Unlike some other craft players, Allagash Brewing Co. has resisted the temptation to add easy volume. Rather than quick-fire expansion into markets around the country and hefty build-outs, the Portland, Maine–based brewer has instead pursued growth by gradually increasing volume in markets where the brand is already doing business.
“We’ve always tried to make sure we have a culture of discipline,” explains founder Rob Tod. “We have focused on drilling down more deeply into our existing markets.” Tod notes that Allagash’s business model makes the company “a bit of an outlier,” compared to other craft breweries that have quickly expanded into new markets, recording high double- and even triple-digit volume gains. “It’s all part of an effort to work more effectively with our distributor partners and to get fresher beer to retailers,” he explains.
Indeed, Allagash’s business approach has been successful in its own right. The company’s volume increased by low double-digits in 2016 to 90,000 (31-gallon) barrels, Tod says. This year, he projects continued double-digit growth, which will push volume past the 100,000-barrel threshold. The Brewers Association ranked Allagash as the 35th-largest craft brewer in 2016. Annual sales revenue is undisclosed.
The company’s beers are distributed in 17 states and Washington, D.C. According to sales director Naomi Neville, its largest and fastest-growing markets include California, Illinois, Massachusetts and Maine. Allagash’s distribution network primarily comprises independent craft beer houses and wholesalers aligned with MillerCoors or Anheuser-Busch InBev, along with wine and spirits distributors.
Brewer For Life
Allagash’s beginnings differ from the usual origin story that starts with making beer in a garage. “I was never a homebrewer,” Tod admits. Rather, a chance position as a keg washer at Otter Creek Brewing in Middlebury, Vermont, opened his eyes to the world of craft beer. “Within two days of joining Otter Creek, I went from not knowing that the craft beer industry existed to knowing that I wanted to make beer for the rest of my life,” Tod recalls. He moved to Maine, built a small brewhouse from used equipment and sold his first batch of Allagash White in 1995.
Tod says he never imagined that his brewery would go on to sell its offerings as far as California—and that the beers would receive national acclaim. “When I started Allagash, I thought that when I retired at age 70, I’d have seven employees and be brewing 7,000 barrels a year, with distribution only as wide as New England,” he says, noting that growth was slow for the first 10 years. “We went from 250 barrels in our first year to maybe 4,000 to 5,000 after 10 years. It was very slow growth, and if I had been in it for the volume, I probably would have gotten out.”
About a dozen years ago, Allagash’s brews were actually more widely distributed than today, with the products available in some 30 states, including craft beer hotbeds like Colorado, Washington and Oregon. But by 2008, the company pulled out of several markets. “We couldn’t supply all the wholesalers,” Neville explains. “It was a tough decision, but we had to concentrate on states with the highest potential.”
Tod notes that in the mid-’90s, American craft brewers were already producing great beers in the British and German traditions, along with northwestern pale ales and IPAs. “I wanted to offer something different,” Tod says. He saw opportunity for craft-brewed, Belgian-style beers, such as Allagash White. The only problem was that many beer drinkers—and bartenders—at the time weren’t aware that Belgian-style wheat beers typically feature a hazy appearance and notes of coriander and orange peel. “I would walk into bars with samples of Allagash White and bartenders would ask what was wrong with it,” Tod recalls. But within 10 years, the brand gained traction. Allagash White now accounts for 75 percent of the brewery’s volume.
Allagash’s other year-round brews include Allagash Black, a Belgian-influenced stout; Saison, a Belgian farmhouse-style ale; and the Bourbon barrel–aged Curieux. Earlier this year, the brewery launched Hoppy Table beer, a hop-forward, sessionable brew at 4.8-percent abv, and the company’s first new year-round beer in three years. “We’ve been extremely surprised and excited by the reception,” Neville says.
In addition to the year-round beers, Allagash released more than 40 labels last year, including limited-release beers and its Coolship offerings, which are made using a traditional Belgian cooling process and then aged for one to three years in French oak wine barrels. Brewmaster Jason Perkins says inspiration for new brews comes from Belgium and other craft brewers. The company also has a pilot program that encourages employees to submit ideas. In general, Allagash beers are priced between $8.99 and $10.99 a four-pack of 12-ounce bottles and from $9.99 to $20 a 750-ml.
According to Neville, 73 percent of Allagash’s volume was sold in on-premise venues last year, with draft beer representing 70 percent of its output. “We’re very happy about how well developed we are on-premise, but we feel there’s a tremendous amount of opportunity off-premise,” Tod says. Neville adds that supermarkets and neighborhood grocery stores account for the company’s largest off-premise volume, while convenience stores are showing the fastest growth.
Allagash relies on a mix of traditional advertising, social media and consumer events to market its products. The brewer runs print ads in consumer beer publications and Maine-focused magazines like Down East. “Instagram, Facebook and Twitter have all been extremely important for us,” says marketing director Jeff Pillet-Shore. And in a tie-in with on- and off-premise partners, the brewery has promoted “Saison Day” for the past four years, with simultaneous tasting events held in about a dozen cities. Saison Day 2017 is scheduled for April 8th.
The Portland brewery also serves as host for events throughout the year, many with a philanthropic tie-in. According to Tod, some 120,000 visitors toured the brewery last year. Visitors can sample complimentary Allagash brews on site and purchase beer for takeaway. Perkins says the tasting room is an ideal venue for “active conversations between consumers and the tasting room staff.” Tod takes pride in Allagash’s robust philanthropy program. “We gave over $300,000 back to the local Maine community last year,” he says. Organizations that received contributions range from agriculture to health care to the arts.
In his more than 20 years in the craft brewing business, Tod has witnessed a lot of changes. He currently serves as chairman of the Brewers Association and expects that the ranks of the 5,000 craft breweries around the country will continue to grow for the foreseeable future. But he believes that the acquisitions of craft brewers by major producers will change the dynamic of the industry, as large players and their affiliates receive easy access to raw materials, distribution and retail channels that independently owned breweries don’t have. “If you’re controlled by one of the big brewers, you’re fundamentally different,” he says.
Tod is also concerned about trends taking place in the retail tier. “In the off-premise, it’s extremely important that beer be presented by brand family, not style,” he says. Tod also expresses skepticism regarding the on-premise tendency to frequently rotate draft handles. “It’s tough to develop brand loyalty if you’re constantly rotating,” he says. “Customers appreciate having something they can fall back on, something that’s familiar.”
In an effort to help retailers understand the value that Allagash and other craft brews provide, the company’s distributors are armed with the brewery’s profit calculator app. “We use it to compare the profit from our bottles versus our drafts for on-premise operators,” Neville says. “We show them what a change from bottles to draft would mean in dollars and cents.”
Tod sees plenty of opportunity ahead for Allagash Brewing by just sticking to its core values. While other craft brewers have increased sales through expanded distribution and the addition of IPAs and cans, Allagash has no plans for that type of growth. “We see potential in existing markets, rather than the need to open new markets,” Tod says. He also has no interest in partnerships with other brewers or private-equity firms. “Some of our biggest strengths include our authenticity and core values,” he says. “There’s a risk whenever you bring a partner on that their interests may not be aligned with yours. That’s a risk we don’t want to take.”
Rather, Allagash will find growth by “hammering away at our core values,” Tod says. “I feel more positive today—in a climate that’s pretty competitive—than I have in the past 22 years for both Allagash and the craft brewing community. It’s amazing to see how much engagement there is, and it’s not going anywhere.”