I’ve told this story a million times, but here it is again. When I started working on building Freetail in 2006, I “borrowed” my business model from Sam Calagione and Dogfish Head: start as a brewpub to build our brand, and eventually move into distribution. One small detail in this business model: a brewpub distributing in Texas was illegal. So, our original included a paragraph that explained how we were going to change the law to remedy this minor inconvenience (as I’ve since joked to Sam, who I have the pleasure of serving with on the Brewers Association Board of Directors, “if some guy from Delaware can do it, how hard can it be?”).
The point of retelling this origin story is to say that despite my model and business plan from the get-go, there were more than a few instances when I was less than confident it would become reality. As you know by now, we did change the laws, and we are building our new “production brewpub” (new term I’ve invented to describe the brewpub designed for wholesale production that we are building).
With all those other parts in play, I’m extremely proud to announce that we have partnered with Silver Eagle Distributors to be the exclusive wholesalers of our products for a multi-county region which includes our home market of San Antonio. I’ve had the pleasure of getting to know the Silver Eagle team through our battles at the Capitol, and without their support for statutory reform, brewpubs still wouldn’t be allowed to distribute in Texas.
As I got to know the team at Silver Eagle better, it became clear that they weren’t just the right legislative partner, but they’d also be the right partner for our distribution plans. Their presence, scale, and thirst to grow the craft market aligns greatly with our desire to be San Antonio’s Beer and eventually expand into other markets around Texas. I’m more excited than ever for the prospects of our brand.
See the official press release below.
During the 2013 regular session of the Texas Legislature, SB 515 was passed with overwhelming bi-partisan support. The bill made it legal for brewpubs like Freetail to sell their beer to wholesalers, who in turn can sell to retail license holders such as grocery stores, restaurants, bars and package stores. Such sales were previously outlawed.
“Freetail Brewing Co. has been a favorite of San Antonians since opening its doors in 2008,” says John Nau, president and CEO, Silver Eagle Distributors. “All of us at Silver Eagle are very excited to partner with a business like Freetail that has such a passion for both beer and the local community. We look forward to expanding the brewery’s reach outside of its brewpub so that local residents can also enjoy Freetail in the comfort of their own home or favorite bar.”
In order to meet the market demand for Freetail beer, the company is constructing a 30,000 SF brewery at 2000 S Presa St. in San Antonio. When complete, the facility will have an initial capacity of 6,000 barrels/year, expandable up to 60,000 barrels/year. The company has stated its goal is to be “San Antonio’s beer” and to first expand its presence at home.
“A lot of breweries start out and expand to as many markets as possible. We want to do the opposite by focusing on our hometown and become the first thing people think of when it comes to craft beer in San Antonio,” said Metzger.
Though the San Antonio market will be the primary focus starting out, the company still has eyes on other markets in the future. “Houston, we hear you,” said Metzger, referencing a failed bid to open a Freetail location in Houston in 2011. “While we may not be opening a physical location there, our partnership with Silver Eagle is especially exciting because it gives us the potential to expand to the Houston market when the time is right.”
The initial roll-out, slated for mid-summer, will include draft and 22oz bombers. Cans are projected to be available as early as this fall. The brewery currently has four year-round beers plus a variety of seasonal and limited editions available throughout the year.
About Freetail Brewing Co.
Freetail Brewing Co. is founded on the pursuit of creating exciting, innovative and unique world class beer. We embrace the laid back and fun-loving Texas culture and set out to create products that mirror the lifestyle of our diverse and rapidly growing community. We believe in promoting an increased appreciation of craft products and their responsible enjoyment. For more information visitwww.freetailbrewing.com.
Here are some pictures of the happenings at the new brewery now that we have our construction permit in hand and can really rock and roll!
More to come!
Having closed down for the rest of 2013 about forty-five minutes ago, I thought I’d be fun to dust off the old business plan (which had a five-year projection) and play the “how good of a guesser am I?” game. If nothing else, I thought it might be a good bit of information for start-up brewers out there.
While we ended up making & selling about 18% less beer than I thought we would in our first year, turns out I was a pretty good guesser from years 2-5. I projected within 1% of our output in year two, 1.74% in year 3, 6.75% in year 5 and 4.14% in year 5. Pretty good considering all those projections were made before we even had an idea of what our restaurants floor layout would look like! The bad news: all those percentages I was off? They were all to the negative, meaning we didn’t end up making as much beer as I thought we would. But, we still finished a shade under 1,100 barrels in 2013. Not too shabby for a brewpub in a town that some felt couldn’t support one.
On the revenue side, there was good news. After falling 1.8% short of our revenue projections in year 1, we’ve exceeded them ever since (6.9%, 4.3%, 10.0% & 13.3%, respectively). Hey, more revenue is a good thing (sorry, I’m not going to share our financial details with you)! Unfortunately, our actual profits have been about half of what I projected (hence why I still don’t drive a Lambo) as it turns out running a brewpub costs more than I thought. I will say that counter to some narratives I read, running a brewpub doesn’t mean you’re going to struggle to keep food on your family’s table. You definitely won’t get rich doing it either: there is always something else to spend some money on, including a brand new brewery!
With five full years in the books, my original projections are an out-dated reference (not that they really matter once you open the door for business anyway) and I feel like our little pub on the outskirts has reached adulthood. In 2014, we start the next chapter for Freetail, opening our production facility. It turned out I was pretty good at projecting brewpub numbers, but I’m far less confident in projecting wholesale figures. Thankfully I tend to err on the conservative side, so I’m hoping I’m pleasantly surprised as we blow through our wholesale projections.
Thanks again for everyone who has supported us and we look forward to the adventures to come!
Most of you may not know a little background about me: I’m a economics geek and as of Fall 2013 a retired economics prof. While I miss teaching, I definitely appreciate the additional time I have to focus on the brewery, especially as we prepare to expand.
The other night I was missing teaching a little more than normal, and I got the idea for a fictional series of beers designed to teach some basic lessons in introductory economics and point out some of the crazy stuff I see happening in the beer industry.
The first lesson deals with artificially restricted supply. There are a lot of reasons a brewery might choose to do this, and most of them don’t have anything to do with greed or malice.
First, it’s easy to observe how relative scarcity of a product leads an overall enhanced reputation, or allure, of said product. An example I’ll use throughout this post is with our own imperial stout, La Muerta. We got to a point a few years ago when it was selling out right away, so we made more. Then it sold out again, so we made even more. Now not only does it not sell out right away anymore (we are down to about 50 bottles left of 1500 sitting on our shelf 20 days after it was released), but it sells at a slower pace than it did previously. Part of that is people don’t feel the need to rush out and get it (which I think is a good thing, I like that people don’t feel like they are fighting over the last Furby at Christmas for one of our beers). But another part is that the beer isn’t as appealing as it used to be, because it isn’t as scarce.
A more malicious reason for doing this is to artificially drive up the price of the beer. Price is the ultimate rationing mechanism, so as a good, service of resource becomes more scarce, the equilibrium price for said good rises. So, make it more scarce, you can charge more. This isn’t in itself that malicious, but as with most things in this world, perception is reality. So if I can make you THINK it’s more scarce that it really is, you’ll be willing to pay more, and my overall revenue is higher as I sell for a higher price (there are other factors in play here, which I will cover in future Lecture Series. No. 2 will be on Elasticity of Demand and No. 3 will be on Monopolistic Competition to round out the lesson on this particular point).
At Freetail, I make a point of being as transparent as possible. We don’t raise the prices of the beers we make, even when we can. We are honest about how much there is. And we are honest when we say that we’re trying to make more (hence, the building of a new brewery). Hopefully you trust us, and appreciate our approach to fair beer dealings. And by no means am I accusing high priced beers of being guilty of artificially inflated prices… just something to whet your conspiratorial appetites.
Wednesday is here and, as promised, so are the details on this year’s Dia de La Muerta.
We will be selling 1,596 bottles/133 cases this year (up from 1,476 bottles/123 cases last year).
Here are details on the event itself:
The tap list for beers available at Dia de La Muerta (Edited 11/01 with Guest Taps):
See you Saturday!
***Note, this is essentially a re-post of what I put together for the La Muerta V release in 2012. I’ve merely updated with new data.
The sixth iteration of La Muerta day looms, and I thought it was a good time to reflect on and share how this all came to be.
When Freetail was still in its planning phases, we knew (like pretty much any brewery that opened since 2004 or so) we wanted to brew an imperial stout. A perfectly healthy admiration for skulls & Dia de los Muertos coupled with half of my DNA rooted in Mexican-American culture led me to a name for our imp-y before we had a recipe: La Muerta. I had grand ideas for a line of similarly named brews. Maybe El Muerto could be a supercharged version, a Double Imperial Stout, if you will. Muertito could be a smaller version, meant for more casual sipping by a winter fire. While these other ideas have not yet (and may never) come to fruition, La Muerta was a concept with legs.
Back then, head brewer Jason Davis and I used to have regular brainstorming sessions. What did we want to brew? What ideas toed the proverbial crazy line? Could we pull all that off or did we need more tanks? How the hell would yeast management work? While not every idea from those early meetings ever came into being (or are even stuck in our memories anywhere), they did go on to help mold the general direction of our brewing and how the brewery needed to be set up to supply such ambitions. It was in one of these meetings that I told Jason about La Muerta.
Jason, the evil brewing genius he is, decided to venture slightly from what we were seeing on the national scene where imp-ys tended to be on the sweeter side, with alcohol content going up but apparent attenuation seemingly going down. Pulling ideas from a previous homebrew test batch, we would leave some sweetness, but focus more on the chocolate characteristics along with another that would be specific to our imperial stout–the addition of rauch malt which now makes up almost 20% of the grain bill. Over the years, my occasional glance at review websites reveals comments like “surprisingly smokey”. Well, I can say that it should no longer come as a surprise to anyone… there’s a whole lot of smoked malt in there!
Here is a brief history of La Muerta, both in pictures and narrative, including slight recipe changes over the years. I’m honored that this beer has become appreciated by so many, but also that Dia de La Muerta has become (in my completely biased opinion) one of the best regular beer events in the state of Texas. All of you, and the epic bottle share you have developed over the years, are responsible for this.
The laws here in Texas are a little quirky so we can’t really have things like Dark Lord Day, but I think Dia de La Muerta is the closest thing we have because of all you guys and gals who wake up early, drive across the state, and come hang out on the patio at 8am waiting to buy some bottles. 2013 Update: This statement is no long really true given the recent changes in beer laws, but the point remains the same. You guys have helped make our bottle releases awesome and until someone tells me otherwise I think Dia de La Muerta is the closest thing to Dark Lord Day in the state. A tip of the hat to my friends at Jester King, who are definitely keeping me on my toes with the great job they are doing. They are forcing (in a good way) me to continually try to up our game. Y’all are awesome!
La Muerta I. 10.2% ABV 50 IBU, 5.9 barrels produced. Brewed January 2, 2009, released on draft January 26, 2009. Approximately 100 bottles released on February 14, 2009. Most bottles had black wax. Bottles sold out in approximately 6 days. Original recipe was 11.4% rauch malt in grain bill.
La Muerta II. 11.2% ABV 50 IBU, 6.3 barrels produced. Brewed October 1, 2009. Released on draft November 1, 2009. Bottles released November 7, 2009. Some bottles black wax, some bottles gold wax. Approximately 250 bottles sold. Bottles sold out approximately 10pm on November 7. Recipe still unchanged from original.
La Muerta moves to its eventual normal release date of November 1 for draft, first Saturday of November for bottles (what we now call Dia de La Muerta).
Bourbon Barrel La Muerta. La Muerta II aged in a Four Roses distillery barrel. Released on Draft January 6, 2010. Bottles release February 13, 2010. Red wax. 95 bottles sold, initial limit was 1/customer, “coupon” emailed out via newsletter on January 1, 2010. Sold out within 4 hours.
This was a very successful release that provided a very delicious beer, for some people. Some other people ended up with a sour, infected imperial stout that I personally despised. This constituted the end of bourbon barrel projects (with the exception of occasional 5 gallon bourbon barrels we get for draft only releases). After this, all barrel aging was done for our Wild Ale program.
La Muerta III. 10.3% ABV 55 IBU, 10.0 barrels produced. Brewed September 30 and October 1, 2010. Released November 1, 2010 on draft, bottles November 6, 2010. Red wax. Approximately 450 bottles produced. Sold out in approximately 2 hours. Slight bump in the rauch malt to 12%, increase in IBUs to 55.
We significantly upped the production, “double-batching” La Muerta.
La Muerta IV. 9.3% ABV 50 IBU, 11.9 barrels produced. Brewed October 5 & 6, 2011. Release November 1, 2011 on draft, bottles November 5.
Gold wax White wax [Edited on 10/31]. Approximately 800 bottles produced. Sold out in approximately 1.5 hours. Recipe increases rauch mault to 18%, IBUs back down to 50.
Labels switch from vinyl “logo only” to wrap-around pressure sensitive labels with brew info (and Government Warning).
La Muerta V. 9.1% ABV 50 IBU, 18.5 barrels produced. Brewed October 3 and 4, 2012. Draft release November 1, 2012. Bottles release November 3, 2012. No wax. 1,476 bottles sold. 1,074 bottles sold on Dia de La Muerta. Final bottle sold out on December 6. 2012 recipe 11.8% rauch malt and 7% oak smoked wheat malt.
Our first ever “triple batch” in order to try to keep up with demand. Also the first time La Muerta was not be bottled by hand and instead on our bottling line acquired at the end of 2011.
La Muerta VI. 9.2% ABV 50 IBU, 20.2 BBL produced. Brewed October 3 & 4, 2013. Draft release: November 1, 2013. Bottle release: November 2, 2013. Blue wax. Anticipating around 1,500 bottles available for sale. 2013 Recipe modifications: 12% rauch malt, 7% oak smoke wheat malt (so, a very minor increase in rauch versus 2012).
I hope you enjoy this brief recap of La Muerta history.
On behalf of myself, Jason and everyone involved in Freetail, thanks again for making this such a cool annual event. I’m looking forward to 2014 when we will have Freetail2 up and running. Who knows what the event will look like then!
So I admit it, I say a lot of stuff and then not follow through. I tell my wife I’m going to wash the dishes, or put together our daughter’s “big girl bed” or I claim I’m going to have a frequently updated blog detailing the progress of the new brewery. I don’t think I’m a liar, I just commit to more than I can execute sometimes.
On the last example, I know I’ve slacked a bit on the blog. As I rambled on a bit on Twitter the other day, I really did hope to do a better job of documenting the construction of Freetail2. My goal was to create almost a “how-to” of sorts, but not in the “hey you need x and y and z” sense but more of a “this is the journey of going from a 4700 SF brewpub where the brewery takes up about 800 SF to a 30,000 production brewery that can (theoretically) produces half of our pub’s annual volume in 6 days”. The hope was that this journey would at least give some insight to someone on whatever project they were working on (be it a brewery themselves, or anything else).
The good news is that not a whole lot has happened that you’ve missed out on. We are awaiting demolition permits to do some minor (I use that term lightly, since it’s almost $40,000 worth) of demolition work inside the building. The biggest part being tearing down an old ceiling that was put up and exposing the roof deck and the cool beams up there:
In the meantime, we are also working on finishing our construction drawings, which I’ll share some images of when they are ready. Hopefully (and it is a big hope) we can stay on track to start construction in December. Some of the fun “unexpected” things that have come up – we need to sprinkler the building and the closest water line to tie into is across the street, which means we’ll have to come across the street and bring water in. This is probably at least a $100,000 extra project and one that will definitely cut back on some of the things we had hoped to do. But that’s usually the way brewery projects work.
I also wanted to talk a little more on the business philosophies that drive us at Freetail. We are very big on Sustainable Business Relationships, and we aren’t talking about environmental practices but rather the way we conduct business with outside suppliers, vendors, etc.
There is an obvious motivation for a business to extract the most value out of every single transaction they take part in to maximize the net benefits from such a transaction. When you view isolated transactions, this is a common sense way of doing business. Stepping back and taking a longer view of things, however, this isn’t always the best approach. We always take the approach that we want transactions to be mutually beneficial to both sides (because we want to conduct these transactions again in the future!).
One example: I got a call from our growler supplier yesterday saying they had accidentally overprinted our order by 4 cases. It would be easy for me to say “I will only pay for what I ordered” and I probably could have gotten those four extra cases for free (because they have no use for 4 cases of Freetail growlers other than to ship them to me). However, because we enjoy a long-term relationship with this supplier, I have little interest in pissing them off. Sure, we’ll take the 4 extra cases, just add it to the invoice.
This is an oversimplified example, but it is one that should extend to all business relationships. It is important to take the long view and approach your relationships in wanting to make it mutually beneficial for both sides. If I enjoy the product & service provided by one of my suppliers, I want them to make a profit so they are successful and can continue providing me with this product & service. Negotiating them down to the very last penny doesn’t achieve this.
The same philosophy can be applied to pricing of the products we make. Can we charge you double for the bottles of beer we sell you? Yes. But I want you to pay a price for our beer that you feel good about, and that leaves you money to go try some other beers and come back around to buy more of our beer in the future. On the wholesale level, I’ve seen a lot of brand new breweries charge prices for their kegs that exceeds the price for a keg of world class beer from established breweries.
I understand that these new guys are hungry to recoup some of their investment, but in my opinion this is a mistake born of taking a short-term view. If I charge you too much for a keg (and try to extract the profit away from the retailer) then all I’m doing is one of a few things: 1) discouraging the retailer from buying my beer again or 2) forcing the retailer to charge even more for my beer to the customer, which may discourage the customer from buying my beer again which trickles down to discouraging the retailer from buying my beer again.
In economics, we always stress the concept that “price matters” and this couldn’t be any truer than in relationships between suppliers. Take the long view, and support your suppliers’ AND customers’ long-run viability.
Until next time,