Before founding the craft brewer Wild Heaven Beer, Nick Purdy was founding publisher of Paste, a music magazine nominated four times for a National Magazine Award. The 1993 Harbert marketing graduate made his move into the craft beer business and has seen the industry grow significantly, despite the competition from major national brewers. It’s a long-term business model that requires investors to be patient.
Before founding the craft brewer Wild Heaven Beer, Nick Purdy was founding publisher of Paste, a music magazine nominated four times for a National Magazine Award. The 1993 Harbert marketing graduate made his move into the craft beer business and has seen the industry grow significantly, despite the competition from major national brewers. It’s a long-term business model that requires investors to be patient.
Narrator:
Welcome to the Harbert College of Business podcast with your hosts, Sarah Gascon and Currie Dyess. Today's guest is Nick Purdy, president and founder of Wild Heaven Beer, a craft brewery in Decatur, Georgia. Purdy is a 1993 marketing graduate.
Currie Dyess:
Nick Purdy, welcome to the show and War Eagle.
Nick Purdy:
War Eagle back to you guys.
Currie:
You are the founder of Wild Heaven Brewery. What's your story? And what inspired you to create Wild Heaven?
Nick Purdy:
I would say enthusiasm. I had a little bit of a history as an entrepreneur, having started a media company called Paste that did, still does to this day, cover music, film, and pop culture, and had gotten really into craft beer and decided that I would really love to spread the word on that. Happened to know a guy who's really, really good at making beer. And so we came together to create a company and we did that in 2010.
Sarah Gascon:
There's been quite a shift in craft breweries throughout the United States. What is the most significant shift you have experienced in the last 10 years with your brewery?
Nick Purdy:
Well, I think the biggest difference we've seen in the first, we'll be 12 years old this fall, is that a lot more people are familiar with the idea. When we began craft beer was still this very niche part of the beer world. Some people were still calling it micro brew, which was a term that got used a lot back in the short lived boom of the nineties. But what happened in the two 2000s, I've always viewed as a subset of the food movement, where a lot of folks were looking into where their food came from and where it began to be interested in words like organic, farm to table, these sorts of things. Craft beer, where you know where it came from, you can sit in the tap room and see the tanks that it was brewed in. I think really fought back against all the disintermediation of modern life. And I think people felt a really strong connection, but that still was really new to a lot of people when we started. And I think millions more over the last 10 or 12 years have had the opportunity to experience that.
Currie:
Given the rise of craft beer and breweries, your experience as an entrepreneur, what is the most difficult component of marketing and branding when it comes to breweries?
Nick Purdy:
Well, I'll tell you this, the answer to that question is different now than it was in the earlier days of Wild Heaven when we were one of only, I think when we first opened, there was only four other Georgia based craft breweries in the market. And one of those is now gone. So we're the fourth oldest Georgia brewery at the moment. I remember the first time we had beer in four packs and six packs, Kroger immediately took it in, barely knowing anything about us. They like, yes, we want it, put it in the stores. Let's go. And now to get shelf space in a grocery store is a huge battle because, whereas there's just this small handful of breweries, then there's, in Georgia we've gone from, like I said, as being the fifth, so I think now there's over a hundred and many of those have grown quite a bit.
And so all of the branding and marketing and everything around building the business has gotten to be more traditionally competitive, like really any other industry. The first few years that we were operating was a bit of a tailwind where the category was growing really fast. We're talking 15, 18% a year. At the same time, there was a dearth of actual producers. And so a lot of breweries could just put out whatever and it would just sell right away. So there was a bit of a supply and demand disconnect that has since been evened out. It's gone from being something that, where you're just, everybody's excited you exist and just they'll be there and they'll buy all your beer to now it's really like any other business, you got to block and tackle and do all the little things and really work hard.
Sarah:
What does that landscape look like throughout the United States of breweries or craft beer?
Nick Purdy:
Yeah. There are certain markets and regions that maybe were a little bit more advanced, and moved along a little more quickly than others. I think about places like Colorado, California, strangely Vermont has been a really strong craft beer state earlier than most. You could imagine some of the Bible Belt states, the regulatory environments made it a little bit more difficult, but we've gotten now to a point nationally where there's a craft brewery near probably within five minutes of almost every American. It's become a very strong business. It's become something that I think people looking for where they want to live and even set up their offices, they like to be near breweries. They like to know that they're nearby, they've become a third place, like a coffee shop where people know they can just meet up and hang out. And as a result, I think it's become now a part of the fabric of a lot of people's lives. And so all around the country, there's breweries everywhere.
Currie:
That's fascinating that you saying there is a brewery, maybe five minutes from every American, that seems like maybe it's a little saturated, the market is a little saturated. Given that competition, how do you scale a brewery? And what does that look like?
Nick Purdy:
Yeah. Well, I tell you what, you're asking a really good question, because scale is something that probably most every brewery seven or eight years ago thought that they could achieve. And now most breweries know that they probably won't achieve. But what you can do is build a deep local business that really works to be a key part of a community, maybe even in multiple locations, that type of business is not necessarily have the same level of top line, gross revenue as a bigger regional brewery that might be distributed in five or 10 or even more states, but while the revenue number is smaller, the profitability on beer that you sell directly at your own locations is much, much higher. So you could make a very nice business without having scaled up to be a large regional brewery.
We're a bit of a hybrid model where we do have our beer in multiple states and we'll continue to grow our distribution business, which again, higher revenue, lower margin, but at the same time, really putting a lot of effort into that local piece. So we have two locations of Wild Heaven and are working on a third.
Sarah:
What is the economic impact of the local brewery such as yours?
Nick Purdy:
Well, I don't have economic impact studies to give you, but I can tell you that some of the ways in which breweries in their local communities interact, obviously job creators, both on the manufacturing side and then on the service side. Breweries tend to be really, really good citizens of communities in the sense that every school around me, when they have their annual auction asks for an auction lot donation. So we'll send over a gift certificate, a couple of Wild Heaven glasses, a t-shirt, a six pack of beer, a tour experience, whatever, if you go to any school auction these days, and there'll be probably two or three things you can bid on that a local brewery donated. We often host nonprofit events. A lot of breweries are close to small downtowns, or in commercial districts. And so they might participate in their local downtown development authorities in terms of helping to draw business.
There was this idea in residential real estate where you could have the canaries in the coal mine of what the next cool neighborhood to pop would be by looking for rainbow flags, the gay community having been a little more aware and ready to go into some neighborhoods that maybe were about to have that moment of rebirth in a way. And I think on the commercial side, we found that breweries can do the same thing. A lot of breweries tend to go into light industrial zoned areas because we are manufacturing. A lot of areas of American cities that became those cool in town areas with old brick buildings getting refurbished and cool stuff coming in and becoming like new communities with lofts and all that sort of thing. Breweries, I think have served a similar purpose where wow, when you see breweries start to pop up other types of businesses know that's a good place to go next.
Currie:
What is an approximate estimate on how much capital it takes to start a brewery? And how do you find access to that capital?
Nick Purdy:
Great question. And there's not really going to be one answer on how much does it take because there are different types of breweries. If you're just wanting to open up a small little neighborhood gathering spot where you're not going to be doing a significant distribution, you're not worried about having a large canning line to put out thousands of cases a month. Then you can probably do that for a few hundred thousand dollars, maybe between 300 and 600 or 700, maybe even less, if you're really handy, if you want to open up a brewery that's going to have an opportunity to make enough beer to reach into maybe a full state, or even get some beer into some surrounding states, and you're getting into a little bit different of a manufacturing scenario where you do have to have some bigger equipment and you're going to start to spend at that point typically a million to two million. And it really can go up from there just depending on how fancy you want your front of house to be, how much you want to invest in marketing sales.
So some breweries are going to start on a bootstrap and just hand to mouth grow it best they can. Other breweries have come in with millions and millions of dollars in funding and are able to put 10 sales people on the street and buy market share in a pretty aggressive way. And I don't fault anybody for doing that, that's another way to build a business. There's no one answer on that for sure. And then on the access piece, this has probably changed a little bit since we've started, we had a lot of people saw the growth opportunities in craft beer and just wanted to be private investors. So we did a lot of extended friends and family type friends of friends, of friends. Hey, my so and so friend wants to put in 25,000 and we're like, well, as long as he is not a jerk, we'll.-
Currie:
We'll take it.
Nick Purdy:
... we'll take it. And so we've been supported. I had a number of people in my own little neighborhood city here, Avondale Estates. I remember being at the pool the summer we were finalizing our preparations and a friend of mine asked me what I was up to lately. And I was like, oh, I'm actually starting a beer company. He was like, oh, what? Really? And he kept pressing me for information like, well, you're looking for money? I'm like, well, yeah, but I don't want to raise it from neighbors. What if it goes wrong? I don't want you to hate me. Not ever want to see me at the pool in 10 years or whatever. He goes, nah, nah, don't worry about that. I've invested in lots of things. I know you'll do great. And so he wormed his way in and next thing I knew I had 10 people from the neighborhood. So man, if we ever let them down, it won't be good. But at the same time, they've been huge, huge fans.
On the other side of things, there's obviously loans you can get. There's two kinds. There's a small business association that's backed by the federal government, tends to have a lot of hoops to jump through. They love it if you already own your property, that's what they like to collateralize against. A lot of paperwork there, a lot of cost to get that money. But what's nice about SBA money is that they amortize it over a very long period of time, sometimes even 15 years or more. That's a lot better than you can get from a bank. And so you can keep that monthly payment a lot lower. So, anybody that's got the patience to get through that process, the SBA is fantastic. They have actually been helpful to breweries during COVID and had economic injury loans available to us. So we were able to take advantage of a little bit of that. So I have some 30 year, 3% money that is almost an incidental impact on our cash flow, but really helped us through the pandemic.
Commercial loans, there's two kinds there. There's ones that are backed by somebody's wealth. Most entrepreneurs don't have that. There's other types of loans that are backed, for us we did some equipment loans. The money that we were getting loaned to us was being used to buy a piece of equipment to manufacture with. And that very equipment was the collateral for the loan. So, there's all kinds of different ways, but I can tell you that takes a lot of work. I've probably spent a solid 20, 15, 20% of my time over the years on the fundraising side.
Currie:
Wow.
Nick Purdy:
Ah, I'm going to say 10%, 10%, but still a pretty good portion.
Sarah:
So what kind of return do investors look for when funding a brewery, and how long before they could expect to get their money out?
Nick Purdy:
Yeah, no one answer on that either. And I think most people find out when they get into running breweries is that it's a little harder than you expected, a little more expensive than you expected. I remember thinking that I had captured every potential cost into our proforma financial model and I'm like, I got it all. I've talked to so many breweries, I've got it down to the price of the bottle caps. I've got everything. And I can tell you, within two months, one of my biggest expenses was something nobody remembered to mention to me, carbon dioxide. I have to buy a lot of carbon dioxide, and a tanker truck brings it and delivers it in two or three formats. And I was like, I'm spending $2,000 a month on carbon dioxide. Nobody mentioned this to me. So I could just tell you that it's a challenge to get to where you're going to be consistently returning. But I think that what most people see is that it's a valuable thing to be involved in.
We have a model that is definitely meant to be, hey, this is not going public. Don't assume we're going on the New York Stock Exchange. We're probably not going to get acquired, some breweries have, but a few dozen out of 8,000. So that's a lottery ticket if you can get that. So it's really a long term dividend income model, I think for a lot of breweries like us. And so we're right. We keep expanding. And so our investors have been patient and said, no, just keep pushing forward. We'll take our dividends when the time is right.
Currie:
That's really nice. And it sounds like you learned a lot of lessons along the way there. And given your experience with entrepreneurship and raising capital, starting your own brewery, expanding it, and then, of course, your expert knowledge with branding, what would you look for in a startup brewery if you were investing in it? And what characteristics would you look for and why?
Nick Purdy:
Yeah, there's a number of things that you want to see in a startup brewery that are similar to what you'd want to see in any business. You want to see a lot of energy, you want to see some smarts, you want to see some expertise in particular areas of concern. You want to see some financial acumen, you want to see some business strategy. It's really an old fashioned business. It's a widget. It's not a lot different than it was in the 19th century, or even before that. You're taking raw materials, you're turning it into a finished good. And you're selling that at a profit. So it's a really old fashioned business in that way. So I say, there's all of that stuff. There's the branding. These days, you got to think about all the social media stuff. All those things are really important, but I got to tell you, we refer to the liquid, which is the actual beer itself.
And I've seen people that say they're going to start a brewer. And they're like, oh yeah, I'm just going to hire a brewer. And I'm just like, ah, that's backwards. You need to have a vision for what the product actually is going to be. And the person articulating that vision better know how to execute that vision, with help. But these days with so many breweries in the market, if somebody's like, well, I'll just hire a good brewer and we'll be fine. No, because we don't need your brewery. We have plenty. There's breweries all over the place. So if you're going to come out with a new beer brand, I think it's really important that you have a vision for what you're going to bring to the market. Even in our early days, we felt it was incumbent upon us to add something new to the conversation, to respect those that had come before us and done great work and inspired us as beer drinkers and as business people. And I think that holds even more true today that it's really important to have a vision for what you're offering.
And so if I was talking to a startup craft brewery and the brewing talent wasn't part of the founding team, I would have immediate concerns that it's somebody that just thinks it's an easy way to make a buck. It's not.
Currie:
Yeah, that'd be a pretty big red flag. And you talk about having a vision, vision goes hand in hand with culture. As a branding expert, how do you capture that vision and that culture and then relate it and convey it to your target customers?
Nick Purdy:
With Wild Heaven, our inspiration for our name came from the music world. It's a reference to an old R.E.M song that's now amazingly 32 years old. I can't believe that's true. And when we wrote down the idea of our brewery, it was talking about respecting the traditions of Europe and bringing the innovations of the American culture and then the charm of the south. So we were like, how do we blend this idea of beer really came mostly from Europe, or at least the way that we were inspired by it? But we, in the United States, have done a really nice job in the last 25 years of innovating in craft beer in a way that Europe wasn't, and now European breweries are imitating American breweries. The influence is now going back in the other direction, which is really exciting. And I think that's just been Americans doing what we do, which is we know the old stories, but we're going to make our own new stories.
And then here in the South, where we had to overcome a culture that might have different views around how alcohol should, or shouldn't even be integrated into a healthy life. I think we just had a high view of beer. We also felt like wine gets, maybe in our opinion, a little more credit that it deserves as a sophisticated beverage. I could do a 15 minute tangent on ways that beer is actually far more sophisticated than wine, but beer has this lower culture reputation. And so what we wanted to do was build the reputation of beer in the minds of consumers and make it more of a food centric, more of a daily thing and rather than just something that you think of dudes in their lawn mowers or whatever.
So you take all of that stuff together, and that did put together a bit of an identity for us. That was a little bit, I would call it upper middlebrow, if that makes any sense. So it's not highbrow, it's not lowbrow, it's not even middlebrow, it's upper middlebrow. It's craft beer consumers do tend to skew higher in education and income than the average American. And so for us, we just felt like let's make our stuff look classic, but fun, a little more thoughtful, we're not going to be putting scantily clad women into our marketing and branding, that traditional brow beer culture always felt inappropriate to us. We felt like it would be really good if we could find ways to both create flavors, but also branding that was female friendly and actually appealed to women, which women drink a lot of beer, but typically not as much as men, but we always figured it'd be really cool if the guy and the girl both wanted one. And so we could sell two beers instead of one.
So there's a lot of little, I don't know what you might call them, tributaries feeding into that river of what our branding has been, but all that came together. And I feel like as we've talked to our graphic designers and different ones we've used over the years, they understand our identity. It's been put out in the world in a lot of different ways. I think during COVID we got really good at making fun jokes on our label. We did a beer called Fauci Spring during the first spring of COVID. And that ended up putting us on in the New York Times and on the Seth Meyers, talked about it on his TV show and it blew up and became this huge phenomenon. So over the years, we've gotten a little bit more into the having fun and being a little bit more humorous, but some of our classic brands, I would say, tend to have that, all the stuff I talked about that just makes us who we are and different than other breweries.
Sarah:
What would you say is the most difficult component of the marketing and branding?
Nick Purdy:
For beers, that we would like to be in the market long term. We just came out with a new IPA called Sunburst. It's really important that there's not another beer out there called that already. And with thousands of breweries having made between dozens and hundreds of beers, that means there's hundreds of thousands of different names that have been used. So it gets a little more difficult. Now when we make a one off beer that we're going to make 50 cases and 10 kegs of, and it's going to be in our tap rooms for three weeks and then it's gone. And we find that somebody in Idaho called a beer that two years ago, eh, whatever, probably not going to worry too, too much about that. Although we do check and if it's somebody that's had that beer out for a while, we just won't even do it. We'll just find a different name. So these days, the naming, I would say has gotten to be a little more difficult.
Currie:
You had mentioned that there are 8,000 plus breweries in the United States. So obviously the industry is massive, billions and billions of dollars. What stopped the big old slow moving beer giants from taking over the craft industry in its infancy?
Nick Purdy:
So that is such a perceptive question, because in its infancy, they didn't take it seriously. The craft brewing industry in the United States actually goes all the way back to the eighties. And then into the nineties, like I said, we had that miniature boom that was referred to as micro brewing. And you had companies that you still know of today, like Boston Beer, who makes Samuel Adams, and you had, of course, Sierra Nevada, some others that came out. And these were, even as they grew and did well in the markets that they were in, these were a rounding era of a rounding era of a rounding error for Bud Miller and Coors. So I just don't think they thought it mattered.
The reason I referenced the food movement as part of how craft beer grew is I do think that as consumers in the United States became more thoughtful about what they're putting in their bodies and the stories behind those products, I think what we had to offer became, I think more relevant. And then as people explored that, hey, there's a lot more flavor here than I realized. There's a lot more interesting things you can do. The work was done and it just, it took time. Eventually what happened, I mentioned how easy it was to get onto grocery store shelves. And it was really that ultimately that prompted the big beer producers to begin to strike back, because what happened is they would come into a grocery store and suddenly a third of it was a bunch of these local craft beer brands and regional craft beer brands. And that was their shelf space. And when I say theirs, I mean, in the case of Walmart, is it Walmart? Walmart actually outsources the stocking and planning of their entire beer program to Anheuser-Busch.
So they decide if I'm in there. I am on emails where I'm pitching my beer and it's an AB person that's on the email. It's crazy. And so about 10 years ago, Bud and Miller, particularly and a couple other large companies began to buy craft brewers, because they were able to come back to the big change and go, hey, you don't need to deal with all these little companies. Some of whom are more reliable, less reliable. We've now got these great craft brands that we've bought. We've acquired them. We've got all your craft needs covered, but you won't have to deal with all these little companies anymore. And so they fought back hard. I think both Bud and Miller bought about, I think Budweiser bought about 15 different American craft breweries, dotted the map around the country and then Miller bought a good handful of them as well.
And most of those craft brands do still exist and exist under these larger umbrellas. They're not technically considered craft beer anymore, but they still make their products. They're still, I'm sure most of the time, good products. But the big guys definitely took note when we started taking a lot of their shelf space.
Sarah:
Well, along those lines, is there anything you might brew that would make you feel like you sold out?
Nick Purdy:
A few years ago that answer might have been yes, particularly around the lighter lagers, but as craft beer has matured, our tastes are also maturing and we like all kinds of beer. And so yeah, more craft breweries are making those lighter larger styles. And part of that is just like, how else can we grow? And if this is something that people want, then we'll make it, we'll make it our way, but we can make it and the hard seltzer world is another extension of that. Not a beverage I would choose typically, but people do want hard seltzers. And the way the law works, craft breweries are allowed to make hard seltzer, which is just fermented sugar with fruit flavor. So we definitely, weren't excited to enter that market, but we figured, hey, this is something a lot of people ask us for.
Currie:
The college students, most of our listeners are current Harvard College students, or recent grads, for the college students listening who want to be entrepreneurs, would you advise them to just take the leap of faith, right out of school and start their own gig, or to go get industry experience first?
Nick Purdy:
Not knowing a person's individual story, I'd probably lean a little bit to the latter, go learn some things on someone else's dime and get exposed to the rules. I think entrepreneurs naturally like to break some rules. We think we've got something new to offer. We want to disrupt. And I think we've all learned from not just the business world, but other worlds that it's a lot easier to know how to break rules once you've learned the rules. I think there are advantages to entering an industry without experience, because you really don't know how it's supposed to be done. And it might give you some ideas that others wouldn't have had. And that can be really positive unless you have a lot of financial backing though, you're probably going to screw up enough to where it would've been better if you just knew a few things going in.
That said, we are now in a world, and I believe this strongly, you don't have to do one thing. Just because you go get a job at Procter & Gamble with your marketing degree to learn old fashioned marketing from the guys that basically invented it, doesn't mean you don't have a side hustle and that you aren't working at night on your other thing and get your dream up and going. And I was at Deloitte & Touche when we started Paste Magazine. So, that can happen. And I think there's more openness, both by employers to not forbid that sort of thing. And I think more of us now realize that we don't have to be just one thing in our lives.
Currie:
Man, that's really great advice. That's exceptional.
Sarah:
Nick, it's been such a pleasure speaking with you today. What is next for you and how can our listeners follow your journey and contact you?
Nick Purdy:
Next for us is coming back out of COVID into a world that is different, but is ready to be a typical business environment. And so it is about us being focused on the fundamentals, knowing that this is now a maturing market. And what that means is that mistakes are more costly and it's more important to be better at the things I hate to do like planning and taking my time, and lots of iterations, and watching every penny, but at the same time being aggressive and believing in ourselves enough to market really aggressively. So, I think, for us, and I would bet a lot of craft brewers, if you interviewed them would have a similar answer that boy, oh boy, we got some help from the federal government during COVID. That was really great. And small companies don't usually get that kind of thing. So it was pretty shocking, I think to most of us to get PPP funds and things like that.
And so we got a little bit of a reprieve there for a minute on the day to day pressures of this. And I think now it's all about have a vision, know what you're offering and know that if you're an entrepreneur, yes, you might get to be the boss, but what that means is that you're going to wake up at four o'clock in the morning a lot of days thinking about your business. There is no off time really. I've embraced that. It's part of my lifestyle. I'm good with it, but boy, oh boy, what's next for us is making sure we're doing the fundamentals really, really well. We are on all the key social platforms at Beer Wild Heaven, and that comes from the song we're named after, Near Wild Heaven, the old R.E.M song. So you can find us on anything at Beer Wild, and anybody's welcome to email me, Nick@wildheavenbeer.com.
Currie:
On behalf of our listeners and the Harvard College of Business, we cannot thank you enough for the great conversation and really insightful wisdom. Thank you so, so much for your time. War Eagle.
Sarah:
War Eagle to Nick.
Nick Purdy:
War Eagle. Hope to see you guys this fall. Maybe we can bring some beer to a tailgate and invite folks out to come say, hey.
Sarah:
That'd be great.
Currie:
Yeah, you don't have to twist my arm.
Nick Purdy:
All right. Cheers.
Sarah:
Thanks Nick. That was great.
Narrator:
Harvard, inspiring business.