Dogfish Head: Brewing Up Relationships

The beermaker employs an off-center approach to everything, including its flavors, grassroots marketing, and wacky promotions

The Entrepreneur: Sam Calagione, 38

Background: In 1995, Calagione opened Delaware's first brew pub, Dogfish Head Brewings & Eats, in Rehoboth Beach. The plan was to introduce a public house with original beer, food, and music to the town. In the beginning, the homemade brews were made in three kegs, five days a week, using propane burners. When he got bored with his original flavor, Shelter Pale Ale, Calagione began experimenting with ingredients, introducing new brews such as Espresso Bock, Arctic Cloudberry Imperial Wheat, and Punkin Ale. Today, the company makes 28 different types of beer.

The Company: Dogfish Head Craft Brewery fashioned itself as the flavorful indie alternative to the beer conglomerates and expanded its offerings beyond beer to include spirits (rum, vodka, gin, and tequila), T-shirts, music, and licensed alehouses in Gaithersburg, Md., and Falls Church, Va.

Sales: In 2006, Dogfish earned $14.4 million, and the company estimates it will bring in $18.5 million in 2007.

His Story: My company recently participated in the Great American Beer Festival held in Denver every year—the granddaddy of American beer festivals. I'm very proud to say that Dogfish's booth consistently had one of the longest lines at the festival. There were a handful of other breweries that had disproportionately long lines. We each had a few things in common. We brewed unique, world-class beers, doing innovative things with nontraditional ingredients and brewing techniques.

Also, the brewery booths with the longest lines were the ones where the brewers and owners were pouring their own beers. These brewers and owners described their beers with passion and enthusiasm and said thanks for their customers' amazing support face to face. This last similarity, personal relationship-building, is the most important thing a business owner can do in the context of "growing" a small business. People want to have a personal relationship with the companies that make the products which enrich their lives.

When I opened Dogfish Head Craft Brewery in 1995, we were the smallest commercial brewery in the country out of over 1,200 breweries. Today we are among the fastest-growing breweries in America. Since day one, our motto has been "off-centered ales for off-centered people."

One Beer-Lover at a Time

In the early days, we didn't have any money to advertise or promote, so I would go on the road in my delivery truck. I'd drive four hours to New York City, drop off two pallets of beer at our distributor, take some samples around to restaurants and liquor stores, trying to convince them to sell our beer. I'd end the evening sleeping on a friend's couch or possibly even on a mattress in the back of our delivery truck.

Unlike the big breweries, with their many-million-dollar marketing budgets, at the beginning it was just me in our truck driving around the country doing beer dinners, beer festivals, and tastings, trying to convince beer-lovers, one at a time, of one thing: Our beer is special because of what we put inside the bottle, not the hype and slick advertising that happens outside of the bottle.

As we all know, the American consumer doesn't trust advertising hyperbole. Big companies try to make products that will appeal to the broadest spectrum of people. Small companies must try to make special, unique products that will appeal to a coveted niche of people. At Dogfish Head, we knew our intense, flavorful beers would never appeal to the majority of beer-drinkers. But we also knew that the niche of beer-drinkers who are interested in expanding their palates was growing. The question was how to reach them.

Humanistic Nature of Small Business

Our strategy was to focus on expanding our brewery using highly skilled, similarly "off-centered" people to become co-workers and fellow beer evangelists. Now they travel to events throughout the country convincing people to try our beer.

At the same time, hundreds of other great breweries are pounding the pavement, convincing consumers, one by one, to trade up. Today, the overall beer industry is relatively flat. According to the nonprofit Brewers Assn., the majority of the beer drunk in America is made by a small number of large companies, such as Anheuser-Busch (BUD).

The excitement belongs to the little guys. According to the nonprofit, sales at small, independent breweries (those making less than 2 million barrels annually) are up more than 14% so far this year. That's because consumers have come to realize that if something is made in small batches, by hand, it's bound to be more humanistic and therefore more appealing to our human nature than something made in mass by machine. This is true whether you sell beer, soap, bread, coffee, or insurance. In small business, one of the biggest strengths we have is our ability to meet our public on an even footing.

The ways that consumers can interact on a more intimate level with your company are only limited by your imagination. We've established a few off-centered grassroots marketing initiatives with minimal dollars and maximum customer face time. For one, there's our Dogfish Head Intergalactic Bocce Tournament, where 64 beer-centric yahoos come together on the regulation bocce courts outside our Delaware brewery and in Arizona each fall and spring. They compete (pint glass in hand) in goofy costumes for Dogfish prizes and bragging rights. They also get to tour the facility, try limited-release beers, and hear about what's new at the brewery.

Honeymoon in Beertown

We also introduced our Off-centered Film Fest, held in conjunction with The Alamo Drafthouse in Austin, Tex., each spring. Artists submit quirky short films that feature our beer, and winners are flown to our brewery. This gives us a chance to celebrate the independent and creative spirt shared by our brewers and the film community. It also provides us with free Dogfish Head promotional films and mock ads that we show at and special events.

Finally, we sell weekend packages. We put guests up at our Brewmaster's Suite at the Inn at Canal Square in Lewes, Del., which is packed with beer soap, shampoo, beer books, CDs, and a well-stocked fridge. There's a tour of the brewery, a dolphin kayak trip, and a boat ride to our pub for dinner. The goal is to give beer-lovers an opportunity to experience, with all five senses, Dogfish Head and the beauty of coastal Delaware. At each of these events, we take full advantage of the opportunity to talk with the folks who care enough to join us on our commercial and artistic journey.

Big companies have to talk to everyone with one booming voice. Small companies have the advantage of customizing our marketing to talk with the people who want to trade up to the small.

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