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BUSINESS
Dogfish

Dogfish Head founder crafts brewery's future

Mike Snider
USA TODAY
Sam Calagione, founder of Dogfish Head Craft Brewery.


Sam Calagione is distilling a future for the growing business that began with the Dogfish Head Craft Brewery brewpub's opening in Rehoboth Beach, Del., more than twenty years ago.

Since opening in 1995 as the smallest commercial brewery in the U.S., Dogfish Head has grown annually -- adding a production brewery in 2002 -- and is now the 16th largest craft brewery, according to the Brewers Association. Beer sales grew about 5% last year at Dogfish Head and are on track for 8% growth this year.

The Dogfish company, which has grown to about 250 employees, also now produces its own from-scratch gins and vodka from a distillery, expanded upon the experimental equipment added more than a decade ago. In 2014, the 17-room Dogfish Inn opened in Lewes, Del., and this year, Dogfish Head opened a new Rehoboth Beach restaurant Chesapeake & Maine, featuring East Coast seafood.

Calagione is in Washington this week for the 9th annual Savor: An American Craft Beer & Food Experience. He spoke to USA TODAY recently about his company, the beer industry and his recently-released book Off-centered Leadership.

Q: This is your second book after Brewing Up a Business: Adventures in Beer from the Founder of Dogfish Head Craft Brewery, released in 2006 and updated in 2011. What else did you want to impart?
A: When you start a small company you have to be a jack-of-all-trades and you wear a lot of hats. This book is what happens when a company grows and it has as many heads as Medusa. You need a lot of people to wear the different hats. The first book was an entrepreneurial startup book and this one is about transitioning to a sustainable company that can hopefully have the structure to outlive the founder and principa.

The cover of 'Off-centered Leadership' by Sam Calagione.

Q: What type of challenges has Dogfish Head faced?
A: The biggest is we decided to have a very complicated business model. We are not just a production brewery. We have restaurants. We have a beer-themed hotel. We have a distillery. So the choice we made to complicate our lives is also what I think makes our brand very rich and distinct. It would have been much easier to sell a lot of beer in 50 states and get as big as we can as fast as we can. But we wanted to try and build a brand that is about strong growth not fast growth and is about interesting a bunch of people in experiencing Dogfish, not just beer lovers.

Q: What led to that expansion into food and lodging?
A: Originally, our purpose raison d’être was off-centered ales for off-centered people. But as we expanded into hospitality and hotels and clothing and merchandise that evolved to off-centered goodness for off-centered people. We are always trying to create stuff that is certainly at the higher end, when you look at the price of it in a category, but people will feel is a good value for what they pay for because of the ingredients and the authenticity and the methods that we use whether it is food or spirits. We do our food direct from (area) fishermen in the case of our newest restaurant Chesapeake & Maine. We always come from a place where we try to be authentic, transparent and well-differentiated.

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Q: Dogfish Head is know for having unique takes on beer. What's a recent one?
A: (New beer) SeaQuenchAle is three traditional beers brewed in sequence. First, we brew a Kölsch that has got a really yeast-friendly pH into a tank and let it go for 24 hours then on top of that we put a Gose that has some coriander, black limes and sea salt from the mouth of the Chesapeake and from the Maine shore and then the third is a Berliner weisse, basically our Festina Pêche, but instead of peaches 25% of our fermentables comes from lime juice. So at the end of the day you have all this German beer-style DNA but they are mashed up with each other. And salt and lime are the most forward characteristics of this great sessionable 4.9% alcohol beer.

Q: There is a lot of consolidation and acquisitions in brewing. Surely Dogfish head has been targeted.  
A: The world's biggest brewery made overtures towards us recently as did one of the world’s biggest importers and we didn’t take those meetings. For me, the line in the sand for an indie craft brewery is the Brewers Association’s definition of an indie craft brewery and I am hopeful that Dogfish stays in that definition for many, many, many, many years to come. (The association's definition of a craft brewery is one that produces 6 million barrels or less annually, is less than 25% owned or controlled by an industry member that is not itself a craft brewer, and uses traditional and innovative brewing ingredients and processes.

Dogfish Head Craft Brewery tap handles at the company's Chesapeake & Maine restaurant.

Q: What does growing consolidation mean for the craft beer movement?
A: Everyone needs to realize that right now in every bar in every state there are massive global breweries going in and trying to sell those bars kegs of beer that they are hoisting off as local craft beers from somewhere in America that are really being made and distributed and marketed by the world's biggest breweries. If the consumer doesn’t vote with their pocketbook to prioritize indie craft, we risk losing the vibrancy and diversity of our industry because the little guys can't compete at the price points that the big brewers are hoisting this so-called craft beer off on.

Q: In the book you cover Dogfish Head's decision to seek a private equity investment.
A:  ​I knew as we were entering this competitive moment that it could be helpful to bring a minority equity investor (LNK Partners in September 2015) because they have great experience navigating competitive moments within, for instance, clothing with Calvin Klein and Levi's and other similar high-end industries and Dogfish intends to stay on the high-end in craft as we always have. They understand that our intention is to stay family-owned and learn from them and then buy them out. We’re not intending to go toward an IPO and we don’t intend to get bought by a big brewery or anything like that.

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Follow Mike Snider on Twitter: @MikeSnider

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