Homegrown Brewery Owners, Who Recently Opened a Third Facility, Share Their Struggles, Successes and Secrets to Becoming Leaders in the Virginia Craft Beer Industry
Eric McKay and Patrick Murtaugh can recall the exact day that they knew the small craft beer venture they'd co-founded—Hardywood Park Craft Brewery—was going to make it.
"It was the first event at our downtown Richmond facility, July 4, 2012, just after it became legal in Virginia to sell in a taproom," company president McKay recalls. Recently opened, the brewery's small staff prepared for 500 patrons, but 4,000 showed up, he says. "People were everywhere. I'm sure there were attendees there who were like, 'We've got to start a brewery.'"
It sort of seems that way. In Virginia's exploding craft beer universe—from 35 to 200 breweries in just the past few years—Hardywood has led the way. With 75 employees spread throughout three locations (including an experimental pilot brewhouse in Charlottesville) the company recently finalized its $28 million expansion to a new 55,000-square-foot facility in Goochland County. This bucolic former business park includes a nearly 4,000-square-foot taproom and a large patio area earmarked for future outdoor events and concerts.
"We knew that our original Richmond facility was a means to an end," McKay says. "We could not realistically expect to become a viable distributing brewery with a 20-barrel brewhouse in a 12,000-square-foot facility." Hardywood needs the room for production, he says. Its beers just broke into the Atlanta and Raleigh-Durham, N.C. markets, and next year will debut in Winston-Salem and Greensboro, N.C.
Homegrown Hardywood has also been poaching from the big leagues—the brewing team now includes Kate Lee, vice president in charge of operations and quality, a former Anheuser-Busch specialist. "I think anyone who really understands beer and brewing understands that one of the things that Anheuser-Busch does extremely well is quality assurance," says company Brewmaster Murtaugh. "Making sure that millions of bottles and packages of beer all taste the same, it's an insanely hard thing to do."
Here in the new West Creek facility, situated near the Capital One building, a taproom visitor may find all manner of different flavors, from a Smoked Marzen Lager to a Rum Barrel Pumpkin yam beer to the new Suncrush citrus sparkling ale, seemingly the perfect beach beer at 4.2 percent ABV. There are also tantalizing concoctions like a "None of This Makes Sense" IPA and a high alcohol Apple Brandy stout. Hardywood brews have copped medals from the World Beer Cup and Great American Beer Festival, and snared a rare 100 rating from the picky BeerAdvocate magazine. Brewing with a sense of childlike fun, Hardywood's mad scientists are now experimenting with cider.
"Eric and I have known each other since we were little kids," Murtaugh says. "We grew up together, me in New York and Eric in Connecticut, where we used to spend summers together. Our parents and siblings are friends, so I guess this all started when we were teenagers. We thought it would be fun to start a business one day, but we didn't really know what that would be."
The following interview was conducted at the new location. After giving a tour of the impressive digs—proudly showing off everything from the grain mill room to the hops dosing unit to the state-of-the-art bottling line (which can fill and cap 10,000 bottles per hour)—McKay and Murtaugh sat down in an executive board room and discussed the art of beer making, the politics of taprooms and how the origins of Hardywood Park Craft Brewery can be found Down Under.
This all started on an Australian sheep farm?
Patrick Murtaugh: Yes. (Laughs) Eric was studying abroad, and I was backpacking around after college, and we met up at this sheep farm where he did his orientation. That was our first introduction to hand-crafted beer. It was a few thousand acres, named Hardywood Park, three hours outside of Sydney. His name was David Crawford. He had a couple daughters, his wife and a baby kangaroo named Sammy. He made his own beer, and he showed us a little about homebrewing, and I can just remember trying this beer with Eric and saying that, 'Wow, beer can actually have a lot of flavor and still be good.' Even through college, all I'd had was sort of this lowest-common-denominator beer.
Eric McKay: It was a malty, amber ale.
Murtaugh: We tried the beer, and I was just blown away. That was it for us.
McKay: That was my third trip to Hardywood Park, and each time I asked him a lot of questions about how it was done, he showed us his setup and kind of talked us through it. And when we returned to the U.S., we got home brewing kits and started brewing, together mostly and kind of read voraciously everything we could about making beer. And around that time, we both graduated college and were kind of starting our careers. Patrick was mostly into the acting path, and I was in the finance path in New York City ... I loved New York but didn't really love the work I was doing but was really passionate about homebrewing.
What kind of beer were you making back then?
Murtaugh: Like a lot of homebrewers, right out of the gate, we made some really good ones and some really bad ones and didn't really know why. The more you read and experiment, the more you realize that, OK, I really have more control over the process than I think. Even with a homebrewing setup you have a pretty decent amount of control. But you have to know what you're looking for and what you're doing and know a little more about the science behind everything.
When did you decide to start a brewery?
McKay: We wrote a business plan over many months. Our first business plan was to buy a small farmhouse winery in New England and convert it into a farmhouse brewery. It sat on a hill overlooking a creek, it was near my hometown and we thought it was something that could work. Investors ... that was a big challenge.
Murtaugh: Craft beer was growing at the time, pretty consistently, like 10 percent per year for a number of years. We felt we had a pretty good argument, but we were kind of like this unknown thing.
McKay: We were 26, 27. We shifted the model, rewrote the business plan, I ended up going to business school, and Patrick ended up in brewing school. And it was during that time we started basing our business plan on actual businesses that existed.
McKay: Our plan had us building a brewery in the Southeast. Nationally, craft brewing was growing about 10 percent per year by volume. The Southeast demand had a very low market share for craft beer but it was growing about 30 percent per year. We were focused on moving to a place where a brewery could [grow]. The number of breweries in operation in the region was really two—Extra Billy's and Legend, and 35 or so total in Virginia, when we opened in 2011. We felt that culturally all of the identifying features of Richmond from a socio-economic and cultural standpoint suggested that it could be a fantastic beer town. It just didn't have the legal structure, and there wasn't really anything in terms of new wave, barrel aging, outside-the-box beers.
Was it easy to get a foothold?
McKay: Virginia was tough. It was really, really tough. For a startup business, economic development couldn't really do anything to help you, it just wasn't how they were set up. Banks were doing zero to be helpful. We were 80 percent of the way to our $1.2 million-dollar fundraising target, and there wasn't a single bank that would even consider what we were trying to do. Nobody had done what we were trying to do. We were trying to start a production, distribution-focused brewery that did not have a restaurant, and in our business plan we were not going to make a nickel for the first three years. At best. That was the hope. That's just how it goes for a manufacturing business, and the laws didn't allow for taprooms. It was a scary first year where we spent way more than anticipated to get up and running. Despite the fact that, right out of the gates, we were selling at capacity, but we were still losing a tremendous amount of money every month.
When the law on retail beer sales was changed, and sampling on the premises of Virginia breweries was allowed, what was the effect?
McKay: We were very fortunate that Sen. McWaters had written Senate Bill 604, and we joined up with Mark Thompson at Starr Hill, Steve Crandall of Devils Backbone, Brian [Nelson] our head brewer, Patrick and I, and we hired a lobbyist and we went down to Capitol Hill and did our best to tell the story of what we thought craft brewing could do for the economy, for job creation, for tourism, for making Virginia an interesting place to live and to visit. And we're fortune that many of them heard our story and listened ... and that bill almost didn't go through. A lot of brewers take for granted that it was an easy sale, but it was not. To that end, it's been extremely exciting to see how the passing of that bill has enabled such a thriving brewing community, and craft brewing and now distilling are becoming cornerstones of the Virginia tourism strategy, which used to focus on wine in the wine growing regions.
The Singel belgian blond ale put Hardywood on the map.
Murtaugh: We had talked about what was missing in the market and went to a lot of sales reps and restaurants and found that there were a lot of pale ales, a lot of IPAs that had been launched, a lot of new brands leading with another pale ale or IPA. So it was becoming harder to sell a lot of pale ales, even though it was maybe the most popular style of beer at the time, the most obvious choice. We knew we could walk in with something that was just as palatable, just as interesting, but we wouldn't duplicate anything else. Not everyone knows what a belguim blonde ale is and what it tastes like so we did have to educate people. These were flavors that people just weren't knowledgeable of.
McKay: We thought it was the most underrepresented style of beer. It's such a versatile food pairing beer, and there were so few breweries doing it well. It's a core part of our flagship lineup, and in our taprooms it's generally our best selling draft beer and for three years, it was our only year-round beer. The moment we started selling it through Brown Distributing, we were maxed out and needed to add tanks to make more."
You use a lot of locally sourced ingredients.
McKay: We've worked with local farmers from day one. The Gingerbread Stout is a great example of that. A small ginger farmer and small honey operation—the ginger is from Casselmonte Farm in Powathan, the honey from Bearer Farms in Louisa County. For the raspberry stout, we use Agriberry. We also use their blackberries in our Virginia Blackberry. Also coffee from Black Hand roasters in Richmond. A lot of our associations have come from being open minded. Bill Cox from Casselmonte just showed up at our door with a stalk of ginger, and we loved his passion for what he was doing. We didn't know what we were going to make with it and finally we thought about it and we ended up with the first commercial available Gingerbread Stout.
Hardywood's Richmond taproom has also become a lively music venue and community gathering place.
Murtaugh: There wasn't anything like it at the time. Pretty much every brewery that has started after us has started with the intention of having a taproom as part of the business.
McKay: From a marketing standpoint, the tap room is the most valuable asset that we have in terms of growing demand and appreciation for our beer. It saved us, really. It enabled us to grow, to add more tanks, to hire more people and to achieve everything that we told the politicians back in 2011 about what craft brewing could achieve for Virginia.