Exclusive Interview with Dogfish Head’s Sam Calagione, Part I: Whiskey Plans, Buyout Offers from the Big Boys and the Struggle to Stay Privately-Owned

Don and I were lucky enough to get a 30 minute phone interview with Dogfish Head founder Sam Calagione,  I started to transcribe the interview and realized that it was way too much content for a single post, so I’ve decided to break it into two parts.  Plus it takes FOREVER to do the transcription, so I needed a break! This is part one of two…

We wanted this interview to move beyond the company and the craft beer 101 stuff and help us and you get to know Sam a little better as a person.  Sam said that was fine, so we went for it.

So, boxers or briefs? 

Uhhh…that’s assuming I’m wearing some kind of underwear at all.

What’s your job like these days?

Just like it was 17 years ago, my favorite days at work are the days that I actually get to make a beer we’ve never brewed before – something totally new to us, and that usually means something pretty distinct within the brewing industry. That’s usually our starting point and if it’s been done before, we’re really not interested in doing it.

Most days are probably more filled with meetings and emails than I would love, but that’s the responsibility that comes with running the company.

Has the balance of creative and administrative changed over the years?

I’d say it ebbs and flow.  Right now we have a lot of new beers in the process of coming to market and that means more bureaucratic gauntlet running than other times in the year.

But I make sure I get to do my fun events to keep things in balance.  It’s a good mix of fun events on the road, getting to have creative brew days, or working on painting a new label, and then there are still a number of meetings and emails that need to be attended to each day.

You mentioned painting a new label. Do you do your own art?

I still love to try and paint at least one label a year.  I did the painting for a beer called Noble Rot that will be releasing late this year, which is like a Belagian saison fermented with this perritus-infected Viognier grape juice.

Well that sounds noble and rotten…

Sure. I also wanted to brew a beer with “rot” in it to see if people would buy it.

Well, if they bought the spit beer…

That’s true, but you had to come to the pub to buy that.  We’re going to try and sell a beer with “rot” in the title coast to coast, so we’ll see how that goes.

What other kinds of creative outlets do you have besides your rapping?

(laughs) Sorry about that!  Music’s a big part of my life – it’s a great escape –  and usually I get an hour a day to run or ride or row or do yoga and listen to music, so that’s usually when I do my most creative thinking. Other than that, I enjoy just hanging out with my family.  All kids are artists in the way they see the world, and I keep my outlook fresh through them as well.

How many hours a week are you putting in these days? It sounds like you could work 100 if you wanted to.

It’s not as horrific as ’95 or ’96 when I had a mattress in the cellar of our pub and I’d only go home a few nights a week.  Now if I’m working super-long hours it’s because I’m on the road. If I’m at the brewery or the pub in Rehoboth brewing a batch of beer, I’m usually here at about 8am and home by 6pm. When I’m traveling like to GABF, there are some 16 to 18 hour days mixed in. I’d say on average I work 55 hours a week. Not horrific.

Do you see the camaraderie between brewers suffering and collaboration being stifled as the industry continues to get bigger and the craft beer marketplace becomes more crowded?

No…right now I think there’s roughly 1,700 breweries in America, which is an all time high, and there’s 700 breweries in the planning phase, which is the highest number of all time, so I think we’re about to see an acceleration of awareness of small breweries in America.

The difference between now and ’97 when there was sort of a tipping point, was in that era I think excitement about craft beer was generated more by the media and Madison Avenue, saying “oh, this is a cool fad thing to look at for a minute” and now it’s truly more of a consumer-driven trend than a manufactured fad, and I think consumer demand is still higher than craft brewing capacity.

I know Dogfish isn’t alone as a regional brewery that can’t keep up with the demand for our beer.  And it’s awesome –  I’m glad to see that we’re not an anomaly and I love to see all the regional breweries kicking butt and growing. So I think it’s a great time and I think collaborations, If they’re done in a way that brings something new to the table, are something that I hope live on for a long time.

I should also note that out collaborations don’t only focus on breweries we love like Sierra Nevada or the Bruery or Shorts Brewery or whoever, we love collaborating just with other companies. We just bought all of our coffee to do this winter’s chicory stout, and the local coffee roaster was like, “you’re my number one customer every year.” We buy truckloads of coffee now for that beer. I know we’re the number one wholesale customer for Askanosie Chocolate in St. Louis because we do our Theobroma beer with their cocoa nibs and cocoa powders, and we’ve done some collaborations with Sony Music.  So we love to collaborate outside of the beer world as well as with brewers.

Do you have any plans to can your beers?

You know, I don’t. I love seeing all the success of the canned beers that are out there from the smaller guys in our neck of the woods like Sly Fox, to national brands like Sierra Nevada and New Belgium, but for us it’s just not an arena we’re choosing to play in.  You know, never say never, but our focus since the day we opened has been “let’s bring beer into the context of wine.” Meaning beer can be as flavorful as wine, as complex and as food compatible as wine. And if that’s really at the heart of our mission, we think it’d be really confusing to put a lot our wine-like beers in cans.

So until we see really high-end canned wines…

(laughs) yeah, when you get Screaming Eagle 16 ounce ponders, call me back!

Do you have any plans to make a whiskey? After all, we are the Beer and Whiskey Brothers…

I figured that question might come up!  What keeps us from doing a whiskey now is space and capacity.  Our brewery makes something like 9,000 cases of beer each day that we make beer here, and our distillery makes about 38 cases of liquor a week. So it’s a very small scale, it’s within our restaurant – 80% of what we sell is in our restaurant, with a little bit of distribution here in Delaware – but we are very proud of our spirits.

Other than the request for us to do a gluten-free beer, the other big request we get is for broader distribution for our spirits.  Where I say “never say never” when it comes to a canning our beers, I’d say “probably soon” on the question of will we be expanding our distribution production.

But probably not a whiskey?

Well, once we have more space that will come down the line, but it’ll start with our unique flavored vodkas, gin and rum.  In terms of having space for barrels to do whiskey, that’s be years away.

Have any of the “big boys” ever reached out to you with an offer to purchase Dogfish Head?

Yeah, but it was always done through third parties.  People say “I represent” or “I’m a distributor for” and they’d want to have that conversation, but we’ve always been clear from the outset that we have no interest in aligning ourselves with one of the big breweries.

How often does that happen?

It happened once in the last year, and it maybe happens once a year in the last four or five years.  More frequently than overtures from big breweries, we get overtures from venture capital people and people on Wall Street that are trying to guide us towards an IPO.

We recognize and we apologize to customers who can’t find our 60 Minute IPA everywhere, or customers in one of the four states that we pulled out of, but we grew 40 percent a year on average from 2004 through 2009, and we got to a big enough size that the cost to keep growing that quickly was more than we could afford out of our cash flow and our existing bank debt.

Our growth is now capped to 18 to 20% a year by our desire to stay a private family company. We could continue to grow at 40% a year for the next few years if we decided to sell equity in our company and do a public offering, but we’re choosing to stay a family owned company and that limits our growth.  I just wanted to be clear on that, when people think we’re idiots for not supplying enough beer to match the demand out there, there’s a reason for that.

Do you see what you do and what Budweiser does as even being part of the same thing?

I believe that all beer is good, and I don’t like seeing beer lose market share to wine or spirits as it has been recently.  But I do think at the end of the day the objectives and the way a brewery like that comes to market is extremely different than what we do.

In essence, there’s a commodity sort of approach to selling a light lager, where you’re differentiating more on your marketing and your distribution strength and your sales force network than you are on the actual liquid within the canister or vessel that you’re putting the marketing around.

Our approach is exactly the opposite. We spend no more dollars or resources promoting our best-selling beer, our 60 Minute IPA, than we put behind selling something that we make just once or twice a year, like Bitches Brew or Red and White. For us, we know we’re growing because consumers are turning each other on to what we do and it’s a grassroots thing, so we don’t want to tell our consumers which beers they should give a shit about. That’s why we make 34 different kinds of beer.

I don’t think you’d see a giant publicly traded company putting the same resources behind every single beer in their portfolio, because at the end of the day they’re legally mandated to maximize shareholder value, and that’s what leads to the one or two flagship beers, commoditization, discounting, volume sales, etc., and that’s a different path than we’ve chosen.

Read part 2 of our interview with Sam here…

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Categories: Beer, dogfish head, News, sam calagione

Author:Jim Galligan

Craft beer nerd, frequent beer blogger and occasional home brewer.

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35 Comments on “Exclusive Interview with Dogfish Head’s Sam Calagione, Part I: Whiskey Plans, Buyout Offers from the Big Boys and the Struggle to Stay Privately-Owned”

  1. November 7, 2011 at 10:24 am #

    Good Stuff. Mrs. King has a crush on Sam.

    • November 7, 2011 at 11:41 am #

      Then you’ll enjoy art II where he shares his personal shortcomings in order to undo such crushes…

      • November 7, 2011 at 1:28 pm #

        Oh cool, you used my question! I eagerly await that response. When we saw him at GABF and at a restaurant afterward, my fiancee went into swooning schoolgirl mode and was too embarrassed to even ask for a picture. I’m hoping you dug up something truly horrific. ;)

        • November 7, 2011 at 1:36 pm #

          Not too horrific. Actually, annoyingly tolerable. :(

          But it was still a great question with an interesting answer.

          Maybe that’d be a fun poll to do – what was Sam’s answer to the question “Tell Us What’s Wrong With You.”

  2. November 7, 2011 at 10:26 am #

    Sam is right on the money in what he says about “a giant publicly traded company”. The corporate/legal structure is self-limiting in regards to producing innovative, quality products or services (companies with strong, iconoclastic leadership, like Apple, are the exception).

    As soon as a company goes public, its bottom-line and quarterly dividends take precedence over quality products/services, its primary product becoming those dividends as well as stock splits.

    Its a faulty paradigm but I don’t see it changing any time soon.

    • November 7, 2011 at 11:42 am #

      By every indication, it’s a pair of handcuffs he has no interest in donning…

  3. November 7, 2011 at 1:08 pm #

    Great interview! I would much rather pay more for a beer that the company puts its heart and soul into than buy cheaper, more commercial beer. It’s almost like Sam says, “here, I made this just for you” every time I open a bottle. Can’t wait for Part II!

    • November 7, 2011 at 1:11 pm #

      Thanks, Krissie. I was going to do it one shot, but after 90 minutes of transcribing, I realized it was a huge job. Plus this way, you have something to look forward to. :)

  4. November 7, 2011 at 1:21 pm #

    I don’t know about DFH being Askinosie’s number one wholesale account…maybe Sam meant they are the number one wholesale account for cocoa nibs but Jeni’s Splendid Ice Cream is cranking out a collaboration ice cream that could make that claim as well.

    http://www.jenisicecreams.com/products/Askinosie-Dark-Milk-Chocolate-Pint.html

    While I love the spirit of DFH I think they’ve lost sight of their core values in the past few years and now we’re seeing them try to get back to those, (hello Brewmasters, a collaboration with Google, Eataly, and spreading their distribution channels too thin) so we’re seeing them pull back distribution and shun off cans (for the time being).

    I also might be a little mad I have to drive 2.5 hours to get my favorite DFH brews where I used to be able to walk to the store and grab a 60 Minute IPA.

    • November 7, 2011 at 1:34 pm #

      I agree that the demand/distribution problem is a bummer, but I kind of feel DFH has always been about finding inspiration for their beers through unusual partners. Sam and whatshisface from that college worked together on the historical brews, for instance. Also. when you look at Eataly, there’s also a huge precedent set for that in DFH’s Rehoboth Beach brewpub. That place kept the brewery funded in the early days and now serves as their mad scientist lab, with patrons being their lucky guinea pigs. Anyway, I think they’ve maybe bitten off more than they can chew, but the core values are still very much there.

      The REAL problem was Brewmasters, which took up Sam’s time, created demand for his beer that pulled it away from your market, and, most importantly, made so Don and I didn’t get the show!

      Anyway,

      • November 7, 2011 at 1:44 pm #

        Sam and Don need their own show together, you can hold the cue cards.

        • November 7, 2011 at 1:47 pm #

          And you can be Don’s fluffer. For his beard, of course.

        • Don
          November 7, 2011 at 1:49 pm #

          GROSS!!! You are Banished!

        • November 7, 2011 at 1:50 pm #

          They could call it Keanu and the Bear.

          Whoh…Growr!!!!

        • November 7, 2011 at 2:02 pm #

          I’m sorry, Don. Please don’t hit me with that massive ban-hammer of yours. :(

        • November 7, 2011 at 2:06 pm #

          Don’t worry, Alex. He wouldn’t know HOW to ban you. He’s luck he can actually make a post!

        • November 7, 2011 at 2:49 pm #

          You don’t fluff bears, you scratch.

        • November 7, 2011 at 3:33 pm #

          The rest takes care of itself… :)

  5. tronto
    November 7, 2011 at 1:45 pm #

    He’s a hipster.

    • November 7, 2011 at 1:50 pm #

      I don’t think he has the right jeans for that…

  6. November 7, 2011 at 1:45 pm #

    I think the attempt to be “off-centered” has gone a bit haywire. I do understand that Indiana was the perfect storm for DFH to leave….breweries opening as fast as permits can be issued and the focus on “being local” (which is a bunch of garbage in my opinion), and the rise of popularity due to Brewmasters. I know *why* they left, but if they had managed the growth from the beginning like Sam outlined going forward in your interview … the distribution might have stood a chance.

    Sincerely,
    Miss Salty

    • November 7, 2011 at 1:56 pm #

      I agree that distribution was mishandled, not just by DFH, but by Oskar Blues, Avery and all the other favorite children of the craft beer revolution. As they couldn’t grow fast enough to meet demand, they had to cut some markets loose and try to satisfy the ones that made the most business sense. That’s not good planning, but I imagine it’s hard to know how a fledgling industry is going to ebb and flow. It still suck to have something you enjoy taken away because you’re not “important” enough to warrant them sticking around.

      • November 7, 2011 at 2:08 pm #

        Time out….

        It wasn’t that Indiana wasn’t “important” enough – it’s that we’re finally getting some seriously great brews made right here! Our community is kicking some major butt in competitions. GABF! Go Indiana!

        What I don’t get is not planning properly and thinking it’s okay. I also don’t get growing 40% for 5 years when you know it’s not sustainable based on your balance sheet. This is why I don’t own a brewery.

        • November 7, 2011 at 2:12 pm #

          I meant “important” to DFH – if your market was large, healthy and growing for them, they would have stuck around. The fact that the locals are stepping up probably made other pastures look greener for DFH, like New Jersey, where almost NO ONE brews! I’m happy to see Indiana brewing up a storm!

        • November 7, 2011 at 2:13 pm #

          Okay then. I get defensive about Indiana…*obviously*

        • November 7, 2011 at 2:27 pm #

          Obviously. :)

  7. November 7, 2011 at 4:58 pm #

    Great interview…can’t wait for Part II !

  8. November 8, 2011 at 1:07 am #

    It’s hard not to like a beer that’s made by someone who’s obviously so passionate about making it. The enthusiasm is infectious. Now if I could just get DFH in Missouri. Good thing I’ll be in Madison over the holidays and can stock up.

  9. November 10, 2011 at 4:28 am #

    Great Interview. I must say that I am quite sad that a whiskey is several years away, but I think Sam can redeem himself if he were to take a lead role as Lincoln Hawk in a remake of Over the Top. All musicians turn actors eventually, and since musician is his second job title it works. Here’s a thought: who would win a fight, Sam Calagione or Sylvester Stallone?

    • November 10, 2011 at 6:19 am #

      The Viet Kong, Ivan Drago and Budweiser. That’s who wins if Rambo and Sam brawl. :(

  10. December 11, 2012 at 11:33 am #

    Reblogged this on The Man Pub and commented:
    Great interview with the head of a great brewery.

Trackbacks/Pingbacks

  1. Calagione on publicly traded companies and IPOs | Beernews.org - November 7, 2011

    [...] via Beer & Whiskey Brothers Blog. [...]

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    [...] about, how much he drinks, and a new beer that will be hitting store shelves in early December.  If you missed part one, you can find it here. [...]

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  4. Why Can? | The Beer Circle - September 5, 2013

    […] enough, though, certain breweries such as Dogfish Head have declined any interest in canning their beers, citing that canning runs counter to the more sophisticated image […]

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