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07.2014

Massachusetts Beverage Business

Article By: Fred Bouchard

When Suzanne Schalow and Kate Baker opened Craft Beer Cellars in Belmont Center three-and-a-half years ago, they were dedicated, hard-working, knowlegdeable, and somewhat business savvy.  But the amiably driven co-owners never did expect the brew-nami of beer and steep fan-to-geek-to-business partner trajectories that have followed in the wake. 

Today they are riding high on beer’s continued ‘bacterial’ growth profile.  To date, Suzanne and Kate are running two successful retail outlets (medium in Belmont and small in Winchester), have developed an education handbook that’s a model for retail sales-staff, and have franchised 1O more beer stores – and counting. 

Of those ten, six are in the Bay State and one each in New York, Pennsylvania, Florida, and Connecticut?

“Three years ago we were just trying to get Belmont on the map,” says Suzanne with typical candor.  “We still come to work every day with a smile, knowing that we could be taken down by a fickle marketplace any day, so we extend hospitality and help.  We know that people may be rude and uninformed elsewhere, but we are all for service, knowledge, and patience.  Our number 1 and 2 goals are to run good stores in Belmont and Winchester (we don’t have to work too hard to extend that over 43O square feet!).”

Suzanne, with Harvard behind her (anthropology and humanities), and Kate – with elbow-deep in the restaurant business (dishwasher, salad prep, line-chef, kitchen manager, restaurant manager) and a degree from Newbury College – met and soul-mated at Lizard Lounge. 

BEAUTIFUL CHALLENGE
They’ve now formatted their business plan – to be modified and replicated elsewhere.  “It was a beautiful challenge!  We spent six months cracking our own heads – we wrote a 154-page operations manual which defines what a beer geek is.  Everything that we knew about running this business went into it.  Its 14 chapters cover topics like Personnel & Training, Education of Staff & Consumers, Passion & Hospitality, and Beers NOT to buy.”  They also wrote an employee handbook with their attorney. 
Nationally, they have found only a dozen beer stores, devoted to quality beer, and few that concentrate on craft beers.  Among those stores are Bottle Works  in Seattle, a few in Portland, Oregon, one in Idaho, and Brews & Ales in Ashland, North Carolina.  Out west there’s selling growlers and in-store bars. 

“Our replicatable model is totally unique,” claims Suzanne.  “As we are franchising our business, we have an identity and track record.  We are the mothership – taking calls daily from satellites.  We stay in touch and help with guidelines, but not decision-making, on hiring and staff-training.”

Day to day store-level operations fall on franchisees.  Craft Beer Cellars (CBC) does the brand development, assistance in social media, PR, marketing, website, page replication, and distribution.
 
This website blurb applies to every CBC shop: “Craft Beer Cellar offers craft, micro, or artisanal brewed beers from the United States and beyond.  Our mission has been to create an amazing beer store; a place with a central focus on beer, not wine or spirits.  While you may not be familiar with everything on our shelves, we are confident that you’ll leave our shop with something spectacular.  And when you visit us, you’ll always find a beer geek who is eager to assist, comfort, and love you, or (if you prefer) just have a chat about happenings in the beer world.  We are focused on keeping our prices down, keeping our pulse on the latest and greatest beers available to you, and putting the sexy back in customer service and hospitality.  So don’t be surprised if one of our knowledgeable beer geeks insists on carrying your goods to your car – that’s just how we roll.”

Kate and Suzanne actively seek beer geeks who might become owners.  They don’t want investors, only hands-on, in-the-trenches enthusiasts.  Partners are franchisees who own their own stores. They offer franchisees a business model, operations manual, employee training handbook, plan, logo, support structure, and distribution network.  Web-content provider and administrator Pham Mamaradlo does 1OO% of the web programming.  Franchisees pay a very small percentage of monthly sales for administrative costs. 

Education runs in their blood – it’s a major component of their business model.  Staff education includes daily communal tastings aimed at cultivating everyone’s palate and opinion.  Staffers tend to go out to beer events on their own – with corporate encouragement and support.
 
“When Kate and I first got hooked on beer,” says Suzanne, “we thought we’d brew our own . . . open a brewery.  We realized brewers are special, smart, passionate, and very focused, but could use help communicating, out front opening doors, and fighting battles.”

I caught up with these fast front runners – both in the same place at the same time – in a tasting class they’re hosting for Newton franchise owner Brian Shaw.  Their non-lecturing banter to a class of ten enthusiasts (half of them women) exudes passion with volumes of re-sud-ual knowledge at their fingertips: total recall, easy analogizing –  all involved with interpreting sensory data and history. 

Baker and Schalow embrace their growing beer family.  They have lots of good things to say about most members of the wider brew community.  They work with the Allstrom Brothers, Todd and Jason, and Todd’s wife Candace.  They like beer writers like Andy Crouch  and they applaud publications such as this one, ALE STREET NEWS, BEER ADVOCATE, and YANKEE BREW NEWS,   and websites like Brewers Association’s craftbeer.com.  They admire Berkshire Brewing Company as well as Jim Koch of the Boston Beer Company.  They collaborated on designing and brewing a collabo-beer with Phil Ballantyne at Cambridge Brewing Company.  (Like so many of the best brews, it’s now just a fond memory.)  We took time for a little Q & A. 

FRED BOUCHARD New trends observed, whether admirable or reprehensible?
SCHALOW/BAKER We’re in no place to judge products, we see a lot of crazy stuff – like beers brewed with Madagascar vanilla or chilies like jalapeno or habanera.  We’ve seen funky ingredients – rose hips, rose petals, black and pink peppercorn, vanilla, organic honey and sea salt.  We had a turmeric beer with mango and britannomyces yeast strain – amazing! 

FB Barrel brewing? 
S/B Barrels were once used for long aging, now 2 to 3 months is likelier.  Allagash has a curio barrel program, only uses them once.  Brother Adam of Anderson Valley Brewing Company now ages his standard oatmeal stout in Wild Turkey barrels.  So it’s ironically a session barrel-aged beer!  Caramel and toffee, but getting very light nuances.  And you can have a couple of pints because it’s only 6.5%.

FB Take on the IPA craze?
S/B In our three years we’ve seen spikes in IPA, but it may be relaxing.  We’re seeing more session beer, they’re easier-drinking with lower alcohol, heavily dry-hopped on the back with more aroma,  with personality ands less alcohol – 4.5% and lots of flavor.  [Founders All-Day IPA; Notch Pils (Salem, Ipswich, 4.5% or less).  Upper Pale #31.  Uinta’s Baba.  Wyld.] 

FB Reliable Imports? 
S/B Belgium, Germany and Czech Republic, without question, for history and quality.  Denmark is on fire!  Brothers Mikel [Mikeler] and Jeppe [Evil Twin] in Holland and  Switzerland’s Rafael Trois Dames – wow! – lots of it sour, saison style, farmhouse, wild ale, brune, grand dame – fermenting in chardonnay or pinot noir barrels. 

FB 2O13 numbers out yet? 
S/B 9O% industry verus 1O% craft.  We’re gaining 1 to 2 % a year.

FB Advice to retailers?
S/B Come in ready – 1OO%.  Represent the product as well as the brewers can.  Some retailers hire people who know nothing about the products!   When a customer asks: “What kinda beer is Nugget Nectar?  What’s in the bottle?” Do you respond, “I dunno” or “well, I think . . .” ?  Our smiling faces and enthusiasm and hard facts bring people back here.  Enough with retail’s old school ways and mentality and snobbery! 

FB Biggest annoyance?
S/B Let’s get in the 21st century with trade restrictions.  Let’s get that no-shipping bill overturned!

FB With so many manySKUs, what takes the hit for shelf space? 
S/B We’ve tightened our walls, and grown higher.  More stuff squeezed in.  Bold prediction: Our SKUs will go down.  Why?  We’re putting out the very best stuff – amazing beer.  With side by side products: the amazing sells, the average sits.  We’re squashing the sitters and pushing the rest into a flow. 

FB How do beers get cut?
S/B Through tasting and discussion, and some on big-beer principle.  Other issues for exclusion?  We can’t possibly even carry every style from every brewery.  We keep a very good selection of local beers, but do have to choose among bottlings.

FB Best distributors?
S/B We’re open, honest, and fair-minded and very communicative.  Quid pro quo in both directions.  Our go-to guys are Craft Brewers Guild, Burke Distributing, Atlantic Importing, Tap Brewing, Mayflower, Harpoon, Berkshire, some others. 

Our shelf space and cooler space is not for sale.  We don’t take buy-offs or hand-outs.  Our product line is driven by two forces: the beer’s legitimacy and customer requests.  All we sell is the beer.

To be continued . . .
FB From your Lizard Lounge days, Kate said you might open a gastro-pub? 
S S Ah, that’s coming back to haunt you! 
KB Well, we’re pretty busy right now . . . Can we help you find the right beer with dinner?

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