Lagunitas Founder looks to 'de-commoditize' barley
Even as he grows, Lagunitas Brewing founder Tony Magee is trying to share his company’s success with his suppliers.
“De-commoditizing” as Magee terms it, is the process of rewarding the ‘enormous value’ he says barley farmers offer craft brewers by offering them better prices for their products.
The tweet-happy CEO recently established an exclusive program between Lagunitas, Rahr Malting Company and a group of Canadian barley farmers (who sell to Rahr) in an attempt to create a new model for the way in which brewers procure their malt.
“The simple idea here is that we see barley grown for malt to be a meaningfully value-added agricultural product and in no way an ordinary commodity that can be sold into any number of parallel markets,” said Magee. “Rahr has worked alongside us in this to create a ‘fair-trade’ type model that gives confidence to the farmers when they seed their furrows.”
The basic principle behind the program, called Chinook Arch Malt after a favorable southern Alberta weather phenomenon, is to support passionate farmers growing high quality barely.
“The idea that they grow their barley to very specific standards, difficult in some years due to weather, gives meaning to their work,” he said. “Since it is true that for them, as for us, their work is their life; it is not overstating things to say words like: Growing malting quality barley gives meaning to their lives. Who…would not want to show some respect for that level of passion- disconnected as it was before our overture?”
Magee said the program will remain exclusive to Lagunitas for the first three years so they can “dial in the most accurate structure to the pricing program before it is subjected to the winds of the larger market.”
And speaking of a larger market, Magee’s beers will soon be sold in every U.S. state but Tennessee.
“We are going to enter a whole bunch of new markets and begin to work to find a place for ourselves alongside the existing local brands already in residence,” he said.
To bolster the rollout, Lagunitas will be expanding its sales force with new hires and more “feet on the street.”
The expanded distribution comes at a time when the brewery is physically expanding to meet current demand issues.
Magee told Brewbound.com that a new lauter tun is scheduled to arrive this month and a pilot brew date has already been set for the third week in April.
The new system (an identically scaled version of the company’s existing 80-barrel system) will begin cranking out production to immediately meet a 200,000 barrel capacity.
“Capacity is finally going to be ahead of demand,” said Ron Lindenbusch, the Director of Marketing for Lagunitas. “As demand increases, it’s only a matter of plugging in fermenters, which is relatively easy and inexpensive to do.”
Lagunitas experienced tremendous growth in 2011, with production up nearly 60 percent to over 160,000 barrels. The new brewhouse is capable of churning out up to 800,000 barrels of beer annually.