Case Study: Two Roads Brewing Company | Brewing Industry Guide
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Case Study: Two Roads Brewing Company

Three beer veterans with different backgrounds but the necessary skill sets banded together five years ago to open Two Roads Brewing Company. It not only turns out their own beers but also contracts recipes for celebrated and sought-after brands.

John Holl | Photo courtesy of Two Roads Brewing | April 12, 2018

There was a time when the word “contract” as associated with brewing was considered dirty. If you’re going to make beer, make your beer at your own location, some purists said. But there were some brewers with no other option and still others who just knew better.

The story of Two Roads Brewing Company (Stratford, Connecticut)—one of the few, but arguably the most successful, modern contract breweries in America)—goes back a few years, to another contract-beer relationship. This one was between Southampton Public House and Pabst. In 2007, it was a chance for the then small brewery to work with Pabst for sales and marketing along with distribution support. The beer would be brewed at a third-party location.

Brad Hittle, now the CEO of Two Roads, was the chief marketing officer at Pabst at the time. He and Clement Pellani, the sales director on the project, worked with Phil Markowski, the brewmaster of Southampton, to get the beer made and sold.

“The whole thing was completely run off the rails because we couldn’t find a satisfactory place to make the beers,” Hittle recalls. “Phil had crawled through every available brewery on the East Coast, and he knew what worked and what didn’t.”

Actually, some beer was made, but the program was largely short lived in beer terms. “In that experience, though, we had the realization of a contract brewery where we could help customers tinker and improve their recipes, where we could do everything possible to be an amazing supplier to them. And to this day, I’m pretty sure that’s what we’ve done,” says Hittle.

Managing Both Sides

Contract brewing is an interesting proposition, and it’s complicated because each customer has different needs, wants, packaging demands, yeast strains, and more. “From the very get-go, we invested heavily in equipment,” explains Hittle. “We didn’t start off with bare bones and add as we got customers.”

The $21 million brewery, which includes the purchase of land and a century-old factory, is a sight to behold. A combination of Old World industrial style and modern brewing equipment regularly brings to Stratford both contract partners and scores of fans who come to the on-site taproom that serves only beer under the Two Roads brand. Those offerings, which include Pilsners, IPAs, lambics, and more are made by Markowski, a partner and cofounder of the brewery.

On some days, Two Roads is where beers from breweries such as Carton Brewing Co., Notch Brewing Co., Lawson’s Finest Liquids, and more roll off the line. Other days, you’ll see beers like Two Roads Ol’ Factory Pils or Lil’ Heaven Session IPA being made.

“We had an advantageous position because we had versatility in packaging and brewing, and our customers are excited to come here because from an equipment standpoint, we were ready to go right out of the gate. We spared no expense, and we hired good people in the brewery and in the lab,” says Hittle. “We’ve retained a lot of our original customers because of that quality focus.”

Hittle also attributes success to timing. “We had first-mover advantage, and that helped attract breweries like Evil Twin.”

The Two Roads beer brand is able to thrive thanks to the contract side of the business. Hittle and others knew from experience that there was a need for craft contract brewing, but also knew that the margins were low. Having a brand of their own—one that makes clean, flavorful, and inventive beer that allows them to showcase their talents—can bring new contract customers to their doorstep. In turn, the contract brewing helps build the Two Roads brand.

Markowski, a well-awarded and respected brewer, admits it’s sometimes a juggle between his beers and the beers he’s making for contract partners, but that’s not a complaint. It comes down to compartmentalization.

“The people who we want to work with as contract customers have established brands; they have their recipe and way of doing things; and we have to, in some cases, simply execute. We don’t want to be in the process of product development for people,” he says. “For our brands, I have an idea of what we want to do and what our beer wants to be.”

Markowski says that one bonus to having other brewers around from time to time is the general brewing camaraderie that comes when professionals get together and the energy and passion shared. Another is the chance to see different ingredients that he might not use regularly. “It doesn’t change the way I do things, but it is interesting to see how different brewers approach different things,” he says.

Hittle says that last year Two Roads produced 56,000 barrels of beer and about 84,000 barrels for the contract partners. The brewery itself can max out at around 190,000 barrels. And should they ever get close to that capacity, they have a 35,000-square-foot space next to the existing brewery that they can get into and build out.

“We are way ahead of where we thought we’d be in terms of volume from the original business plan,” says Hittle. “When you write a business plan, you want to beat it; you don’t want to fall short. We’ve beaten it every year—we have happy investors.”

Area Two

One arena that Two Roads will be entering in a big way later this year is the sour- and wild-ale market. While Markowski and his team have already made and released beers brewed with Brettanomyces, yeasts harvested from hurricane winds, and all manner of fruit lambics and gueuze, they will now have a dedicated spot to ply their craft. Area Two is a $12-million, 25,000-square-foot facility on the Two Roads property that will be home to what Markowski calls “all types of esoteric beers.”

Hittle calls it a leap of faith because the company deliberated over this for a long time before pulling the trigger. “There’s very little data to say [sours] are a great thing sales wise. There’s no IRI (a firm that specializes in analytics) data, but you see some places doing it well, and the anecdotal evidence is the best to rely on.”

Markowski knows the risk with such a big project but sees a lot of the long-term potential, especially on the East Coast. He notes that states such as Connecticut, New York, New Jersey, and others in the region are a few years behind places such as Colorado and the Pacific Northwest when it comes to wild beers, so looking at those markets and seeing what’s been viable should be a good indicator that this new project will work well.

Area Two will be branded separately from Two Roads and have its own tasting room, giving visitors to the complex two very different experiences. The plan is to make the Area Two tasting room a cross between a brewery tasting room and a library. The two facilities will be connected by an 800-foot pipeline 22 feet in the air that will pump wort from the Two Roads brewhouse to Area Two and then back again for packaging.

“We’re going to have a lot of fun over there,” Markowski says. “We are going to do a lot of variation on themes and taste the same mother beer with different treatments, something I hope will be interesting to people. When you can taste the transformation in a beer that occurs over a year or two in a barrel, or even just after a month or two or three, there’s a lot of education that we can do, and through these tastings, we will be able to talk about what makes beer special and why. People will leave with the stories behind [the beers].”

This isn’t going to be just for beer geeks, either. Markowski sees this as a chance to introduce beers such as spirit barrel–aged beers, extreme kettle sours, beers fermented in concrete, and other interesting things to Two Roads drinkers who have not yet branched out past the Pilsner or Oktoberfest.

This project will also allow the company to expand into new markets since many of the beers they plan to make have open-ended shelf life. What Markowski calls the “exploratory and contemplative” beers will hopefully bring people to come and visit. In addition to the tasting room, there will be a cool ship in a prominent location, a walking path through wetlands on the property, and a chance to see an orchard that has been growing over the past few years. It aims to be a wholly nature-immersive experience, all next to a busy Amtrak corridor and highway.

And in the existing Two Roads model, Markowski says that there will be a chance for contract customers to use Area Two. “It’ll be for established customers who we feel have long-term potential.”

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

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