Entrepreneurs leverage OTR's history - and $1.2 million - to start new craft brewery
OVER-THE-RHINE — This is what happens when passion intersects with friendship, a solid business plan and appreciation for history.
A building that could never be recreated comes back to life. A diverse group of angel investors provides financing, drawn by the potential return and promise of adventure. And the revitalization of the urban core, where entrepreneurs are already bouncing off each other like pinballs, takes another step forward.
Bob Bonder, president of the Tazza Mia chain of coffee houses, and business partner Bryant Goulding are renovating the second floor of the Christian Moerlein bottling plant, work that will advance the revitalization of a growing Brewery District that made Cincinnati a Midwest Brewing hub at the turn of the 20th century.
Bonder and Goulding plan to turn part of the 250,000-square-foot complex on Elm Street just north of Findlay Market into a craft brewery called Rhinegeist Brewing.
The two have raised $1.2 million from local investors and recruited brewer Jim Matt to launch the startup, which will initially focus on manufacturing, distribution and a healthy dose of education through a tasting room where patrons can see the beer being made.
Bonder, 31, hopes to leverage his existing distribution network for Tazza Mia, which also sends coffee beans to several local businesses including Remke/bigg’s, Whole Foods and Jungle Jim’s International Market. Goulding, 31, brings deep experience in craft beer sales and marketing. Matt, 46, a chemist, has developed a reputation for his brewing expertise.
They hope to open by the end of this year and produce West Coast-style dry, hoppy craft beers and a slew of seasonal varieties. And in a direct way, Rhinegeist will be another piece of the burgeoning entrepreneurial infrastructure in Cincinnati’s urban core, providing what Goulding calls “social nutrition” to entrepreneurs.
Bonder and Goulding, who live in Over-the-Rhine, have spent most of their lives on the East and West coasts, and in more mature startup ecosystems.
“It’s that entrepreneurialism in the restaurants and bars that make entrepreneurs doing tech companies want to live (on the coasts) because it’s their vibe,” said Bonder, a Cornell University graduate who moved here in 2007. He also co-founded 1215 Wine Bar & Coffee Lab in Over-the- Rhine. “It gets away from the typical office structure, and provides people with places where they can hang out and feel comfortable and motivated because they’re surrounded by like people.”First decision? Making the big move to Cincinnati The early rise of Rhinegeist has involved a lot of pitches. The first was Bonder convincing Goulding, who graduated from the University of Connecticut with an economics degree, to leave the West Coast and move to Cincinnati.
Goulding fell in love with beer during a semester abroad in London. The discovery, combined with the mind-blowing art and architecture of Europe, had a profound impact on his career path. Goulding started working at beer festivals and connecting with craft beer distributors. He wrote his senior thesis on the economics and evolution of the craft beer industry, which in 2011 produced $8.7 billion in revenue, a 14 percent increase over 2010, according to the national Brewers Association.
“It was defying the logic of consolidation and corporations gobbling each other up, because each of the little breweries were brewing such highly differentiated products,” Goulding said. “The business managers themselves and entrepreneurs loved their business, so they weren’t going to sell out very readily, because that’s what they loved to do.”After graduating, Goulding worked for consulting firms Accenture and Fair Isaac, where he worked for clients, including Chevron, doing supply chain and marketing program management.
In 2008 he became the north coast sales manager for California-based Anderson Valley Brewing Co. About a year later, he moved to Delaware-based Dogfish Head Craft Brewery, where he was the West Coast regional sales manager.
Goulding wasn’t just a salesman at Dogfish. He was an ambassador and educator, and introduced regular West Coast beer drinkers to the product.
At the same time, Bonder was establishing himself in Cincinnati. Over-the-Rhine’s resurgence excited him, but he also noticed craft beers from outside the region dominated most local taps. At the turn of the century, Cincinnati pumped out 36 million gallons of beer annually. Bonder started thinking big.
“In my mind I was like there’s got to be some way,” Bonder said. “I know my buddy Bryant’s working at Dogfish Head … I know a bunch of people who own a bunch of bars, somehow we need to combine this. I’m living down the road from the most beer history of just about anywhere in the country, and it’s all worn down but it’s still there. It was like somebody needs to do this.”Craft brewers could not keep up with demand in Ohio Bonder called Goulding, whom he’d met when the two were consulting in San Francisco, and pitched him for an hour on leaving California and moving here. The two friends had connected not through their work, but their passions: Goulding and beer; Bonder and coffee.
“We would drive every day to work, and I’d be talking about coffee stuff, and he’d be talking about beer stuff,” Bonder said. “We turned everything into an education process, it was so fun and cool,” Goulding said.Goulding agreed to visit in September 2011 and help write a business plan. Nothing more. He liked Cincinnati so much that he postponed his flight back to stay one more day.
When Goulding returned to California, he started doing market research and found that, essentially, craft brewers were unable to keep up with demand in Ohio. It took a few more trips before he committed to moving. This time it was Cincinnati that made the successful pitch.
“I was just charmed,” Goulding said. “People are friendly here; they’re excited about where the city’s going.”The business plan went through several iterations. The two considered developing a brew pub, but were leery of the overhead and their lack of restaurant experience.
“You don’t want somebody to come and have a mediocre hamburger and have them think, as a result, that your brand isn’t that great,” Bonder said.Advisers, meanwhile, gave them a consistent message: If you start brewing great craft beer, you’ll never satiate local demand. That epiphany gave them flexibility as they searched for space. Foot traffic wasn’t as critical, and they wanted a location where they’d easily be able to expand.
That’s when an empty building made its pitch to the entrepreneurs.
Massive size, location, revenue possibilities were selling points Bonder and Goulding’s real estate agent took them to 1910 Elm Street on a whim. Finding a flexible space to grow was one thing, but
250,000-square-feet seemed ridiculously enormous at first. From the outside, Bonder describes the structure, which was just one part of the massive Christian Moerlein Brewing Complex, as a brick monolith.The inside, however, is breathtaking. Light streams in through massive windows and ceiling skylights. The landlord was also willing to just rent out the second floor, and give Bonder and Goulding right of first refusal on adjoining spaces.
Another plus: The building is right next to the northernmost point of the proposed Cincinnati streetcar.
“We just said, ‘This is it, let’s go figure out how to make this work.’ It’s more space than we intended taking on, but really great in terms of our ability to grow,” Bonder said.The building’s size also gives Rhinegeist other revenue possibilities. For examples, the space could be used for concerts, parties, wedding receptions or a giant indoor beer garden.
Murray Sinclaire, president and CEO of Ross, Sinclaire & Associates, LLC, owns the building with his brother-in-law. Sinclaire turned down several other proposals for the space before agreeing to lease the building to Bonder and Goulding.
“I really liked the vision, I thought it would be a great part of the renaissance in Over-the-Rhine,” said Sinclaire, who is also an investor in Rhinegeist. Sinclaire added that he was impressed with Bonder’s ability to overcome challenges while building Tazza Mia. “He makes things happen by force of will, and he’s shown he’s willing to roll up his sleeves and work,” Sinclaire said.In April 2012, Bonder and Goulding started lining up their investors. Bonder began with the people he knew. As it turned out, he and Goulding raised $1.2 million in capital from a totally new group of people.
“We had this epiphany. Instead of approaching the people we know, let’s think about who in this community not only might have the money to do this, but it just matches their interest, where they’re all about the development of Cincinnati and their hearts are in it,” Bonder said.Investor saw chance to tie in to Cincinnati's past, revitalize city Besides Sinclaire, investors include Jack Rouse, founder of Jack Rouse Associates. Rouse said he didn’t know “a damn thing about beer” until he met Bonder and Goulding, and jokes that under their tutelage he’s become a beer snob.
Rouse said making this type of investment is highly unusual for him. But he was attracted by the solid financial planning, which he said is among the best he’s seen in his business career. He was also drawn in by the chance to connect with Cincinnati’s history in a new way, and the opportunity to revitalize another part of Downtown.
“It celebrates Cincinnati, which we’ve all got a passion about,” Rouse said. “I think (Over-the-Rhine) has come further much faster than anybody thought. It’s still a bit – and I mean this in a good sense – the gritty, urban, real quality of downtown living. It’s not manufactured, it’s building on the real roots. It’s not plastic. “I think that’s probably why it’s more appealing to me than an investment in something that maybe didn’t quite have that authenticity.”Right now, workers are painting, laying concrete and working on the plumbing at 1910 Elm. The equipment has been ordered, and some of it is already in place, including a 20-barrel brew house that Goulding found in Mexico.
The two estimate Rhinegeist will have capacity to brew 6,000 kegs a year using its existing equipment. If it maximizes all of the second-floor space, Bonder estimates Rhinegeist can brew up to 80,000 kegs a year. The plan is to put Rhinegeist beer in 16-ounce cans, which will come in packs of four. The canning will take place on site.
Bonder said he expects getting the beer onto supermarket shelves will be an easier lift than coffee.
“Buying coffee off of a retail shelf is a very habitual purchase. Most people have their one brand that they go for. There’s not a ton of variety in the supermarkets. And really on the back end we have to pitch really hard to try and get into places,” Bonder said. “Beer is like the opposite. They’re craving you in their supermarkets. They’re craving you in their bars.”Inside Rhinegeist, Bryant and Goulding will constantly hold taste tests with different styles of beers. The idea is to educate novices, and also engage with what the men say is a tight-knit group of local craft beer connoisseurs.
Like all entrepreneurs, there’s nothing else they’d rather be doing.
“You pretty much rule out professional athlete, and once you’re past that, what’s the next-best stuff you could be doing?” Bonder said. “This is better than being an astronaut, I don’t really want to be president, that’s no fun. What else would I want to do?” I bring you news and insight about the region’s entrepreneurs, and why they matter. Follow me the next few days on Twitter @joshpichler as I report from the Austin SXSW innovation conference. I will give you a new perspective on local executives and the region’s entrepreneurs – and why both matter to you. Find me at linkedin.com, facebook and snipped-for-privacy@enquirer.com--- news://freenews.netfront.net/ - complaints: snipped-for-privacy@netfront.net ---