Hugh Sisson, Founder and Owner, Clipper City Brewing Co.
Hugh Sisson was served the wrong sandwich at our lunch meeting. But he didn’t flinch: “I’m not a prima donna,” he says. “I’m terribly happy with this.” Besides, he’s got other things on his mind … like the growler bill he just passed through the Maryland Legislature, the 550 firkins sitting in his Baltimore, Md., brewery, and his robust (and expensive) barrel-aging program. At least the success of the 22-year-old company’s recent brand makeover has given Clipper City some breathing room. But will most of the new breweries popping up these days see the same level of sustained growth? Sisson doesn’t think so.
We’re entering a period where a lot of brewery owners are approaching retirement.
Ah, yes, the old succession strategy. … There’s a lot of guys like me who are five or 10 years away at the most of being finished our careers, and what are we going to do? … I have to figure something out at some point in time. … I have investors as well. So at some point, trying to get them out is a net positive even if I don’t get myself out. And how do you do that? Do you sell the company?
Selling can be very risky.
Don’t any of us for a split-second forget that the big guys, from a technical standpoint, are really good at what they do. … So if Tenth and Blake is all about taking some small companies and giving them capital and technical resources, and trying to take these brands to the next level, that could be interesting. … Do we believe they’re going to do what they say they’re going to do? … What I would be more cautious about are private equity funds, only because the whole focus of a private equity company is to take something and then flip it for money. … At least [Tenth and Blake] are beer people.
What do you think about the rapid growth of the industry?
I survived and remember vividly ’97 through about 2001 when everybody and his brother decided to get into the craft beer industry. … And if what happens is that we once again repeat the cycle, and there’s a lot of not-very-good product, or perfectly good product that can’t get through the distribution system fast enough to stay good product, and people who don’t understand the business models, then what’ll happen is people will find themselves overleveraged. First thing, any industry starts to struggle, what do the knuckleheads do? They cut the price, which then screws everybody. …
There’s also no doubt in my mind that 75 percent of the people on that list of [pending breweries] will fail. Or will find out that what they have is a very expensive hobby … [which] I don’t mean as a pejorative. “I can make 35 barrels of beer a month.” OK, well, I’m sorry, that’s not a business yet. And the gypsy brewers, as far as I’m concerned, are exactly the same thing. I know a couple of these folks—some of them have got some awesome beer. But to me, you’re not legit until you’ve got skin in the game, which means capital at risk. …
I love the fact that there’s that much interest. … I see a few bumps in the road. I don’t think they’re going to be near as severe as they were back in the mid- to late ’90s. I think the category is much more solid now, and there’s clearly a lot more well-established, consistent, quality players who are paying attention to the fundamentals of the business model, who will certainly go right through whatever this phase is relatively untouched. So that’s the good thing. The bad thing is, I don’t wish anybody ill, but this is a hard, hard, hard industry. And if all you are is going into it with wide-eyed enthusiasm, be prepared for a kick in the pants. ■