Two Roads finds success by brewing for fellow beermakers

Peter Doering, left, and Brad Hittle, of Two Roads Brewing Company, address the Association for Corporate Growth/Crossroads Venture Group Northeast Consumer Products conference at the brewery in Stratford, Conn. on Monday, April 6, 2015. less Peter Doering, left, and Brad Hittle, of Two Roads Brewing Company, address the Association for Corporate Growth/Crossroads Venture Group Northeast Consumer Products conference at the brewery in Stratford, ... more Photo: Brian A. Pounds Buy photo Photo: Brian A. Pounds Image 1 of / 5 Caption Close Two Roads finds success by brewing for fellow beermakers 1 / 5 Back to Gallery

When Two Roads Brewing Co. completes installation of a quartet of 50-foot-tall fermentation tanks next month, the Stratford microbrewery will have ample new capacity for the beers it produces.

For founder and Greenwich resident Brad Hittle, those beer silos may as well be monuments to his original vision for a company buying itself time to build up its own brand by churning out beer for competing craft brewers.

More than three years after its opening, Two Roads draws 300 people to its tasting room on a typical weekend. The choices at the tap range, depending on the day, from standard-issue beers like Ol' Factory and Honeyspot Road, to seasonal bottles like Igor's Dream and Rye 95, to one-time-only brews like Urban Funk, produced with the help of Sacred Heart University biologists who captured airborne yeast during the 2012 storm Sandy.

Though Two Roads' brewmaster Phil Markowski has proven himself to be as creative as anyone in the craft brew industry, Two Roads' business success is squarely the result of Hittle's grand plan that others had not spotted -- tap a spigot of cash from investors by offering production in state-of-the-art equipment to other growth-minded craft brewers, giving Two Roads cash flow to build up marketing for its own brands of beer.

"Our business is unique because we said, `let's go big, let's build a brewery that can grow to be a 250,000-barrel brewery from the get go, rather than starting with a tiny little system,' " Hittle said, speaking last Monday at the Northeast Consumer Products Conference sponsored by the Association for Corporate Growth and Crossroads Venture Group. "Let's fill it by inviting other craft brewers to make their beer at Two Roads. So today we have 13 craft breweries that actually make their beer here. And that absorbs a lot of overhead; it pays a lot of bills, and it allows us to invest a lot in marketing."

Two days from dead end

In just a few years, Two Roads has grown into what Hittle says is the largest of a small army of craft brewers that has sprouted in Connecticut, a list that includes Half Full Brewery in Stamford and Charter Oak Brewing in New Canaan, with those companies' founders scheduled to tell their own stories over beers drawn at a confab scheduled for April 22 at the Stamford Innovation Center.

Hittle said Two Roads' annual revenue is $22 million, easily besting the $12 million forecast by Hittle and Peter Doering, Two Roads' chief financial officer who also hails from Greenwich. Companies that brew at Two Roads include Blue Point Brewing in Patchogue, N.Y., Peak Organic Brewery in Portland, Maine, and Terrapin Beer in Athens, Ga. Hittle said Two Roads expects to ship 1.5 million cases this year, about 70 percent of it bottled for others and the remaining 30 percent under the Two Roads label.

A former chief marketing officer at Pabst Brewing, Hittle left the company in 2010 following a buyout of Pabst by Greenwich billionaire Dean Metropoulos. Concocting the idea for Two Roads, Hittle recruited his friend Doering and the pair began seeking capital in 2011, a "very difficult" year, in Hittle's words.

After a succession of starts and stops, Hittle was two days from accepting a job offer when he and Doering met with a potential investor in Manhattan. It seemed to go well, and as they mulled the meeting outside the Madison Avenue office, the man spotted them as he was exiting the building.

"And he says, `oh, you guys are still here -- I've got to run to lunch, but count me in for $2 million,'" Hittle recalled. "So I didn't take the job."

From that seed funding, Hittle and Doering would grow Two Roads' pot to $13 million in equity funding and another $7.5 million in debt, including a low-interest loan from the state of Connecticut eyeing the 60 full-time jobs Two Roads would produce.

`Now that's a (expletive) brewery'

The question was where to produce the beer, a question not without a sense of urgency.

"We had to have 'first-mover' advantage on this project because the business plan is pretty simple," Hittle said. "It just so happens we came up with the idea first and so we wanted to get in the marketplace first so we could attract the premier customers." Hittle, Doering, Markowski and co-founder Clem Pellani knew they wanted an old factory building, with Connecticut offering any number of advantages. The site they chose in Stratford's former U.S. Baird machine tool factory was appealing for its high interior bay and location just off Exit 31 of I-95.

"It was a lot more than our budget called for, but ... we came inside and said, `There's nothing else this building could be but a brewery,' " Hittle said. "We were finally convinced it was the right building when we invited one of our potential packaging vendors to come look at the building and see how his equipment would lay out. ... He got out of the car, he looked at the building, and he says, `Now that's a (expletive) brewery!' "

As construction crews got to work rehabilitating the plant with the flexibility to produce craft beers for varying companies, Hittle and Doering began planning for a capital outlay of equal importance: Two Roads promoting its own brand on everything from tap handles for bars to its own billboard on I-95.

"You have to have (the) ability to invest in the marketplace; going to a distributor, and saying, `Yes, I have the liquid, I've got the packaging, but I'm going to spend $8 a case in your market and $3 a case in your market," Hittle said. "That will open a distributor's eyes in a big way, because very few of these craft breweries invest money in selling and marketing."

If it's a trend applicable to countless consumer products, the fragmentation of the craft brewery industry presents a particular challenge, according to Jesse Silver, owner of Greenwich-based Ground Up Group, which helps beverage and food companies get onto shelves.

"(Being) unique in a category like craft beer, where there are hundreds, thousands of players. ... It's not reinventing the wheel, but it's having the funding and the people to actually get your brand properly positioned."

Charter Oak Brewing founder Scott Vallely relayed his own experiences in trying to get advance distribution in place before he had a product.

"In the early going, I was out there selling beer and (stores) didn't know what the packaging looked like, they didn't know what it tasted like," Vallely said.

Beer geeks and vibes

Hittle said Two Roads is now a known entity coast to coast among distributors, but he expressed caution about attempting to duplicate the company's Connecticut formula of complementing its marketing with the physical draw that is the Stratford brewery.

"We'd rather go a mile deep and an inch wide," Hittle said. "That doesn't mean we couldn't do Two Roads West Coast, Two Roads Europe, Two Roads Asia ... (but) there would have to be an immediate demand for that to validate the model, and we don't know yet if the Two Roads brand can carry in California. Right now we're making it carry here and we're getting a national reputation."

Even as it has built that reputation with distributors, Hittle said the company has been able to overcome early skepticism from its core base of craft beer and home-brewing aficionados who see big as bad.

"We had some beer geeks who initially didn't like Two Roads because we were `big,' and that meant we were `corporate,' and `that's bad -- that's really, really bad,' " Hittle said. "The negative vibe out there --you have no control over it and all you can do are things within your control to offset it."

Alex.Soule@scni.com; 203-964-2236; www.twitter.com/casoulman