Hops and Grain was the fastest fundraise to $1 Million last year and they're proving their delivery prowess with the steady buildout of their new San Marcos location. As Josh says, "the concrete's moving around and walls are going up" at his brewery and you can listen to our Director of Fundraising Dylan's full conversation with Josh below. So crank up the volume and listen to this short audio during your commute or your bedtime.
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About Hops and Grain & Its History
Can you introduce yourself.
My name is Josh and I'm the founder and CEO here at Hops and Grain brewery, a six-year-old brewery in East Austin, just east of the capital city of Texas.
When did you start this adventure in beer?
Way back before the brewery was a thought of mine, I spent some time in Boulder, CO, at the the epicenter of the mountain beer scene. I was racing triathlons and road bikes and was drinking beer along with all of that. I met some really great folks who were in the beer scene in Boulder and got my wheels turning on how cool it might be work in the beer industry. At the time, I was in specialty retail, selling running shoes and gear. I fell in love with the scene and moved to Austin in 2005 and helped open a running store here.
The beer scene that connected to the health and fitness scene in Boulder was almost absent in Austin. I didn't intend on staying here, but after a few years, I decided to leave the running industry and bring those two worlds together in the city that I fell in love with, Austin. I started raising money in 2009 and then 2010, I found a property and signed a lease. And we started brewing our own beer in 2011.
Walk Us Through the Hops and Grain Brewery
Can you describe the location of the new brewery in San Marcos and its distance from the main streets?
San Marcos is a really cool town. The way it's situated is around the San Marcos river, which creates the heart of San Marcos. The university is almost right on the river. The downtown area is where all the pedestrian foot traffic exists around the square where the bars and restaurants are. We're uniquely positioned that we're walkable from the downtown square and less than a mile from Texas State and we're less than a mile from State 35, where all our delivery trucks and 18 wheelers can go in and out of our facility, and we're also 2 blocks from the downtown square. Everyone is walking around for dinner and drinks and we're right in the heart of the city. It's a cool property. We were actually looking at other properties and the developer of this property actually came looking for us and said he had this space. Sure enough, it was perfectly suited. It used to be a grocery store so all the electricity was in place, which is generally a big time sink in the construction process so we were able to go in and gutted it out. We didn't have to go through any real serious demo and reconstruction permits.
Paint a picture for those investors who haven't been there what this space will look like.
When I lived in Boulder, most breweries serviced like 1 mile radius around the neighborhood. Basically all the beer sold was at the bar. They didn't distribute anything. You couldn't get them at the stores and it became this really cool community gathering space where folks would walk from and to work. So when I moved to Austin and I decided to do this, that is what I looked for and our original location in Austin is one mile from Downtown Austin; it's on 6th street. Most people are familiar with this party area. If you go a little east of Downtown, it's a really rich manufacturing and art area, old manufacturing facilities that closed up and art, maker spaces. So neighborhoods still developed around that, making this. When I looked for properties, that's where I really zero-ed in.
The way we function is we have a tasting room, about 1500 sq ft, open 7 days a week- beer and coffee in the morning and beer in the afternoon. It's an awesome way for people to see how the beer's made. That really translates when they're shopping. We wanted to be accessible on weekends. About 2,000 people come through our tasting room on weekends and we do flights, pints, and pitchers. That's ultimately the lifeblood of our ability to grow. If we didn't have that component, there's no way we could be selling beer outside of our brewery in grocery stores, bars, restaurants. So with San Marcos, we wanted a space that was similar, walkable, close in an industrial park and felt unique. It fits our culture and ethos of the brewery.
We're not trying to go for volume. We're trying to chase the richness of the experience. Volume comes when the experience is rich. If your customers get to come in and drink the beer at the store and fall in love with the story, they'll keep buying it in the market.
Our San Marcos location will be even bigger than Austin's. This year, I think there are 36,000 students enrolled at Texas State, and they're all less than one mile away from the brewery.
Please tell us how Hops and Grain differs from other bars and brewery options in the area.
You've got a a couple options in the main square. Most of them are restaurants that have a few craft beer taps. The limited buy in downtown is parking; it's mostly street parking and either bars or restaurants. But there's nothing you can really go in to see 1) a manufacturing facility. When you walk into our tasting room facility in San Marcos, you'll see massive windows where you'll see the brewers working and see the process happening while sitting in an air conditioned space. Our property has 180 parking spots, which no one in downtown San Marcos has at all. So that itself will be quite a draw. It's incredibly unique. You've got bars and restaurants and right in the middle of all that, you'll have a state of the art 20,000 square foot brewery and tasting room. You can spend the whole night at the brewery.
How Were Funds Used?
You raised $1M on Wefunder. How was the funding used from the Wefunder campaign?
We're adding new packaging formats to our beer cans. We're doing a complete change in our packaging so they go in 6 and 12-package boxes. We put a lot of effort into a couple new brands we're rolling out. One we'll roll out this month and another we'll roll out in September. We're relying on the new San Marcos location to push them out. We started the brand design in hopes that we can really hit the ground running in September.
The construction piece was a big chunk of our cost. Just taking a property, gutting it out and rebuilding it.
Also, our equipment. A lot of people don't really understand how costly it is to build out a brewery. A brewhouse is almost $250,000 and individual tanks is about $45,000 - $50,000. Once you have the infrastructure in place then you can really start scaling. You need a base that's giving you the ability to scale up.
In Austin, we maxed out our capacity in 4-5 years. For a manufacturing business, you shouldn't max out in 4-5 years but we just didn't anticipate to sell as much as we did. San Marcos is really built out with the future in mind. We'll be able to fulfill distribution throughout Texas from that San Marcos facility.
We're also putting in another $250,000 into our tasting rooms as well. So we're really making sure that the space is designed out to accommodate customers and be able to sell growlers, six packs to go, as we continue to evolve. And we have a huge outdoor beer garden and indoors where we'll be able to seat 3x as many people as we can in Austin right now. We've built in a lot of automation too so that we'll be able to operate that brewery with the same number of employees that we have in Austin but produce 4x the amount of beer. That's been all our money's been going.
How's the San Marcos community evolving and interacting with Hops and Grain?
The last couple of months has been slow in terms of updates. I've been using the portal to keep them up to date. But the fun stuff is really happening now. It was fun for me because I got to see the rendering and the mockups but now that it's actually happening and concrete's moving around and walls are going up, it's really fun to provide frequent updates with everyone.
The whole reason we chose to go this route with Regulation Crowdfunding is building a deeper base of people who are invested in what we're doing and our story. Part of keeping people engaged with that is providing unique behind the scenes information not everyone has. So we want to keep doing that; quiet on our social media channel because we want to make sure that as we make our big steps, we get that info out to our investors first. Build a buzz within that core group of people who put their money into what we're doing. And as we get closer to opening, we'll start blasting out and get people excited. We get requests from media about updates and it's nonstop. It's awesome but we want to control the information delivery so that it maximizes the impact.
We've been updating about every 2-3 weeks but it's about to get really frequent. Shiny equipments are coming and walls are coming in.
Does San Marcos community know about you yet?
Reception in San Marcos has been awesome thus far. We already distribute our beers in downtown bars and restaurants here. So the first thing we did when we identified the property is we told everyone in the community before we leaked it out to the press. We told all our accounts here about our plan and asked for advice and feedback. That really helped out because everyone was incredibly excited about us being there. They viewed us as more traffic into the downtown district. Then we started going out to local retail shops that align with the lifestyle and culture that we have. Lots of river rafting, fishing shops. We started giving out a lot of beer to these retail shops to hand out to shoppers. Then we started chatting up about ways that we can help with fundraising, which is what we're committed to here in Austin.
We've definitely tried to get out there and communicate what we're trying to do. We're not trying to take over San Marcos but we're trying to be a good piece of that community. Half our staff went to school in Texas State and four of our production crew live in San Marcos. We're already part of this community, and we wanted to get critical feedback and suggestion from the community. Thus far, it's been well received. The property we have has been vacant for almost 4 years so everyone's excited to what's been an eyesore turn into something that'll bring traffic to the city. We'll have 20 employees in San Marcos and about 15 in Austin.
How Hops and Grain Investors Can Help
How can all your investors help you make it more successful?
The biggest thing we like about investor engagement is telling the story. I believe our potential success is based on a rich story that we can tell. There are over 5,000 craft brewers in the country right now. You can find one in almost any city. What makes you remember one is the story. And for us, that story is deeply rooted in environmental stewardship, community engagement, and industry leadership. Why we have an onsite full-time quality incensory late. We upcycle to make dog treats. We're 100% wind powered. We give a lot of beer away to our local businesses and charities because we really want that story to be something that everyone hears when they think of Hops and Grain, that we're great community citizens. That's what sticks out to people. We are trying to be as transparent as possible with all of our investors. We want to make sure they know and understand the story, because we think that they are much of a salesperson as any of the salesperson we have on staff. We want people to go out and tell our story accurately.
Engaging our investors in a way that educates them on our story is what excites me the most about having a large group of investors. The story gets deeper when more people are involved.
Are you planning to have a grand opening party for your investors in the San Marcos location?
Absolutely, I have a feeling we'll have two nights of celebration with that many folks. The very first weekend we open the doors will be only open to investors. We'll have our full staff there and full tanks of beer. We'll give everyone a tour of the brewery before we open it to the public. Then off to the races!
Anything else you'd like to tell investors?
The fun part's getting started right now. Having been a part of building a few breweries in the past, the boring part is the 6-8 month buildout for construction to before finally hitting the final stages. For everyone that's been waiting for the next steps, it's all about to happen really fast. All the fun info and news is about to start!
A huge thank you to everyone who believed in our project and backed our business. We're incredibly excited to have you on board and cheers to the future!