Q&A with Tom McManus, CEO of KegWorks

CP:
How, when, and where did you discover craft beer/home brewing?
TM:
I started really drinking Craft Beer in the early 90’s when I lived in Cleveland.  Great Lakes Brewing was just starting to grow and a Rock Bottom Brewing had just opened up.  At that time in Ohio everything else was Budweiser or Miller.  When I wanted a taste of home, I would try to order a Labatt Blue, but usually it was in the weird green glass (usually skunked) or it was crazy expensive because they considered it an import.  Very different that what I was used to when I was visiting home.  I also discovered Anchor Steam beer at the time.  This is still my favorite.
CP:
How, when, and where did you realize that craft beer/home brewing could be a business that might successfully take root in Buffalo?
TM:
I knew the Godfather of Buffalo Brewing (Tim Herzog) when he was still a bartender at Laughran’s in Snyder and was just getting Flying Bison going.  This was long before I joined the KegWorks team.  Watching how hard he worked at every event trying to evangelize this new local beer and the struggles he went through made you wonder if it would every take off here.  When I started at KegWorks in 2005, we were just beginning to see this movement starting in other cities.  We knew it would eventually get here.
CP:
What about craft beer/home brewing appeals to the WNY psyche?
TM:
One of the things I try to tell people when they talk about the how great the Buffalo beer scene is, it that “yes, it is great” but we shouldn’t think that it is unique to Buffalo.  It has been happening in every metropolitan market.  The efforts that have gone into our beer tourism are great, but a fantastic beer scene is not a differentiator for Buffalo.   Pittsburgh, Cleveland, Rochester, Columbus (do I need to keep going) all have great breweries.
CP:
What other impact has craft beer had on the local economy?
TM:
I think we should look at the local brewing industry from the point of view of how many manufacturing jobs it has created.  I had never looked at it that way until I asked Paul Iskalo why he decided to get involved with Big Ditch.  His answer was he had been looking to invest in a local manufacturing project and really like the business of beer at scale.  There are a lot of talented brewers going pro, but when the really smart business people get involved that changed things.
CP:
Are we nearing a saturation point on local bars, brews, and brands?
TM:
I think so. Ethan Cox describes it best in that craft beer drinkers are very promiscuous in regards to what they drink.  Everyone is looking for something they haven’t tried before.  That makes it very difficult to build a brand for a brewery, and even harder at a product level.  Look at the level of distribution over time.  That shows you how hard it is.  Flying Bison Rusty Chain and Big Ditch Hayburner come to mind as ones who have done it well.
As an outsider looking in (I don’t brew beer) all of the breweries are still very collegial for the most part.  This surprises me because during the growth of the market there was room for everyone.  But now there is a limited number of handles and limited number of shelf slots and there is more choices for the retailer.  Competition will eventually get ugly because its going to take more that a quality product to earn the opportunity for your beer to be sold.
CP:
Do you think Budweiser and Labatt (etc.) have lost a market share, or have they maintained their place, craft brews only bringing new people to the beer marketplace, rather than segmenting the existing customer base?
TM:
It’s going to get ugly for the macros. They are getting squeezed from both sides. Craft is growing a percentage of total beer sales but what no one is talking about is that beer as an overall category is shrinking.  There are a lot of things working against beer right now. Changing drinking styles of the millennials as this group ages up, wine seeing a resurgence, all people becoming more health conscious — and don’t forget about cannabis. All these things. The drink local movement is hurting the macros and the regionals (Ballast Point, Stone, New Belguim) too. You don’t see as many CEOs getting fired because they are doing great jobs growing their companies.
CP:
What does the future of craft beer in the region look like, especially economically?
TM:
I think we will see a brewery or two closing in the next year.  The pipeline of new ones opening up is still pretty strong and established ones are getting smarter.  Better product and more capitalization by the competition will force a couple out.  It will be interesting to see how many breweries will start distilling to find growth.  Bootleg Bucha is going to work its way into one the top brewers in the area because of their first mover advantage in the fast growing kombucha market.
Tom McManus is CEO of KegWorks, a home brewing and bar supplier based in Buffalo, NY.
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Content for the July 2017 issue, Craft Beer and the Buffalo Economy, presented by Waterbourne Group of Companies, LLC.

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