Stewbum & Stonewall Brewing Co.: Brewing unique craft beer on the island of Oahu

I watched Darren build Stewbum & Stonewall from the ground up by himself! Opening a brewery is tough, and it is extraordinarily difficult in Hawaii, but Darren has done it with great success. He not only has the business acumen to build and run a brewery, but he's also a fantastic brewer, crafting much sought after beers in the Oahu beer market (which is on fire right now!). His Smoking Cannon Imperial Stout was a customer favorite at my bar and I can't wait to see Stewbum & Stonewall back up and running in a bigger and better brewery.

Timothy Golden

Co-Owner, Village Bottle Shop & Tasting Room

For my birthday this year, I planned a bar tour of Windward O'ahu and this was my first stop of the day. It also ended up being the best! I have never been to a place with a nicer owner/operator/janitor/bartender/cashier. Darren Garvey made my DD/tasting companion and I feel super welcome. He clearly loves his brewery and the beers he makes. We were both struck right away with the story. What the heck is "Stewbum & Stonewall," not very Hawaiian! He explained that they were his father's and uncle's nicknames; he wanted to incorporate family stories and memories into the business and brews. It's definitely worth the stop for something unique for tourists and locals alike. We will certainly be back!

Alexander G.

Customer

I am DEFINITELY a fan of smoked ales, and this local offering was a surprisingly good recommendation from a friend. Subtle and complex, it’s a dark, heavy stout, but not cloying or too sweet like others tended to be. The smokiness could be increased, but as is, it was a great savory beer to pair with Pint & Jigger’s famous bacon plate.

Tracy Chan

Writer for Frolic Magazine

Investor Q&A

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What does your company do?

We started by brewing single kegs in a small manufacturing facility on Oahu. A year later, we gained popularity and opened a small tasting room. Still, we maxed out our system in less than two years. Now, we've sold off all the equipment in our first location and are expanding into a new 2,800 square foot brewpub space in downtown Honolulu. Our lease is signed, our brand new brewing equipment is on site, and we’re eager to re-launch in the fall and get our beer back into our customer's hands.

Where will your company be in 5 years?

Our new brewpub has a prime location in Honolulu, so we expect business to be brisk after opening in fall 2018. After our first location opens, we hope to get into canning by the summer of 2019. This will allow us to grow to two brewpub locations and complete statewide distribution in cans, bottles, and kegs and continue our goal of crafting amazing beers and telling the story of Stewbum & Stonewall.

Who are you and what do you do?

My name is Darren Garvey and I'm the owner and founder of Stewbum & Stonewall Brewing Co. The brewery started about three years ago in a small warehouse on the east side of Oahu. Once we outgrew our small equipment in under two years, we knew it was time to expand. We’ve sold all of our old equipment, moved out of our old warehouse, and we're gearing up to relaunch as a full brewpub. Last fall we signed a lease on a 2,800 square foot space in downtown Honolulu. We already have 85% of the equipment on site and ready to go. We can see the finish line in sight, and plan to open in the fall.

What's the beer scene in Hawaii like?

The craft beer scene in Hawaii is still very young as far as I’m concerned. I've been here for a little over 16 years. When I first moved here, there were maybe two or three breweries, and most people drank either Corona or Heineken. In recent years, the craft beer explosion has been happening on the mainland. We’re seeing our own little explosion here in Hawaii, but there is still plenty of room for many many more breweries! In the last three to four years, there have been four to five new breweries, including us, that have opened. I know of at least three additional breweries opening within the next year, and at least four or five more that are in the planning stages. Currently, we have about 14 or 15 breweries in the state and nine breweries on the island of Oahu.

Who is the market?

The market is essentially craft beer loving local residents and tourists. As you know, Hawaii is one of the biggest tourist destinations on the planet. I’ve always envisioned the focus of the brewery to be a brewpub and restaurant instead of a distribution brewery. So shipping overseas is a long way down the line for us.

How was the brewery started?

Like most craft breweries, it all started in my kitchen with a homebrew kit and a dream. Anyone who brews at home for the first time immediately imagines owning a brewery as soon as you smell that sweet nectar brewing. I was no different. Shortly after brewing my first batch, I was buying all the cool toys and gadgets that go along with it and upgrading my equipment. My collection started to grow, as did and my recipes and my passion for craft beer. It basically just snowballed from there. In the summer of 2013, I got more serious about the idea of starting a brewery and established the name along with a logo. In July 2013, we ran a Kickstarter campaign for a month, in which we raised over $52,000. At the time, it was the second most funded brewery ever to be on Kickstarter. We then spent over a year looking for a brewery space and just couldn't really find that perfect fit. Eager to get the brand started and some beer flowing, we finally settled for a tiny little warehouse on the east side of Oahu, in Kaneohe. After the lengthy licensing and permitting processes, we officially launched the brewery in June 2015. We started out just selling kegs to a few bars and restaurants. We then opened up a little tasting room at the brewery itself on St. Patrick's Day 2016. That’s when we really started to gain recognition. People could come by and taste the beers we had to offer and then buy/fill growlers of beer to go. Once the tasting room took off, we simply couldn't keep up with demand. We maxed out our small 2 barrel brewing system rather quickly. We began to run out of beer and even had to close completely for the weekend multiple times. That’s when I realized we needed a much larger facility with bigger brewing equipment to keep up with demand. So, in March of 2017, I put up our original equipment and lease for sale. We used those funds to purchase brand new equipment, which is five times the size of what we started with. We leased our new brewery space in August 2017. Since then, we’ve got our liquor license approved and are awaiting construction permits.

Where does the name come from?

This is by far the number one question we would get at the brewery. The name comes from the nicknames of my father and my uncle, respectively. They were brothers-in-law and best friends. They weren't beer brewers but they were definitely beer drinkers! Hard working blue collar guys from Pittsburgh, Pennsylvania that loved muscle cars, music, and beer more than anyone I know. So, the goal was to open a brewery that was a tribute to them and their way of life.

What were you doing before this?

I co-own a very small event management company here in Hawaii. We organize annual academic research conferences.

How is your new location different from the old one?

The new location is much different than our old one. It’s more than twice the physical size and located in a much more densely populated area. We have our brand new 10 barrel electric brewhouse and four 20 barrel fermenters already on site and ready to go. In our other spot, we couldn't even sell our beer by the pint. We had a manufacturers class license in the old space, which meant we could manufacture the beer there, but we could only sell the beer in growlers to go. In this new space, we have a full brewpub license. We will manufacture our beer on site, and serve it for on-site consumption. We’ll also serve food, liquor, wine, and we will even serve other craft beers not made by us. The new space is located in the Chinatown district of downtown Honolulu, right in the middle of a hotspot of other bars and restaurants.

What would you say makes your brewery special?

I think what makes our brewery special is the story behind it. The story of Stewbum & Stonewall. A lot of our flagship beers are named after stories or funny things about my father and uncle. Beers like our Swear Jar IPA, and The Days of Our Wives - Bitter Ale almost always get a chuckle and a question about the story behind them. Beer is definitely a social drink that incites conversation, and comradery. To us it is more about the story behind the beer, and behind the brand. People seem to appreciate that. We're definitely more of a traditional style of brewery. Not that we won't make trendy beers here and there, but our focus is definitely more of a traditional style of brewing that's timeless and classic.

What has your revenue breakdown been so far?

When we launched in 2015, we were strictly wholesaling kegs to bars. And then once we added our tasting room, it was kind of half wholesaling kegs and half growlers to go as far as the revenue stream. But once the tasting room became more and more popular, I actually had to remove some of my draft accounts. It was definitely a small brew system, and I was running it to its capacity. Like I said before, with our license type at the beginning, we couldn’t sell beer by the pint. People would come in with their hydro flasks or growlers, fill them up with beer, and go. In this new space, we will be selling beer by the pint, along with liquor, wine, other beers, and food. This instantly opens up more revenue streams. Our brewing capacity is now exponentially larger than what we started with, so we will be able to handle our entire brewpub easily. We will also be able to have at least 25 to 30 draft accounts around the island.

And that will do a lot for your exposure, right?

Yes, having draft accounts around town is great exposure. When people go to a bar here in Hawaii, they increasingly ask for something local. If they try our beer and like it, they’ll likely visit the brewery itself where they can try more of our beers and get a bite to eat. It’s really great marketing.

What are the details and expenses of the new space?

The new space is about 2,800 square feet. It's not an industrial warehouse -- it's more of a storefront type space. The brewery itself, brewing equipment and all, will be located directly behind the bar. All of the customers will essentially be right in front of the brewing equipment. They can watch, listen, and smell all the wonders of the brewing process as they sip a beer that was brewed 5 feet from where they’re sitting. It's definitely going to be a fun, casual place with TV’s, sports, games, music, and good times.We have all of our new brewing equipment on site and ready to go. We just need to get our walk-in cooler, basic kitchen equipment such as a dishwasher, three-bay sink, and service well, for instance. We're in the construction permitting phase right now. That's going to be finished in about a month. The only major construction we need to do is install a trench floor drain for our brewing equipment. Other than that, it’s basically just the aesthetics that need to be put in place. We already have all the bar stools and tables. We really just need to put it all together. Our major costs are going to be running electrical and plumbing to all of the equipment.

What will this round of financing help you accomplish?

I’d say at this point, we’re over the hump and coming down the hill. We’re looking right at that finish line. But we need about $50,000 for basic kitchen and bar equipment, another $50,000 for construction, and another $50,000 for working capital.

How do you measure your success?

Honestly, to me, it's tough to measure success in the brewing industry. As a professional brewer, you learn very early on that taste is extremely subjective. When you're a home brewer, you could just give your friends your beer and everyone tells you it's great. When you're a professional brewer and there are websites like Yelp and UnTappd, people will tell you exactly what they think about your beer. Some people think that it's the greatest beer ever and some won't even finish it. I measure our success by the fact that we couldn't keep up with production and outgrew our old space very fast. We started in an oddball location, definitely out of the way. People had to seek us out. There was no foot traffic; nobody was just walking by and coming in. We’ve only had about 50 Yelp reviews, if that, but our average is five stars. We've had some write-ups from local beer festivals. We participate in all of them. But the main thing to me is, how many regulars I have coming back, and they bring new customers in. I have a lot of regular customers who really, really like our beer and like the story and like the brand. To me, that's the measure of success: customer satisfaction.

What are your goals for this year?

First and foremost, our main goal is relaunching in Q4 2018. We're planning to have a huge relaunch, and then we’ll focus on drawing a great lunch and happy hour crowd. We want to add another 4-5 flagship beers to our label as well. This is made possible with our new equipment and much larger capacity. We’re hoping to rotate eight or nine beers on draft with constant seasonals and one-offs. Then, by probably summer of 2019, we want to get into canning. That's obviously the latest trend in brewing and that's how you can easily segway into retail stores like Whole Foods and Safeway. All of that leads to more exposure. We can’t wait to get back into all the local and national beer festivals. We had a large presence at the Great American Beer Festival in Denver in 2015 and 2016 and it's the largest beer festival in the world. Obviously, there's no guarantee on revenues, but we're in a really good location. We are directly across the street from two restaurants that were nominated as the top restaurants on Oahu. They both frequently have long lines and we’re 30 feet away from them. They’re not really beer bars, so people waiting to get into the restaurants or wanting a drink after are great prospective customers for us. We have great exposure. There are thousands of people who live and work in the area who go out to lunch and need a quick bite to eat and maybe a beer.

What was your revenue in the 12 months before you closed?

In the 12 months before we closed, we did about $85,000 to $90,000. So it's going to be quite the jump. But, like I said, we're going to have a capacity to sell. We're going to be selling a lot at the pint level, and on top of that, food, liquor, wine, and logo swag.

How are you going to prepare for the food serving aspect?

Food service will be the biggest addition in the new space. We're going to have sandwiches, pizzas, nachos, pretzels, and other simple items that are popular beer foods. I've worked in restaurants my whole life, so I’m no stranger to a commercial kitchen. Though this will be a new feature for the brewery, we’ll be prepared for it. The hardest part I’m currently having is deciding on the final menu.

What are you worried about that could go wrong?

The biggest issue that we have in Hawaii — which we had even in the old space — is that you really have to be on top of your scheduling and logistics. Everything has to be shipped over here, you can't just go down the street and pick up barley or yeast. You can go to the homebrew store and buy something if you’re short a few pounds, but we need large scale quantities. So you're really planning way out. If I'm planning on doing an ingredient order for beer, I'm looking three or four months down the road. I have to know what I’m going to be brewing in three months. If it’s fall, I've got to start thinking about winter beers already. When we order something, it's a minimum of three weeks before it gets here You can get yeast and small quantities of hops fairly quickly, but it's expensive. Coupling that responsibility with running an actual bar that has food is going to be a challenge for us. I think it's really going to come down to customer service and hiring the right people. I know people like our beers, not to say that everybody loves our beers, but I know we can make great beer. It’s really hard to find and retain good employees. So that's always a concern.

Are you worried about the competition of the other microbreweries?

I don't even consider the local breweries my competition. Of course, they're competitors, but we’re a community. We feed off each other. What's that saying? A rising tide raises all ships? We're all in this together, and actually, our main competitor is the big beer. The Budweisers and Millers of the world, who fight very hard to keep small guys like us out of bars, restaurants, and grocery stores. That's the real competition.The craft beer scene is still young here and we all need each other. Everybody in the brew scene gets along. Now, that’s not to say that this won’t change years from now, but as of right now, everybody's cordial. We go to each other’s breweries. We're all at the events together. We have a Hawaii Craft Brewers Guild. We all have one common goal, and that's to defeat big beer. That's the hardest thing for us.

What is your relationship to the tourism industry?

Tapping into the tourist market is always good, but we definitely want to focus on local residents. When we first launched, we were on tap at two very touristy bars in the heart of Waikiki Beach. We sold a lot of beer there. We’d go through two or three kegs each week. But it was rare that those tourists would then drive all the way out to our brewery to try our other beers. We get a lot more return business from being on draft at places where local residents frequent. We will have the capacity to be on tap at a lot more bars, and being in the tourist bars is definitely great. But I think it’s smart to strategize and get into the smaller locals-oriented bars that will get us a lot more return business, especially in the early stages.

What is the background of your team?

Basically, I'm the everything. I'm the founder. I co-founded it with my cousin Eric, but he’s just "mythically involved", as he likes to say. He lives in Pennsylvania. At the old place, I did everything. I had one part-time employee who operated the tasting room, but other than that, I did everything from the brewing, to the accounting, to mopping the floors, and making deliveries, the whole nine yards. Obviously that will all change in the new place. I have three or four of my close friends in mind to be bar managers, floor managers, and lead service staff. As well as a slew of resumes for bartenders, servers, and kitchen staff. I'm also going to hire two assistant brewers that are as passionate about brewing as I am. I’ll show them the ropes so I can focus on other things like draft accounts, upcoming events, payroll and all other daily business items. We'll have a distributor for our outside accounts, and of course, bartenders and servers. Most of my close friends are in the service industry, so the hard part will be deciding on who to hire. There will be no shortage of applicants, but as of right now, I don't officially have anybody hired. We will begin hiring all management positions in about four to six weeks.

When you think about the future of this business, in an ideal world, how does it end or continue perpetually with other things?

I've always just wanted to have a nice little neighborhood brewery where people can go and enjoy themselves and have a good time. That’s always been the goal. I don't see myself selling it ever. It's such a personal thing. This is for my dad and my uncle. Of course, I can see us growing into a bigger brewery, and into an additional location. But I still always want to have that bar where people can come and enjoy a nice draft beer and watch the game. I can do that forever, basically. I'm happy with that.

Is there anything else you’d like to add?

Here’s a fun craft beer fact. We now have over 6,000 breweries in this country. About a year ago, there were 5,000. When it passed 5,000, I remember reading an article that said, "The last time we had 5,000 breweries in this country was in the late 1800s." I would mention that tidbit to people and they were shocked. They couldn’t believe we had that many breweries, way back then. But to me, it wasn’t really that shocking. Back then, there weren't really ways to easily distribute beer very far. There was no real way to get the beer everywhere you wanted it to be. However, every single neighborhood and small town had its very own brewery. I find it amazing that today with all the transportation technology we have, It's going back to that. It's going back to small, independent, craft breweries. I'm beyond excited to be bringing the next neighborhood brewery to Honolulu.

1	We outgrew our first location in only 18 months of business.
2	Lease signed on a new 2,800 square foot brewpub in downtown Honolulu that's set to open in fall 2018.
3	Our first location had a true 5-star rating on Yelp.
4	We raised over $52,000 on Kickstarter in 2013, the 2nd most funded brewery ever on the site at the time, which allowed us to launch our brewery.
5	Despite a small and inconvenient first location, we took part in the Great American Beer Festival our first 2 years in operation.

1	The Company's owner Darren Garvey also co-owns another business. Although that business takes up very little of his time, there are a few weeks each year that he will be busy running both businesses and must rely solely on the the managers to handle day to day brewery operations during this time.
2	Our future success depends on the efforts of a small management team. The loss of services of the members of the management team may have an adverse effect on the company. There can be no assurance that we will be successful in attracting and retaining other personnel we require to successfully grow our business.
3	We will be brewing on all brand new equipment much larger than our previous set up. Our flagship beers must retain their high quality, along with the exact tastes and flavors that our customers remember. Not being able to correctly and meticulously scale up our old recipes to our new batch size could impact the brands reputation. Knowing our new equipment inside and out is paramount.
4	We're betting on the continued success of a monthly block party event in downtown Honolulu known as First Friday. It shows no signs of slowing down, but if that event were to cease, we would feel the effects of that huge monthly boost of customers.
5	Because the Company will manufacture and sell alcohol, it is subject to regulation by the Federal Tax Trade Bureau and the Honolulu Liquor Commission. These regulations are strictly enforced. Failure to follow those regulations could have a severe negative impact on it's sales and even it's ability to remain open
6	Shipping brewing ingredients to Hawaii is very cost prohibitive. Any rise in the cost of fuel could have an adverse impact on our bottom line.
7	We face competition from breweries that are already established and have far more resources for funding marketing. Attracting and retaining customers in this climate may be difficult.
8	The company intends to use a significant portion of the proceeds from the offering to open the business location. As an early stage company, its operations are subject to all the risks inherent in the establishment of a new business enterprise, including potential operating losses. Any investment in the Company must be considered in light of the risks, expenses and difficulties frequently encountered by companies in an early stage of development in new and rapidly evolving markets. No assurance can be given as to the ultimate success of the Company. The likelihood of the success of the Company must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the formation of a new business. Furthermore, the Company may not be able to expand its operations to a second location, which could further inhibit business growth and projected revenues.
9	We are subject to governmental regulations affecting our business. The production and distribution of beer is a business that is highly regulated at the federal, state and local levels. Our operations may be subject to more restrictive regulations and increased taxation than are those of non-alcohol related businesses. For example, the distribution and sale of beer requires various federal, state and local licenses, permits and approvals. If one or more regulatory authorities determines that we have not complied with applicable licensing or permitting regulations or have not maintained approvals necessary for us to conduct our business within their jurisdiction, our business and results of operations could be materially adversely affected. Similarly, the loss or revocation of any existing licenses, permits or approvals, or the failure to timely obtain any additional licenses, permits or approvals when required, could have a material adverse effect on our ability to conduct our business. In addition, if any taxes or fees imposed on our business by applicable regulatory authorities are increased, our profit margins could be negatively affected.
10	Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents. The Company places its cash and cash equivalents with a limited number of high quality financial institutions and at times may exceed the amount of insurance provided on such deposits.

$175,000	$50,000 in equipment $50,000 in permitting and construction costs $66,250 in working capital, inventory, and brewing ingredients $8,750 on Wefunder cash fee
$300,000	$175,000 in equipment, specifically more fermenters for increased capacity, as well as a canning line so that we can distribute to local grocery stores and markets $50,000 in permitting and construction costs $60,000 in working capital, inventory, and brewing ingredients $15,000 on Wefunder cash fee

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We Keep Hawaii Libated

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