I visited Two Roads Brewing Co., a brewery that has great beers, a solid brand and a secret weapon – a plan for the future.
I don’t want to condescend, but I think it’s a fair assumption that few of the dozens of breweries opening every month have a business plan of the caliber of one written by the ex-CMO of Pabst, a world class brewer, an electrical engineer-turned-brewer-turned-Marketing Director at E. & J. Gallo and a Harvard MBA and ex-CFO of one of New England’s leading shipyards (who project-managed the construction of the largest yacht ever built in America) at the core of their operations.
Two Roads Brewing Company does. And it’s a pretty comprehensive, ambitious and risk-heavy plan that has been executed flawlessly since the brewery opened in December 2012.
“We’re actually ahead of our plan,” CEO of Two Roads, Brad Hittle, told me when I visited the brewery, “we grew from just over 16,000 barrels in 2014 to 32,000 barrels in 2015, and most of that growth came from existing markets. In fact we grew about 65% in our home state of Connecticut, so we are now quite comfortably the largest brewer in the state.”
The business plan for Two Roads has four elements at its heart that go a long way to explaining its success.
The absolute center is of course great beer, and luckily the Brewmaster and one of the founding partners is New England Brewing Co and Southampton Publick House alum Phil Markowski, who ensures the output of the brewery is top-notch. (Phil has a host of GABF and World Beer Cup medals to his name and literally wrote the book on Farmhouse Ales.)
Second in the plan, Two Roads has – take it from a long time professional marketer – great branding. Which is not surprising given the pedigree of Hittle and fellow founder (and VP of Sales & Marketing) Clem Pellani, who between them have held senior marketing jobs at Unilever, Johnson & Johnson, Gallo, Labatt and Pabst. (Hittle was CMO at Pabst when it became cool again. He is largely credited with the turnaround of PBR. Which in turn has probably led to the existence of Not Your Father’s Root Beer, but we can’t really blame him for that.)
The third pillar of the Two Roads business plan is a simple but quite revolutionary principle for managing their growth. They pre-bought it.
“When we decided to start a brewery, we didn’t want to work from the ground up,” explained Hittle, “we wanted to hit the ground running and eliminate some of the growing pains we saw other craft breweries experiencing. We decided to open the brewery with 40,000 barrels capacity at the outset, so we wouldn’t have to move facilities or go through the rigors of constant refinancing, with all the discomfort and risk that involves.”
40,000 barrels a year is a lot of beer, folks. It’s 13 million 12oz bottles, or 80,000 standard kegs. To my knowledge, that makes Two Roads one of the largest brewery start-ups in US history. What drove that audacious decision?
“Well, I had a pretty clear view of an unmet need in the market for quality contract brewing in the NYC/New England area, so we intended for the majority of our capacity to be for contract brewing customers while our own beer was a growing minority.” Hittle revealed, “We could then either grow Two Roads beer as a proportion of that capacity or grow capacity for both our brand and the beer of our contract partners, which includes Lawson’s Finest, Evil Twin and Stillwater. Which is what has turned out to be the case.”
Hittle refers to the ongoing expansion of the brewery, whose annual capacity is now a pretty stunning 175,000 barrels. (Yes, that’s 60 million bottles of beer for the math whizzes out there.) “We continue to invest in capacity and QA equipment, spending $5 million over the past two years alone, of which 90% is cash flow funded,” stated Hittle with some well-deserved pride, “which isn’t bad for a three year old brewery.”
Starting out with such large capacity has some great benefits, one of which is the stunning 100-year-old building that houses the brewery. It’s huge, and beautifully constructed, with enormous wrought-iron-framed windows that flood the place with daylight and floors of lovingly varnished reclaimed wood. It also sits in a 7 acre space, which allows for festivals and special events.
“We’re lucky to have this phenomenal space as a start-up brewery. It comes with the kind of privileges most breweries don’t enjoy till they’ve put in 10 years plus of solid growth. And we’re only 60 miles up from Manhattan on the I-95, and 150 miles from Boston. It’s a pretty good spot, all things considered!”
While Hittle is clearly pleased with the success his carefully crafted business plan is reaping, it comes at a price. And that’s risk.
“My partners and I worked very, very hard on our business plan. And we’re as confident as we can be in its potential.” Hittle told me, “But as a NBW (that’s natural born worrier), I’m constantly aware there is a large investment at stake. And my partners and I are on the hook for it. You can imagine my trepidation when, before being close to selling a bottle of beer, I signed checks for $7 million in one day. I did not sleep well that night.”
“Our mission now is to continue to make the Two Roads brand and the organization behind it robust, while maintaining state of the art brewing facilities for us and our contract brewing partners,” stated Hittle with more than a little zeal.
Which leads nicely onto the fourth and final pillar of the masterplan behind this fast-growing business: people.
“I’m a people person, in two senses of the term,” Hittle stated earnestly, “I’m at my best when I’m around happy, motivated people and I firmly believe happy, motivated people are the key to success. Especially in beer.”
“We have recruited 91 highly knowledgeable, talented people to Two Roads so far, but our future depends upon retaining them. My goal is for every single Two Roads employee to be a stake-holder in our business, and to share in its success. I feel like there’s a bit of a shakeout coming in beer, and we will only weather that by having the best people managing our operations and representing us in the market.”
With a portfolio of beers that includes the popular Double IPA Road 2 Ruin, the aromatic Ol’ Factory Pils and world class Workers Comp Saison, as well as cult seasonals and special releases such as Roadsmary’s Baby pumpkin ale and the Two Evil Icelandic Gose collaboration with Evil Twin, selling Two Roads beers looks like a pretty juicy proposition. But when it’s backed up by visceral passion for team culture that goes all the way to the CEO, you begin to understand why this well-planned, well-located and well-housed brewery is rapidly climbing the steep slope of success.
10 Questions To Educate The Drinking Classes with Brad Hittle, CEO Two Roads Brewing Co.
- Can you describe what your company does in one short sentence?
Two Roads does two things very well – we brew unique, delicious renditions of classic beer styles as well as brew great beer for other high-end craft brewers.
We see no stigma in contract brewing. The key to a successful beer is the vision of the brewer, not the tank in which it’s brewed. We’re proud to be associated with all the beers that leave this brewery.
- How long have you worked here?
We shipped our first beer in December 2012, but the brewery was my full-time occupation since January 2011. Realistically quite a while before that too!
- How and why did you come to be here?
I wouldn’t say this is the job I’ve always planned on, but it’s the job I’ve probably always dreamed of. Ever since I was at college, beer has been in my veins.
I did a few different things before studying for an MBA and entering the world of corporate marketing – at first at classic CPG firms Johnson & Johnson and Unilever before being headhunted to join Labatt USA on the Rolling Rock brand. This was when my path became a lot clearer. Working in beer may be “consumer marketing” but it’s more about lifestyle and helping people connect than other more functional consumer goods. It’s got the rational and the emotional components. And I loved working in beer from the get-go.
I moved from Labatt to Pabst and had a great time there – despite the commute from Connecticut to Chicago – but when that company changed ownership I decided it was time to give working for myself a try. I had been friends with Clem, Phil and Pete [Peter Doering, CFO & Director of QA] for a long time and I slowly got them on my bandwagon. It’s been hard work – all-consuming at times – but it’s by far the most fun I’ve ever had at work. Absolutely no regrets.
- What is your daily routine?
I do a lot of managing by wandering around. I try to stay in touch with every part of the business and keep it moving in the right direction.
A huge part of my job is generating the direction for the organization, and that comes by way of healthy, rigorous debate between me, my fellow founders and our senior management. It’s how I like to operate, and it’s how this business has worked since its inception. I’m fortunate that my partners bring different strengths and perspectives to the table, and I know that when we reach consensus we’ve probably arrived at a very sound decision and I’m comfortable to go execute it.
We’ve done our best to create a culture where great ideas and opinions can come from anywhere, and I see it as my responsibility to make sure everyone’s input is included. From the guys who cellar and drive forklifts through our brewers, bar tenders, sales people, managers and directors. Everyone in this company has an important role to play and I’m proud that we have a distinct culture of involved, creative, and problem solving employees working toward a common cause.
- What is the hardest thing about your job?
Not worrying about the future too much! I love this industry, this market, this company, but I can easily lie awake at night thinking about how to protect the future of this enterprise. Five short years ago Two Roads was just a dream shared between a few friends. Today there are 91 people involved, and every one of them is a person with a life, a set of hopes, and I see it as my responsibility to ensure their happiness as best I can.
- In your view, what does it take to make it in beer?
There are several definitions of “making it”, including successfully operating a small, over the counter brewery or operating a regional craft brewery such as ours. Each has a different set of success factors, but in all instances one must be an absolute quality nutjob. People are paying a lot of money for a craft beer and one bad experience will have a negative and profound ripple effect. Obviously you need great recipes, great branding et cetera, but if you let quality standards slip you’ll go nowhere.
- What is success for you?
I can put that in very specific terms, which would be to run an employee survey and see that 95-100% of our employees are happy, satisfied and committed to the future of this business.
Another area that defines success for me is to walk in and see distributors get excited to see us. I want the Two Roads presentation to be a highlight for the sales force at a distributor we work with, because they love our beer and because they love working with our people.
- If you could change one thing about the industry, what would it be?
I get a little concerned about some of the consolidation taking place in the industry. I’m a believer in the free market, but when a small number of companies hold all the cards I don’t think it’s good for the market. In the U.S. I’m speaking mostly about distributor consolidation and supplier owned distributorships. Things like the recent megabrew merger have raised a few eyebrows for example, and in some markets around the world it could have an impact on competition.
The US is actually a pretty healthy market by global standards, but I don’t want to see things get any more concentrated than they already are. So it’s not so much something I would change as something I don’t want to move to an extreme.
- Apart from your own, what are your three favorite beers, and why?
1. I am a huge fan of Sierra Nevada, always have been. I think that company is a representation of all that is good in American beer. And Sierra Nevada Pale Ale is a benchmark of greatness in my mind.
3. I’ve recently been drinking Founders Breakfast Stout, which is a flawless beer.
10. Where’s the best place to get a beer in the state of Connecticut?
Impossible to answer as there are so many outstanding accounts in Connecticut. Our state used to be behind the craft curve but now dozens of craft retailers are on the leading edge in terms of offering unique and interesting beer venues. In my home town of Greenwich I’ll usually go to Ginger Man, which is owned by the same group that owns Cask Republic, a very successful craft retailer. They create a fantastic atmosphere, have extensive, balanced beer lists and serve excellent food. What more can you ask for?