Trend. Craft beer has been a fast-growing business despite the recession.
When you think of entrepreneurs, Neal Knapp may not be the kind of person who immediately comes to mind.
After all, Knapp, 71, retired from Anheuser-Busch in 2006 after 30 years in top positions at the famous St. Louis brewer and settled in Cape Coral eight years ago.
But Knapp is far from your traditional retiree. He launched Brew-Bev, a company that provides the equipment and know-how to brewpubs and craft brewers. Some weeks he works 80 hours, often texting his suppliers in China in the middle of the night.
As more people retire to Florida, it might be useful for economic development experts to take note that people like Knapp may be the ones who start new businesses and drive job creation. These hard-charging executives have decades of experience running companies, and they don't take to the golf links too easily.
Like many people who settle here later in life, Knapp used to vacation in Southwest Florida. But Knapp had a storied career at Anheuser-Busch, building and operating huge breweries that produced millions of barrels of beer. He spent the last 10 years working to supply the company's 50 Chinese breweries.
“I tried to retire,” Knapp chuckles.
An engineer by training, Knapp says he loves to design and build breweries. When he started Brew-Bev after he retired eight years ago, the company was nothing more than an expensive hobby, he says.
For a year after retiring he was a consultant to Anheuser-Busch. Then, he became a manufacturer's representative for China-based brewing equipment companies.
But as word spread about his background and experience, Knapp says he began offering to build small breweries from scratch for restaurants and craft brewers. That includes performing market surveys, creating a business plan, finding financing, buying and installing the equipment and providing ongoing maintenance and consulting services. “We'll supply you right down to the labels,” he says.
Fact is, brewpubs and artisan craft breweries are growing quickly even in challenging economic times. Craft brewers sold 15% more beer in 2011 than in the prior year in dollar terms, according to the Brewers Association.
Because Chinese equipment cost half as much as that made by U.S. manufacturers, Knapp says he can build a small brewing system that costs from $60,000 to $2 million.
Now, Knapp has a business that's growing. While he declines to cite financial data, he says Brew-Bev is currently working to build several artisan breweries in Canada and Mexico.
Beans to beer
Knapp grew up in the food business. His parents owned a vegetable cannery in Springville, N.Y., and he became the warehouse foreman at age 16, displaying leadership skills early.
Knapp eventually earned a master's degree in food engineering from the University of Arkansas and worked at a series of vegetable and cola packing plants. Then, he joined Anheuser-Busch in the mid-1970s.
His first big assignment with the brewing giant was tripling the output of the Los Angeles brewing operation to 10 million barrels a year with a staff of 500 people. At the time, that represented 10% of Anheuser-Busch's total beer production. He was then promoted to run the St. Louis beer operation, overseeing a work force of 2,000 people.
In 1989, Knapp moved to Cartersville, Ga., just north of Atlanta, where he built an Anheuser-Busch plant from the ground up. That plant produced 7 million barrels of beer annually, which is the equivalent of 217 million gallons.
Following a stint at corporate headquarters, Knapp took the job of procuring supplies for the company's Chinese breweries despite the fact that he didn't know how to speak the language. “Somebody looked at me and said, 'do you have a passport?'” he laughs, recalling how he got picked for the job.
But there's a common language in manufacturing, whether it's in China or the U.S. One clue is whether the shop floor is clean. “That's an indication of how you do business,” Knapp says.
Doing business with the Chinese wasn't as difficult as some manufacturers say. “I found people pretty willing to work with you,” Knapp says. He adds: “Special people rise to the top.”
For 10 years, Knapp developed a network of top-notch Chinese manufacturers and suppliers, commuting halfway around the world from his home in St. Louis. It was a grueling lifestyle, led by a demanding chief executive, August Busch III, also known inside the company by his suffix as “three sticks.”
Knapp developed a wide network of Chinese suppliers over a decade of international procurement for Anheuser-Busch. “My suppliers wanted to do business here,” he says.
Initially, Knapp agreed to help Chinese manufacturers sell their brewing equipment and supplies in the U.S. “I started as a manufacturer's rep,” he says.
But Knapp prefers the engineering side of the business rather than sales, so he designs and installs the systems. For example, he's helping a retired 3M Corp. executive build a small brewery in Mexico. “I buy the machinery and resell it,” he says.
Knapp's service is invaluable because of the risks of getting cheated by unscrupulous operators. “We know who's safe to deal with and who isn't,” he says.
Still, as any good business executive knows, you can't be too trusting. Knapp now travels to China about four times a year to inspect the equipment he's buying for customers.
Before it's shipped, Knapp insists that manufacturers assemble the equipment to test it before it's sent to the customer. Then, he personally oversees the loading and shipping. “That's the only way to know what you're going to get,” he says. “You get what you inspect, not what you expect.”
Although Knapp says he knows he's undercutting U.S. manufacturers with less expensive Chinese equipment, he says the lower cost is helping many entrepreneurs start craft breweries and brewpubs in the U.S.
Knapp's company itself is looking to hire additional people to its existing staff of 20. “We need more people because I don't like working 80-hour weeks,” he laughs.
BUILD YOUR OWN BREWERY
Ever dreamed of building and operating your own brewery?
Then you might want to have a chat with Neal Knapp. The longtime Anheuser-Busch executive's Cape Coral-based company, Brew-Bev, can build it for you and even find a professional brew master to operate it.
The trend is on your side. The growth of craft brews has made beer drinking more sophisticated and sales have grown by double-digit percentage rates in recent years, eating into the sales of giant brewers.
But beware: Running a brewery takes money and time. “You're either brewing or cleaning,” Knapp says. “You've got to be ready to work.”
Getting the word out and landing shelf space in stores can be challenging. “It's all about getting a following,” says Paul McLaughlin, director of marketing and sales. “It's cult-like.”
Beer aficionados seek out craft beers from small manufacturers. “They'll be there with their laptops, rating it,” McLaughlin warns. “This is passion driven.”