Case Study: Starr Hill Brewery | Brewing Industry Guide

Case Study: Starr Hill Brewery

Starr Hill Brewery started as a brewpub and shared space with a music hall of the same name in Charlottesville. It was the second craft brewery to open in the Commonwealth and quickly grew in popularity thanks to its proximity to the music industry.

John Holl 5 months ago

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Photo courtesy of Starr Hill Brewery

It was a solid idea back in 1999. Two friends, inspired by the growing brewery scene out West, decided to start their own brewery in Virginia. Starr Hill Brewery started as a brewpub and shared space with a music hall of the same name in Charlottesville. It was the second craft brewery to open in the Commonwealth and quickly grew in popularity thanks to its proximity to the music industry and making beers available at festivals such Bonnaroo Music and Arts Festival.

Awards soon followed from both the Great American Beer Festival and the Great British Beer Festival, and by 2005, Starr Hill moved into a former food plant in the nearby town of Crozet, where it gained the distinction of being the first production craft brewery in Virginia.

In 2012, state laws changed, making it easier for breweries to operate and get their beer to the public. Starr Hill, which had enjoyed a relatively stable market, suddenly needed to rethink the way they did business, focus on strengths, and come to terms with the fact that nothing was sacred, from labels to recipes.

In 2015, brewery Founder Mark Thompson was ready to retire, and Robbie O’Cain, a banker turned graduate of the World Brewing Academy, became the new brewmaster. He, along with Josh Cromwell, the brewery’s business manager, and Duke Fox, vice president of sales, spent months working on redesigns and recipe development that would help them strongly compete in the now crowded marketplace.

Today vs. the Past

Northern Lights IPA remains the flagship of the brewery. But when it was created, those three letters—IPA—meant something different to the American beer drinker. In order for the beer to stand out, O’Cain knew that he would have to change things up. “We didn’t want the recipe change to be subtle; we wanted it to be stark,” he says.

“Beer drinkers moved away from these overly bitter IPAs to ones with huge hops aroma and flavor with only moderate bitterness.” Growth and brewery size meant access to better hops contracts, so Starr Hill simplified the malt bill on Northern Lights and brought Simcoe, Centennial, and Falconer’s Flight into the mix with the existing Columbus and Cascade hops.

The hops received both the hop-bursting and late-addition dry- hopping treatment, something that was new at the time for the brewery. Samples of the older recipe and the newer ones were sent to media and influencers for review in advance of the formal release. Side-by-side comparisons were conducted at the brewery taproom for consumers as well, so by the time the rollout was ready, the brewery was able to give a proper send off to one and to introduce the other to the general public.

At the same time some Starr Hill beers were retired, others were brought back for specialty releases, and the trio took a hard look at the home market in Virginia (accounting for 60 percent of sales) to respond to the consumer demands.

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This was also the time that the brewery decided that it needed to step up its visual—on-the-shelf—game with a complete packaging overhaul. From the brewery’s long association with the music crowd, O’Cain says there was a reputation of Starr Hill being something of a “hippie” beer (thanks, in part to names such as Grateful Pale Ale or Double Platinum Omperial IPA). The redesign kept the star logo inside a circle but took out much of the fill, making it cleaner. The beer logos also got scrubbed up. Picture label art was replaced with clean and easily readable text with corresponding colors.

If you want to be a grocery-store brand, Cromwell explains, you need to make sure that consumers can see what you are selling and that they know what they are purchasing. The earlier designs didn’t help much with that. But you don’t want to destroy what you’ve already built; you want to build off of it and help consumers either change a negative or nonexistent perspective or keep loyal folks coming back for more.

“Our owner invested in capacity well ahead of our time, so it wasn’t that we just had to make beer. We had to make good beer and keep it fresh on the shelves,” says Cromwell, who worked in corporate finance for a public relations firm before joining the brewery. During the transition period, it was on him to get the business practices in order and to make sure everyone knew where costs were and should be all while making sure the beer never suffered.

It was also during this time that the brewery pulled out of some states it had entered, such as New Jersey and Florida, to focus on states closer to home. “We want to be part of the community,” Cromwell says, so they dialed into core markets to make it easier for existing customers and potential customers to have as much access to the beer as possible.

The relaunch was a “nervous time,” says O’Cain. “We didn’t know what [the consumers] were going to say. We were banking on everyone liking the newer one better, but we didn’t fully know.”

But the uncertainty was important. It led to more investment that led to high-quality products, and the risks in the marketplace coupled with an increase in the sales component of the business ultimately paid off.

“We can’t ever be everything to everyone, but we do a great job offering the grocery consumer an enormous amount of variety and consistency. That’s our focus. Creating value for the grocery-store buyer.”

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Grocery

The brand has been in grocery stores for a long time. Signing early with distributors meant you were likely to see Starr Hill beer on shelves from Kroger, Harris Teeter, Wegmans, and more.

Last year, the brewery made about 26,000 barrels of beer, not an insignificant amount.

“We just did a stout variety pack where we did almost 1,600 cases, 3,200 12-packs,” says O’Cain. “So, when we do something, we’re doing a significant amount of beer, and to do that large of a volume, we need a larger audience.”

“In the early days, there wasn’t a lot in the state, so we benefitted from that,” says Fox. About five years ago, the brewery personally and directly started calling on the beer buyers from the larger grocery chains and started adopting the standard retail practices of much larger breweries, such as standardized price promotions. Soon, in its home state, Starr Hill was able to start nipping away at some of the larger breweries.

The brewery spends a lot on the analytical side of sales because it’s important when selling in grocery. Fox knows that they are still reliant on draft-beer sales, but he thinks that increasingly there’s a “lack of any real loyalty,” a sentiment that is likely shared with brewers around the country.

“But we know that we’re always going to have distribution, and at the end of the day, people are going to buy beer when they go to the grocery store,” he says. Let’s say that the beer Customer X is going to buy is an IPA. He walks into the store and sees some that are made locally, some from national brewers such as Sierra Nevada Brewing Co. or New Belgium Brewing Co. Some, such as Goose Island, are owned by larger beer conglomerates. “First off, having your beer in the store is a win,” says Fox. “Then, being the local guy, especially in Virginia, is another win. We’re a local brand that has 6-packs and 12-packs, and if we can convey who we are, it can be an easy sell in our market.”

That doesn’t mean that they don’t have a brand or a SKU that is underperforming or that doesn’t do well in a particular store. It just means that once the numbers present that way, Fox and his team have to adjust and figure out how and where to best turn the product.

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One way they regularly engage consumers is through a “pretty aggressive” sampling program. It’s “almost as important as [retailer] beer sales.” They have an internal team that has been educated on the brand (although he acknowledges that they have used third-party firms from time to time, but finds that they aren’t always as passionate as the brewery hoped).

The samplings are rolled out when you’d expect: around new releases, major holidays, or at times when things look like they could use a bit of a boost. They have also seen some seasonable sales success through social-media promotions, ticket promotions, and other promotional plans.

“At the end of the day, my argument, and this is not unique to us, is the idea of getting people to sample our brands at events, at our taprooms, at our festival, and on premises so when they go out to buy their beer, we’re an option they consider because they like our flavor.”

He knows that the on-premise promotions can be expensive, but that they are necessary to make sure the sampling gets done. “Otherwise you’re just another brand on the shelf.”

An Incubator

When the laws changed in 2012, Starr Hill didn’t have much of a taproom business but quickly saw the need to step up the game and compete with the smaller breweries that were suddenly selling pints from their own bars. The location in Crozet stepped up, naturally, but since it was never intended to be that kind of space, there were challenges. Taking advantage of the laws, Starr Hill opened a second brewery and taproom in Roanoke, a populated city with a thirst for local beer.

It would have been harder to open a retail establishment earlier in the brewery’s life because of the economic side of it, says Fox. But, almost as important as the financials is the ability to influence people, and this taproom was built just for that.

“The goal is to do a pilot batch a week in Roanoke for product development,” says O’Cain. “In the past, with the larger brewery only, we went through the same things as everyone, asking, ‘what’s new, what’s exciting,’ but we couldn’t go down those rabbit holes because we realized it’s unsustainable at a certain size and we couldn’t make money that way. So, we’ll use this small-batch system to help drive creativity to drive the future.”

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John Holl is the Senior Editor of Craft Beer & Brewing Magazine®. Email tips and story suggestions to [email protected].

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