Hyper-Local Sales are Key to 4 Hands’ Growth, Founder Says

Even though 83 percent of the beer St. Louis’ 4 Hands Brewing produces stays within Missouri borders, founder Kevin Lemp wants even more of it to remain local.

“I want to dive deeper and dig deeper in my home market,” he told Brewbound.

About 87 percent of 4 Hands’ in-state volume sales occurred in St. Louis last year, Lemp said, adding that future growth plans call for that figure to grow to 90 percent over the next five years. Missouri-wide sales, meanwhile, could account for 87 percent of the company’s total business by 2022, he added.

4 Hands’ top-selling brand, City Wide American pale ale, is sold exclusively in 16 oz. cans and on draft throughout the St. Louis metro area. And its growth prospects are a big reason why Lemp believes his company’s bet on hyper-local sales will pay off.

“On-premise pulls like crazy with these cans,” he said.

City Wide, with the St. Louis flag emblazoned on its aluminum packaging, makes up 25 percent of 4 Hands’ overall business in the state, Lemp said. A recently launched line extension — City Wide Pils — will enable the company to further bolster its hyper-local strategy.

“We’re creating a brand within a brand,” he said.

Despite the local popularity of the City Wide label, Lemp said 4 Hands does not plan to sell canned packages outside of the St. Louis area, but he would consider selling the beer on draft in other markets.

4 Hands, which launched in 2011, operates with an “inch-wide, mile-deep” philosophy in St. Louis, Lemp said, while using out-of-state distribution of specialty and barrel-aged releases to build brand awareness.

Last year, 4 Hands was one of 20 breweries to move out of the Brewers Association microbrewery category (breweries making fewer than 15,000 barrels annually) and into the regional brewery grouping (15,000-plus barrels annually).

The company sold 16,800 barrels of beer in 2016, up 24 percent from the previous year and a far cry from the 5,800 barrels that were written into Lemp’s original business plan.

“I didn’t know we’d be selling as much beer as we are now,” he said.

Additionally, about 12 percent of the company’s total production was sold directly to consumers in the 4 Hands taproom.

“We feel really fortunate,” he continued. “This is not a labor. We’re not kicking our feet. We’re having a ton of fun doing it. It gives us a lot of hope for the future.”

This year, Lemp, who worked as a director of sales for Glazer’s Midwest and as a field marketing manager for E&J Gallo Wine prior to launching the brewery, is forecasting sales of 23,000 barrels as the company approaches what has been historically its most profitable time of year — the fall and winter.

Outside of St. Louis, Incarnation, a Mosaic-hopped IPA, is 4 Hands’ top seller. The company, which has seasonal-focused approach to its portfolio, gets a sales boost from brands such as Contact High wheat ale in the spring and summer months and Chocolate Milk Stout during the fall and winter.

Despite an increased focus on sales in the St. Louis metro area, Lemp said he also plans to continue growing throughout Missouri and Illinois. Chicago, he added, is the company’s second largest market.

Outside of those core territories, Lemp said he’s happy to let the 4 Hands brand fight for rotating tap handles.

“I don’t want to rely on that volume to hit my bottom line,” he said. “Then you’re not fighting being the rotating handle. You are the rotating handle. You’re new and exciting every quarter.”

In doing so, 4 Hands embarks on what Lemp called “flash distribution” in markets such as Washington, D.C., Philadelphia and Boston, where the brewery recently signed a distribution deal with Craft Brewers Guild. As part of that strategy, the company ships a core SKU — such as Incarnation IPA — along with seasonal offerings and an allocation of barrel-aged products up to six times a year.

“We’re planning to go slow and low and grow organically,” Lemp said.

The company is also looking to expand into New York City and Virginia, he added.

“We’re looking to cover the eastern seaboard,” he said.

Closer to home, Lemp said he plans to build 4 Hands’ sales in Kansas City, which ranks as the company’s fourth largest market.

“We’re going to fix that,” he said. “We’re going to look at Kansas City more like we look at Chicago and little less like St. Louis. We’ll over-allocate seasonals.”

In December, 4 Hands upgraded from a 15-barrel brewhouse to a 30-barrel system that pushed the brewery’s capacity to 32,000 barrels annually. Lemp said he wants that capacity to carry the company for another two years, when he plans to evaluate the market and analyze trends before deciding how to proceed.

“We didn’t build this brand to sell it,” Lemp said. “We’re not interested in being debt heavy. We’re in a comfortable position now. We don’t have to grow 7,000 to 10,000 barrels every year.”

Three years ago, 4 Hands moved its core beers out of glass bottles and into aluminum cans, and Lemp said the company’s sales were evenly split between on-premise and off-premise when the change was made. Since then, off-premise sales have grown to account for 70 percent of the company’s business.

Lemp also stressed the importance of maintaining a “premium price point” in the $9.99 to $11.99 range for its canned packages.

“We would rather make less beer at a higher margin,” he said. “We’re not interested in selling a bunch of beer and making no money on it. That makes absolutely no sense to me.”

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