our new leave no trace brewing initiative, and supported our local community through donating a portion of beer sales to The Community Foundation of Mendocino County.

Which of your adjustments and initiatives do you think you’ll continue past the pandemic, and why?

Basically all of them. All of the decisions we made this year, whether the pandemic played a role or not, were initiatives that needed to be made for the long term health of the business.

This is a long-term investment for my family, which puts us in a different strategic position than the vast majority of ownership groups.

We’re not trying to sell to a larger conglomerate, we’re not beholden to a short-term quarterly results perspective and we don’t have an investment exit timeline of private equity.

Our long term vision frees us up to focus on producing delicious beer. Our most important metric for success will always be the quality of the product, full stop.

Humans have been drinking beer for over 10,000 years. There is and always will be a market for excellent beer, and we have the luxury of focusing on that as our primary concern. I like where that puts us. We can make the right decisions for the long term health of the business and the people who are a part of it. We can choose not to chase trends we don’t believe in (like never making a hard seltzer).

We are proud of the growth we’ve made this year and have some plans to continue this momentum through 2021 and beyond.

How are the North Bay wildfires and power shutoffs affecting the outlook for your business?

Our biggest concern is the impact on our staff and community. Living in Healdsburg the wildfires have been a big part of my family’s day-to-day life - we’ve evacuated three of the past four years.

We’ll never get used to the devastation they leave behind and want to always do our part to help our community push through these trying times.

We’re a local community resource center in the event of Public Safety Power Outages and participate in PG&E’s demand scaling initiatives.

In addition, our solar array expansion is going to include adding battery capacity and control systems that allow us to operate as a “micro-grid,” effectively removing us from the power demands of the community and larger utility grid. Our system will allow us to insulate the business from adverse impacts from power outages, but more importantly it will allow us to have resources that we can use to help others in the community.