In 1993, Crayne Horton founded Fish Brewing Company, brewer of Fish Tale Ales in Olympia, Wash. For the last nine years, he has helped build the company into a leading environmental brewery with one of the world’s best-selling lines of certified organic beers. Today, he serves as vice president of marketing and sales.
Monday, 17 Jun 2002
As I write it’s about 8 a.m. on a beautiful morning in Olympia, Wash. I just arrived at work after watering my veggie and fruit beds and then walking down the hill to the brewery. While walking, I considered what to write about for my first journal entry for Grist. Best to start at the beginning of my brewery’s comeback — that is, best to start on New Year’s Day 1998.
It was early in the morning and I had just woken up on the couch in my office, with a slight hangover. Time to take stock of the situation. First of all, it was very cold in my office; heat costs money and the company was broke. After the big expansion of our brewing capacity back in 1996, the bottom had fallen out of the craft beer business. The 40 percent annual growth rate which our industry had experienced for more than 10 years had come to a nearly complete halt, with 3 percent growth expected for 1998. Back in 1995, during happier times when we were planning an expansion, we had projected continued vigorous sales growth. We were relying on that growth to support all the physical plant investment and new overhead associated with the larger brewing facility we had committed to. Three years later, it was obvious that those projections had been a serious mistake. Business was flat, and our expenses far exceeded our income. In short, the company was in a lot of trouble.
After two years of trying to keep the ship afloat, those of us who were still around were not getting along well, to say the least. Fish Brewing Company was no longer a happy place to work. The friendly management team was falling apart and the brewing team was talking unionization. Things were clearly not going well in my domestic life either, or I would have woken up at home, rather than on a couch at work. My marriage to the company’s other founding partner would soon come to an end, the victim of too much work and too much stress.
No, things were not working out as planned. Admittedly I was very proud of the beers we were making. They were very strong and tasty, and widely appreciated by beer geeks. Our graphic presentation, logos, and intellectual properties were well done. Nonetheless, my enthusiasm for the business was waning. It was becoming very difficult to summon the motivation each morning to go forth and present the product to sullen bar owners in smoke-filled taverns. After all, it was only beer I was selling. The world would be no less rich if we went out of business. Lying there on the couch, the idea of just throwing in the towel had a certain appeal. The bank would probably make the decision for us soon anyway. Maybe the landlord would put a padlock on the building next week, or the city would shut off our water. So why not just face the facts and begin liquidating before someone else did it for us?
Unfortunately, there was that nagging problem of all those people who had invested in the company. Some were family and friends. Many of them lived in Olympia; their children went to school with my son. I did not want to move away. Best to keep trying to find a solution, stubbornly working to turn things around.
So there I was lying in the dark on that cold couch looking for answers. That’s when it started to come together, what I refer to as the “epiphany.” What we needed was a holistic solution. Some way of improving sales quickly by giving us a brand identity, bringing all of our employees back together, and giving me a better reason to go to work in the morning.
A simple plan began to take shape. We would introduce a new product, something more lightly flavored with broader appeal than our usual super-hop beers. A nice light beer that would be called “Wild Salmon Pale Ale.” We would find a worthy nonprofit organization and offer to donate a portion of the proceeds from each sale of Wild Salmon to their pro-environment efforts. In return, we would receive the good will of our customers and increased sales. This would also help us to better define our customers and establish a niche. Our target customers would be just like us: liberal, environmentally minded, gracefully aging Deadheads living in the beautiful Pacific Northwest. We would put all our energy and marketing efforts into redefining the company as the leading environmentally friendly brewer — a super green eco-brewery. Did it work? Well … four years later and we’re still here.
Tuesday, 18 Jun 2002
Today is a “Meeting Day” for the folks who help keep Fish Breweries up and running. In addition to myself, there’s Martin Bills, our operations manager, who runs the brewery and has for nearly four years; Stephanie Whener, our pub manager, who is in charge of the Fishbowl Pub, our front-line retail operation, which is located just across the street from the brewery; and Scott Hansen, founder of the Leavenworth Brewery, whose brands and intellectual properties we purchased back in October 2001. Scott is now the man responsible for selling our draft beer throughout the Northwest. He spends most of his time on the road and typically only shows up at the brewery for Meeting Day.
Also present is Lisa Vatske, our chief financial officer. Lisa is an old friend and the only person besides myself who has been here since the company was launched. Lisa and I had nothing nice to say to each other from 1997 through 1998. She has the most unpleasant job in the company, telling our creditors, “The check is in the mail.” We would not still be here if it weren’t for Lisa, and I am glad we’re friends again.
These are not the only people who make Fish Breweries happen; they are just the ones who usually attend management meetings. In case I have misrepresented the situation thus far, let me be perfectly clear: I personally did not save the Fish Brewing Company with the Wild Salmon Epiphany. On the contrary; the miracle of our continued existence can only be attributed to a huge team effort. The people listed above made it happen, with the help of many hardworking brewers, sales people, and pub staff. I like to think that what brought us all together again was our shared desire to become the leading green brewery in the business. I also like to think we are well on our way toward achieving that goal.
Finally, let me not forget to mention Lyle. Lyle Morse is our “White Knight.” Lyle was a local furniture manufacturer and a Fish Brewing Company shareholder who joined the board of directors during the expansion. The worse things got, the more stock Lyle bought. He did his best to force some fiscal discipline upon us and he encouraged our efforts to develop the pro-environmental niche. Lyle became board president when I stepped down in 1999, and is now CEO and chair. He has never drawn a salary and he very seldom tells us what to do. Thank goodness for Lyle.
Back to the meeting. We hold these meetings approximately every two weeks. After a little catch-up on what we are each currently working on, we get down to the core issue. This is almost always the same: How are we going to get enough malt, hops, packaging, and so forth to fill last week’s orders? You see, we now brew a very popular line of certified organic beers, and orders for our products almost always exceed our brewing capacity. This would be a great situation, except for the fact that organic beer is very expensive to make and most people do not want to pay more for it than any other craft beer on the shelf. Even though we are still in business and brewing at full capacity, we never did fill all the financial holes we created back in the dark times. Cash flow is the issue. The catch-22 is that while demand for our product is high, our profit margins are too low. And as I am constantly reminding everyone, we really cannot raise prices again this year.
So here we sit at our meeting, incidentally, in the same office where I woke up on that cold January morning four years ago. We are here to try to juggle our resources and prioritize our needs. Marty needs a full silo of organic malt and a shipment of organic hops from New Zealand. Stephanie is hoping to improve the ventilation in the pub. Scott would really like to have new table-tents or coasters to help sell more beer. I have been hoping for a computer upgrade for some time now. Lisa listens and then reminds us that we are already overdrawn and payroll comes through this week. Then we get down to it. As always, Marty’s priorities come first. If we don’t order raw materials, we can’t make beer. On the other hand, ordering new point-of-sale to help sell more beer is not a priority. We can’t keep up with demand anyway. And as for my new computer, let’s get serious.
I for one like these meetings. I am not a communication guy for the most part, but I do like the opportunity to express my opinions. (Just ask anybody.) Unfortunately, none of my colleagues is required to take my advice any longer. I gave up that kind of authority a couple years back. No regrets though. Wearing different hats over the years and narrowing my focus to distribution and marketing has made my life much easier. Besides, most of my companions are pretty good about listening to my ideas before telling me to mind my own business. Sometimes I can even win a point, if I can persuade them that it is the environmentally responsible thing to do, and won’t cost too much money. If only I could think of a good reason why getting a new computer would save more salmon.
Wednesday, 19 Jun 2002
The rain has returned, but that is probably a good thing under the circumstances. By the looks of my schedule, my work day is going to be gloomy as well. We are bottling today, and I need to take my position on the bottling line soon. Although bottling will consume the vast majority of my time today, there will no doubt be any number of planned diversions and unexpected interruptions.
While Marty and the brewing staff prepare the bottling line for action, I take the opportunity to check my email and phone messages. The key to having a successful day is to minimize the surprises. Fortunately for me, the only new issue which arises from my messages is a request for free beer. We give away a lot of free beer here at Fish Brewing. The primary recipients are nonprofit organizations doing environmental work, especially those associated with water resources. In any given week, I might donate a few cases to the Sierra Club, Trout Unlimited, or any number of local watershed protection groups holding a weekend cleanup. For the most part, the beer we donate is consumed by the happy volunteers of these worthy organizations. In other cases, they will offer our beer as an auction item in their annual fundraising activities.
Thank goodness it is legal in Washington State to give free beer to qualified nonprofit organizations. For a company such as ours, this is the ideal form of marketing, involving no direct cash expenditure. Effectively, we are placing Organic Fish Tale Ales into the hands of our core demographic group — and receiving their grateful appreciation in the process. Everybody wins in this situation, and I am certain that over the years we have gained many loyal Fish Tale followers through these donations.
At 10 a.m., the bottling line is ready to go and I am at my position. I work a float position on the back end of the line, alternating between watching the drop-packer, pushing cases through the taper, and stacking finished cases on a pallet. This is an old technology, but if handled with the right balance of force and love, we should be able to turn out 1,500 to 2,000 cases today. Each major piece of equipment on the line has a person operating it and a good luck icon mounted on it. The bottle-filler is operated by Jeff, who is protected by a Kenny doll from South Park. Marty is at the labeler, where a small image of Buddha looks over his shoulder. I work at the end of the line assisted by Sarah and Bill, not to mention an African fertility goddess and Sponge Bob Square Pants. I can assure you that bottling is wholly unpleasant. It is fast, loud, monotonous, and dangerous all at the same time. We need all the protection and good juju we can get from the powers that be.
At 11:30, one of those little unexpected interruptions arrives. Ron the tap handle man is making a delivery and hopes to get paid. Although his arrival today was unexpected, Ron is almost always a welcome diversion. Ron is a wood-carver and all around artistic type who leads a pretty colorful life. He is one of those people who makes Olympia a better place to live. I met him 10 years ago at the Olympia Farmer’s Market where he occasionally has a table. For as long as we have been in business, Ron has carved our tap handles. He carves a beautiful 10 inch salmon tap handle out of Alder. They are perfect for us and we have received a lot of recognition for them over the years. The problem is that these handles are almost too nice. People like to collect them. Bar owners, distributors, beer drinkers, fishers — you name the group and I am sure that they are stealing my tap handles to adorn their garages and basements.
Consequently, we never seem to have enough tap handles. Our distributors are always calling up to ask for two dozen more handles on the next truck. I know through years of experience that Ron is making the tap handles as fast as he can, which is never fast enough. Our distributors and even some people at Fish Brewing frequently suggest that maybe it is time we went to a professional tap making company in order to assure a more regular supply. But I just can’t see putting Ron out of work. His handles have been the symbol of our draft beer for years. He is a local entrepreneur (loosely defined) and he will rush orders in return for low-fill beer bottles that get rejected on the bottling line. I believe that if we take this job away from Ron, we will lose a little bit of our soul.
Back to the bottling line, but at 3:30, another diversion shows up in the form of Ken Desmarets. Ken is the hardest-working beer salesman I know and we are lucky to have him. With that said, I always anticipate his arrival with some trepidation. When Ken arrives it means we need to get his truck filled and help him on his way as quickly as possible. Unfortunately we almost never have all the beer that Ken is hoping to deliver. This makes Ken angry.
The problem is that we are victims of our own success. Since converting most of our brands to certified organic, we have not been able to keep up with demand. In response, we have raised our prices and cut back on the territory we are delivering to, all in an effort to dampen demand. In April, we decided to pull out of California all together. We just did not have enough beer for all of the distributors we were working with. Fortunately, our pro-environmental strategy helps in decisions such as this. If we need to reduce the number of distributors carrying our products, we simply begin by eliminating those at the furthest distance — that is, those which need the most fuel to get the beer to market.
Personally, I love this situation. It is always best to sell a fragile product such as beer as close to home as possible. If we can sell all of our beer in the Pacific Northwest, so much the better. We even market our beer as “Brewed in the Republic of Cascadia,” which we print on every package. Beer is best consumed fresh. The further it is shipped, the less fresh it becomes. We did not invent the concept of “thinking globally and drinking locally,” but we do try to live by it, and the logic is difficult to deny.
Despite our efforts to reduce the brand’s geographic territory, the summer is upon us and we are definitely low on product. Ken knows the pressure we are under to keep up with demand when the weather turns warm, but he is unsympathetic. Ken is a beer salesman in the best tradition. He has a strong ethic of customer service and he hates to see a shelf or glass go unfilled for lack of product. All I can do is to encourage him to sell more draft beer and less packaged beer. We make a much better profit margin on draft beer –and it doesn’t necessitate my having to work on the bottling line.
Thursday, 20 Jun 2002
School is out for the summer and I have just arrived at the brewery after having dropped off my nine-year-old son, Gaius, at day camp. He is definitely going to have more fun today than I will. The usual amount of interruptions — both planned and otherwise — are bound to delay my one overriding priority for the day, which is label approval.
Under the best of circumstances, the process of acquiring approval for package labels in the beer business is extremely convoluted and time-consuming. In Washington State, all labels which appear on kegs and bottles must be approved by the Washington State Liquor Control Board. If you sell beer in more than one state, it is necessary to comply with the labeling laws of each different state — and in some cases, those laws are contradictory. For example, some states allow or require you to list the alcohol quantity on the label. Some require the alcohol to be listed by volume, while others require it to be listed by weight. I think you get the picture.
The WSLCB has any number of arcane requirements concerning what can and cannot appear on a beer label. Fortunately, however, there is really only one overriding requirement for label approval in Washington State, which is that the label in question first must receive approval from the Bureau of Alcohol, Tobacco, and Firearms, in Washington, D.C. The BATC may sound like an intimidating agency to have to deal with on a daily basis, but the fact is, they almost never actually show up to threaten brewers. Once licensed as a brewery, all we need to do is pay them annually for our license and file and pay our excise taxes twice monthly. Basically, if we send them money, they don’t send guys with guns to collect. They must be concentrating on all those other vices — cigarettes, guns, explosives.
Unfortunately, when it comes to labeling, our situation is slightly more complicated than the normal brewery, because we also have to maintain our organic certification. This is further complicated by the fact that this coming October will witness the advent of a new national organic standard to be used across the land.
My label approval process is now as follows. First, I must study all the requirements that are expected to come into play. This is not easy, since the BATF and the U.S. Department of Agriculture have not quite come to full agreement on what “organic” means for beer, or exactly what wording will apply after Oct. 21. Nonetheless, I believe I understand what is required and allowable, and I have conveyed that information to my graphic designer, who has printed up mock-up label designs for me to submit. The first approval must come from the Washington State Department of Agriculture, which is the current certifier of our beers and through which we will later receive our USDA approval.
Once the WSDA has renewed my certification for 2002 and granted preliminary approval on the new label design, then I can proceed with the big boys in D.C.
Today, I am filling out the label approval application forms for the BATF. These must be submitted as duplicate originals. The applications include full color mock-ups of the new labels. Color is required because the new USDA symbol which appears on the labels must follow specific color requirements. I am told the B.A.T.F. will be running the new lables by the USDA; if they are in full compliance I should see federal approval on my desk in about four weeks. If they do not comply, I will have to make changes and resubmit until they are correct.
Once I have USDA and BATF approval, I will then submit the labels to each state in which we intend to sell our beer. In some cases, such as in Washington State, once I have received state label approval I must then post prices for the new products, even though the products are not really new; the labels have just been changed to reflect the new federal standard.
All of the time involved in approval and price-posting assumes that we will be able to order new labels from our printer in time to meet the deadline in October when the new standard takes effect. Naturally, I cannot order new labels until I have all the necessary approvals. If I send the job off to the printer before receiving final approval, I may just end up wasting a lot of money and paper on labels that do not comply. So in the meantime, we face the challenge of ordering enough bottle labels, six-pack carriers, and mother cartons with the old design to last up to the point when the new standard kicks in. That is the trick: how to achieve full compliance on the new standard, order all the new packaging we need, and then run out of the old packaging just in time to begin using the new stuff.
I am hoping that sometime in November, when we are still using the old packaging because we did not correctly judge the amount we needed, and because an environmentally friendly brewery such as ours does not want to waste old packaging, the WSLCB, WSDA, USDA, and BATF do not all get irate at once. Could get kind of crowded on our doorstep.
Friday, 21 Jun 2002
Well, it is finally Friday. Having just briefly reviewed my entries for the last few days, I fear I may have given the impression that my job is less than fun. Today, however, is the kind of day which makes the beer business worthwhile. Although we will be very busy arranging last-minute shipments to distributors and stocking the Fishbowl Pub with beer for the weekend, we do have a fun production meeting scheduled.
After taking care of business as usual all morning and putting out several minor fires, we finally convene in the early afternoon to do a little quality control and new recipe formulation. This is why we all joined the business. I started out as a homebrewer before founding the company, and all the brewing staff began as homebrewers and beer geeks. Fundamentally, we just love beer. Some of us drink more beer than others, but we all love making, talking about, and sampling beer in its varied and wonderful forms. If we didn’t love beer we would get real jobs with real pay.
At today’s production meeting, the usual suspects are present. First, there are the people we proudly refer to as The Mighty Fish Brewers: Philip Roche, Jennifer Gridley, and Jeff Wuellner. Dominick Tullo is also present. Dom does not brew but he does make sure the beer gets finished, packaged, and loaded out the door. These four people are joined by their supervisor, Martin Bills, and myself.
My own role in production is a complicated one. I am the founder of the company and am currently responsible for marketing and selling our products. I was head brewer for the first year we were in operation and I have been in the business longer than anyone else. In short, I am a know-it-all who refuses to go away, and I insist on having my opinion heard. Actually, it makes sense for me to have some input since I am the most in tune with what our customer base, including distributors, bar owners, and beer drinkers, are currently infatuated with. Fortunately, my choice back in 1999 to go organic was the right call, so I still have some credibility.
We begin production meetings, especially on Fridays, with a broad sampling of our products. Since last October when we first began brewing our new Leavenworth Beers brands, we have been tasting a lot of these products. I was about the only person in the group who was very familiar with these beers, since I was used to tasting them while doing my rounds in Seattle. These beers are very different from our Fish Tale Ales brands. They are unfiltered, we use a different yeast altogether, and for the most part we are using different malts and hops in brewing these beers. We are finally starting to become more familiar with these beers, but it has been a struggle. Everybody does not agree on recipes, procedure, or even the way the beers should be changed to improve the original Leavenworth recipes. Nonetheless, I believe that a consensus is finally forming. Sitting around drinking beer with your coworkers on a Friday afternoon tends to lead to a consensus of one form or another.
In addition to all this important sampling of finished product, we also take the opportunity at these meetings to examine some raw materials. Today we are scrutinizing some new organic malt and hop samples which our suppliers sent us. The unfortunate reality is that there are extremely limited varieties of malt and hops available to organic brewers. To claim that our beers are “organic,” we need to brew with at least 95 percent certified organic raw materials. Since there are no certified organic hops grown in the United States (at least none that are commercially available to brewers), we need to import all of our hops. The very best are grown in New Zealand, which seems to be free of certain pests and diseases that hops are prone to. Naturally we hate having to import hops. The shipping cost only adds to the cost of the beer and we feel guilty about the fuel expended in getting them here.
The need to import hops is just one of the little compromises we are faced with in trying to become the greenest brewery possible. Sometimes we find more eco-friendly solutions, sometimes we don’t. But the little victories make it worthwhile. Just recently we found a company that will collect and recycle our shrink-wrap. You can’t avoid shrink-wrap in the beer business, and so it came as a great relief to remove this stuff from our waste stream. We also found a farmer last month who is feeding our spent organic grain to his livestock, which is certified organic and sold at our local farmers’ market. I love being able to buy this guy’s meat for my family.
The bottom line is that brewing is resource intensive. We use a lot of water and energy to produce beer. There is little we can do about that. Still, we’ve had a lot of success in reducing our waste stream and using raw materials that are certified organic. It does not leave any but the narrowest profit margin, but we do love working here. It seems like ages since that cold morning in January when we reached rock bottom. Should we have just hung up our boots and called it quits? I don’t think so. If we hadn’t stuck it out, all those beer drinkers looking for a more eco-friendly alternative would have far fewer choices. On this particular Friday afternoon, I choose to sample another Fish Tale Organic India Pale Ale. TGIF everybody.