Steamworks Brewing Co. launches distribution in NY, Minnesota and Wisconsin

DURANGO, Colo. – In 1996, a then-unknown Steamworks Brewing Co. was causing quite a stir around Durango. Shiny, new copper kettles and giant fermentation tanks were being carefully lowered into the circa 1920s motor works on East Second Ave. It was the birth of a brewpub.

Rumors ran wild that “big corporate money” from Denver was moving to town. In truth it was just a couple of young entrepreneurs – Kris Oyler and Brian McEachron. The only thing “big” was their dream.

Today, 12 years later, (though the pair fought with some in the community to secure the brewpub’s initial liquor license), the name “Steamworks” has become virtually synonymous with “Durango.”  The brewpub has become part of the fabric of the town – giving back as much as it receives – and is a local tourism draw. Plus, the hand-crafted beers have earned numerous national and international awards. Indeed, the business has achieved double digit growth every year since opening.

What most don’t realize, however, is that the future for the company lies in wholesale beer sales. And just as The Steam Team was successful in building positive relationships and a strong business at the retail restaurant level, it is now breaking loose – in a big way –  in the wholesale realm.

“Distributors from around the country are now calling us to carry our beers,” said Oyler, now CEO of the parent company, Peak Brewing LLC (dba Steamworks), noting that to distribute across state lines, all breweries and distilleries must by federal law secure independent state distributors. “They’ve heard about us, or they’ve tasted our beers at the various festivals, or they’ve visited Durango. We’re moving out of our regional sales area and have selected the Minneapolis/St. Paul area of Minnesota, Long Island, N.Y., and the state of Wisconsin as the first areas for national expansion.”

In recent years Steamworks established markets throughout Colorado, as well as in New Mexico, Arizona and Texas. Originally that was going to be it, primarily to protect the quality of the product. But successes in the brewing and bottling process, as well as careful education of distributors and their accounts, is allowing the beers to travel far a field.

“The market for craft beer is continually expanding throughout the United States and has now reached 5 percent of the total beer market in terms of dollars,” said McEachron, Steamworks director of sales and marketing. “Tastes are evolving and beer drinkers now appreciate the nuances and flavor of a variety of craft beers. I can tell you that we are the most drinkable craft beer in a can in all of Wisconsin and Minnesota.”

To meet the demand for Steamworks’ craft beers, the company took a big leap of faith in 2004, opening its second brewery in Bayfield. Where the annual brewing capacity in Durango is only 1,500 barrels, Bayfield presently has a 5,500-barrel capacity, with plans for the addition of new fermentation tanks to bring total capacity up to 9,000 barrels.

“Our current capacity is adequate to meet the expected demand for the existing and these first new markets, but as we move into additional markets, we expect to be undergoing expansion in Bayfield,” said Oyler, explaining that the company initiated its New Mexico distribution efforts in January of 2005, Arizona in summer 2006 and Texas in fall 2007. “Last year, when moving in to Texas was delayed, we had more labor and capacity than sales. Now it’s a different story.”

“The machines are now running like they’re supposed to be – almost 24-7 to meet the demand,” said McEachron. “But that’s why you buy a machine – to run it. We’re talking about doing brew days that encompass 48 hours – three eight-hour shifts.”

Oyler and McEachron have approached the new markets much in the same way they initially approached Durango – personal relationships with individuals and the communities. It’s a challenge to be on the road, as the co-founders both have young families in Durango, but as Oyler has said of the “beer,” it’s his kids’ college investment fund.

In January Oyler and McEachron flew to Minneapolis to meet with J.J. Taylor, the distributor for the area. The company was already familiar with the beers, as representatives had tasted them during the Great American Beer Festival and witnessed the awards. Steamworks’ Steam Engine Lager – the company’s flagship beer – has won national and international awards in seven of the past ten years, including most recently yet another Gold at the GABF.

“We produced a commemorative label – only 200 pressed – just for Minnesota,” said McEachron. “Any of Taylor’s accounts that had agreed to take on our brand or who were already carrying our brand, we went and met them personally, told them the Steamworks story and gave them a collectible. In Minnesota the beer history is huge and it’s something they take seriously. They really appreciated the collectible bottle from Steamworks.”

In Wisconsin, Steamworks has opened talkes with the Badger State Alliance – 12 Wisconsin distributors who have banded together to add more craft beers to their portfolios. And in New York, Garal Wholesalers Ltd. is Steamworks’ distributor. Some 3.5 million people live on Long Island alone, which is Garal’s territory. To put it in perspective, this is roughly the same population as all of Colorado.

“There’s more competition, for certain,” said Oyler, “but because of shipping we’re going to price our six packs at $10.99 or $11.99. I asked them if it was a problem and he said, ‘Not in this market.’”

All new markets will begin with six-packs of both Steam Engine Lager and Third Eye Pale Ale, plus 22 oz. bombers of Colorado Kölsch, The Conductor and Lizard Head Red. Kegs sales will be limited initially.

“We’re also gearing up to market a 12-pack ‘sampler’ in these new markets,” said McEachron of the package that will feature Steamworks’ Steam Engine Lager, Third Eye Pale Ale, Lizard Head Red and Colorado Kölsch. “Aside from it being great for parties, it will allow folks to become more familiar with the brand and our beers.”

But even as the proverbial train appears to be rolling out of the area, Steamworks is still very much a part of the Durango community. From charitable involvement to leading the way on sustainable business and operational practices, Steamworks has made an indelible mark on Durango. The efforts earned the company the “2005 Business of the Year” at the annual Chamber of Commerce Awards.

“Handing someone a beer is like shaking their hand,” said McEachron. “And we realized right from the start that in the tight-knit community of Durango it was going to take one handshake and one beer at a time to share our vision and prove we cared. In 12 years we’ve never strayed from that formula, and we don’t intend to in the future.”

Steamworks is located at 801 E. Second. Ave., Durango (970.259.9200), and 442 Wolverine Drive in Bayfield (970.884.7837). For further information, visit www.steamworksbrewing.com.