(Lambertville, NJ) – Earlier this spring, BeerPulse correspondent, Chris Ferullo, visited scenic Lambertville, home of River Horse Brewing Company. There, he and owner/general manager Chris Walsh had a conversation about the business side of acquiring an existing brewery, balancing high demand with resource constraints, Big Beer entering craft and interacting with the online community.
BP: Can you talk about the state of River Horse in 2007 when you and (partner) Glenn (Bernabeo) took it over?
CW: Sure. Glenn and I sat next to each other for six years. We were partners in an investment banking firm; we focused on distressed companies. Mostly what I did was sell companies in bankruptcy. So in 2006, we actually wound up selling our firm to Nationality City, a bank out of Cleveland. I had worked at a big bank before, Glenn had done the same, I’d worked at GE for six years. So, being part of that ‘big bank’ culture, we knew we weren’t going to last very long.
We started looking for other things to do. We didn’t say “let’s go buy a brewery”, we were just looking at a company where we understood the product. We wanted a consumer product, a company that was close enough to get to every day, understood the product, the industry dynamics, something that’s scalable, all these kinds of things that you would look for in a business. We didn’t want something fat, where we’d have to go in and fire a bunch of people; we wanted something that needed capital, some attention, and someone to take a different look at it.
This just sort of popped out as something that fit all the characteristics. So we pursued it, and ended up executing on it in August 2007. At that point, it was pretty hurting. The brand had taken some beatings, the product, anybody will tell you, was inconsistent. We put some capital behind it, and a whole lot of hours, and turned it around.
BP: Distribution-wise you’re in four states…NJ, NY, PA, and CT. Is that fairly balanced volume-wise?
CW: Yeah. I mean, Jersey’s our home state, so it’s our biggest (market), and then it’s pretty much even between Pennsylvania and NYC. We’re only in NYC. CT does well for us. We just recently pulled out of DE, MD, and DC. We have to serve the home markets.
BP: What is your current capacity, barrel-wise?
CW: It’s funny, because people calculate that a ton of different ways. Me personally, I only care about what we put in the bottle, and not brewed, or that other stuff. We’re at about 9,000 barrels.
BP: Are you seeing any supply challenges in price of ingredients, or not being able to meet demand? Has that got you thinking about expanding?
CW: Capacity-wise, we are physically constrained. Ingredient-wise, it’s not a problem, it’s just within this building…there’s things we can do, but we don’t own the building, and we’d have to drill up the floor, stuff like that. It’s the point where we’re at now, so we’re doing that analysis. It’s a very momentum-driven business, and if you’re not going to grow, you’re going to wind up irritating and disappointing people. You work so hard to get draft lines and brand recognition, and then you’ve got to meet that demand.
BP: Coming from banking, how did you get yourself ramped up into marketing and distribution and all the things specific to the brewing industry?
CW: Well, it’s a consumer product company, so you have to look at what goes in the bottle; at the end of the day, that’s the most important thing. Some breweries get away with just marketing, and how it’s packaged is more important than what is in the packaging. We don’t have any ‘vortex bottles’, so we start with the liquid and hire the best people we can. A lot of it is just stepping back and saying “What is best for the company?”
Distribution is incredibly important; we had a lot to fix in-house in terms of technical knowledge, experience, the equipment, all that kind of stuff. You’ve got the guys with the big brands and the guys without the big brands. When we bought the company, we were mostly with big-brand houses. Some of them are good; others are more focused on those big brands so it took some hammering to get that into shape.