In the early days of Gehl Search Partners Kevin was one of the first people to reach out to introduce himself to see how we could help each other. Community has always been a part of his vocabulary. I had the opportunity to ask him about his recent successful exit with Anderson Valley Brewing Company. Kevin shares his advice and thoughts on running and selling a global beer brand with humility, and provides an excellent example of a leader who took the time to advocate for his employees.

Executive Spotlight: 8 Candid Questions for Kevin McGee

1. Building a successful brewery involves numerous facets, from brewing quality to distribution and marketing. In your experience, what were the most critical elements that contributed to Anderson Valley Brewing Co.’s success or presented the biggest hurdles?

The brewery has been making world-class beer ever since it started, but these days that’s not so much an advantage as it is table stakes just to stay in business because there are so many good breweries now. I’d say the real strength of AVBC comes from its depth of authenticity and substance. There is a very strong current of affection for the brewery and some amazing things about that brand that hadn’t really been brought to the public’s attention. One example is that there are industry-leading sustainability practices that have quietly been going on there for over 30 years because it was the nature and character of the brewery to do it that way. I also discovered only a few years ago that AVBC is the first solar-powered brewery in the world. Another example is that AVBC also installed a forward-looking self-contained water system in the mid-90s that they hadn’t really told anyone about.

The biggest challenges we saw at AVBC really came from managing access to the market, particularly in the pandemic. Andersen is nationally distributed and exports to about 15 different countries. Managing distributor priorities and making sure that you are one of them is a constant concern and distributor relationships in general are steeped in regulatory and legal complexities. That got a lot more challenging during the pandemic just due to the way the middle tier started to manage its own business at the onset of the quarantine. We engaged in some extensive distributor realignments and my background as an alcohol beverage attorney came in very handy in those negotiations and movements. Ultimately, Anderson’s strengths should be the solution to its main challenges – the strength of the brand and the connection it has with consumers will drive sales and retail depletions and prove out that Anderson deserves to be a priority in any distributor portfolio.

 

2. Reflecting on your time as owner, what are you most proud of achieving with Anderson Brewing, and what were some of the key lessons you learned about the brewing industry and business ownership?

The thing I’m most proud of is that we were able to create a modern consumer communications and marketing program that remained true to the history of the brewery. AVBC was founded in 1987 and when you have a brand that has so much legacy it can be difficult to do anything new or basic things like update the packaging or product offerings without conflicting in some way with the spirit of the brand and what got you to where you are today. I think we were very successful in raising the awareness of AVBC and modernizing its packaging and branding while remaining true to its soul. This brewery means a lot to some people, and it was not lost on us that we were stewards rather than owners. It took a great deal of work and a lot of attention to detail, but I think it was successful and an example of a best-in-class modern branding and marketing program.

I suppose the other great source of pride is the opportunity to advocate for the craft beer industry in general. I’ve been serving on the board of the California Craft Brewers Association and have been lucky to be able to contribute through that position. But closer to home, we were able to stand up for craft brewers’ rights by not backing down to the largest beer distributor in the US when they started making demands for things they weren’t entitled to. Opting for litigation rather than capitulation, we won a complete victory after a trial in Sacramento – and achieved a legal result that was a true David v. Goliath moment. That felt good.

3. Anderson Brewing is in a rather rural area of Northern California. I’m curious; what was your philosophy regarding the relationship between the brewery and the local community, and how did you foster those connections?

Being a good neighbor was very important to us. For basic business reasons, your local community is also your regular customers and that needs to be recognized and respected. But on a more human level it’s just better to live your life as a friendly and collegial member of your local community. I think this may have been more of a front-of-mind consideration for us because we were family-owned and operated. We did what we could to make the beer park welcoming and enjoyable for our neighbors. We would provide a free venue for any of the local nonprofits or community organizations. We hosted free live music on a regular basis, which also gave us an opportunity to support local musicians, and the disc golf has always been free. We also did what we could to make the beer park as family friendly as possible. We had a phenomenal asset in the property there and liked to see how many different ways we could invite people to enjoy it.

 

4. Was it difficult to find employees in the area? How were you able to overcome that challenge?

Fortunately, when we bought the brewery it already had a local and very highly skilled production crew in place. We had the benefit of a number of very long-standing and capable employees that we maintained throughout the time we owned the brewery and have since been rehired by the new owner. The labor pool up in that location is no doubt challenged, and for some of the business functions, such as accounting, we ended up finding outsourced solutions. With all the services that are available through cloud-based applications and the increase in people’s abilities to work remotely, the physical location of the brewery was less of a challenge for those kinds of roles.

5.  How long did it take from the initial decision to sell to the closing of the sale? Were there any lessons learned that you could pass on to others?

We actually decided to start the process of selling the brewery about a year before we were able to close the sale. Our process took a little longer than we had planned, for reasons outside of our control, but still happened within a reasonable expectation of how long these things take. We also took a little bit more time because we were looking for a buyer that was interested in continuing to employ all the staff. I am happy to say that we were able to find someone who was a really good fit and it ended up working out well for us and I think also for them. If there are any lessons to pass along, it’s that you should expect the process to take longer, you should make a point to do thorough diligence on any prospective buyer, you should have clear expectations for what you want the end state of a transaction to look like and you should engage a solid professional to help navigate the M&A process.

6.        What are your perspectives on the current state and future of the craft beer industry, and are there any trends or opportunities that you find especially interesting?

I am optimistic but realistic, which I think is in line with the majority of the craft beer community these days. The current market for craft beer is no doubt challenging, but beer is 10,000 years older than Jesus and one of the most durable consumer goods across the history of civilization. There will always be a market for well-crafted, flavorful beer. What has changed over the millennia is how people get access to the beer and how the brewers are able to interact with the people who are drinking it. Right now, there are some substantial challenges to craft breweries getting effective access to the market. Like basically every other business cycle this one will work its way out over time, but the challenge for the breweries is how do they weather the current situation with enough endurance to be able to take advantage of changing market conditions when things start turning around. I think it is a certainty that things will get better for craft beer. The very difficult question is knowing when that will happen and what it will look like as it evolves.

7.        For individuals considering entering the craft brewing industry or taking over an existing brewery, what key advice would you offer based on your experience?

First and foremost, someone entering the market needs to understand what their brewery brings that is special and compelling. Then they have to understand how they are going to communicate that and whether that will translate into a profitable business. Years ago, the craft beer market was growing so quickly that if you had the ability to put liquid on a truck you generally were assured of extraordinary growth. That ended about 10 years ago, at which point having an effective consumer marketing approach started becoming much more important – something that other consumer categories had known for ages but craft breweries in that era hadn’t had to reckon with. The breweries that did consumer marketing well evolved into the household names that everyone knows, and those that didn’t either stalled out into mid-level breweries or eventually went out of business altogether. These days it is simply not enough for a new brewery to suggest that they make good beer and expect customers to find them – a brewery now has to stand for more than that and do more than that to earn the customers attention. The good news is that if a new brewery does have a compelling personality and perspective there are a legion of customers that are eager and looking forward to engaging with it. So, my strongest piece of advice would be to understand what your brewery stands for, why that should be important to people and then how you were going to communicate that effectively.

8.        What’s next for you?

I’m enjoying some flexibility and have started taking on legal and business consulting clients while looking at some potential in-house and executive roles. My legal practice is centered around business law and advisory, but I also do some select litigation and fractional general counsel engagements. For companies that want comprehensive legal advice but don’t want the cost of a full-time attorney on payroll a fractional GC is a great solution and I’ve found there’s a growing need for that kind of service. My business consulting projects range from M&A and corporate development to business model and operational refinement all the way to full-on crisis management. Typically, though, the engagement will tend to blend the legal and business advisory roles. I’ve been an attorney for just about 30 years now and have worked both in-house and in hybrid business executive roles for most of the last 20 years. In that time, I have found that almost every challenge that a business faces are never purely legal or purely operational, and my ability to address both of those areas has helped me find ways to often turn challenges into opportunities. That and being able to balance both business and legal considerations within the same skull also improves the speed to execution as well as saves my clients money.

Want to learn more? Kevin is currently available for consulting engagements. Please feel free to email him at:  Kevin.McGee@TRDCFT.com

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