Sea Changes: Dogfish Head continues to evolve with blissful-innefficiency

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After a week of crummy weather, spring was finally in full bloom, Saturday, across the Delmarva Peninsula. Wind and rain gave way to balmy breezes, sunny skies and seventy degree weather.
The timing was prescient: Saturday was the date for Dogfish Head’s Weekend of Compelling Ales and Whatnot (or WOCAAW, for the uninitiated). Nearly 800 people flocked to the company’s headquarters and brewing facility in Milton, Delaware for an afternoon of beer tasting and general debauchery.
In case you haven’t made the pilgrimage, the facility itself is a sight to behold. It’s easily the biggest landmark in town, rising from the ground like a futuristic-monolith.
The magnificent structure was just a backdrop Saturday, as the action mostly centered nearby, under a giant tent. A DJ spun indie-rock records, while event-goers milled around stations that provided both beer and a corresponding food pairing.
Kiosks containing samples of beers slated for mass release were displayed next to ones housing zany-experimentals, which may never end up seeing the light of day. The vibe of the WOCAAW is as much that of a science fair, as it is beer festival.
Take “Beer for Breakfast,” a milk/coffee stout. It’s brewed with a list of ingredients that sounds straight out of Epic Kitchen (applewood-smoked barley, maple syrup, cold-press coffee and, yes, scrapple to name a few).
This particular batch of Breakfast was bourbon barrel-aged. The result: a slightly-higher ABV (9.2% compared to 7.4%) and some vanilla undertones; very tasty. It was paired alongside candied bacon for an exercise in savory decadence.
B4B’s recipe might seem outlandishly-pretentious for another brewery, but it fits snugly into Dogfish Head’s, quirky catalogue. The company and its founder, Sam Caligione, pride themselves on being “off-centered” in their thinking.
What does that mean? It means resisting the temptation to brew with cheaper materials, artificial-flavorings and extracts. It means doubling-down on unpopular styles before they pop mainstream (Chicory Stout, Punkin Ale and Festina Peche to name a few).
“I’ll hear people give all the standard ways that things are done and then they’ll ask, ‘What’s the opposite?’” said Tammy Ditzel, president of Inesse Consulting, who works with Dogfish Head to develop leadership strategies.
It’s a mindset that has allowed them to grow from a tiny start-up to a virtual empire – in 2016, Dogfish Head was ranked as the 14th largest, craft brewery in America.
However, the philosophy has and will be tested, as competition increases, and the economics of the craft beer market continue to shift.

The Shot Heard Around the Beer World

One billion dollars.
That was the price mega-distributor Constellation Brands paid to acquire the southern-Cal brewery, Ballast Point. The announcement set off gasps throughout the industry.
It wasn’t a reaction to the sale itself but, rather, the sheer audacity of the figure attached. It served official notice that the big boys of beer had begun to take this movement seriously.
Craft beer still occupies a relatively-small piece of market share pie (12.2% of total bottles sold in 2015, according to the Brewers Association). However, that figure has proven a big enough thorn in Big Brother’s side that they have begun to react.
Other breweries have jumped aboard, most notably Lagunitas (Heineken International) and Goose Island (Anheuser-Busch, Inc.). It proves out the old, business theorem: if you can’t beat your competitors, then buy them out, instead.
Such moves have multiple implications. For the brewery, it means risking consumer backlash due to the stigma of being “sell outs.” To be considered “craft”, no more than 25% of the company can be owned by big corporations.
On the other hand, the increased resources and distribution-access gives breweries the firepower to push product into stores nation and even world-wide.  That, coupled with the prospect of financial windfall, can be an enticing proposition for brewers wishing to cash in their chips – or, more appropriately, bottle caps.
The unspoken question is: if Ballast Point was valued at a billion dollars, what would Dogfish Head – one of the forefathers of craft beer – go for on the open market?
Caligione has resisted such overtures to sell the farm completely. He did, however, give up a 15% stake to LNK Partners, a private-equity firm. Terms of the deal were not disclosed, but the New York-based company reportedly seeks deals in the ranges of $50-150 million.
It’s one of several moves by Dogfish Head that, for the first time, seem motivated more by a desire to “keep up with the Joneses” as opposed to blazing a fresh trail.
Other moves, along those lines, include making a cider, opening a canning line and getting into the craft spirits movement.
As such trends appear, companies must weigh the risks of appearing to be fad-chasers, against being left in the dust by competitors. For few companies is that quandary more visible than for Dogfish Head, who have laid the foundations of their brand on being unique.
As far as beer goes, the brewery has re-tooled their seasonal catalogue, and streamlined their overall, release strategy – cutting the cord on slower-moving products. One such casualty is the “Ancient Ales” series, a collection of beers brewed using old-world methods and ingredients (for the time being, Midas Touch will remain in production).
Novelty brews like the Sixty-One (a marriage of IPA and red wine) have also met the cutting room floor, in favor of more conventional styles. Such beers might not have buttered the brewery’s bread, but best exemplified its creative spirit.
Even Caligione himself seems a slightly more rehearsed version of himself, these days, making sure to insert trademark phrases such as “blissfully-inefficient” into his videos, interviews and speeches, as if someone backstage is reminding him, “don’t forget to be weird,” as opposed to a more, spontaneous form of peculiar.
And, for a company that prides itself on being one of the so-called “little guys” of the industry, they’ve been more protective their brand. Several, small-scale breweries have been threatened with legal action for using names that sound similar to DFH products.
They have also undergone turmoil at the executive level. CEO Nick Benz resigned, after only two years on the position. Caligione has stepped in to fill the vacant role, while they parse out Benz’s replacement.
One might chalk the moves up to growing pains. Or they might have been made at the behest of ROI-hungry, investment partners. Or, maybe they’ve foreseen the inevitable, bubble burst of the craft beer movement and are taking steps to safeguard their company against a precipitous decline.

Good Vibes

If Caligione is worried, however, he doesn’t show it.
On the cusp of turning 48, Dogfish Head’s leader is still focused-as-ever. He has a new book coming out, in the fall, and seemed to be in high spirits at Saturday’s event.
He did drop the “blissfully-inefficient” line again, during a welcome speech at the beginning of the event. But it didn’t come off as corporate-speak. It was more of the tongue-in-cheek variety – the kind that is usually delivered with air-quotes, or a subtle wink and a nod.
As WOCAAW participants grazed about, Caligione worked the crowd, pausing to extend high-fives, pose for pictures or just shoot the breeze. The staff would tease him, accusing him of hamming it up and he would absorb the jibes with good-natured fashion.
Everywhere you looked, good vibes abounded.  The new beers seemed to be well-received, and the distillery was cranking out shandys made by pouring the Flesh and Blood IPA over their brand-new, citrus-infused gin.
After a while, however, you understood that they weren’t promoting the products as much as celebrating the processes and lifestyles behind them.
2017 was the ninth rendition of the Weekend of Compelling Ales and Whatnot. A decade ago, the emphasis was undoubtedly on the “Compelling Ales” portion of the title. Over time, it has become clear that the “Whatnot” aspect is of equal – if not greater – importance to them.

 

*Editor’s Note – In the interest of full-disclosure, the author is an employee of one of Dogfish Head’s Alehouses, a subsidiary of the facilities in Delaware

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