Crafting Beers for Conscientious Consumers
July 1, 2007
Crafting Beers for Conscientious Consumers
By ELIZABETH FUHRMAN
Mainstream consumers are beginning to employ compact florescent light bulbs, but that’s old news for New Belgium Brewing, Fort Collins, Colo. The craft brewer has operated with compact florescent lighting, which consumes approximately 75 percent less energy compared with widely used incandescent bulbs, throughout its 16-year existence.
Last Christmas, Kim Jordan, New Belgium’s chief executive officer and co-founder, along with her husband Jeff Lebesch, even gave all their co-workers five high-spectrum compact florescent lights.
Conservation and quality reign at New Belgium. Before Jordan and Lebesch made their first barrel of beer, the couple went on a hike in Rocky Mountain National Park and talked about what was going to be important to them as they ran the company. The points they identified were that they were going to make world-class beer; they were going to promote beer culture, particularly bringing the culture of Belgium into the company; they were going to be good environmental stewards; and they were going to have fun.
It comes as no surprise that the brewer of Fat Tire Amber Ale and the host of Tour De Fat philanthropic bicycle rides would be interested in making beer fun. But New Belgium’s environmental advancements and new sustainable advertising campaign have showcased its green manufacturing practices and made consumers take notice.
While reducing the waste involved in the production of New Belgium’s beers such as Fat Tire, Sunshine Wheat, Blue Paddle Pilsener-Lager, 1554 Brussels Style Black Ale, Abbey Belgian Style Ale, Trippel Belgian Style Ale and seasonal brews like Skinny Dip, the company is proving full-bodied beers and environmentally conscious practices are resonating with consumers. “All those little things add up to make a difference, and that’s always been important to us,” she adds.
This year, New Belgium is on track to grow to more than 485,000 barrels, which sparked the construction of a new 55,000-square-foot packaging hall. Additionally, New Belgium launched its first organic beer, Mothership Wit, which the company plans to use as a test to see if the whole portfolio could one day move to organic.
As a newly married couple, Lebesch and Jordan started New Belgium Brewing in the basement of their home in 1991. Jordan was formally a social worker and Lebesch an electrical engineer. The homebrewing lasted 14 months. The company then moved to its second location near its current location, and stayed there for three years. In 1995, New Belgium relocated to its current brewery, which has undergone nearly 10 expansions and the addition of the new packaging facility this year, Jordan says.
As indicated by the company’s name, New Belgium’s Lebesch discovered the source to his homebrewing success on a mountain bike and beer trial tour through Belgium. At that time, a mountain bike often was referred to as a “fat tire” bike. After one of the beers Lebesch tasted, he decided to make something like it as a homebrew, which he called Fat Tire in honor of his trip on his “fat tire” bike.
Lebesch brewed Fat Tire for a long time, and it became popular with friends. When Lebesch and Jordan decided to start the brewery, one of the things the couple discussed was whether they still wanted to call the beer Fat Tire. Not surprising this should come into question since the beer often gets misnamed by newbies as “Flat Tire.”
The name apparently works. Fat Tire sales always have grown more than double digits since the beer started being brewed. Fat Tire grew 34.3 percent, to nearly $10 million, in the convenience store channel for the year ending in June 17, 2007, according to Information Resources Inc., Chicago. The brand gained 19.5 percent, to more than $25.5 million, in food, drug and mass merchandisers during the same time period. New Belgium ranked third in the Boulder, Colo.-based Brewers Association’s list of top craft brewers based on 2006 sales. The association also ranked the company ninth in overall brewing companies.
Just as Belgium’s culture, heritage and beers have greatly influenced New Belgium’s success, New Belgium regularly acts as a starting point for consumers into Belgian beers.
“We often feel like we benefit Belgian brewers because often people will start by drinking something from New Belgium, and then they’ll think, ‘Now I want to try an abbey style ale or a trippel style ale from a Belgium brewery and want to see what theirs tastes like,’” Jordan says. “So we all win.”
Since Ft. Collins already was home to another craft brewer producing keg beer and a brew pub, New Belgium discovered its niche in town by bottling its craft beers for liquor stores. Because no one else was doing it, the company quickly progressed to selling in nearby Boulder. During the next few years, New Belgium moved and grew throughout Colorado. Then the brewer began to look into other markets.
Jordan says, in the beginning, the company was not very reasoned in its approach to increasing distribution, as New Belgium next began distributing in Washington, D.C., and Minnesota. But as the company began to expand, it realized it needed to focus on distribution patterns. So it pulled back on those markets and opened up Wyoming and Kansas. It next moved to Washington, Arizona and New Mexico. In its 16-year existence, New Belgium has expanded to 17 states, with its 18th to be added in August.
“I think it has been a really great strategy for us to focus on going deep in the marketplace,” Jordan says. “And at the same time, we’ve built a world-class facility with state-of-the-art equipment in a great environment and green building. Parallel to that, building a way of running the business with our co-workers that has been very emotionally satisfying. We’ve built a community of people here who are really engaged in the community that we call New Belgium.”
Although New Belgium entered the Chicago market last year and expanded into two more states, Iowa and Minnesota, this summer, it is not the brewery’s goal to become a national brewer.
“Success is not defined by whether we are a national brewery or not,” Jordan says. “…We talk about it, and the board is exploring what the options are, but it is not the driving force. It would be a by-product of other decisions.”
In addition to the brewery’s growth, New Belgium’s environmental approach drives the company. In 1999, the company subscribed to 100 percent wind power for its electrical energy. In the brewhouse, New Belgium uses a heat exchange system in which heat captured at the end of the process is used to heat water for the beginning of the next batch. The brewhouse also contains temperature sensors that automatically open windows to cool the building.
The company tries to make sure its numerous pumps are the right size for the job instead of buying a bigger one that might require more power. In the case of its new packaging hall, New Belgium opted for a fully electronic filler that reduces CO2 usage.
One of its biggest environmental efforts in terms of energy is its wastewater treatment plant, Jordan says. The anaerobic bacteria in New Belgium’s water treatment facility digests the leftover nutrients in its process wastewater. This process creates methane gas, which is captured in a sealed bubble and piped to a generator. The methane-powered generator can produce enough electricity to meet 15 percent of the brewery’s needs.
And the environmental innovations don’t stop there. New Belgium is a partner in developing a process to use the carbon dioxide byproduct from fermentation to feed fast-growing algae in silo-shaped bioreactors. The oil in the algae can be pressed to make biodiesel, and the rest goes into the company’s wastewater treatment ponds to make methane.
“We work consciously on closing loops in our manufacturing because manufacturing is resource- intensive,” Jordan says. “We work pretty hard in trying to make a sizeable difference.”
Moving into organics
New Belgium Brewing would conduct environmentally conscious programs even if its brews weren’t finding success because environmental stewardship is part of its foundations. But the company finds itself in a period where consumers are expecting more from their products.
“People are looking for differentiated, high-flavor, high-touch — I would go a little farther and say closely held — products,” Jordan says. “People want to feel like they have some connection to their buying choices.”
Consumers’ increased interest in how a product is produced, and the importance New Belgium places on environmental stewardship led to the creation of Mothership Wit. The organic beer is launching in bottles to select markets and into more distribution areas once production is up to capacity.
“It’s been interesting in the beer world that customers haven’t seemed very interested in organic,” Jordan says. “We felt like, at our size, we can really begin to have a marketplace to support that.”
One consideration is sourcing organic barley. “You have to have barley growers who are willing to go organic in their process,” Jordan says. “We thought that we were a big enough company that we could begin to make some change in that. It was interesting for us to explore that and work on the differences in organic malts.”
New Belgium’s sales volume is 60 percent bottles vs. 40 percent draft. The company will launch beers in bottle or draft depending on the market. For example, New Belgium launched Fat Tire 22-ounce bomber bottles with a special launch label in Chicago, and is just starting to add other New Belgium brands in that market. In Northern California, Fat Tire entered the market in draft first, and in the new Iowa and Minnesota markets, the brewer is opening with a mix of beers.
Within each market, New Belgium has “Beer Rangers” who are charged with building the brand at street level. The more than 60 Beer Rangers spread the word about New Belgium’s culture and watch the beer’s quality in their areas.
“It’s more than just selling,” says Greg Owsley, chief branding officer. “We’re really sticklers to making sure the beer is fresh, dated and hasn’t had a quality issue, particularly on draft.”
New Belgium’s growth is not just about expansion into new markets.
“We’ve had three fantastic years with our sales — all with steady growth,” Owsley says. “But the numbers we are most pleased with are three years of double-digit growth in our home state of Colorado. So often, when people hear about this brand, they are not from the West, and they think we are growing because we just don’t have very big market share. They say, ‘They moved Fat Tire into Chicago and that’s what’s fueling their growth’ or ‘They moved Fat Tire into Southern California.’ But we’re getting just as much growth from these mature markets as we are opening new markets.”
The growth of the brewery in-state can be attributed to a newfound respect for New Belgium, Owsley says. “Our company has come to stand for more than just imaginative beers,” he explains. “…It’s a level of authenticity with consumers. We mention sustainability and success in the same sentence, and that we have this value-based approach to how we do things. To me, as people learn about that, we’re getting a loyal consumer that really can’t be found in any other way these days. We’re getting people who really don’t even like being marketed to.”
New Belgium calls its marketing approach a “sustainable branding strategy.” Even though environmental stewardship was written into the core values of the company before it even bottled its first beer, the brewer was somewhat shy to talk about it in its marketing, Owsley says.
Two things made New Belgium realize it was under-optimizing its brand and sustainability. The first was the idea that if people knew New Belgium was a sustainable company, they would be more compelled to be engaged with the movement.
“If they had a deeper appreciation of our beer because it was sustainable, maybe they would also go out and seek other products that were also done in a sustainable matter,” Owsley says.
The second realization was that there is really only so much that even a sustainable brewery can do to help the environment. “We’re not a heavy manufacturer,” Owsley explains. “We don’t use a ton of energy. We’re not that big of an impact on the planet compared to some other corporations and manufacturers out there. But we do have sort of a special platform. Beer is cool. What if beer went out and helped sustainability?
“If you think about environmentalism, everything you ever hear is super bad,” he continues. “Environmentalism is doom and gloom, and people, if they want to commit to sustainability, usually it’s all about abstinence and giving things up in your life. Who better than a brewery to go out there and say sustainability doesn’t have to be all about abstinence. It can be a load of fun too. That’s what we wanted to show them.”
That’s the impetus behind New Belgium’s “Follow Your Folly” print ad campaign, which was a switch from 30-second television spots. New Belgium will spend $2 million in national and regional magazine advertising this year. Each ad focuses on the brewer’s sustainable practices or environmental concerns, such as the Save Our Rivers ad, which features naked people, stripped to keep a dam project on the Cache La Poudre River from going ahead.
The print ads are supposed to suggest the possibility behind not only the story of New Belgium, but other people who are living a whimsical, sustainable life out there, Owsley says. Consumers can then learn more at followyourfolly.com and view related pages and videos.
Ahead for crafting beers
New Belgium always is considering new products, where the company can go deeper into market, what it can improve and where the new places for pioneers are, Jordan says.
“Innovation is what makes it intellectually stimulating to be here,” Jordan says. “It’s a combination of innovation and community.”
In a 2003, speech Jordan presented at the Brewers Association conference in New Orleans, she said it is completely reasonable that the craft brewing industry could be 10 percent of the marketplace. As the industry now sits at more than 4 percent, Jordan still believes it is possible for craft beer to reach that 10 percent mark.
“With New Belgium’s commitment to being innovative, we like to be leaders,” Jordan says. “We love this industry. We love being craft brewers.”
New Belgium culture
Community is important at New Belgium Brewing Co. Rapidly approaching 300 employees, about one-third are in sales, a little more than one-third in production and the balance are in support services such as engineering, finance and accounting, production administration and human resources.
After one year of employment, employees are offered ownership in the company and a Fat Tire cruiser bike. Today, the employee stock ownership plan owns 32 percent of the company. After five years, employees also are awarded a trip to Belgium. This summer, two groups of nearly 25 employees are taking the two-week trip.
These rewards are part of what Chief Executive Officer Kim Jordan calls New Belgium’s “high involvement culture.” The company practices what it calls “open book management,” which means that all New Belgium employees are trained in financial literacy and understand the business of running the business.
The company also involves co-workers in strategy, budgeting and departmental planning. The process involves the management team sitting down and deciding on big picture issues. Then the team takes it back to its co-workers during an annual retreat. The company develops initiatives that fall into those big areas of opportunities. Every department works by taking those initiative and creating departmental plans.
“Not only do we feel like that builds community, but it makes us more successful,” Jordan says. “It also just feels like a great partnership as opposed to a few people who know what’s going on and making all the decisions.”
Last year, New Belgium Brewing Co. revamped its company logo to incorporate a bike, which pays homage to the Fat Tire brand, and the lifestyle of the company.
“We wanted something which was more symbolic and had a deeper meaning to us as a company,” says Greg Owsley, chief branding officer.
The old logo’s focus was a chalice with the company’s name. The glass still shows up in packaging, “because we do think our beer is worthy of being on a pedestal or stemware-type glass, and it really has a nice Belgium feel to it,” Owsley says.
While the company wants to be more than a one-product brand, it also celebrates that New Belgium is built in large part by the Fat Tire brand, and that a bike better represents the culture of the people at New Belgium.
“We have more bikes than cars in the parking lot here,” Owsley says.
Bikes and beer
New Belgium Brewing Co. used to participate in sponsorships for bike rides, but found its name got lost on the back of a bike jersey along with all the other sponsors. In lieu of staying in the logo graveyard, New Belgium created the Tour De Fat, a philanthropic cycling circus now in its seventh year.
Costumes and decorated bikes reign as participants come for a casual ride, music, entertainment, and of course, beer. Amid the hoopla, Tour de Fat also raises money for local charities, with all profits from beer sales going to local nonprofit organizations.
More than 70 events later, New Belgium has raised more than $500,000 for bike-related activism. The company has 12 locations set for this year, with the tour adding a new evangelistic theme. Bike crusaders will be at each Tour De Fat asking participants, “Would you trade your car for this bike?”
The brewer is looking for one dedicated individual at each Tour De Fat to commit to living car-free for one year. The prearranged volunteers will sign over the title of their cars, with the proceeds going to charity, and in turn receive a custom-fitted commuter bike.
“We’re truly out trying to save the planet one Tour De Fat at a time,” says Greg Owsley, chief branding officer.
The company also runs a bike program called Team Wonder Bike in which it asks members to pledge to commute at least twice a month by bike or alternative transportation. Currently, 7,000 people are enrolled, and New Belgium is trying to reach 12,000 by the end of the summer.