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Business Observer Friday, Aug. 2, 2019 3 weeks ago

Danish draft beer equipment maker drinks up growth

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After spending more than a decade consolidating the majority of its U.S. resources, Micro Matic looks to conquer nonalcoholic categories.
by: Brian Hartz Tampa Bay Editor

When you order a cold one on tap at a bar or restaurant on the Gulf Coast, chances are the man or woman slinging the brew is using equipment made by Micro Matic, a privately held Danish firm that has made Brooksville, in Hernando County, the epicenter of its U.S. operations.

President Cian Hickey, whose beer career began in 1991 at Dublin’s iconic St. James Gate Brewery, maker of Guinness, says Micro Matic has grown to become a $100 million company in the United States by effectively becoming “the Amazon Prime of beer equipment.”

From individual bits of keg hardware to complete, turnkey draft beer delivery systems, Micro Matic supplies equipment to customers in 120 countries, keeping about $20 million worth of inventory on hand at any given time so it’s never caught short-handed. In the past few years, it’s been on a big roll, securing a $10 million deal to design and install new draft beer systems in more than 900 Chili’s restaurants across the country and winning a lucrative contract to outfit concession stands at the Atlanta Falcons’ new stadium.

“We've grown to not just being on the hardware side of the beer keg, but everything that now takes beer from point A to point B,” says Hickey, 50. “Our secret sauce is not only the inventory that we carry, but the speed at which we can react to orders.”

In a unique move, Micro Matic has also gotten into education, establishing a Dispense Institute that offers training in how to install, clean and maintain draft beer lines. The company says it’s trained more than 2,500 representatives from breweries, wholesalers and even firms that it competes with.

“The reason we're OK with training the competition is that it can get very, very confusing for a customer,” Hickey says. “If the Micro Matic guy goes in and says, ‘We should do it our way,’ and our competitor goes in and says, ‘We should do it another way,’ now the customer is stuck in the middle and doesn't know who's right and who's wrong.”

Valeria Pianta, manager of the Hernando County Office of Economic Development. Courtesy photo.

That approach is part of a strategy to become a one-stop shop for anyone who wants to deliver beverages on top, whether it’s beer, craft soda, tea, coffee, juice, kombucha, even wine. And guess what? The game plan is working.

In July 2017, Micro Matic entered into a three-year agreement with Dunkin Donuts that will see it provide and install tap systems in 1,000 stores across the country. A similar deal has been struck with 7-Eleven, which should have fancy new taps for coffee and tea in some 30 stores by the end of 2019.

“Micro Matic has been a real bonus for us,” says Valerie Pianta, manager of the Hernando County Office of Economic Development. “The buildings, the tangible improvement, is big for our community, but then there are the jobs. They probably had 20 employees when I first met them, and they’ve steadily grown.”

That’s an understatement. Micro Matic’s U.S. division now employs 250 people, the majority of which — 160 — work in manufacturing or distribution in Brooksville. (The company has three other facilities, in Allentown, Pa., Northridge, Calif. and the Chicago area.) That makes Micro Matic the county’s fourth-largest employer in the manufacturing sector.

But the firm’s rise in the United States hasn’t been without hurdles to surmount. Cheap, Chinese-made imitations of Micro Matic products are a continual headache for Hickey, who says the company prides itself on being the supplier of choice for bar and restaurant operators who prioritize quality, not cost.

“Low-cost international providers are certainly a challenge,” he says. “Micro Matic will never be the cheapest piece of equipment you can buy. That’s just not our strategy. We are not the Kia or Hyundai of the industry. We are on the higher end … if people are shopping on price, we will not be the lowest-cost provider.”

The tight labor market has also presented challenges. Hickey, who declines to disclose the company’s revenues, says Micro Matic is fortunate to be at full employment at the moment, but retention can be an issue and so the company has had to make moves like raising its minimum wage — no one makes less than $10 per hour, he says — and expanding its employee benefits package.

“You've got to do more for your employees today than you did 20-odd years ago,” he says.

CONSOLIDATION OF POWER

Twenty years ago, Micro Matic’s U.S. operation didn’t look anything like it does today, and it didn’t have a presence in Hernando County until it acquired a Rockford, Ill.-based company called Johnson Enterprises that had a manufacturing facility in Brooksville. Around the same time, it bought an Allentown, Pa.-based company called Draft Services that helped augment its service and maintenance offerings.

“Micro Matic will never be the cheapest piece of equipment you can buy. That’s just not our strategy.” Cian Hickey, president of Micro Matic USA.

U.S. manufacturing was done in Northridge, Calif., before being moved to Reno, Nev., and eventually Brooksville, where Micro Matic has constructed not one, but two, purpose-built facilities — one for manufacturing, the other for warehousing and distribution — at the Brooksville-Tampa Bay Regional Airport & Technology Center, an industrial park near the Suncoast Parkway that’s also home to another major manufacturer, Barrette Outdoor Living, which employs 250 people.

“It's beautifully done, a showpiece for us,” says Pianta, referring to Micro Matic’s headquarters. “When I'm entertaining new businesses, prospects and consultants, we show them our successes right here. And we hope to see Micro Matic expand more — that was the initial goal, to continue to grow here.”

Pianta has seen firsthand the growth that has come from the company marshaling its U.S. resources in Brooksville, recalling that when she first arrived more than 15 years ago, the company was all about beer — and beer only.

“It was strictly beer taps,” she says, “but they’ve diversified to meet the growing needs of the consumer, and I think that’s key to their success.”

Micro Matic, Pianta adds, has been a positive force for the county — not only because of the economic activity it generates but also the way it improves the lives of residents. For example, the company routinely works with Arc Nature Coast, an organization that provides opportunities for adults with intellectual and developmental disabilities, to fill manufacturing jobs that don’t require advanced training.

The arrangement is a big win-win, helping Micro Matic deal with its aforementioned tight labor market challenges, and giving at-risk members of the community structure, purpose and a steady paycheck.

“That’s another bonus for the community, when people are civic-minded like that,” Pianta says.

BY DESIGN

Micro Matic also carries a unique profile in its manufacturing niche because of its willingness to do custom work for its clients, who Hickey says are increasingly looking for eye-catching bar setups that provide not just beer, but a visual experience to remember — and share on social media, of course. As one of the world’s largest suppliers of draft beverage equipment, it’s a service the company doesn’t need to provide, but Hickey says it’s all about keeping up with the times.

“We've put in a brand-new department that basically operates off the back of a napkin,” Hickey says. “If a customer draws something, we will build it. It’s something you see more and more of these days — these elaborate bars and serving areas.”

That willingness to try new ideas should serve the company well as it continues its forays into the non-alcoholic side of the beverage dispense equipment business, an arena where it’s not as known. That presents yet another challenge, Hickey says, but one that he feels the company is well equipped to tackle thanks to its reputation in a closely affiliated industry.

“There are a lot of legacy companies that have been in the coffee business, for example, for hundreds of years, whereas Micro Matic is very much the new kid on the block,” he says. “It’s going to be more about awareness. I don’t like to use the word marketing, because we’re not really launching something new. It’s basically about communicating our overall capabilities.”

Don’t expect Micro Matic to lose focus on its core business, though. The rise of the craft beer industry has been lucrative for the company because more and more craft breweries and pubs are backed by deep-pocketed investors who have no qualms about paying top dollar for the equipment that’s so vital to their success.

Whereas restaurants might generate 15% of their revenue from draft beer, brew pubs are typically looking at up to 95%, Hickey says, so they don’t want to take risks when it comes to quality. Micro Matic, he adds, fills some 80,000 orders per year but deals with so few refund and exchange requests that its returns department is staffed by just one employee who works three days per week.

“Beer dispense is core to their success,” he says of craft beer establishments, “so those guys are more likely to spend their money on a good beer system, and they don’t really care whether they have the latest and greatest hand dryer [for the restrooms]. That channel has been extremely beneficial to us over the years, not only to our revenue but also our image. We are the high-end guys.”

(This story was updated to reflect the correct number of 7-Eleven stores Micro Matic is working with.)

 

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