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Plant Expansion Brews Double Sales

“Plant Expansion Brews Double Sales”

At a crossroads for growth, Geoff and Marcy Larson tapped staff and customers — early and often — to follow $10MM dream.

Geoff and Marcy Larson opened their Juneau, Alaska-based microbrewery in 1986. Alaskan Brewing Co.’s business was so good that demand exceeded capacity for the first eight years. By 1994 the Larsons faced a tough decision: Either pull out of some markets or expand operations with a new brew house, which required significant investment and could seriously disrupt ongoing production.

The Larsons opted to build a facility capable of producing 100 barrels a batch — while operating their current 10-barrel brew house.

After nearly a year in design, ground was broken in late February 1995. Five months later, construction was complete and beer was brewing.

"It could have been a nightmare," says Larson, recalling the amount of work going on simultaneously. Some crews were up on scaffolding while others worked on the floor below.

Complicating the new construction was beer brewing just 25 yards away, which impacted everything from sharing equipment and power to keeping things clean. "We figured in the costs that a couple batches would be ruined — although that never happened," says Larson.

No Lag Time Allowed

A big key to their success was tapping an insider to serve as general contractor. Plant manager Dayton Canaday coordinated the 13 outside crews working on the project. His goal: no downtime. Canaday constantly checked with workers to see what had been completed so the next team could be on their heels. He also communicated with workers to find out what they needed — from forklifts to extra jump cords — and made sure they had it.

Since there were both union and nonunion workers on the project, Canaday also took care to keep tension at bay, which included assigning a staffer to watch over various crews’ equipment during the night. When the dust had settled, the final bill came in at about $2 million — only 5% higher than original estimates (the Larsons had been advised to expect at least 10% higher costs). And the project was right on deadline.

Making Customers Part of the Process

Involving customers in the project was also important. Larson took color photographs of the ongoing expansion and made montages for salespeople to show clients. "That way, they got to see and feel like they were part of it going up," explains Larson. "Often customers are frustrated when you’re shorting them on product and then confused when suddenly there’s plenty. Sharing that in-between phase helps them understand what the company is going through."

The expansion enabled Alaskan Brewing to nearly double its annual production to 25,000 barrels the first year and increase capacity each year after, producing 70,000 barrels in 1999. Sales doubled to more than $3 million in 1995, up from $1.5 million the year before the expansion, and last year’s revenues exceeded $10 million.

"Not only was it a big increase, but it was a lot easier," says Larson. Before the expansion, teams worked around the clock to keep "jamming" batches through the old system. The company was able to move from "outrageous schedules" to more normal production. "We could never have kept up the old pace. Now there’s time to relax a little," she adds.

Another key to success: consulting employees. "We put it to the staff as a vote," says Larson, explaining that the potential chaos of construction and transition to a new system would "make life miserable, unless we agreed there was a payoff."

Writer: TJ Becker