I fell in love with great beer in 1984, especially German beer. I was lucky enough to total my beat up old Audi during my senior year of college and use the insurance money to travel in Europe for several months. When I got home, I wondered why no one was making great beer here like they did in Germany. At that point, I had found a job on Capitol Hill in Washington, but it didn't take long to figure out that politics was not the path I would follow. Once I left D.C., I knew it was time to pursue the dream and get started making "craft beer." This was in late 1986 and going into '87. I didn’t realize that nobody knew what the heck craft beer was in 1987. But ignorance being bliss, I put together a formula and a recipe with a partner, and we started brewing a beer called Pecan Street Lager. I also started to work to get the laws changed in Texas so that we could do more and better things with craft beer. Eventually, we did get brewpubs legalized, and I opened up my first brewpub, Copper Tank, in 1993 with some partners while I continued to brew Pecan Street Lager.

Our advantage is that I've been doing this a long time. We've got such a good reputation in Austin that we have a leg up on all the new guys coming in and put us on an even footing with the other early adopters/craft breweries in the Austin area. As a brewpub, we are able to turn on a dime when we see shifts in consumer demands, wants, and likes.

With a new brand, your best asset is that people want to try it. I was concerned when we decided to do this that being more established would hurt us. I had a lot of conversations with salespeople and our distributor, and they assured me that we had nothing to worry about because we’re such a quality beer. Plus, they said we will be the new kids because North by Northwest has never been in cans before. People will see the cans with the red NxNW logo and be excited that a beer they've known and trusted all these years is finally available in stores.

The major impetus for me wanting to venture out on my own and get away from Copper Tank was that Copper Tank was very much a bar/brewery.  I felt the longevity of the restaurant/brewery business was much better, and it turns out that it is. We've all seen it happen -- in the bar business, a new bar opens up and that’s where everyone wants to go. I felt that we needed to be a great restaurant and also make great beer, and that’s how I came to open North by Northwest. Expanding into the outside market is the next natural progression for us now that we have a well-established brand. And with the way we've gotten the laws changed in Texas to allow us to distribute our beers, we're in a great position to take advantage of that.

For today's craft brewers, the massive proliferation of the breweries can begin to be a problem. You have some markets that can sustain many. I believe Austin's has proven to be one of them; Portland is obviously one. But over time you'll continue to see people go more and more local. The out-of-state beers are having a much more difficult time selling in Texas. When I was first entering the market in 1987, there were three beers. It was me, a beer called Collin County Gold out of Plano, Texas, and Sierra Nevada. Now you walk into any major grocery and you're going to see about 300 brands on the shelf.

We are already starting to see a shakeout for two reasons. One reason is that the out-of-state brands are having a much more difficult time drawing customer attention from the local brands. The second reason is that by my estimation 50% of the local brands aren't putting out a good product. That eventually takes care of itself. The danger for the craft beer market is that there are still beer drinkers coming into the market for the first time. If they get a hold of one that's not well made or just plain bad, they don't know necessarily why that's the case. They just know they didn't enjoy it. The worry is that one bad experience early on will turn them off to the entire market.

We work with a great distributor called Brown Distributing. They are phenomenal with logistics and have a great reputation. I did a lot of research before I decided to pick them. But Brown Distributing is only our distributor in the Austin area.  As we expand, we would develop other distributor relationships.  We will manage our local growth by deciding what stores we go into. Once you're approved for all the stores, you decide whether you want to approach that particular grocery store or that grocery manager about carrying your products.

For us, it's a matter of trying to achieve more organic growth and managing the turn of the product. One thing we're always laser focused on is quality. We have a really great relationship with one of the most successful small brewers in Austin, and they have been kind enough to let us make use of their lab facilities to keep on top of all of our necessary lab work. They've spent a quarter of a million dollars on lab equipment, so we feel very fortunate to have them as friends in the business. We’re able to take advantage of many symbiotic relationships that we've developed over the years to everyone's mutual benefit, particularly our beer drinking public. 

Our brand recognition is such that going off-site is honestly an easier road for generating revenue than building a new brick-and-mortar brewpub. The dollars it will take for us to expand into canning are much more limited than if I were building another pub and only serving that immediate area. This allows me to potentially get my product out all over the state of Texas.

Our initial focus is going to be very local. I've often said that I personally do not care whether we ever sell outside of Austin as long as we're still growing. I'd rather go 10 miles deep and an inch wide than 10 miles wide and an inch deep. If our sales are anywhere near what I believe we can do and are similar to what other small brewers have been able to do, then we shouldn’t have a problem.

We'll initially come out with three products. They are Northern Light, a German-style Helles; Red Zeppelin, an Irish red ale that's smooth and malty; and Zombie Dragon, which is our heavy juiced New England IPA.

The Zombie Dragon came about as a sort of fluke. It was our anniversary beer just a couple of months ago. We had been planning to release a beer called Kodiak IPA in cans, a more traditional American IPA, with the typically aggressive bitterness across the palate. When we released the Zombie Dragon for our 18th-anniversary party, it was there and gone in a few days. Next batch, same thing, boom - gone! That made us realize there was a clear market for these New England IPAs. We felt like we'd miss a sales opportunity if we didn't go ahead and release that now.

The can art is completely done. Each can has a story with it and some hidden musical references. The idea is to get people to read it and then search Google so they can catch the references to bands and other stuff. Beer packaging can be fun and engaging.  I think people will enjoy all the little things we've hidden in the stories and on the can in other areas.

The brewing operation is already mostly set up. There's enough tankage at our north location to produce most of the draft beer that we would be putting out into the market. The canning facility that we are putting together is down at our south location. The infrastructure for the facility is already there. We've already purchased the several tanks to expand, including two 60-barrel bright tanks from a brewery that at least in part, went out of business for product quality reasons.

As far as what’s left on the to-do list so we can get in stores, we have already sent in our deposit on our canning line. It's ready and waiting in Golden, Colorado for us to say, "Ship that baby!" Can designs are done, and are already in process at our canning company. We've got our UPC codes. Now, it's a matter of getting everything in place, up and running, and testing everything out. We believe we should be able to have the product by the end of March.

We would start off targeting key grocery markets. In some markets, we'll be able to get all our beers in the cold box right away, but the beer market in the grocery stores is way different than it was in 1987, so 1 or 2 of our beers may have to start off on the dry shelf, meaning the beer won’t be in cold storage. That's just the world we live in. I used to be able to walk in and get shelf space just because the grocery manager thought I was a good guy. Now it's run from a more corporate level. You might have to do some trial promotions to show them you’re a brand that can sell. Everybody that I talk to believes our brand will sell, including folks I have spoken with at H-E-B, which is the major grocery house in Texas.  We will do loads of sampling in the stores. That builds sales, and sales get more beers in the cold box. Simple!

We want to be in the high $8 to low $9 price range, so maybe an $8.79 to $8.99 price point. When it gets into convenience stores, you might see our beer at $9. We're not looking to be the $14 six-pack that you'll sometimes see. We’re looking at charging our distributor $20 a case. It costs us about $12 to produce a case of beer, so at $20, we are netting $8 a case. That’s before adding in expenses like rent and operational costs on top of that.

Our initial projected volume is quite conservative. We're looking at producing about 1,400 barrels our first year. There are 13.78 cases in a barrel. That means we’re looking at producing more than 19,000 cases in the first year. We've got the capacity to be able to go to about 4,500-5,000 barrels. If we did that our first year, we've got the tankage to do it. That'll come. By our fourth and fifth year, we're talking about getting up to 5,000 barrels. This plan gives us the chance to manage our growth, which is the whole point of being exclusive in deciding what stores we go into and when. It also creates a bit of scarcity which can create demand. The 2,000-barrel mark is when you’re really able to generate a good amount of cash flow. We don't project any negative cash flow in our first months, other than during the ramp-up time that we're in right now because there's no income.

We're hyper-focused on quality, and we are hyper-focused on simplicity. You don't need to make a chocolate-orange Belgian purple stout. There's a market for that, but it's not us. We do get adventurous. We’ll do some sours. We'll do some experimentation with hops, barrel aging, and things like that and push some boundaries, but I don't want to ever feel like I'm masking the flavor of my beers. I’m not saying that’s what other brewers are doing, but a place needs to make me a damn good pilsner before I'll try your orange-chocolate purple stout or whatever the heck it is.

As far as the competition goes, I think our product speaks for itself, but we have to speak for it in terms of getting it on the shelf and getting it into the hands of the consumer. We want our beers to be somewhat exclusive. You're going to be able to find it, but it's just not going to be thrown out to the mass market or “shotgunned” as it’s called in the trade.  We want to develop some sense that North by Northwest is available in stores now but it’s not available everywhere. Often a beer gets into a distributor, and the distributor will want to sell as much as it can as fast as it can. Then two things can happen. One, the brewery spreads itself too thin from a production standpoint. Then all of a sudden there isn’t enough product to meet initial demand because you get that initial trial phase, the beer sells out and your shelf sits empty. Or two, a beer gets out there but doesn’t have any name recognition, so the product sits on shelves and your distributor thinks the beer must not be good because it's not selling. Actually, it’s not selling because no one built up the brand and there are a million other brands to compete with, many who also have no name recognition. North by Northwest has name recognition.

I think about it a lot. It’s a never-ending battle from the restaurant standpoint. We work on it every day with our staff. We don't have a perfect track record of satisfying every customer. You can go on Yelp any day you want and find a negative review, but I think the way to handle that negative feedback is to take it and work with it. It’s information. If we don't make adjustments and don't try to fix the problems that we've been made aware of, then we're missing our opportunity and we’re not going to get any better.

As far as customer retention, I know that walking through my stores I can see people who have been coming in since the day we opened, 18 years ago, at the north location. Bringing in new customers is more difficult than it was 15 or even 10 years ago. Brewpubs are not a unique concept anymore. Now it’s about how well are we meeting the needs of our customer every day as a restaurant. The beer side is a whole other operation going on inside the walls of that restaurant. But it's still about making beers that appeal to your customers. That's an advantage we have. Every day, we can get feedback directly from our patrons about what beers they like and what beers they'd like to see us brewing.

Back in 1987 when I was just starting out, Dan Brown of Brown Distributing told me something that really stunned me, and I think it’s still true today. He told me he considered my little upstart beer, Pecan Street Lager, his competition. We were going to sell approximately 0% of what he was selling but he told me, “Son, water is my competition.” He saw anything people drink as the competition, and it’s true. Craft cocktails are our competition, wine is our competition, spirits are our competition, and craft beer is our competition. Even Budweiser is our competition, because if we don't do a damn good job, we are going to see people reverting back to Budweiser.

To compete requires vigilance. There’s been a lot of fuss and media attention about how the growth of the craft beer industry has slowed. Of course it has, because you can't grow at the same rate every year forever. It's just impossible. We’ve seen this monster growth from brewery openings and from craft beer sales continuing to go up. Now the growth has slowed, but that's just the maturation of any business. To deal with that, the market’s going to get super local. Any beer better be damn good and damn well-focused on the local market, or it’s not going to make it

Our focus is on entering the off-premise market and getting cans on store shelves. Before we launch, we’ll pick the stores that we want to have our product in and focus on gaining entry in the cold box, the dry shelf, and in-store sampling. In short order, we should have cold shelf placement in most all of our accounts. Because the H-E-B grocery store chain is the behemoth, you have to gear your life around how their system works and then you fit everybody else around that.

Once April comes around and we feel good about getting cold shelf placement from the H-E-B main offices in San Antonio, we'll hit the key stores and make sure they're well taken care of and moving product through those stores. Then we can expand into more key stores and key liquor stores. That gradual expansion will probably take us beyond the first year. After that, we will see how things stand and decide if we want to go into convenience stores etc. Our products would do very well in some large liquor store chains in Austin, and we'll probably end up in some of those a little sooner than we would the convenience stores.

We see our customers as an extension of the business family. We hope that's how we can grow our brand once we're outside the walls of the restaurant. There are people who come into my restaurant who I say hello to all the time. I shake their hands, hug them (I’m a hugger), kiss their babies. They ask about my family. There is a real feeling of camaraderie, and we want to continue to develop that over the course of our entrance into the off-premise market as we go into grocery stores and into customers’ homes. When you open up the door of your refrigerator and see that North by Northwest product sitting on the shelf, I want you to have a feeling of family and fun and security in knowing that NxNW beers are always going to be consistently excellent. And there will be many who will know they were there at the beginning, some all the way back to my craft beer in 1987, Pecan Street Lager, and others who have followed NxNW since we opened our doors in 1999.

The Germans have a word gemütlichkeit. It basically means a sense of well-being. That's what we’ve tried to develop with North by Northwest as a restaurant, and that's what we continue to push forward with our brand as it moves out into the market. When people see our brand, we want them to go, "Ah, that's North by Northwest. I know those guys and I know I can trust that beer.”

We have great brewers. Don Thompson has been with me in one location or another since 1993. He started the first craft brewery in the Southwest in 1982 with Reinheitsgebot Brewing. He came on as my brewer when they ceased production and has been with me as head of brewery operations for a number of years now. My head brewer at my original NxNW, Kevin Roark, has 12 years brewing experience. Hayden Winkler, my head brewer at my south store has eight years of experience and was with a large Texas regional craft brewer called Real Ale in Blanco. Our other brewers, Matt Benevides and Brad Saliga, are a key part of our brewing team. All our brewers are all deeply involved in and dedicated to putting out a consistently great product and I love them for it. 

On the creative side, there is Matt Thompson and me. Matt's a graphic designer and copywriter and does great work. He’s done great things with our can designs. They're inventive, yet very clean, simple, easy to read and stand out on the shelf. So many cans these days are so busy that they’re hard to read or even tell what brand it is. We’ve done a good job conveying our name, our longevity, and experience.