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Craft Brewer Dogfish Head Enjoys Strong Double-Digit Growth

December 20, 2011

Dogfish Head Brewing, the Milton, Delaware-based craft brewer founded 16 years ago, has built a cult-like following among beer connoisseurs in about 25 states—thanks to its reputation for creating unique beers that feature unusual ingredients. The brewery, led by its founder and president Sam Calagione, has been a key player in driving the craft beer craze at a time when the mainstream beer market remains sluggish. Shanken News Daily spoke recently to Calagione about his vision for the company and for the craft beer category overall.

SND: Dogfish Head Brewing is ranked by the Association of Brewers as the country’s 11th-largest craft brewer. Will you crack the top 10 this year?

Calagione: We don’t keep track of that type of ranking, but I can tell you that we’re on track to grow 18%-20% this year.

SND: What are your latest expansion plans?

Calagione: We have a five-year plan to expand our facility’s capacity to half a million barrels, but we’re in no rush to accelerate our growth beyond the current rate, regardless of demand. There’s a difference between fast growth and strong growth. We don’t want to be in a position where we have to discount our beer. We want our growth to be organic, where the consumer is pulling our beer off the shelf rather than having to rely on a huge sales force or discounting to push our beer off the shelf.

SND: Are there any plans to expand geographically?

Calagione: No. Frankly, it was a difficult decision earlier this year when we had to pull our beer out of four states because demand was so far ahead of supply. We felt a responsibility to our distributors in the mid-Atlantic region to bring back some of our inventory closer to home. While we have no plans to expand distribution at this time, we do plan to open another Birreria in Rome late next year, similar to the one in Manhattan, where we collaborated with Mario Batali, Joe Bastianich and two Italian brewers. We’ll be brewing small batches of beer over there.

SND: Is there any concern about all the new craft brewing competition and what it will mean for Dogfish Head?

Calagione: I don’t feel that way at all. I believe that any of these new breweries that make great, differentiated, quality products, deserve to be in the marketplace. The difference between today and the late ’90s—when we saw a shakeout and supply did overtake demand—is that consumers are more evolved. Today craft beer is more of a trend than a fad, driven more by consumer demand than by media fanfare. We’re at a great tipping point, and craft beer’s momentum is only going to accelerate.

SND: How much market share do you expect craft beer to have in five to 10 years?

Calagione: I think 10% market share on a volume basis is very possible, and potentially a 15%-20% revenue share. I also think there will be a number of different models for craft players. There will be breweries similar to Dogfish Head that will choose to sell beer coast to coast, but not in all markets. There will be those like Sierra Nevada and Boston Beer that sell in all 50 states. And there will be local breweries like New Glarus that will only sell within their states’ borders. There won’t be one basic model for successful craft breweries.


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