Dan Conway ’84 provides insight about Great Lakes Brewing Company’s sustainable growth
By John Walsh
If you talk to small-business owners about their companies’ performances the past few years, many say they’ve been weakened by the sluggish economy. But that’s not the case for Dan Conway ’84, the co-owner (with his older brother, Pat) of Great Lakes Brewing Co. (GLBC) in Cleveland’s Ohio City neighborhood.
Great Lakes is categorized in the craft segment of the beer market that has performed well recently. Overall, beer sales declined 2 percent in 2009 and 1 percent in 2010, but the craft segment increased 10 percent and 12 percent during those two years, according to the Boulder, Colo.-based Brewers Association.
“We believe it may not be so much recession-proof as it is a fundamental shift of how consumers are looking at beer,” Conway says. “Craft hits on many points – full flavor, local, authentic, and often sustainably oriented – the convergence of which will likely grow its share of the beer industry from 7 percent to 20 percent in about 10 years. However, there could be a trend in this economy in which folks say ‘drink less, drink better.’ If this happens, the craft segment would benefit.”
GLBC is no stranger to troubling economic times. The Conway brothers opened the brewery in September 1988 – after a casual conversation about the Wisconsin-based Stevens Point beer Pat drank while living in Chicago and how fun it would be to own their own brewery – amid the savings-and-loan crisis. However, the company’s challenges then were typical start-up concerns – business plans, revenue projections, and operational costs – not the general condition of the economy. (The Conways’ father, John F. ’39, an attorney, helped them in the early days by giving them sound advice.) They bought much of the company’s real estate in the early 1990s through the Resolution Trust Corp., which was created to help unwind many of the troubled savings-and-loan assets from the crisis, including the ones the Conways were renting.
“They joined the industry at the right time,” says Tom Fox ’83, managing partner of Troy, Mich.-based CM Profit Group, a beverage industry consulting company that has been providing GLBC sales training since 2000. “Even though they weren’t the first craft brewers, they’re known as pioneers in the industry.”
Watch it rise
Despite the economy, Great Lakes’ business continues to improve. The privately held company has grown between 15 and 20 percent each of the past few years and 25 percent in 2011. The growth is in the areas of the brewery, brewpub, and gift shop. The largest area of growth is the brewery, which represents about 85 percent of the company’s sales – about $30 million in 2011.
Great Lakes Brewing Co.
Year founded: 1988
Location: Ohio City neighborhood in Cleveland
Owners: Brothers Dan ’84 and Pat Conway
Revenue: About $30 million
Number of barrels of beers brewed in 2011: 175,000
Number of employees: 160
Largest craft brewery ranking in the U.S.: 22
Number of beers brewed: 65
Web site: greatlakesbrewing.com
“They’ve been in a wonderful sweet spot,” says Fox, who has known Conway since their days at Carroll.
GLBC is spending the last of $6 million it raised last year through industrial revenue bonds, mostly for the expansion of its brewery: an enhancement to the brewhouse, a larger filter, a new bottling machine, more fermentation tanks, an improved dock, and new offices.
“With all this, we’re up to 160 employees – 26 added since 2008 – and we’ll be adding more as we continue to emphasize cross-training between departments,” Conway says, adding the company is focused on training employees more than ever and implementing lean manufacturing business practices.
Since its inception, the growth of Great Lakes never has declined, yet it’s been controlled. The company’s many expansions – comprised of brewery tanks and buildings, for example – were never so big it couldn’t handle them physically or financially. During the late 1990s, GLBC borrowed $800,000 to expand. Now it’s reaching a similar point.
The company’s growth is focused on the Great Lakes region because of its name and location. Growth outside the state – there have been numerous requests for beer samples – has been helped with the recently added capacity.
“They’re well regarded nationally, and yet they are unbelievably modest,” Fox says about the Conway brothers. “Their Irish Catholic roots have guided them to take a more purposeful and conservative route in the business.”
Conway and his management team, including controller Kevin Cawneen ’88 MBA, are determining how they’ll continue to expand once the company has reached its brewing capacity, which could be in two years. They want to provide an additional 350,000 barrels – from about 175,000 now – of capacity.
“There are a number of ways to do it, so we’ll be distilling our thinking,” Conway says.
“Dan is one of the most thoughtful guys I know,” Fox says. “He’s always thinking about the business. It’s great talking to him because he’s always so courteous and professional.”
Beyond the bricks and mortar, GLBC is focused on its employees.
“We hope our emphasis on our people will translate to an environment in which new teams of employees are working in new ways together to produce results,” Conway says. “They help define what success looks like and are part of delivering it.”
In the spring of 2010, the company had its own upsizing summit. It closed for three days and worked with all its employees, suppliers, and customers (such as retailers, distributors, and individual consumers). They thought collectively about GLBC’s future.
“We had a couple of consultants guide us through our work, which we did with an appreciative inquiry (AI) approach,” Conway says. “Since then, we’ve been planning strategically, again using AI and its four Ds – discover, dream, design, and deliver. We’re at the important design step, where we’re attempting to put meat on the strategic bones. The best part of the process is the quality of the internal dialogue has been elevated.”
Local food and drink
Beyond the brewery walls, the Market District neighborhood (an area of Ohio City) is transforming into a local food area that will be highlighted when the West Side Market, which is across the street from the brewery, celebrates its 100th birthday this year.
“Walking through our part of Ohio City today is very different compared to what it was like in the mid-1980s,” Conway says, referring to the police officers he and Pat hired every day and night for a while and the various unsavory establishments near the brewery. “We’re gratified to see what’s been done since we started, and there are many things still on the drawing board.”
Since Great Lakes settled in Ohio City, the Flying Fig restaurant, Cleveland Film Society, Dave’s Supermarket, Crop Bar and Bistro, and Garden Market Brewery have opened their doors nearby. Conway, who’s wrapping up his six-year term on the Jesuit Retreat House board, welcomes the growth because it brings more people to the neighborhood.
There are other improvements in Northeast Ohio Conway would like to see to help the local economy. He cites a study that challenges Northeast Ohio to have 25 percent (versus 1 percent currently) of its food come from its own backyard, which could improve many of the 3,300 blighted acres in the city and help form an infrastructure and supply chain for local food. This would satisfy sustainability’s triple bottom line of creating jobs, improving the land, and providing healthy food for people.
“We’ve provided robust community- sponsored agriculture investments for the Ohio City Farm and our Pint Size Farm at Hale Farm just south of Cleveland,” Conway says, adding that 35 to 40 percent of the food used in the brewpub is local. “We’re not getting all of our investment back in food, but there are many beneficial intangibles. We’re looking to see how the 6-acre Ohio City Farm – the largest urban farm in the country – could be extended to the 25 acres at Irishtown Bend – land no one wants because of severe erosion problems – by incorporating terrace farming.”
The hardships of the regional economy are plenty and well documented, but Conway is optimistic about the future because of the many developments happening on a grassroots level. For example, the 25 acres on Irishtown Bend could connect the Market District to the soon-to-be-completed Ohio & Erie Canal Towpath Trail.
“That would be a wonderful manifestation of a green city on a blue lake,” he says. JCU