Critical Drinking

Critical Drinking with Dan Kleban of Maine Beer Company

Maine Beer Company was founded by two brothers, Dan and David Kleban, in 2009. They started the brewery on a one-barrel system in an industrial park in the Riverton neighborhood of Portland, Maine. Other than Allagash, (Maine’s most iconic brewery, located right across the street from the original MBC location), there wasn’t much to the beer scene in Portland at the time, nevermind Maine in general.

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Today, there are more than 70 breweries in The Pine Tree State, and MBC looks virtually nothing like it did back then. For starters, they have a new location in Freeport, a taproom, and an upgraded brewhouse with an extensive QC/QA lab. To put it simply, the brewery, best known for its New England-style IPAs with playful names like Lunch, Dinner, and Another One, is thriving. And the Kleban brothers are going all-in on a massive expansion that will triple production.

This is coming at a time when the U.S. has more than 6,000 breweries, and market competition is increasingly tough for those breweries operating above the 15,000 barrels/year level. (At 12,500 BBLs in 2016, MBC is right on that cusp.) The Klebans built their brewery on the motto “Do What’s Right,” and to Dan, that means quality, independence, and community. He recently sat down with GBH to discuss how these three values have got them where they are today—and how they'll propel MBC into the future.

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Independence has always been an important aspect of Maine Beer Company’s operation. In your capacity at MBC, and as a representative on the Brewers Association’s board of directors, what was your involvement with the development and roll-out of the new seal?

Obviously, the concept of the logo was a discussion that well predates my time on the board. It’s my understanding that the board had been discussing some sort of seal for many years. I’ve been on the board for three years, and it’s been discussed almost since I’ve started. About a year to a year and a half ago, that’s when there was some more serious consideration was given to it.

I talk to people all the time about a beer they like, and I say, ‘Did you know that’s owned by Anheuser-Busch?’ And they have no idea.
— Dan Kleban

So, the seal was definitely a long time coming.

Absolutely, and over time and discussion, the board’s opinion really started to gel around the concept. I was always a supporter of the concept.

What drew your support toward the concept of an official “independent” BA seal?

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I think it’s an important piece of information to give beer drinkers. Some sort of indication about the beer they’re drinking, on the bottle, the can, the glass, the tap handle, the chalkboard, the storefront window, as to who owns that brewery, who is behind the beer they’re drinking. I was convinced then, and I am convinced now, that there is a certain amount, a significant number, of beer drinkers that care.

Of course, the counter argument is that it shouldn’t matter who makes the beer, it’s all about what is in the glass.

There is a certain amount of validity to that. Beer certainly needs to be good. Ownership in and of itself isn’t all that matters—good beer matters. But ownership matters too, and that doesn’t just apply to beer. If I go to the farmers market, for example, and I buy some apples, right, and I get home and I find out that those apples were grown by Dole and sold at my farmers market, I’d be pissed off. When I go to my farmers market, I go with the expectation that I am supporting small, family farms. When I go to craft breweries, I go with the expectation that I am supporting small, family breweries. And I don’t think I am alone in that feeling.

Why is it important for Maine Beer Company to implement the logo?
 

We’re running through our existing stock of labels, and it will eventually appear on all of our bottles. The importance is for the same reason: we are proud to use it, we’re proud to be independent. It’s a piece of information to give the consumer. It’s just another piece of information for them and I think people care.
 

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And you’ve always dated your bottles, providing that piece of information too, as I recall?
 

We’ve always dated our beer from day one. We’ve always put born-on dates, and we say “drink within 90 days” right on the labels. So, the consumer knows exactly when the beer was ready and what date we recommend it should be purchased and hopefully drank within.

If, in five to 10 years from now, we’ve won the battle for independence? That’d be pretty damn cool.
— Dan Kleban

Has there been any BA-level push toward making that another mandated piece of information to provide to the consumer?
 

There really hasn’t been a lot of conversation about… Well, let me backup. The seal is not mandated. It’s a voluntary adoption. The BA can’t force anybody to use it, and shouldn’t, in my opinion. I think it’s up to every individual brewer to decide, I would encourage them to use the seal, but it’s up to them, and the same goes for date coding. And you would have to check the BA website—they might have some sort of position about date coding

It seems like the right thing to do, obviously, an important piece of information to provide.

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We’re not hiding anything. Everybody wins if the beer is treated properly in the distribution process and consumed within a reasonable amount of time. That’s in everyone's best interest. What’s in nobody’s best interest, the beer drinker, the retailer, the wholesaler, and the brewer, is for the beer drinker to drink a bad beer. Long term, that’s in nobody’s best interest. It might be short term best interest, you can push more product into the market and get more beer on shelves. But long term, a beer sitting on shelves longer than it should be and where a consumer doesn’t know if that beer is fresh and might get a bad beer, that’s going to have a ripple through the supply chain and ultimately the brewer will suffer and sell less beer.
 

Do you think that “independent” is a value-added proposition for a beer sitting on the shelf? When I’m buying beer, I don’t buy it if it’s not dated. Do you think there will be that beer drinker that doesn’t buy a beer if it’s not designated as “independent” with that logo?

Oh, I know that’s true. I’ve already heard it. You can look at social media. I know that that’s true. There are beer drinkers, there is no doubt about it, that either because of lack of education or that they just plain don’t care who owns the brewery, that seal is not going to matter to them, I concede that. But there is a significant number of people that that does matter to. This is going to be an organic process, with the idea that part of this is about consumer education. I talk to people all the time about a beer they like, and I say, “Did you know that’s owned by Anheuser-Busch?” And they have no idea. Does it affect their opinion of that beer? Heck yeah, it does—they kind of have that stunned look on their face. This is going to be a long term education about why independence matters. Over time, more and more consumers will care and it will be a value add to a brewery, to a brand.

I think that the consumer education component is where the Brewers Association has the best success of staying relevant. That must be what the BA is looking to do with this logo.

There are some things that trade associations can’t do and shouldn’t do, but the seal is a great example of things that trade organizations can do and should do, because it helps distinguish our membership, the independent brewers in the United States from big, industrial brewers. That’s the role of a trade organization, to promote and protect its members. The message of independence buys us political capital with legislative leaders—they love our small business success stories. It’s bringing manufacturing back to the United States.

Switching topics a bit, customers see the solar panels as soon as they pull into the parking lot here at the brewery. What does sustainability look like at MBC?

Before we started making beer, going through our business plan, sustainability was an integral part of who we were. We were a beer company, we were a brewery, we were going to make beer. But, we were going to be more than a brewery. If I just wanted to make beer, I’d still be a homebrewer. I wouldn’t have assumed all the headaches of running a business. Our motto is “do what’s right,” and that encompasses three things: one, its treating the environment well, it’s treating your employees well, and it’s treating the community well.

We structure our business model to give our employees good benefits, good pay. But a tangible thing we could do to show our commitment to treating the environment well was deciding to be a member of 1% for the Planet, which is an organization that businesses subscribe to and donate 1% of their sales, gross revenue right of the top, to environmental non-profits. It’s a tangible way to say we’re not just talking the talk, we are doing something here.

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That 1% revenue contribution might seem small, but it’s not insubstantial.

Sure, and by definition, as you grow your business, so too does your donation grow. There is a certain amount of pride in knowing that, as you grow your business, certainly it’s good for me, it’s good for the employees, but I get to see the amount of money we are donating grow as well. Out of the gate, we couldn’t afford to put up the solar array, no small business can, nor should they be expected to. But if it’s ingrained in your business plan and your company culture, we always looked at what investments we can make in sustainability as we grow capacity. How many additional solar panels can we buy? What kind of new high efficiency boiler are we going to install? Growth isn’t just about growing capacity and making more beer and growing the bottom line—it’s about giving our employees more benefits and what extra sustainability measures are we going to implement, and we build that into the cost of growth.

Do those costs that go into all of that get passed along to the customer? Does that help or hurt your brand?

I think that’s true for any product. I mean, look at Patagonia outerwear, it’s not the cheapest outerwear in the world, far from it, but it stands for something. And everyone who buys Patagonia outerwear, they know what Patagonia stands for and they will pay a premium to know that their dollars are going to a company that cares about more than just the bottom line, I think the same goes for beer.

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On the other side of that, for every Maine Beer Company or Sierra Nevada, there are thousands of other breweries that aren’t investing in solar, aren’t buying high efficiency boilers. There are breweries that will grain out into a dumpster. Does that concern you? Is the BA concerned?

I know that the Brewers Association has invested a lot of money and bandwidth in promoting sustainability with their manuals. You can go on the website and find sustainability manuals on trash, water, and best practices. They’ve culled together information from some of the leaders, whether that’s New Belgium or Sierra Nevada, experts who were integral in forming these best practices. But to me, it’s brewery-specific. It’s about doing what you can, it’s all size-dependent. Not everyone can do everything. We can’t do what Sierra Nevada does—we’re not that big. Nor should we be expected to. Only each brewery knows what they can do, but it does require an effort, a conscious effort.
 

But what about those breweries that just don’t put in that effort?

Obviously, that’s not what we stand for. And that’s not something I would advocate or advise any brewery to do. Part of why we started this was to make the best beer we could, but part of this was that we wanted to show that you can be a small brewery and still do really great things. It’s about how you structure your business, but I think we’re proof that it’s not impossible to have a significant impact on your community and your environment, and still be a small company.

Beer certainly needs to be good. Ownership in and of itself isn’t all that matters—good beer matters. But ownership matters too.
— Dan Kleban

The best you can do is to lead by example.

We wanted to show people. And it’s cool, you know, it didn’t happen right away, but we’ve been around long enough now that I’ve been approached, not just by other brewers, but other small entrepreneurs, that say, “I’ve seen what you guys have done, and it’s inspired me.” Especially with respect to solar—we get calls weekly about the solar panels.

Your expansion is a big one. Break down some of the numbers for me.

Right now, we’re producing a little under 13,000 BBLs a year on a 15-BBL brewhouse.

Wow, that’s crazy.

We’re brewing as much as we can. The expansion is three-fold. It will encompass a new production facility. It will be a new administrative space and a new tasting room experience. An expanded indoor and outdoor tasting room experience for people who come and visit us in Freeport. In terms of equipment, we will go from 15-BBL to a 60-BBL brewhouse with 120- and 240-BBL fermenters. We will update packaging with a new bottling line and kegging line. The new “capacity,” and I use the term capacity deliberately as in what we could grow into if we chose to grow that much and max out the new facility, would be 45,000-50,000 BBLs annually.

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What are the goals for growth?

We’re not going from zero to 60. Our growth pattern has been pretty slow and methodical, and our plan is to keep it that way. Keep a temperature on the market and not be in a position where we ever have to push our beer out there, hopefully having consumers still asking for it. But we will be much more nimble now, because we will have the ability to get capacity online faster. We’ve been operating at capacity for the last two years, and demand has—thankfully, for us—continued to grow, but supply hasn’t. The initial bump up for the first year will be satisfying existing demand.

Everybody wins if the beer is treated properly in the distribution process and consumed within a reasonable amount of time. That’s in everyone’s best interest.
— Dan Kleban

Are you looking at new markets?

Not out of the gate. It’s more, again, filling the pipeline that’s running dry. There are markets that we are in, but those markets don’t get much beer. We are in 16 states, and I say we are “in” 16 states, but I don’t know the exact numbers off the top of my head. But the lion’s share stays in New England—Maine, Massachusetts, Vermont, etc. So, for more of our far-flung markets, it’s going to be good to be able to say to South Carolina, North Carolina, Virginia, D.C., Chicago, Ohio, “We can send more beer to you.”

The bigger guys are seeing the crunch on both sides. Moving up to that next step where you are almost a regional brewery would make me nervous. You’re confident this is the right move?

Of course. If we didn’t think so, we wouldn’t do it! No one has a crystal ball, but every business decision is made off of gathering all the information that you can and acting on it. I mean, we still run out of beer in Maine in the summertime. We’ve been very careful all along to never put ourselves from a business standpoint in a position to have to sell beer. We’ve never taken on debt that meant we had to sell more beer than we possibly could in order to pay that debt down. Unlike probably some other breweries, we haven’t over invested in capacity—that’s where you get into a bad position. We don’t have to sell that much more beer in order to finance the expansion, so we’re not putting ourselves in that bind. We don’t have to sell 40,000 BBLs of beer to break even, so that made it an easier decision for us.

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More and more brewers are starting to think about succession as they expand. What are the plans for you and your brother?

I don’t have a crystal ball. I can’t tell you what the future holds, [but] I’m not going anywhere. Now certainly, I hope to see, and what I’ve already seen, is that we have great people working here and I’d like to see them grow in their jobs and take on more responsibility. My brother and I aren’t going to be here forever, so if we want to sustain this company long term, and if we want it to grow in the way we want to grow, we have to provide growth opportunities for folks. There’s always an evolving role for people here, including me and my brother. I’m not down on the floor brewing every day, and there was a time when I was. You invest in people, smart and talented people to do that, because I can’t be doing that every day, nor do I necessarily want to. Every brewery should be thinking about succession, and that means different things for different breweries. For us, the way that we’ve approached it is to grow it internally and invest in people who can do the work. Hire people more talented than me and my brother, essentially.

If you did have a crystal ball, what would beer look like in the United States in five or 10 years from now?

I think that if we, as an industry, can show that we can thrive in an era of mass consolidation and we can be relevant still? I’d be really damn happy. That if we show that not all industries are susceptible to mass consolidation that we’ve seen in other industries, that there is something unique about beer that makes us different, sets us apart? If in five to 10 years from now, we’ve won the battle for independence? That’d be pretty damn cool.