Butcher’s taken on a tough challenge. He’s not running a brewpub, but rather Port City Brewing Co., whose business is brewing and packaging beer, and then distributing it to bars, restaurants and groceries through a conventional wholesaler.
That puts in competition with the big boys – including Anheuser-Busch and Boston Beer Co., producer of the Samuel Adams family which became the first broadly distributed craft beer.
The story of how Butcher, who grew up in Alexandria, leaving just long enough to graduate from James Madison University in Harrisonburg, Va., became the founder of a new packaging brewery is worth telling. There are lessons for would-be brewers, vintners and distillers – and, indeed, for anyone who aspires to start their own business.
After graduating from JMU, Butcher found himself in the wine business for 18 years, 12 of them with the Mondavi Family. From 1996 until 2004, he represented Robert Mondavi Corp. brands throughout the Mid-Atlantic region.
In 2004, when Mondavi Corp. was acquired by Constellation Brands, Butcher joined Michael Mondavi and helped start Folio Wine Partners. Folio initially was a wine importer, but Michael Mondavi soon bought a winery in Carneros.
At the end of 2007, Butcher and his wife Karen were travelling a lot on business. But with small children at home, they concluded that “one of us needed to focus on the family. I decided I would look after the children for a couple of years,” Butcher said.
But Butcher didn’t simply look after his children. He spent that time pondering his future and looking at a number of opportunities.
“I had watched as the craft beer industry become more like wine – more styles, more sophisticated products, more experimentation by its consumers.” And he noted that many restaurants were treating craft beer as they treated wine, with beer lists, beer dinners, etc.
And, he said, craft beer has posted higher sales volume, sales dollars and higher market share for more than 11 years. He expects this trend to continue for a number of years because young people are “developing serious appreciation. These are the same people who grew up drinking Starbucks coffees, so they are used to flavorful coffees. It’s the same enthusiasm I’ve seen with wine connoisseurs.”
Butcher smelled opportunity, spent six months putting together data and information about craft brewing and developing a business plan. “I was travelling to other breweries, learning about the craft beer business. After six months, I was ready to shop this to banks – in 2008, when the credit markets were frozen.”
He interviewed 12 different banks – big national banks, small local banks and regional banks. “I finally found Virginia Commerce Bank , which was interested in the project,” Butcher said. Virginia Commerce makes a lot of Small Business Administration loans and is very familiar with SBA’s 504 programs. Virginia Commerce also works with Business Finance Group, a non-profit lender financing commercial real estate and long term equipment.
While he was talking to banks, he also was talking at his kids soccer games, and found there was a lot of interest among families in the area. “Finally I decided we should set up the company to bring in outside equity.” Ten families ended up buying a piece of Port City Brewing.
Today Port City’s financial structure is a bank loan, an SBA loan, Butcher and his wife Karen, and 10 families. Those 10 families want their investment to be successful, which makes them avid ambassadors for the new brewery.
Brewing equipment was ordered in April 2010. The brewhouse was fabricated by JV Northwest. “They built it in their warehouse, took it apart and shipped it to Alexandria on trucks.” They then worked 12 to 15 hours a day for six days straight. Butcher took delivery of the brewhouse Dec. 8.
Brewing began Jan. 15. Kegs of beer were delivered to customers in Northern Virginia and Washington, DC. A key objective was to open Port City’s tasting room in time to make sales for Super Bowl parties.
The brewmaster is Jonathan Reeves. He’s been brewing professionally for 17 years. He’s been involved in many startups, and shares Butcher’s philosophy about how a great beer should taste.
“A lot of this project was working with Jonathan. I needed an experienced brewer who could help me cost product and operations and posted an ad on Brewmaster.com.” Butcher got 150 replies in three days.
Reeves grew up in Montgomery County, and most recently was brewmaster at the Ruddy Duck Brew Pub, Solomons Island, Md., where he won a number of medals and best of show in the most recent Maryland Governor’s Cup competition.
The tasting room opened a week ago (2/5). “We sent word out on Twitter and Facebook. The tasting room was open Friday through Sunday and had 600 people come through the doors.” Two hundred fifty growlers of beer were sold.
The initial product line includes Optimal Wit and Essential Pale Ale. A Porter is coming soon, and next week Monumental India Pale Ale will be available. Monumental is a tip of the hat to neighboring Washington, DC, “the city of monuments,” Butcher said.
With the product in restaurants and bars in Washington and Northern Virginia, Butcher plans to enter Montgomery County within the next 90 days.
Port City’s first retail account, serviced by Hop & Wine Beverage LLC, a Northern Virginia wholesaler, was Church Key, a premier craft beer bar in Washington. Church Key tapped its first keg on Wednesday, sold out by Saturday.
Port City’s staff is just three people – a brewmaster, assistant brewmaster and Butcher. We wondered if Butcher’s experience in the wine business helped him launch his craft brewery.
“It’s my experience in the wine business that made me convinced we could do this. The same sales activities that drive the craft beer business today are those we’ve always done in the wine market,” Butcher told us. “It’s a hand sale.”
And the wholesaler is crucial: “Our wholesaler, Hop & Wine, understands how to sell craft beer. If the three-tier system went away, a company like mine couldn’t develop a customer base. If we didn’t have a wholesaler knocking on doors, presenting beers to accounts . . . We don’t have the resources to put a fleet of trucks on the road or to hire a sales force.”
We asked about growth plans. Butcher said he’s focusing on the Metro DC market for at least the next three years. “Our goal is to become established in DC as a high quality, reliable craft beer. We want to take care of our own back yard.”
Butcher thinks staying close to home will be a plus: “People are more interested than ever in where their food and drink come from,” he said. So do industry experts. A recent survey of top restaurant chefs by the National Restaurant Association found sourcing foods and beverages locally to be one of the top trends for this year.
Public tours of the brewing operation are available on Saturdays from 2 p.m. to 3 p.m.
“Our capacity now is 5,000 barrels, and we expect to hit that in 18 months,” Butcher said. He has room to expand in his current building to 25,000 barrels.
We asked if brewpubs such as Capital City Brewing Co. were competition. Not at all, he said. “They are an ally in the market. Brewpubs exist alongside package breweries. Bottled beers can be carried in chain and upscale groceries, independent wine and beer stores.
When bottled beer becomes available, six packs are expected to sell for $9.99. Growlers are available for $14.99 in the tasting room, with refills priced at $10.