Amid ‘Chaos’ in Craft, No-Li Brewhouse Leans on Innovation and Local Markets

John Bryant, the founder of Spokane, Washington’s No-Li Brewhouse, doesn’t mince words when describing the state of the beer industry in 2019.

“It’s chaos,” he told Brewbound during a recent interview.

The beer industry veteran — whose three-decades-long career includes stints at Deschutes Brewery, Odell Brewing and Oskar Blues — is, of course, referring to the 7,500-plus craft breweries fighting for distributor, retailer and consumer mindshare.

The reminders of just how competitive the landscape has become arrive in Bryant’s inbox daily: weekly roundups of brewery closures, stories about bankruptcy filings, e-mail advertisements for used equipment, and weekly headlines about sluggish beer sales.

“There is a lot of panic right now,” he said, referring to marketplace uncertainty and a growing tension between brewers who are finding it more difficult to grow and distributors who are overwhelmed with thousands of SKUs.

“I don’t know if any of us are structured for this,” he said. “Nobody within the three-tier system prepared for what is going on right now. Today, we have the fewest distributors, the most breweries and consolidation in the chain business.”

Nevertheless, Bryant remains bullish on his company’s prospects.

“We have prepared for this day,” he said. “It’s been seven years, but we’ve been very frugal, humble, and conservative. And in the chaos is our greatest opportunity. This is our time to shine.”

No-Li is working its way toward 17,000 barrels and upwards of $10 million in revenue (including brewpub sales) in 2019, and the overwhelming majority of its beer doesn’t travel more than six hours away from its brewery by car.

That wasn’t always the case, however. In 2012, the company was selling beer in Colorado, Baltimore and Washington, D.C., and at one point the brand was available in more than 15 states.

But as more breweries entered the fray over the next four years, No-Li opted to withdraw from multiple markets and focus on selling beer in the Pacific Northwest.

“We had Born & Raised IPA up and down the East Coast,” he said. “What you quickly learn is that is a lot of travel for not a lot of revenue.”

As a result of retrenchment, No-Li has enjoyed larger profit margins, and the opportunity to reinvest in new product innovation and people. A tighter distribution footprint also put the company in a position to acquire a secondary brewing facility last year – the former Orlison Brewing location, where it had already been contracting some production – for less than it would have spent to build a new brewery from the ground up. It now has the space to brew about 30,000 barrels annually.

“You have to invest in front of the curve if you believe in the future,” Bryant said. “You have to stay steady and committed to the cause. That makes you qualified to compete.”

As the company looks ahead, it sees opportunity in hard seltzer – its “Day Fade” line launched in March – and aluminum cans.

“We look at the craft hard seltzer category as a way to make better beer,” he said. “Making a crystal clear hard seltzer with great flavor is really difficult. There is a five-step filtration process, and learning that has made us a better craft beverage company.”

Over the long-term, Bryant said he believes a few smaller craft beer producers will succeed in the seltzer category even though Mark Anthony Brands (White Claw) and Boston Beer Company (Truly) currently dominate the segment.

“It’s more than just case sales,” he said. “We are reaching a consumer whose drinking habits have changed. Can a handful of breweries around the country be a worthy competitor? I think so. But if it becomes a commodity, we would step away.”

Ultimately, Bryant believes the most successful craft breweries – especially those working through the middle-tier – will be the companies that aren’t afraid to pivot and demonstrate and ability invest behind trending beverages.

“This is about innovation, reaching new demographics and recognizing changing drinking habits,” he said. “In this moment of chaos, here is an opportunity to learn.”

That’s the strategy No-Li has deployed, and it appears to be working. Through the first six months of the year, sales were up 20 percent.

Editor’s Note: Bryant will appear on an upcoming episode of the Brewbound Podcast.

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