Jimmy had a chance to sit down with Tom Schlafly, Chairman and co-Founder of Schlafly Brewing in St. Louis, at their BottleWorks facility - what a lovely afternoon. He had some fascinating answers to our incredibly succinct questions. Also a big thank you to Lindsie Van Winkle for her service as still photographer and new-to-the-team dark haired Happy Hour Gal. Enjoy!
At The Happy Hour Guys we’re fascinated by Craft Industries - and we feel that our business (Acting) is a Craft industry as well, so there’s a simpatico there.
We’re both lucky in that we found careers and what from most people call Recreation - I mean, I’m a lawyer in my other life, and nobody ever says anything nice about lawyers, so…
What was your ‘Gateway Beer’?
Well, let me give you some context. I was in San Francisco in 1983 and I tasted Anchor Steam, my first different experience from light Pilsners and Lagers, but I didn't fully appreciate it… but then later in 83 I went to a continuing legal education program at Oxford, so I could say that I read law at Oxford - I mean, it was 2 weeks, that’s kind of like a Rhodes scholarship, right? (laughter) Nowadays I say I learned more about English beer than English law. So I came home, and I was speaking to a former Law partner, he said “How was it?” and I said, “Oh, I had some great beer there, it’s a shame that no one is making beer like that here,” and he said, “You need to meet my son, Dan.” I think it was after Dan approached me that I started paying attention to Craft Beers and seeking them out.
Dan Kopman, who got me into the business and is my Founding Partner at Schlafly, was working for Young’s Brewing in London - he was an Export Manager, selling Young’s here in the U.S. He noticed that local craft was being sold next to the exports in stores then - so he was the one that convinced me that Craft could work here.
What was it like to start a brewery in THE Budweiser Company Town in 1989?
Well let me put it this way; I wrote a book for our 15th Anniversary called “A New Religion in Mecca - Memoir of a Renegade Brewery in St. Louis.” Producing any other kind of beer in this town was considered HERESY.
I grew up in St. Louis. And in the beginning we were just a little brewpub in a crummy area of downtown. Funny story; before we moved in, the film ‘Escape from New York’ shot footage in what would become our taproom. I guess they couldn’t find a bad enough location in the South Bronx, so they came to our neighborhood.
Even today, years after Annheuser Busch has been sold to InBev and is no longer an American Company, I mean it’s owned by a Brazilian Hedge Fund… even today, on the radio if there’s traffic out on I-55, they’ll just say that there’s “Traffic out by The Brewery” - no name, just THE Brewery. We had our work cut out for us, but we started small and just kept going. Friends would say, “Oh that’s a terrible idea to open a brewery here. No one will come. I mean, I’m coming, but no one else will.” Turns out a lot of people said that. We’re the largest American owned brewery in Missouri now.
You helped change the legal issues around Craft in Missouri, yes?
AB was and is extremely influential in the Missouri Legislature. But when we started the law was that a brewery could not own an interest in a retailer, with two exceptions: If the retailer was Busch Stadium or Busch Soccer Park. That gives you an idea of the playing field, as it were. You also have this tension between those folks in the southern part of the state, what we call the Buckle of the Bible Belt, who oppose alcohol in any form, and the massive corporate lobby that the AB folk have. Big differences there. But we had an advantage in that no matter what the dispute was, they were never going to openly say they were picking on us. No matter what, we were David and they were Goliath - those optics in the press are terrible.
So we opened as a Brewpub in the taproom downtown, but could only sell our beer onsite. Then we got the law changed in ’93, so we could start selling tap beer to other bars and restaurants. We opened this location, our Bottleworks, on the 70th anniversary of the repeal of Prohibition. Our geographic footprint is now around 1400 miles - we distribute to 15 states, plus DC.
You’re part of the ‘earlier generation’ of American Craft Brewers. A few years ago, in 2012, you sold a significant percentage of the brewery to a Private Equity Firm. Why?
AB was sold to InBev on my 60th birthday - we had a party at the taproom. So there were all these TV cameras, and reporters asking what it felt like to be the biggest American Brewer in St. Louis now, and I’m saying, “Oh, well, by the way it's my birthday.” And I realized that someone else was going to own the brewery in 30 years, and the transition could either be smooth or chaotic. And my nightmare, frankly, would've been for my executor to have to sell to the highest bidder, and InBev would buy it and say, “Well this is a nice brand name, but we can brew more efficiently several states away,” etc etc - and fire everyone.
So I thought, “Who are the stakeholders, to which I owe something?” Obviously the employees, the customers who embraced us when everyone said a Craft Brewery would never work in St. Louis, and the communities who supported us. I just wanted to make sure everyone was taken care of. The Private Equity firm we partnered with, the Sage Group, are local people, and there’s also now employee ownership within the company. Our employees collectively own about 10% of the brewery. A lot of our employees are not experienced investors, but it’s been very gratifying to watch them choose to invest in us - we’ve helped to get them to think long-term. It was complicated, and the easiest thing would have been to take a check from InBev, but I’d never be able to show my face in St. Louis after that, after all these pieties I’d been preaching.
I’m still the single largest shareholder, and I’m still the Chairman. But if I’m hit by a bus, the company goes on now, and we think in the right way.
When you reflect on what you’ve gotten out of this business, what comes to mind?
I’ve made money, I mean if you don’t make money you can’t stay in business. I’ve had fun, and there’s a little sense that we’ve done something good; I mean two neighborhoods are better, we went into two vacant buildings and two zip codes are better off. It’s not the world, but… we’re proud of it.
You’ve been ‘ahead of the curve’ in many ways in Craft. Can you see the future, or are you just lucky?
Lucky. (laughter) The real visionaries were the ones who started breweries with no one to look at, like Ken Grossman and Fritz Maytag. I saw Craft working in other cities, and figured it could work in St. Louis - even though most folks said it wouldn’t. I figured if I didn’t do it, in 10 years someone else would be doing it successfully, and I’d be kicking myself. It was an instinct, it was a fantasy thing: I mean I can’t be a Super Bowl Quarterback, and I can’t be Mick Jagger, but… owning a Brewery is pretty cool.
