Hail to the ale - Pete's Brewing Co - Cover Story - Company Profile

Prepared Foods, Oct, 1996 by Steve Dwyer

Resiliency. Dogged determination. Sharp focus. Risk-taking. These traits invariably describe our Rising Stars. As is customary, all were drawn from a diverse cross-section of the food industry, each with unique stories to impart and strong blueprints for success.

Fran's Chocolates wants to grow alright, but is prudent in its restraint. Like a smart confection lover, this $2 million firm knows its "indulgence" threshold. Quantum Foods jumped from a five-person start-up in 1990 to a 350-employee concern in 1996. Juanita's Foods is an all-in-the-family story that has resisted the temptation to sell out because, frankly, what they do remains a labor of love. Pete's Brewing Co.--our leading Rising Start--has turned microbrewing into a macro success.

Fontina Foods exhibited a high level of stick-to-it-iveness in identifying a market for its product.

Hats off to this year's Fabulous Five, and may the Rising Stars in-waiting use these stories as a measure of inspiration in their own rising ambitions.

How does an entrepreneur know when his business has achieved success? Sales and profits are typical indicators. So is product name recognition. Pete Slosberg, former corporate executive and founder of Pete's Brewing Co. defined success differently back in the mid- 1980's when he launched his microbrewing business with Pete's Wicked Ale.

Success, in Slosberg's estimation, would be assured "when I would somebody look down and accidentally come across one of my bottle caps, a true sign that there really were people out there enjoying my beer," said Slosberg in the company's 1995 annual report. "Lo and behold, in August of 1993 while on a river-rafting trip to Oregon, I stumbled across a weathered Pete's Wicked Ale bottle cap pressed into the dirt of a parking lot."

Slosberg's litmus test speaks volumes about a company that in 1986 was founded on the principles of fun and of not taking itself too seriously. Ten years later, the small, one-man entity has grown exponentially. But while Slosberg is not involved in the day-to-day operations of the company anymore, functioning more as a spokesperson and craft beer educator, the fun still remains despite higher stakes.

"The fun factor is absolutely sustaining itself," says Mark Bozzini, CEO for Pete's Brewing. "Ten years later, Pete still abides by the simple philosophy that he established when he coined the term `wicked.' Take the beer seriously but have fun doing it."

How much fun are they having? Currently the No. 2 craft brewer in the U.S., behind Boston Brewing Co.--the maker of Samuel Adams--growth of Pete's Brewing from 1991 to 1995 is a hefty 2,270%. Sales surged from $2.49 million in '91 to $59.1 million in '95. It is this kind of herculean effort that helped propel Pete's Brewing Co. to 49th place on Inc. magazine's 100 fastest growing private companies list in May.

In 1995 alone the Palo Alto, Calif.-based brewer's sales leaped 92% as Pete's Brewing was the only specialty beer company to increase market share last year--to 14% versus 10% the year before.

The company--which uses an award-winning recipe consisting of specialty malts, hops, water, yeast, natural spices and flavors with no preservatives--has exploded like a powder keg.

It used the occasion of its 10th anniversary to place four new brews on the market, complementing its existing line of six award-winning brews including its flagship Pete's Wicked Ale, a smashing success.

Want more bouguets? In January 1996, the company was recognized as the "Mid Size Brewery of the Year" in the internationally acclaimed 1995 World Beer Championships.

HONING THEIR CRAFT

Just as many consumers are buying gourmet coffees, they are also turning to fuller beers and ales, and Pete's Brewing is riding the wave of that trend.

"Pete's Brewing is a prototype American enterprise for the 21st century," says Bozzini. "Our company was founded and built by a small group of entrepreneurs who feel ordinary people have the ability to accomplish extraordinary things. Some may call us a `Gen X' company--the average age is 29 years young. Our mentality is 24 hours a day, seven days a week. This is what it takes when you are the underdog. We share the commitment that there is only one way to do things. We call it the `Wicked Way."

Like many small companies, Pete's began by trial and error. Slosberg, a native of Connecticut, took a stab of making wine in his kitchen in 1979. After discovering that wine took too long to mature, he turned to beer. Slosberg spent seven years brewing batches of a variety of beers, enlisting friends and family members as tasters. He borrowed $50,000 to get the business rolling. Pete's Wicked Ale, debuting in 1986, gained acceptance as a favorite in the San Francisco Bay area.

Today, the company's market penetration our domestic business," says Bozzini, noting that only about 1% of business is concentrated abroad. "One reason for our European business is trademark protection."

In terms of U.S. distribution, Bozzini says that the developed craft brewing markets like Seattle, Portland, New England and San Francisco are pulling the load for the company's fortunes. The challenge, he says, it to "keep bringing our message to the lesser developed markets like Chicago, Miami, Houston and Dallas."