June 6, 2012

Adrian Grenier and Justin Hawkins Discuss Churchkey's Return to a Simpler Time

Of all the breweries opening every week in the US, Churchkey Can Company has been the big story lately. Fueled by investment capital from Silicon Valley tech moguls and the star power of Adrian Grenier (better known as Vinny Chase from HBO's Entourage), the new brewing outfit, which has brought back the old-timey flat-top steel can, has torn up the e-waves with a media blitz most startup breweries can only fantasize about. So we now have combined an interesting brand, unusual strategy, venture funding, and a media strategy. And it's founded by a television star and... (wait for it) a designer, Justin Hawkins.

Has there ever been a more low-hanging fruit for the interests of the Pour Curator?

So when I had the opportunity to interview Grenier and Hawkins, I was excited. I may have been the only blogger more excited to talk to the designer than the celebrity, but there was plenty to go around.

What I found was that Churchkey is actually a few stories, and all of them are compelling in different, if occasionally contradictory, ways.

An Origin Story
The first thing to know about Hawkins and Grenier is that they are difficult not to like. And, at least on the topic of their new venture, they come off as genuine and engaged. It's quite easy to believe that this began, as the story goes, at a dinner party in December of 2010, where a discussion on the graphics of vintage beer cans left the two with a handshake and a promise to build a beer company that brought it back.
Grenier and Hawkins at their brewery in Seattle
"I think it started from a place of nostalgia and heritage," Hawkins says of the vision. And a conversation leaves one with the belief that he is the visionary, at least when it comes to pushing the idea forward.

Hawkins is forceful and talks quickly in sentences that have many clauses. He was on the line for the interview before I got there, and I am an obsessively early person. His business partner, on the other hand, came onto the line after about 15 minutes (he was at the gym) and speaks at the perfect speed for me to take notes. Grenier is more thoughtful and reflective, and his respect for the craft and brand is just as evident as Hawkins' excitement for it. It's pretty clear to me early on in our talk that is this study in contrasts that drives this company.

So where did this idea to bring the flat-top can come from, and why are they doing it?

"It kind of comes down to where we are as a society right now," Hawkins says. "We're at a great point where we can choose what we want our experiences to be."

There is of course the added sustainability advantage of steel, which is more recycled than aluminum. But there is more to the can-as-differentiator than that.

He continues: "We don't really make anything any more. We don't use our hands. We don't get our hands dirty."

This is kind of  a heady concept. We've gotten to a point where everything is easy. And so, now that we're here, we can actively choose to do things because they are harder. Hence Churchkey's tag "It's worth the effort."
It is hard not to think of Mad Men and the postwar nostalgia our nation is having right now. Even discussing it, Hawkins sounds a bit like Don Draper's carousel monologue when he talks about a longing for a time when things were maybe harder, but simpler.

It's certainly fascinating from a brand and strategy perspective. But one immediately understands the doubt. There is a fine line between branding and gimmick, after all, and craft beer is an industry of socially awkward bearded men concerned with specific gravity, not TV stars and designers talking about the visceral experience of using our hands.

Other than Grenier's name, the most common word used in the coverage of Churchkey so far is "hipster."

Now, that word, as Hawkins noted in our conversation, has changed a lot in the last five or 10 years, and has myriad meanings and connotations. But whether it's because of Grenier's home in Brooklyn, the throwback identity, or the way talk about doing something because it's harder walks the line between psychology and pretense, it's clearly something people see in the new company. So I asked Hawkins how he feels about it

"To us, it's a compliment in many ways," he says, acknowledging that probably not everyone means it that way.

"The term really came from the 1940s and 50s, with jazz and beatniks... I think it'll come full circle," he explains. "To me, hipsters, while they are trendy... they are also challenging the status quo in a way... they take things from trends to standard."


An Entrepreneurship Story
Hawkins was an agency designer before "getting interested in entrepreneurship."

The solo definition and design of a brand was a departure for Hawkins, who had little experience in the beverage industry at his previous agency stints.

"I'm used to working on a team," Hawkins says. He enjoyed the freedom of creating a business himself with Adrian, and its contrast to the groupthink that characterizes much of agency work.

The word Hawkins uses the most is "serendipitous," and one gets the sense that his wonder at the luck of everything is absolutely genuine.

He even suggests that an established brewery could not have made the bold choice to go with a totally different vessel, and that "two or three years ago, the flat-top can wouldn't work."


Of course, at the level to which Churchkey aspires, nothing works without someone making it work.

"We realized, 'holy crap, we don't know anything about beverages or the industry,'" Hawkins explains.

And so the Churchkey Team now includes CEO Ryan Sowards, a beverage industry vet.

"He has really taken the reigns and made this work really well," Hawkins says.
Sowards, Grenier and Hawkins.
Sowards, like many of the things helping Churchkey, probably wouldn't have been possible without the capital investment the company received from many Silicon Valley bigwigs. While many investors are not yet disclosed, CrunchFund's Michael Arrington is on board, and he is far from alone.

The decision to go to tech moguls for money was an inspired one, but Hawkins says that it was largely a "serendipitous" accident.

"We went through the stages of trying to find your typical investors and none of them really fit," he says, "We did not expect it to go so well."

I asked whether the investors were interested in the beer company as a real portfolio piece, or more as a passion project. The answer was that they seem to be a bit of both.


"I think that people who invest in beer are passionate," Grenier says, adding that "it's not a get rich quick scheme by any means... [I think] they saw an opportunity to do something a little different."

"I think it really comes down to: These guys are young, they love to do angel investing... and who doesn't want to be involved in a beer company," Hawkins explains.

Still, both Grenier and Hawkins agreed that the investors are not involved with Churchkey out of charity. It is a legitimate business opportunity, they feel, and the fact that there is a technological element may have made them feel just comfortable enough.

"Churchkey is really stepping out there and creating a new category," Hawkins says.

Again we are back to the question of whether a technology that is old, expensive and hard can be disruptive. But whether one thinks the flat-top can is a fad or a lasting differentiator, the reality is that the business of craft beer has changed, and the returns angels hope for are not as unreasonable as they once seemed.

For one thing, we have models for a big exit. I asked if last year's purchase of Goose Island by ABI for around $39 million affected Churchkey's conversations with investors at all.

The answer was that many signs of the industry's strength, from Goose Island to the booming growth numbers, all made the industry a more attractive investment space than it used to be.

Grenier acknowledged that "there's definitely a trend, a movement toward quality" and that "the craft brew industry has an upslope" compared to macrobrewing outfits, and that is fueled by a more aware consumer. "They want something that will enrich their lives," Grenier says of the




I'll make up some numbers here: Venture capitalists look for a potential 20x return or so, depending on the industry. A big brewery with media, etc. can be launched for $2 million. Assume you are an angel who drops $250,000 for 12.5% (pocket change ever since Google bought your algorithm three years ago). If the brand grows quickly and, say, MillerCoors buys it for $50 million in two years, you've quickly turned that percentage into $6.25 million, which is a 25x return.

each six-pack of Churchkey
comes with an opener.
So it's not a crazy investment, at all.


The next steps include a wider distribution, starting with New York City.

"Adrian has been clamoring to get the beer in his back yard," Hawkins says, agreeing that the move to the unofficial capital of hipsterdom will probably not lessen the association with the "h" word.

They are also working on apparel and beer shipping, an undertaking that will involve a robust website and a whole world of fulfillment and paperwork intricacies.

"It's a long road, and we're heading down it," Hawkins says.


A Craft Beer Discovery Story
Whatever else this unique venture may be (and it is unique), it is a story of how two men came to really love craft beer.


Churchkey Pilsner is a recipe developed by homebrewers Lucas Jones and Sean Burke, friends of Hawkins whose homebrew he enjoyed for years.


Hawkins says that the process of learning about beer caused him to evolve as a beer drinker. Early in the "research" phase, he noted North Coast's Scrimshaw Pilsner and some of the pilsners he had in Germany as inspiration for his palate, which was averse to hops. Now, Hawkins says, the same pilsners he used to like are less to his taste than some of the bigger, hoppier beers.

Grenier sees himself even earlier in the craft-beer-conversion process. His bio from Churchkey includes as the memorable beer experience:
"Drinking 40's with friends on a stoop, making fun of the yuppies who were going into some club that
wouldn't let us in, even though we wouldn't want to go in anyway."

"I humble myself to the educated palate," he says. "I'm trying to make it more sophisticated, but we're really lucky to have Sean and Luke."

The duo share a palpable sense of gratitude and respect for the beverage they now enjoy.



"I sort of took it for granted," Grenier admits about the beer he used to drink. "I guess I'm part of that movement because now when I order a beer... I want something [high-quality]."

"I'm just discovering it," Grenier says about his couple years of craft beer awareness, "and now that I have a lexicon to articulate it, it's become a lot more enjoyable."

And it is craft beer, make no mistake.

The brewing process of Churchkey is unique in the industry. It's brewed in Seattle, at their own brewery space, with six 60-gallon tanks. They share a wall with next door Two Beers Brewing Company, whose brewers manage production in the Two Beers brewhouse. Then the beer is fermented at Churchkey, and both breweries use the Churchkey canning line.

All future styles (the next will probably be an ale of some type) will be recipes of homebrewers like Luke and Sean.

"We really wanted to connect with a group of people who did something just because they were passionate about it," Grenier says of his and Hawkins' immense newfound respect for the work that home brewers do.



I asked if the two had considered contract brewing, still a bit of a craft beer taboo, but one that a brewery with major growth expectations would be expected to consider.

"We're open to doing anything we can do to get it to as many people as possible," Grenier says, with reluctance for the idea obvious in his voice, "but right now that's not in the cards."

Hawkins points out that it's not really an option, if for no other reason than no facility makes steel flat-top cans.

"It doesn't exist," he says. "No one has done this in 50 years."

Still, they are aware that almost no brewery struggles with demand as much as meeting it on schedule, and as much as production has already been an issue, it will only be a larger one for Churchkey in the months to come.

"The one thing we have that I think is unique is national demand," Hawkins says, which is of course a good thing, if one that requires the two entrepreneurs continue their craft beer learning curve.

...

It is of course possible that Grenier and Hawkins are slick men well trained by the good folks at Ogilvy, and that they are extremely charming and are relying on a set of skills (one is a trained actor, after all) to trick me into believing them.

But I don't think so. These are two guys who are deeply respectful of craft beer and legitimately happy and honored to be in business making it.
A can of Churchkey Pilsner.
The design is fittingly vintage-inspired, but still holds the clean look contemporary audiences crave (there's no paragraphs of looping script, for example). The logo of the circle with the openings is nice and replicable, and the blue is a nice color (Hawkins confirmed they would change colors, but not designs, for future styles).

Right, but what about, you know, the beer?

Of the two cans I got sent, one had been banged up pretty bad. This brought to mind an unheralded benefit of the steel can, especially if Churchkey explores shipping: They can take a beating and not explode or leak. This can had all of the carbonation and spit when I opened it.

Imagine an aluminum can like this.
Now, when I opened my can, I was not feeling like a beer. I'd been sick with a low-grade fever for a few days, and I did not want to drink beer. But I also needed to get this post up, so I went for it.

It was delicious. Seriously. Up there with my favorite US pilsners, like Victory's Prima Pils and Great Divide's Nomad. It's got a lot of hops in the finish, almost like a Czech style, and it's a very bold 4.9%. I would drink a ton of it.

Also, there is something really cool about it. It's got a heft and the opening is a great tactile experience. Maybe that makes me a hipster (especially if I admit I thought these were coming back about three years ago), but it is a really pleasant drink, which should matter in beer.


As a business, I believe it's a good bet. I think Hawkins is right that this is a phase of our society rather than a fad. I don't think that steel cans will return to dominate the market, but I think there will be a decently lasting niche for these cans, and I expect they will get interest from big buyers.

The price is comparable with other craft beers (recommended $9.99 per six pack), despite the steel can being a bit more expensive to produce. Hawkins said he didn't know if there was an economy of scale that could get the price down to that of other can lines, but my guess is they can get it close. More importantly, their investment means they don't have to worry about that right now and focus on building a market. Money helps you make money, and Churchkey's got it.

I know there are those who see a celebrity-backed "hipster" brand of beer in a gimmicky can with vintage design, and are scoffing. It's natural for those of us who cultivate skepticism, and on my bad days I can be pushed in that direction, too. But Churchkey is legitimate craft beer, and I think the men behind it are legitimately respectful of everything they are doing.

No comments:

Post a Comment