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Food and beverage in N.J.: Perfecting their craft — Entrepreneurs who joined state's brewery boom feel potential is still untapped

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Jamie Queli, co-owner and operator, Forgotten Boardwalk Brewing Company.
Jamie Queli, co-owner and operator, Forgotten Boardwalk Brewing Company. - ()

A bunch of under-30 beer enthusiasts throwing Skeeball at a funky, Jersey Shore-themed bar, complete with a boardwalk spin wheel and funhouse mirrors, sure seems like fun and games.

But Jamie Queli, co-owner and operator of Forgotten Boardwalk Brewing Co. in Cherry Hill, knows its event was the result of a lot of hard work by her and her staff.

“I spent an entire Tuesday in the office looking up mechanical-bull sharks and shark rides for the 100th anniversary of the shark attack at the Jersey Shore,” Queli said.

Welcome to the fairly new, mostly successful industry that people are leaving their high-profile jobs for: craft brewing.

An industry where the quality of the product obviously is key — but creating an atmosphere around the sale of it is nearly as important.

Queli, who worked for Merrill Lynch in product development prior to transforming her passion for home brewing into Forgotten Boardwalk Brewing in 2014, discovered that early on.

“The first year for us was about launching something into the atmosphere and getting people to try and drink it,” she said, before detailing a “go big or go home” attitude that helped her produce 1,800 barrels in 2015.

This year, it’s about the marketing: Hence the mechanical-bull sharks.

Forgotten Boardwalk Brewing relies heavily on its marketing plan and event planning to incorporate the “tall tales and pretty true stories” of the Jersey Shore.

It’s working.

This year, Queli said the brewery is capable of producing up to 3,000 barrels — and $1 million in revenue.

“We are definitely seeing the market become more crowded, but a lot of breweries like us are doing their own thing and have their own style of approaching the market,” she said. “If we keep hammering home what we do and how we do it well, people will recognize (our brand) and drink our quality products brewed right in their home state.”

Queli is not the only one with this business plan.

# # #

In 2012, the state Legislature made revisions to New Jersey’s Class A licensing statutes for alcohol, wine, distilled spirits and beer — most notably, adding the right to sell product after tours, both on-site and up to a keg for off-site consumption.

Since then, the number of craft breweries in New Jersey has quadrupled. And, according to Don Russell, executive director of the Garden State Craft Brewers Guild, the industry’s growth shows no signs of slowing down.

“We’ve got somewhere in the vicinity of 50 breweries operating in New Jersey right now,” he said. “That number will be over 60 by the end of the year and probably closer to 70.”

And it will keep growing.

“We have a list of about 20 breweries in planning who are, at this point, members of the guild,” he said. “And (we) are aware of another 20, too. That’s 40 breweries in planning right now that are expected to open in the next 18 months.”

The nearly $1.24 billion economic impact of craft beer in New Jersey and the creation of 9,500 jobs in the state speaks for itself: Craft beer isn’t just a fun industry to get into — it’s a financially sound one, too.

Regardless of how big or small your business is.

Jeremy Lees, co-founder and operator of Flounder Brewing Co. in Hillsborough and board member of the Garden State Brewers Guild, began by brewing one barrel in 2013. Now, it’s a three-barrel brewery working this year to expand into a 15-barrel brew house.

That size operation is not cheap to start, said James J. McGovern III, partner, director of the labor law and alcohol and regulated products law practice groups at Genova Burns in Newark. By his estimates, it can cost just under $1 million to start, based on costly equipment and available space.

“Those that have planned it out have a lot of capital going in,” McGovern said. “We often deal with people who are thinking about starting a brewery but have significantly underestimated the startup cost.”

Other times, it’s simply the next logical step.

“It was an expensive hobby, so, being passionate about it, I wanted to pour my entrepreneurial spirit into beer,” Lees said. “Now we can’t remotely keep up with the demand. We open once a month and we go through so much beer in that one day that we can’t open again for another month.”

With the right distribution and business plan, nanobreweries such as Flounder Brewing Co. can quickly generate revenue to expand significantly.

Ryan Krill, co-founder and operator of Cape May Brewing Co.
Ryan Krill, co-founder and operator of Cape May Brewing Co. - ()

Take Cape May Brewing Co.: Ryan Krill, co-founder and operator, as well as president of the Garden State Brewers Guild, reinvested every single dollar to take his brewery from 1,500 square feet in the Cape May Airport in 2011 to 20,000 square feet between two buildings today.

“It went from zero to 60 very quickly,” he said. “When we started, we were the smallest (brewery) in the state, with one employee brewing 12 gallons at a time for one account, Cabanas Beach Bar and Grill in Cape May.

“We now have hundreds of accounts all over New Jersey and in southeastern Pennsylvania and a 30-barrel brew house with 40 employees brewing 930 gallons at a time several times a day.”

Even the largest craft brewer in the state started from, literally, nothing.

“We started selling T-shirts and glasses online (in 1995),” said Gene Muller, owner and operator of Flying Fish Brewing Co. in Somerdale and treasurer of the Garden State Craft Brewers Guild. “We didn’t even start brewing until 1996. It was kind of like a Kickstarter campaign before Google existed.”

It was Muller’s only option prior to the cash flow breweries now earn from selling beer on-site, after sinking in $750,000 to start.

Now, Flying Fish generates just over $8 million in annual revenue.

“It took 20 years to become the largest in the state, whereas people who started at the same time as us (in other states) are now significantly bigger,” Muller said. “But the laws in New Jersey had not been favorable to small breweries’ success.”

Many say they still aren’t that great.

THE BREWERIES

Flying Fish Brewing Co.
Executive: Gene Muller, owner and operator; treasurer of the Garden State Craft Brewers Guild
Founded: 1995
Headquartered: Somerdale
Annual production: About 24,000 barrels
Employees: 34
Most popular beer: Hopfish IPA (English India pale ale); Daylight Savings (American India pale ale).


Demented Brewing Co.
Executive: Tom Zuber, founder and operator
Founded: 2015
Headquartered: Middlesex
Annual production: 1,000 barrels
Employees: 10
Most popular beer: Astarte (strawberry cream ale); Scarlet Knight (American red ale)


Kane Brewing Company
Executive: Michael Kane, president and founder; vice president of the Garden State Craft Brewers Guild
Founded: 2011
Headquartered: Ocean Township
Annual production: More than 10,000 barrels
Employees: 25
Most popular beer: Head High (American India pale ale)


Forgotten Boardwalk Brewing
Executive: Jamie Queli, co-owner and operator
Founded: 2014
Headquartered: Cherry Hill — in the former site of Flying Fish Brewing Co.
Annual production: 2,500 barrels
Employees: 8
Most popular beer: Funnel Cake (Boardwalk ale)


Cape May Brewing Co.
Executive: Ryan Krill, co-founder and operator; president of the Garden State Craft Brewers Guild
Founded: 2011
Headquartered: Cape May Airport
Annual production: About 7,500 barrels
Employees: 40
Most popular beer: Cape May IPA (American India pale ale); Devil’s Reach (Belgian strong pale ale); Coastal Evacuation (American Double/Imperial India pale ale); homemade soda.


New Jersey Beer Co.
Executive: Paul Silverman, chairman and co-owner of Silverman, a real estate developer in Jersey City
Founded: 2010
Headquartered: North Bergen
Annual production: 1,200 barrels
Employees: 15
Most popular beer: LBIPA (American India
pale ale); and Hudson Pale Ale (American pale ale)


Flounder Brewing Co.
Executive: Jeremy Lees, co-founder and operator; board member, Garden State Brewers Guild
Founded: 2013
Headquartered: Hillsborough
Annual production: Working this year to become a 15-barrel brew house
Employees: None on payroll yet, has plans to add this year
Most popular beer: Hill Street Honey (American pale-amber ale); Espresso Brown (Murky brown ale).

# # #

According to 2014 data from the Boulder, Colorado-based Brewers Association, New Jersey ranked 29th in the country for its number of craft breweries. However, the state ranked 48th in breweries per capita, while Pennsylvania and New York ranked 25th and 26th, respectively.

The biggest reason, say industry insiders, is regulation.

“It’s a highly regulated industry, which is something I didn’t fully understand when I started,” Krill said. “In New Jersey, you have all these alcohol-related interest groups who all have something to say about how things work.”

Between the Beer Wholesalers Association, the New Jersey Restaurant and Hospitality Association, the Licensed Beverage Association and the New Jersey Liquor Store Alliance, to name just a few, New Jersey brewers have their work cut out for them.

Brewers say it makes things difficult to get done, even if ideas seem harmless.

Tom Zuber, founder and operator of Demented Brewing Co. in Middlesex, just wants to be able to watch sports in the tasting room.

“It’s not written into law that we can’t, but the guidelines set by the Garden State Craft Brewers Guild discourage us from doing things like that: playing live sports on television, having trivia, having live bands,” Zuber said. “The idea behind the guidelines is that, if we play by these rules, it’s more likely that we’ll get new, favorable legislation passed for us in the future.

“We don’t want to make things more difficult for us.”

Eric Orlando, vice president of the Kaufman Zita Group in Trenton and government affairs representative for the Garden State Brewers Guild, said the regulations are costing the state the chance to fully benefit from the craft brewery craze.

“West Coast breweries who want to gain greater distribution on the East Coast have been building in Virginia, North Carolina, and even states up further in New England, because these states have done a lot to try to attract such business to bring in hundreds of jobs and millions (of dollars) of tax revenue,” Orlando said. “New Jersey’s red tape, plus the state not making itself more attractive to the craft beer industry, will make us miss the boat.”

Muller said simply looking to a neighbor could help the existing, homegrown craft brewery industry in the state grow.

“New York state is phenomenal,” he said. “They spend money on their wineries, breweries, cideries. In New Jersey, we have to do it all on our own. We’ve been working with Visit South Jersey to create trails that will include breweries, wineries and distilleries to showcase that there is this huge industry creating local businesses, jobs and economies.”

Michael Kane, founder and president of Kane Brewing Co. in Ocean Township and vice president of GSCBG, said New Jersey has the potential to be a top market for craft beer in the country.

“The market here is highly educated,” he said. “Especially being between Philadelphia and New York, there is a lot of good beer available here, so we have a great base of craft beer drinkers who actively look for these types of beers, as opposed to markets in other states.”

It seems Jerseyans want Jersey beers.

# # #

Kane Brewing Co. has distributed only in New Jersey since it opened in 2011.

The ability of breweries in New Jersey to self-distribute is huge, he said. In fact, it’s a resting pillar of his business.

Kane currently has over 400 wholesale accounts in the state.

“Part of our success is in self-distribution,” he said. “If our customers have questions about the product or the market, they can talk to us when we deliver the beer directly to them. We are building strong relationships by selling directly to our customers.”

Paul Silverman, chairman of New Jersey Beer Co. in North Bergen and co-owner of Silverman, a real estate developer in Jersey City, agrees with being Jersey-centric — even though New Jersey Beer Co. distributes solely through Allied Beverage Group in Carlstadt.

“Most microbreweries can sell out of their production right here in New Jersey,” Silverman said. “Plus, it’s fun to say, ‘If you want to drink our beer, come to New Jersey.’ There’s Jersey pride in it.”

Demented Brewing started out self-distributing to around 40 accounts, but found increased success by partnering with Hunterdon Brewing Co. in Whitehouse.

“They took us to over 200 accounts in a matter of six months,” Zuber said. “They’ve done a great job getting our name out there.”

Forgotten Boardwalk goes as far as to use three distributors to maximize location: Shore Point Distributing Co. in Freehold; Kramer Beverage Co. in Hammonton; and Peerless Beverage Co. in Union.

“They definitely do a good job of launching our brand and making their sales teams familiar, but it is still our job to go out, shake hands and talk to people about the brand,” Queli said.

Local, in the brewing industry right now, is really important, Kane said.

Bottling production at Flying Fish Brewing Co.
Bottling production at Flying Fish Brewing Co. - ()

“Selling your story and getting involved in the community — that’s what people are looking for today,” he said.

Queli believes this will soon result in a hyperlocal beer movement.

“Every county seems to have a brewery these days and, because of self-distribution, the bars and restaurants will begin to carry the beer of their region,” she said.

The more, the better, they say.

# # #

It doesn’t bother Queli when brewers open up near her in New Jersey.

“I welcome them. Everyone is doing their own thing,” she said. “A brewery could open up down the block that specializes in high gravity beers, but that’s not what I specialize in. We try to specialize in balance and drinkability, so that isn’t competition to me.”

The well-educated beer community in New Jersey presents Krill with an exciting challenge, he said.

“Beer advocates and consumers are more in the know, which doesn’t leave a lot of room for breweries to make mediocre beer,” Krill said. “It becomes more competitive and elevates the whole experience for everyone. It may be harder to compete, but as a craft beer consumer, I know the beer I’m going to get is going to be awesome.”

Krill perceives the fact that five breweries are planning to open up in Cape May County as flattering.

“They see we’re making money; they want to make money,” he said. “A rising tide will raise all ships.”

New Jersey Beer Co. — which, due to a strong social media campaign, won the New Jersey Monthly Craft Beer Showdown in competition with 16 state breweries, including Flying Fish Brewing Co. — also thinks of itself as a colleague with fellow craft breweries in competing against larger companies, said Silverman.

“Craft brewers are all enthusiastic about small, consistent quantities of beer that can be closely monitored and made special,” Silverman said. “It is not about mass production.”

The problem lies in breweries such as Anheuser-Busch in Newark purchasing smaller breweries, Muller said.

“It’s an issue when big brewers, such as the Chicago-based Goose Island, masquerade as craft brewing companies, when Goose Island is now wholly owned by Anheuser-Busch,” he said.

That puts breweries such as Flying Fish Brewing Co. in a tough spot.

“When you talk to guys who are older and bigger than us, they are concerned with knowing when the right time to sell is,” Kane said. “They say they’re getting squeezed because the bigger guys have the financial resources to keep growing and the smaller guys are hitting them in different, local markets.

“From a business perspective, right now there is a lot of merger and acquisition activity with early founders exiting — a lot of people are watching the exit strategies of these companies.”

# # #

Gene Muller, owner and operator of Flying Fish Brewing Co. in Somerdale and treasurer of the Garden State Craft Brewers Guild.
Gene Muller, owner and operator of Flying Fish Brewing Co. in Somerdale and treasurer of the Garden State Craft Brewers Guild. - ()

As larger breweries in the state consider their options for growth, others are content remaining quite small.

“Some of us want to stay small and manageable by producing a few thousand barrels a year,” Silverman said.

New Jersey Beer Co.’s goal, for example, is to sell $1 million worth of beer a year and employ about 25.

Zuber has bigger plans for Demented Brewing Co.

“In the next six months, we will start canning our beer,” he said. “By the end of the year, we’d like to move into the New York and Philadelphia markets. Five years from now, I want to outgrow my building — and we’ve still got enough space to put another 30 barrel fermenters in our space.”

Lees is with him: Flounder Brewing Co. will start its expansion as winner of the Samuel Adams 2016 Brewing and Business Experienceship. The company will travel to Samuel Adams Boston Brewery for coaching, mentoring and funding for additional space and equipment, while also brewing a collaboration beer.

“Over the course of the next year, we would like to multiply five times,” Lees said. “Within 24 months, we’d like to have several employees on the books and the tasting room open every weekend.”

Brewpubs
Triumph Brewing Co. in Lawrenceville is one of the best-known brewpubs in New Jersey, with popular, existing locations in Princeton and New Hope, Pennsylvania, and a new location in Red Bank set to open in the fall.
Since opening in 1995, the company has brewed over 1,000 barrels per year at both its Princeton and New Hope locations, offering seven craft beers — both flagship and seasonal — on tap and beer-to-go in growlers and half-growlers.
“With the (2012) law changes in New Jersey, much more flexibility has now been offered to brewpubs and breweries in the state,” said Eric Nutt, sales and public relations manager. “We are now able to own multiple locations in the state, like our future opening in Red Bank, as well as self-distribute (on site).”
But brewpubs, under the restricted brewery license, do not operate as breweries do under the limited brewery license. While the restricted brewery license allows the holder to brew up to 10,000 barrels per year and sell such product for consumption in an immediately adjoining restaurant, the license may only be issued to an entity that also holds a Plenary Retail Consumption License.
So while the fee for the restricted license is $1,250 plus $250 for every 1,000 barrels produced beyond the initial 1,000 barrels, owning a brewpub is extremely expensive in the state of New Jersey.
Therefore, the Garden State Craft Brewers Guild is advocating for the right of brewpubs to self-distribute off-premises without having to hire wholesalers.
While it’s something Triumph Brewing would consider in the future, it is not currently set up to do so now.
“Our fermenters currently serve our walk-in restaurant business,” Nutt said. “Perhaps one day we can expand and consider distribution.”
Brewpubs in New Jersey do not necessarily view craft breweries in the area as competition, seeing as they cannot serve food on their premises — however, their products do create a challenge.
“Our largest competition now comes from other well-run bars in the area that have adapted (to) the craft beer phenomenon and now have 24 taps with a lot of variety,” Nutt said.

Kane Brewing Company — which increased its production of 2,500 barrels in 2011 to over 10,000 barrels today — will begin canning its beers for sale at liquor stores next month and increase production of its 750 milliliter bottles as well, Kane said. He is also currently looking for more employees and more space to barrel age beer, such as its award-winning “A Night to End All Dreams,” a bourbon-infused American Double/Imperial Stout.

Cape May Brewing Co. is working on a mixed fermentation brewery, having just hired the former production manager of Brooklyn Brewery as its new director of brewing operations and investing lots of money into laboratory equipment.

“We will also be increasing our footprint with bottled beer,” Krill said. “All of our beer has mostly been draft, so this year, we are focusing on packaging, quality control and safety.”

At Flying Fish Brewing Co., Muller is content with its production and packaging capabilities, but would like to invest in more partnerships, such as its collaboration with Jose Cuervo — in which Flying Fish ages beer in tequila barrels.

“It’s fun to blur those definitions and make brews with tequila notes, with character from the wood and the agave,” he said.

As for Forgotten Boardwalk Brewing Co., Queli is again thinking outside of the box.

“I think that if the experience of Forgotten Boardwalk is as amazing as it is now and continues to grow, I would like to open something different,” Queli said. “I’m not sure I would go into beer. I would look more towards opening a distillery or a cidery.”

However, Queli added, she would also like to be producing between 20,000 and 30,000 barrels of beer a year at Forgotten Boardwalk within five to 10 years.

Good thing the craft brewery industry in New Jersey is so much fun to work in.

E-mail to: megf@njbiz.com
On Twitter: @megfry3

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