Bars/Taverns and Retail and Real Estate & Retail

Brugge Brasserie gastro-pub to produce line of 10 beers

July 23, 2007

Since mid-2005, Brugge Brasserie's beer tanks have been operating at full capacity--pouring out 400 barrels of its signature Belgian brew each year. Now the Broad Ripple gastro-pub is aiming higher.

Brugge owner Ted Miller is set to start producing a line of 10 bottled beers--plus seasonal specialties--on July 23 at the Terre Haute Brewing Co., which stopped brewing its own product last year.

If history holds true, he has his work cut out for him. Since the specialty beer boom began in 1989, 32 microbreweries have opened in Indiana, according to the Brewers of Indiana Guild; 13 have closed.

Miller isn't deterred. In fact, he's starting off-site brewing three years earlier than he had planned.

"One reason we're into the production side [sooner] is because of our significant popularity in Broad Ripple," said Miller, 37. "We can't brew enough to satisfy demand."

Although Miller and his partners initially touted the gastro-pub's higher-quality food, its house-made Belgian beer quickly became a star. Brugge's Tripel de Ripple won a silver medal at the 2005 Great American Beer Festival, and this year its Diamond Kings of Heaven ale earned a gold medal at the Indiana State Fairgrounds' Brewers Cup Competition.

The craft brewing industry is gaining steam nationwide, said Blaine Stuckey, president of the state brewers guild, which promotes awareness of Indiana beer. Unlike early microbreweries that focused on beer, today's brewpubs also include restaurants. Indiana has 16 brewpubs, Stuckey said.

All told, domestic sales of craft beer barrels increased 38 percent from 1997 to 2006, said Julia Herz, director of craft beer marketing for the Colorado-based Brewers Association.

The fall and rejuvenation

Terre Haute Brewing Co. has its own storied history. It opened in 1837 and by the end of the century had become the seventh-largest brewery in the United States, said owner Mike Rowe, 53. Post-World War II, the company employed 950 people and sold 1.5 million barrels of beer a year--including Champagne Velvet, its signature drink.

The Terre Haute brewery closed in 1958, but Rowe bought the original building in 1995 to turn it into apartments. When he discovered historical documents about the company, he decided to develop a restaurant instead. Since that time, he has collected Champagne Velvet memorabilia.

"A guy walked into my office about 10 years ago saying he had a book about beer and would sell it for $20," Rowe said. "I gave him the money and flipped through the book [and found] a handwritten recipe of CV beer from 1901."

After acquiring that recipe, Rowe started making it again and reopened the Terre Haute Brewing Co. as a brewpub in 2000. The restaurant remains open, but Miller bought the brewery building and equipment, so production of Champagne Velvet has stopped. Rowe said he might make the brand again elsewhere.

When Brugge beer production begins, six people will brew 1,500 barrels--each holding 31 gallons--a year, Miller said. Eventually, he'd like to grow the operation to 20 employees.

He expects first-year startup costs to be $1 million, which he's paying for with loans and help from his business partners, family and friends. Miller has an agreement with Wabash Valley Malt Beverage Co., which will handle packaging.

"We're making the beer, we put it in their bottles, and they pick it up," Miller said.

Miller hopes distribution by Indianapolis-based World Class Beverages will begin by September. His product should be available in liquor stores, grocery stores and restaurants. A 25-ounce champagne bottle will cost $6.99 to $9.99 for his regular line and his specialty beers will range from $11.99 to $19.99. He said he expects first-year revenue at Terre Haute to be $1.5 million.

Obstacles to overcome

Times have changed since the first microbrewery boom and bust, Miller said. He blamed mismanagement, poor timing and undercapitalization for previous failures. Several Indiana operations, including Indianapolis Brewing Co. and Evansville Brewing Co., closed in the late 1990s.

Now, the industry is looking to cash in on the burgeoning popularity of so-called craft brewers--by definition someone who produces less than 2 million barrels a year, owns at least 75 percent of the brewery, and produces at least 50 percent of its volume in malt beers, according to the Brewers Association, a not-for-profit that compiles statistics for its industry and provides resources for craft brewers.

Craft brewing is the fastest-growing segment of any alcoholic beverage sold in supermarkets, Herz said. From 2005 to 2006, craft beers rang up 18 percent more in supermarket sales; sales of other alcoholic beverages increased 10 percent or less, she said.

"As a consumer culture ... they're demanding flavor and diversity in everything such as coffee, cheese and breads," Herz said. "Choice, flavor and diversity is what craft brewers deliver and what the general adult beer drinker is open-minded and interested in."

These days, brewers are more knowledgeable, said John Hill, owner of the Broad Ripple Brewpub, the oldest brewpub in the state. During the 1990s, they weren't in it for the long haul.

"It's not because the beer failed, but because of bad management or they decided they didn't want to do it anymore," said Hill, 63. "A lot of people don't know what it's like to open one."

Microbrewers of the past failed because they rushed into it without being prepared for the demands and hours the industry calls for, said Stuckey, of the Brewers of Indiana Guild. Now, they know what to expect.

"What's happening now is, you're seeing the ones who have opened since [the decline] having to have a tight business plan and restaurant model and know what's going on," he said. "We're still not where other states are around us ... but we're on the verge. We're slowly but surely educating ourselves on what's out there and what's available."

More of the same

Miller thinks his beers will succeed where others have failed because Belgian beers are increasingly popular nationwide. They've certainly sold well at Brugge, and he doesn't expect that to change.

"Customers have asked why they should come to Brugge Brasserie if eventually Brugge beer will be everywhere," he said. "Here's what we've thought about: One ... because our food rocks and, two, because we're going to have this brew line of beers available year round and the brewery can brew fun, obscure, seasonal specialty stuff all the time."

He said he hoped to add more varieties as customers' tastes change.

"We're going to find out which of these beers is really driving sales, then we'll put more resources into that beer and continue to come up with new things," Miller said. "Being an innovator is going to be part of the thing that's going to make us great."

Broad Ripple Brewpub's Hill isn't worried about the additional beer competition because he makes different types, such as English and German ales.

"The people who drink it [will] drink it, and the people who drink my beers [will] drink my beers," he said. "We get a lot of clientele and they keep coming back. From the standpoint of Indiana beers, it's a great plus because [Miller] makes wonderful beers."

Rowe of Terre Haute Brewing Co. has confidence in Miller's success. He has approached his business plan well, has established a relationship with a distributor, and has the capital to make sure production is met, Rowe said.

"I'm truly excited for them," he said. "I think this is a tremendous thing for this community and the state of Indiana. These guys are going to do some great things and produce some great beers."

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