Made in Northwest Indiana

MADE IN NORTHWEST INDIANA: Three Floyds brand, building grows

2012-08-04T14:00:00Z 2014-02-06T16:48:48Z MADE IN NORTHWEST INDIANA: Three Floyds brand, building growsBy Rob Earnshaw Times Correspondent nwitimes.com
August 04, 2012 2:00 pm  • 

MUNSTER | Three Floyds beer can be hard to come by. Barnaby Struve, vice president of the Munster brewery, knows this.

It’s all about demand. Sounds like a good problem for any business to have, especially in the current economic climate.

“Our brand grows faster then our brewery,” Struve said. “And we grew by 40 percent last year, production-wise.”

Struve said the reason people like Three Floyds Brewing Co. is because its a small brewery. But the reason people don’t like it is because its a small brewery and can’t get the beer.

“Even with that kind of growth we’re still a small company,” Struve said. “People think there’s a magic machine that our beer comes out of.”

Struve said Binny’s Beverage Depot in Chicago is limited to maybe one case or two per week of his company's product. He was in Whole Foods recently and the story had no Three Floyds beer.

“They would get it if they could, but they can’t,” he said. “Before we have these plans of massive distribution and doing all these other things we want to make sure that the people who have stuck with us for the past 16 years actually can get our product.”

Fifteen years ago a bar or liquor store owner probably wouldn’t stock something they couldn’t always get. That climate has changed. Struve said the company is fortunate people continue to support the Three Floyds brand even though the product is few and far between.

“I feel fortunate that people are that loyal to us that they’ll stick with it even though it’s not exactly the most convenient thing in the world to get,” he said. “But also there are people who say negative things because they can’t get it.”

Struve said Three Floyds is doing everything it possibly can to get its beer in the hands of its fans.

“The only way to really grow is with revenue,” he said. “There’s a tipping point for craft breweries. Now we’re starting to make enough money where we can re-invest – we just brought three new tanks. But those tanks are not cheap.”

Struve said some people think the company is being lazy.

“If they could see the operation – it’s not a sprawling Anheuser Busch factory,” he said. “But because we’ve grown we are producing more. We’re starting to get more revenue in where we can actually grow. But we have to also grow intelligently. We’re doing it as fast as we possibly can while keeping in mind that the most important thing is the quality of the beer.”

There is a purchase limit of two six packs for Three Floyds’ new to-go beer kiosk. The way the brewery used to sell to-go beer was according to Indiana law – six cases per person.

Although Struve said what Three Floyds sells at the kiosk is a fraction of what it produces, “nefarious and ne’er-do-wells” forced the company to change the limit.

“People were coming down here from whatever corner liquor store and bringing like four homeless people with them and each one of them would buy six cases,” he said. “And then the people who’ve been supporting us from the town of Munster or wherever couldn’t get anything. So we limited it to two cases per person to try to stop that.”

Struve said people don’t understand that once beer leaves the facility, Three Floyds has no control over it.

“We can’t stop people from illegally selling it or putting it online or whatever,” he said. “We have no control over that, unfortunately. We’re trying to curtail that. With a two-case maximum people can still get beer but more people can get it. Sometimes people complain about it but we’re trying to get the most for the majority. It’s hard to make everybody happy, but we’re certainly trying.”

The vast majority of what Three Floyds produces it sells to distributors.

“That’s our job,” Struve said. “We’re a factory. Sometimes we do run out of a specific product. It’s all based on demand. We try to do the best we can to keep up. A lot of times people will say, ‘well you’re a brewery, how can you run out of beer?’ ”

On-site expansion

In addition to streamlining the to-go beer process and the addition of three new tanks for brewing, Three Floyds bought all new equipment for its kitchen, which has doubled in size.

The size of the keg room has been increased and moved entirely. A conference room – “the red room” – has been added. Because Three Floyds does not take reservations and has lines “out the door,” private parties can now be accommodated.

“We can sequester people where we couldn’t before,” Struve said.

There’s also been a big upgrade in terms of the infrastructure. New sewer lines were built and the bathrooms were remodeled. Office space was added. There’s an improved menu.

Struve said the expansion costs the company a great deal, but that it was worth it.

“It was time to update everything,” he said.

Off-site expansion

There’s also been talk about Three Floyds expanding its operation to Chicago. Struve said Three Floyds always wanted to and will at some point.

“As of right now there’s not a business plan drafted,” he said. “We don’t have the property. It’s always in the form of process. We’ve always wanted to do it and we will. Right now the focus is on the expansion here. As we grow the most important thing for all of us is the quality of the beer. We’re fortunate to have very good growth. But because it’s a food product we’re making the risks are higher if someone doesn’t do something correctly. There are so many breweries that have gone straight downhill because they weren’t paying attention.”

Whether a Chicago location would entail a pub or brewery, Struve said it would depend on the property.

Three Floyds brewed roughly 20,000 barrels last year (one barrel is 31 U.S. gallons). This year its shooting for about 25,000. Eventually it will go beyond 30,000. That’s where the Indiana legislation enters the story. Not only is the Three Floyds name stamped on beer bottles, but also on two amendments.

The Three Floyds amendments benefit craft beer in Indiana.

“When there weren’t any breweries in Indiana the legislators just made a law that if you are going to be a small brewery the definition of a small brewery is up to 20,000 barrels of production,” Struve said.

Among other things the law meant a brewery topping that production would limit pubs and increase taxes.

“We would be given two options,” Struve said. “One would be to continue to grow and close our pub. The other would be to stay at 20,000 barrels and keep our pub. So as a stopgap measure they (the Legislation) increased that to 30,000. And we’re going to go beyond 30,000 barrels as well.”

Meaning there is still work to be done, legislatively.

Struve said the second amendment was about excluding out-of-state sales from what it means to be an Indiana small brewer. Out-of-state sales were excluded “because no one wants to have the finger pointed at them saying ‘we’re the ones that shut Three Floyds down or whatever.’ ”

“None of these legislative efforts would have gotten passed had we not had the distributors and their lobby on our side,” Struve said.

Struve said the legislative process was not necessarily about Three Floyds but about the whole state of Indiana and how people view beer.

“Right now craft beer is going through a huge growth curve,” he said. “If we have, legislatively speaking, backwards-ass laws, we’re not going to keep up. We don’t want our state to be viewed, or any state, as backwards. But we’ll certainly lend our name and the wake that comes with that and the notoriety to just make things better for Indiana beer in general.”

Struve said Indiana as a state is a little behind the national average in terms of sales for craft beer. But it’s growing.

“None of us as craft brewers want to conquer the world,” he said. “We’re a very heavily regulated industry. We have no problem with that. We have no problem paying our taxes. But we’re growing and we’re hiring people when no one else is. It’s something Indiana should be proud of.

“We’re just a little brewery. We just want to make more beer.”

Copyright 2014 nwitimes.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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