Denver Brews Up an Industry


By Ed Sealover

Though separated only by the park that serves as the dividing line between Denver’s LoDo and LoHi neighborhoods, Wynkoop Brewing Co. and Denver Beer Co. seem to be of different worlds.

Opened in 1988, Wynkoop is the pioneer – the first brewpub in the Centennial State, the business that crafted the national model for how to revitalize shuttered inner cities with a few pints. That one of its founders, John Hickenlooper, went on to become Denver mayor and now Colorado governor, only added to its legend.

Denver Beer Co., meanwhile, opened in 2011 in an old garage and without front-page photos in the city’s newspapers. It wasn’t even the first brewery in the city to take its name – Denver Beer came and went in the 1890s and Denver Brewing shortly after World War II ­– and it opened in a landscape seemingly filled to the brim with brewers.

Yet in today’s Denver craft beer scene, co-owners Charlie Berger and Patrick Crawford are every bit the entrepreneurs that Hickenlooper and gang were 26 years earlier. Even at a time when craft beer seems omnipresent, they gave up safe careers (Crawford was a rocket scientist), ventured into a new niche (a rotating selection of beers that rarely repeats) and threw off the old expensive business models of packaging or offering food to become one of the first successful taproom-only breweries that relies solely on its beer for revenue.

Berger and Crawford announced in 2013 their plans to open a $2 million plant to bottle and can their beers. Suddenly, they’ve become the symbol of a craft beer scene that has learned to grow in new ways just as rapidly as the demand for its ever-varied products dictates.

“It was a legal way to do it. It was a model that we can make money with. And it was affordable to start,” Berger recalled. “Now we cross paths with other entrepreneurs all the time. We give advice to other breweries. We worked with one in Costa Rica recently.”

The Napa Valley of craft beer

As of February 2014, 26 breweries operated in Colorado’s capital city. When I wrote the first comprehensive guide book to the state’s breweries in May 2011, there were only 10 such practitioners in Denver. And as many as 20 more may open by the end of 2014.

Colorado is known as the “Napa Valley of Craft Beer.” Craft breweries – smaller, locally owned companies – account for 5,000 direct jobs in the state, and they collectively produce an annual economic impact of more than $826 million. In 2013, 56 breweries opened, the first time suds purveyors cut ribbons at the rate of more than one a week.

The brewing industry has capitalized on residents’ love of locally made product. And it’s been nurtured by laws that allow brewers to make and sell their product in the same location, to self-distribute and to get their beers on the shelves of liquor stores that must be independently owned, freeing them from having to pitch to grocery and convenience-store chains reluctant to take a chance on unknown brands.

Colorado is not yet Napa in terms of using alcohol to draw significant numbers of visitors from out of state, but more than a dozen touring companies cart people around to Denver or Fort Collins breweries by bus, bike or foot. And with roughly half of the 49,000 people that attend the annual Great American Beer Festival in Denver now coming in from out of state, even brewery tourism is starting to make an impact on the bottom lines of local beer makers, restaurants and hotels.

But before craft breweries became as embedded in the local culture as snow-covered mountains, there were men and women who found new ways to spark public interest in their beer. And if a doctoral history candidate, a Cajun restaurant owner and two out-of-work newspaper guys didn’t seem at first to be the most likely set of entrepreneurs, they would soon rise to the occasion.

Oskar Blues

In 1997, Dale Katechis maxed out five credit cards and two cash-advance checks when no bank would loan him money to open Oskar Blues restaurant in the mountain gateway town of Lyons. Two years later, when he’d paid off his debts, he started brewing his own beer, naming the flagship offering Dale’s Pale Ale.

But it wasn’t until 2002 that Katechis crossed the Rubicon, becoming the first craft brewer to package his beers in aluminum cans. He got a bank loan and invested $1 million in the packaging system, thinking it might inspire liquor store patrons to seek out the origin of this strange product and drive to Lyons to eat.

Instead, it inspired a national wave of craft breweries moving from traditional bottles to cans that deflect light and are easier to take on hikes and rafting trips. By 2012, it was the 36th-largest brewery in America.

Katechis didn’t stop with a mountain-town restaurant. He built a production facility down the road in Longmont and opened another in 2012 in Brevard, N.C.. He launched three beer-themed restaurants in the Longmont area, supplied by his own farm. And he opened a bike-making shop in an effort to “keep work from being work.”

Oskar Blues now has 400 employees, including 150 in the brewery, but Katechis said the diversity of the company’s holdings “helps keep us small.” Every new venture opens up a personal relationship with a new audience, in a new place or a new industry sector, and he hopes to grow into more fields that “synergistically make sense to the Oskar Blues brand.”

“It’s not like we sit in a room and say ‘What’s next?’ Some of those things just evolve,” he said. “I am always looking for ways to make sure my soul is intact. That’s probably more of my role than anything else these days.”

Dry Dock

Kevin DeLange evolved too. While studying for his Ph.D. in medieval history, the longtime homebrewer shifted course and bought The Brew Hut, an eight-year-old homebrew shop in Aurora. After a year-and-a-half, when he no longer felt challenged, he opened Dry Dock Brewing next door.

Dry Dock is most famous for winning a gold medal at the 2006 World Beer Cup just six months after it opened, which, combined with its Small Brewery of the Year honor at the 2009 Great American Beer Festival, attracted much attention from distributors. But DeLange resisted the temptation to grow like a weed.

Instead, he launched into a series of projects that kept regulars enthralled and attracted new customers. Dry Dock and The Brew Hut moved to a bigger location in 2009. In 2013, he built a production facility and started canning. Now he’s building a beer garden there while expanding distribution.

The slow growth allowed him time to develop recipes like Apricot Blonde, one of the most-sought beers in Colorado bars. And a desire to constantly take the business in a new direction keeps him hungry.

“Those projects are what get me fired up. When I’m done with those, I almost go through a postpartum depression feeling for a while,” he said. “A lot of people are brewing because it’s their passion. My passion is being an entrepreneur and growing something.”

Though Denver Beer, Oskar Blues and Dry Dock represent some of the biggest names in Colorado brewing these days, perhaps no brewery has more impact on the culture of craft beer entrepreneurship than Strange Craft Beer.

Strange Craft

IT workers Tim Myers and John Fletcher had talked about opening a place for several years, but made the jump when their employer, the Rocky Mountain News, closed in 2009. Not wanting to raise $2 million to start a bottling operation, they invested their life savings in a 2,000-square-foot space in an industrial strip mall south of Mile High Stadium and took a radical approach to the industry.

Wander through Denver’s brewing scene now and you’ll find most locations are situated as taprooms where beer is served by the pint and food – if there is any – comes from the fleet of food trucks parked outside. But when Strange opened in May 2010, the lone taproom-only brewery in the area belonged to Dry Dock – and that had the buffer of a homebrewing shop next door to supplement its income.

But Myers, now the sole majority owner, realized he could make the same $5 profit on a pint served at the taproom as he could on a six-pack sold at a store. And he liked saving money on the building, feeling people would find their way to the location just off Interstate 25 if he could get his name out.

Strange attended every beer festival within a five-mile radius its first year and handed out coupons for $1 off a pint. It offered beer when fledgling tour companies like Denver Brews Cruise came by, believing that would create a positive memory on attendees.

Myers built the brewery slowly, in keeping with Denver’s craft ethos. Eventually, he began distributing kegs to bars and restaurants. One of his biggest challenges now is keeping all of his regular beers on tap at the brewery and his accounts.

Strange hasn’t started canning the way that other, newer breweries have. But Myers loves his business model – one that’s drawn dozens of start-up brewers to seek advice and emulate him while still allowing him to attract crowds with unique beers like Zora Rosemary Pale.

“I love being home at night. I love being small. I love not having to worry about getting more cans out,” he said. “We have more money to spend in the next year. But we don’t have any investors to answer to. And we don’t have any debt hanging over our heads.”

Can it. Sell it from the taps in an out-of-the-way location. Tease the distributors who want you to go nationwide. Hell, just make so many beers that even your regulars can’t keep up with them anymore.

Denver’s craft brewing scene succeeds partly because no two entrepreneurs have the same idea about how to make it big. But every one, in their own way, has attracted locals and drawn the attention of out-of-state beer lovers. And that, above all else, may be why no one can look away from the scene now.

Ed Sealover is the author of the 2011 book "Mountain Brew: A Guide to Colorado's Breweries" and will be the host this summer of the weekly TV show "Colorado Brews" on Rocky Mountain PBS. He covers the brewing industry, among other beats, for the Denver Business Journal.

 

Colorado's Booming Brewing Industry

 

Number of Craft Breweries: 232
Number of Employees in Craft Brewing Industry: 5,014

Annual Wages: $135.8 million

Average Annual Salary: $27,084

Annual Economic Impact: $826 million

Source: Colorado Brewers Guild


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