As one of the pioneers of the craft-beer industry, Larry Bell has seen it all. From the early days of running a homebrewing shop to overseeing one of the largest craft breweries in the country, he’s built a reputation of pulling no punches and telling it like it is, all while letting the beer speak for itself. Hear the extended conversation on the Craft Beer and Brewing Magazine Podcast.
CBB // What was the original plan for the brewery?
LB // I had taken a class with Bill Newman [a craft-brewing pioneer], and he said the rule of thumb was that you needed $250,000 to open a brewery. We opened up with a total of $39,000. We knew we didn’t have enough money, so the original plan was to develop a product and a market for that product and then go out and secure some real financing.
Originally, when I was young and single, I thought I was going to move up north. I wrote a plan for the Traverse Bay Brewing Co. I wound up being around Kalamazoo, and it turned into Kalamazoo Brewing Co. By today’s standards, our goals were relatively modest. I hoped to build the brewery up to 30,000 barrels. Some of the old timers I’d visited, some of the regional breweries, suggested that if you could get up to 30,000 barrels, you could have a nice family business. That seemed reasonable at the time.
CBB // How long did it take to hit 30,000?
LB // Until 2001—sixteen years after opening. Last year we did 463,890 barrels. The number one question I get asked by media customers is, “Did you ever think, imagine, it would be like this?” And no, I didn’t. If you talk to anyone else of my era—Jim Koch [of Boston Beer] or Ken Grossman [of Sierra Nevada] or Gary Fish [of Deschutes]—no one had a clue that what we were making was going to blow up the way it did. For me, things started slowly and small, and I’m flabbergasted when I talk to younger brewers who tell me that in their first year they made 8,000 barrels.
CBB // Was there a moment when you realized that you could go beyond 30,000 barrels and that this niche industry could become more mainstream and get to where it is today? LB //That point was when we got to 30,000 barrels. We were in the old downtown brewery and were building a new brewery and green space. We hired John Mallett as a consultant, and I thought, “This is real brewing, this is real brewing equipment, and this is a real thing now. We’re going to get noticed by the big guys.” It was all changed then. We were beyond where our homebrewing days took us and were a real brewing company.
CBB // You’re starting to step back a little bit, and your daughter, Laura Bell, is stepping up more and more. When you first started the brewery, did you have an exit strategy? Did you think about the end?
LB // One of the things that I probably did wrong was setting up stock in the company. I didn’t have provisions for ways to get those shareholders out of the company. It became a problem for us. In 2006, some shareholders sued me for shareholder oppression and for not having provisions for how to move forward. It was a problem because the bank had come to me and asked me to move people out and said they weren’t going to finance me unless these people got out. So they stepped up and financed me in the process. It was contentious, and a lot of people thought I was doing that so I could sell to Anheuser or to a bigger company. Certainly that’s what some of the [shareholders] wanted to do, and that’s why I wanted to move them out. I never really thought about it.
And as Laura came on, I was very fortunate. She has a real passion and drive and a real acumen for the industry, and that became my exit strategy. We’re going to become a legacy brewery, which, quite honestly, is the hardest way to do things. It’s easy to take a check from someone or to do another deal. But to do all the accounting and to transfer the wealth takes a lot of accountants and lawyers and time, but for me it’s all worth it.
CBB // If you didn’t have Laura in the wings, had you thought about what you would do or what you wanted to do?
LB // Certainly. There was the looking at going public. I think it’s interesting that since the earlier days of craft where you had some company, like Sam Adams, that went public, we haven’t seen anyone going the IPO route. Ballast Point was flirting with it, but then they sold [to Constellation Brands]. But there is probably still a chance for someone at the right time to do an IPO, and it’s something that I thought about doing. If I were ever going to have to sell to one of the big guys, just show me the money and I’m out of here. I don’t want to stick around and see this. I think I would have difficulty with my independent nature working in a large corporate brewery structure.
We’re probably one of the few breweries that uses our family name. There are so many breweries out there but not necessarily a lot of family names. It’s personal—it’s our name on the product. So to think about Bell’s Brewery being led by Industrial Brew? Ugh! I thought that if I were going to do that deal that I’d separate out the bar [Bell’s Eccentric Café in Kalamazoo, Michigan] because the bar contains so many things that I’ve collected during my travels—my art, artifacts, and whatnot that I’ve put on the walls. It’s a personal place for me. So I would have had to keep that.
CBB // Even though you’re one of the largest craft breweries in the country, you’re still connected to homebrewing. Why?
LB // This summer, we’ll celebrate thirty-five years of selling homebrewing equipment. I love it. Who better to sell homebrew equipment than a brewery? We have an annual homebrewing competition where the winner gets to come and brew on our 15-barrel system. And homebrewers continue to be the minor leagues of the beer industry. It cracks me up. It was mentioned this morning in a meeting that there are professional brewers, commercially licensed brewers, in this town who come into the shop to buy things for their professional brewery. I was in the store a couple of months ago and heard the clerk say, “But sir, we’ve already sold you all the fifty-pound sacks of malt that we have. We don’t generally stock that many.” The brewer said he couldn’t get his own [malt contract] account so he needed to buy from us.
[Homebrewing] is where we started, and it’s part of our DNA. I think it keeps us honest in a way. There’s still part of me that’s a homebrewer—when I’m thinking up recipes.
CBB // What do you see as the biggest threat to you and your brewery and your legacy?
LB // I think we’re in Star Wars Episode V: The Empire Strikes Back. We’ve had a lot of success in this craft-beer movement that was started by guys like me, but we’re getting toward retirement. There are people who need to exit, so you’ve got big guys grabbing [breweries].
I remember Fritz Maytag [Anchor Brewing] being interviewed by Michael Jackson and Fritz saying, “You know, Michael, there’s one guy who’s got 50 percent of the business, and he wants 100 percent of the business,” and that hasn’t changed. It’s going to be dog-eat-dog out there, and the big guys are coming for that share of craft because they want it all. The have the Death Star, and they are moving it into position. We rebel forces, we craft guys, have to keep sticking together and keep attacking.
This interview was condensed and edited for clairity.