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The Way I Work: Ken Grossman, Sierra Nevada

Ken Grossman has built Sierra Nevada into one of the largest craft brewers in the country. But he still makes time to take a few of his 650 employees to lunch every week.
Science Tastes Good: Ken Grossman spends hundreds of thousands of dollars on research equipment to improve his beer.

Hopped Up:
Each day, Sierra Nevada goes through about 2,000 pounds of hops.

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Ken Grossman, 58, started out as many brewers do: making beer at home. He liked the taste of hoppy, aromatic handcrafted beer and thought others might, too. In 1980, he jury-rigged his first real brewery using recycled dairy equipment and launched Sierra Nevada, one of the first craft brewers in the country. Among Grossman's early brews was Sierra Nevada's Pale Ale, which is still its bestseller. Today, the Chico, California-based company is one of America's largest craft brewers, producing close to a million barrels of beer each year. To keep up with growing demand, Grossman is building a second brewery, set to open this fall on the East Coast. Because he can't be in both places at once, it was a tough decision for Grossman, who likes to walk the brewery daily, chatting with employees and testing new ways to make his beer taste even better. 

I'm constantly thinking about beer. Trying to figure out how to improve our product has driven me from Day One. Beer starts to degrade the moment it leaves the brewery. Heat, light, and oxygen can all damage the flavor. I'm always trying to think of ways we can better control that.

I usually wake up around 6 a.m. I try not to look at my email until I get to the office, but I inevitably end up checking it to see if I've got any fires to put out. We're building a new brewery in North Carolina, and they're three hours ahead of us. So when I wake up, there's often a lot of back-and-forth in my inbox.

I live 30 minutes outside of Chico, on more than 1,000 acres of untamed land. I've always preferred wild nature to city life. My wife, Katie, and I have a garden and eight laying chickens. We used to have goats, too. My three kids are grown, but they were raised on goat's milk. We like living off the land.

I usually have a couple shots of espresso and sit and chat with Katie for a while before heading to the brewery. The first four miles are dirt road, so I drive slowly. That's good thinking time.

I'm in the office by around 7 a.m. I usually start my day with a videoconference with my team in North Carolina. For the last two years, I've dedicated at least 20 hours per week to this expansion. At first, I was resistant to the idea of opening a second brewery on the East Coast, because I like to walk around the place every day to see what's going on. But, as our business has grown out east, expanding has become necessary from both a business and an ecological standpoint. Beer is heavy and expensive to truck, and I care deeply about our company's environmental impact. Plus, we have been growing so fast that we're about to reach maximum capacity in Chico.

We settled on Mills River, North Carolina, after analyzing our current distribution and projected growth in different markets. We whittled the search down to a dozen potential communities, all of which I visited in 2011. We looked at shipping, energy, and infrastructure costs, as well as water quality and local taxes. But the final choice came down to lifestyle: We wanted a place with plenty of outdoor activities--mountain biking, climbing, river rafting--like we have around Chico. I've always been active, and most of my employees enjoy the outdoors as well. Work is important, but so is a life outside of work.

In the last year, I've spent one week a month in North Carolina. My 28-year-old son, Brian, already moved there. He's going to be one of the plant managers. After we open the plant this fall, my plan is to visit every other week. So far, I've been sleeping in a 26-foot trailer on the construction site. Once my son and his family are settled, I'll stay with them.

After the videoconference, I spend the rest of my day in meetings or walking around. On Tuesday, I meet with my plant manager, who runs the facility. For a long time, everybody at the company reported to me. But I wasn't always doing a great job of guiding or mentoring folks. The brewers and the R&D folks still report to me, and that will always be the case. I love beer and brewing, and I don't want to give that up.

My head brewer is Steve Dresler. He and I talk daily. We've got about a dozen brewers under Steve, and I'm involved in all those hires. Every year, Steve and I go to Yakima, Washington, to meet with hops growers and buy hops. We've been doing that since the very beginning of the company. Hops have distinctive aromas. They may smell like pineapple, citrus, pine, or cedar. We use different ones for different beers. They're like spices. I've been very involved with hops research since my early brewing days.

On Wednesdays, we have a production-planning meeting, where we go over the schedule and make sure everything is running smoothly. It takes time to brew beer--two weeks, start to finish, for our pale ale, longer for others. We need to make sure we have all the ingredients ready to go, in the quantities necessary.

The beer-making process is pretty elaborate. The first ingredient is barley. You add hot water to extract starches and protein. Then you remove the grain, boil the liquid--called sweet wort--and add hops. You then transfer the cooled liquid to a fermentation tank, add yeast, and let it sit and do its thing.

Our goal as brewers is to make the same beer every batch. But we're using agricultural products, which inevitably vary because their taste is affected by soil, climate, water, and age. That's why we focus hard on the science of brewing.

About 10 years ago, I bought a very fancy instrument, an EPR spectrometer, for $250,000. You can put hops, beer, or whatever you want to analyze into the machine, and it separates out each compound and its aroma. So if I think, This is a great aroma; where did it come from? I can see it's from this malt or that variety of hop.

Investing in this kind of technology is worth it to me. I'm convinced that our success is driven by our focus on quality. We do things that most small brewers would consider labor intensive and expensive. For instance, we use whole cone hops instead of pellets--hops that have been pulverized and compressed. Pellets are easier to store and last longer, but I think whole cone makes better tasting beer. We never really advertised much, and we still don't. I've always thought it was better to focus on our beer.

We have a very advanced research and development team that I meet with every week to go over new ideas and discuss results. For instance, there might be a new bottle-cap lining material we want to try. Most liners are made out of PVC, or polyvinyl chloride, which is banned in many European countries. Ours are not--we use a blend of food-safe plastics. We've been working to find the Holy Grail of bottle-cap liners--something that doesn't impart any flavor or odor while preventing oxygen from migrating back through the plastic into the beer. A lot of our research has been done around finding material that doesn't scalp, or absorb the aromas from the beer. I'm techy, and finding the Holy Grail of bottle-cap linings is really important to me.

My CFO and I talk every day, but I probably don't spend as much time poring over books as some CEOs might. I do review financials and am involved in those decisions, but I'd much rather be playing with brewing ingredients than crunching numbers. We do track our key performance indicators, and we have screens throughout the brewery so everyone can see them. One of the most important is beer loss. On average, we lose around 8 percent during the brewing process, because of all the liquid transfers. If it's higher than that, we need to figure out what's going wrong. We also track and analyze things such as overtime hours, consumer comments, and energy and water use.

I spend more time now thinking about our brand than I did in the early days. When I started, 10,000 barrels a year was my dream. Then, I wanted to get to 60,000 barrels. Now, we're up to a million barrels. I had my head down for years and years, just focused on how to grow the company and make more beer. I didn't have to think about the market. Back then, there were only 35 brewers. Now, there are more than 2,000. So I think a lot more about how to connect with our customers. We do more tours of the brewery, and we go to lots of festivals and events. We also have a much larger sales force. We used to have one salesperson for every 10 states; now we have an army of 100 people out there telling the Sierra Nevada story.

I also spend a lot of time thinking about ways we could be more energy efficient. We use a lot of resources, so to feel relatively good about what we do, I think it's important to use those resources as wisely and efficiently as we can. We have more than 10,000 solar panels on-site. It's one of the largest privately owned solar installations in the country. That allows us to generate up to 80 percent of our own electricity.

We have a restaurant and pub at the brewery, and that's where I usually eat lunch. We have subsidized lunch plans: All employees get a tab, which increases with the number of years worked. Steve Dresler, who has been here 30 years, gets $300 a month to spend at the pub. We also have subsidized day care and an on-site health clinic that's free to employees and their family members. I think it's important to show our employees that we care about their well-being. Beer is a product people can abuse, so we try to help people lead balanced lives.

Every other week, I take a few of my employees out for lunch to a restaurant of their choosing. It might be up to three people that I pick out of a hat. Those lunches help me get to know people better on a personal level. I also try to walk around the plant and talk to people every day. I want our employees to think like owners. And I find that making a connection to as many people as I can helps with that mission.

After work, I have a beer at our pub a few days a week. I try to leave the office by 6 p.m. I make dinner often, usually a simple roast chicken or stir-fry. Nothing fancy. Our evenings are generally quiet. We'll play cards and watch movies. I may jump on the computer and do a little work, but that's rare.

My wife and I like to sail, so we recently rented a sailboat with friends in Belize. Every year, we go somewhere. We usually try to go scuba diving. We just bought another house on the coast in California, and my plan is to spend more time in the ocean. If I have a day off, I usually go on a long hike with my dogs.

But even then, I'm thinking about work, how we can get bigger and maintain quality. That is what drives me. When I first started this company, American beer was a joke. Today, we are regarded as one of the great beer makers. We went from getting no respect to having German brewers come visit us to see the way we brew. That's pretty awesome.

Sierra Nevada, At a Glance

Headquarters: Chico, California

Year founded: 1980

Gallons of beer produced each year: 31 million

Employees: 650

Beers: 18 available nationwide, including a stout, a brown ale, and an IPA. The company also makes seasonal and experimental brews.

***

Why he expanded to North Carolina: "The final choice came down to lifestyle. Work is important, but so is a life outside of work."


Why he bought 10,000 solar panels: "We use a lot of resources, so to feel relatively good about what we do, I think it's important to use those resources as wisely and efficiently as we can."


Why he has a small marketing budget: "We never really advertised much, and we still don't. I've always thought it was better to focus on our beer."


Why he takes employees to lunch: "I want our employees to think like owners. And I find that making a connection to as many people as I can helps with that mission."

Last updated: Apr 24, 2013




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