Dogfish Head: Brewing Up Relationships

The beermaker employs an off-center approach to everything, including its flavors, grassroots marketing, and wacky promotions

The Entrepreneur: Sam Calagione, 38

Background: In 1995, Calagione opened Delaware's first brew pub, Dogfish Head Brewings & Eats, in Rehoboth Beach. The plan was to introduce a public house with original beer, food, and music to the town. In the beginning, the homemade brews were made in three kegs, five days a week, using propane burners. When he got bored with his original flavor, Shelter Pale Ale, Calagione began experimenting with ingredients, introducing new brews such as Espresso Bock, Arctic Cloudberry Imperial Wheat, and Punkin Ale. Today, the company makes 28 different types of beer.

The Company: Dogfish Head Craft Brewery fashioned itself as the flavorful indie alternative to the beer conglomerates and expanded its offerings beyond beer to include spirits (rum, vodka, gin, and tequila), T-shirts, music, and licensed alehouses in Gaithersburg, Md., and Falls Church, Va.

Sales: In 2006, Dogfish earned $14.4 million, and the company estimates it will bring in $18.5 million in 2007.

His Story: My company recently participated in the Great American Beer Festival held in Denver every year—the granddaddy of American beer festivals. I'm very proud to say that Dogfish's booth consistently had one of the longest lines at the festival. There were a handful of other breweries that had disproportionately long lines. We each had a few things in common. We brewed unique, world-class beers, doing innovative things with nontraditional ingredients and brewing techniques.

Also, the brewery booths with the longest lines were the ones where the brewers and owners were pouring their own beers. These brewers and owners described their beers with passion and enthusiasm and said thanks for their customers' amazing support face to face. This last similarity, personal relationship-building, is the most important thing a business owner can do in the context of "growing" a small business. People want to have a personal relationship with the companies that make the products which enrich their lives.

When I opened Dogfish Head Craft Brewery in 1995, we were the smallest commercial brewery in the country out of over 1,200 breweries. Today we are among the fastest-growing breweries in America. Since day one, our motto has been "off-centered ales for off-centered people."

One Beer-Lover at a Time

In the early days, we didn't have any money to advertise or promote, so I would go on the road in my delivery truck. I'd drive four hours to New York City, drop off two pallets of beer at our distributor, take some samples around to restaurants and liquor stores, trying to convince them to sell our beer. I'd end the evening sleeping on a friend's couch or possibly even on a mattress in the back of our delivery truck.

Unlike the big breweries, with their many-million-dollar marketing budgets, at the beginning it was just me in our truck driving around the country doing beer dinners, beer festivals, and tastings, trying to convince beer-lovers, one at a time, of one thing: Our beer is special because of what we put inside the bottle, not the hype and slick advertising that happens outside of the bottle.

As we all know, the American consumer doesn't trust advertising hyperbole. Big companies try to make products that will appeal to the broadest spectrum of people. Small companies must try to make special, unique products that will appeal to a coveted niche of people. At Dogfish Head, we knew our intense, flavorful beers would never appeal to the majority of beer-drinkers. But we also knew that the niche of beer-drinkers who are interested in expanding their palates was growing. The question was how to reach them.

Humanistic Nature of Small Business

Our strategy was to focus on expanding our brewery using highly skilled, similarly "off-centered" people to become co-workers and fellow beer evangelists. Now they travel to events throughout the country convincing people to try our beer.