Bike Rack Brewing Company outlines expansion plans in downtown Bentonville

Jeff Charlson, a vice president at Wal-Mart, along with a few friends in 2014 invested their savings and more into a venture they call Bike Rack Brewing Company in Bentonville. Two years later their brewing capacity has tapped out and is serving 32 restaurants and bars and selling from their own venue.

This eager investor group set their eyes on expansion opportunities in Bentonville’s up and coming Market District, located just a few blocks away from their present facility in Arts District on S.W. A Street.

Charlson said the four original partners include himself, Joey Lane, Steve Outain and Andy Nielsen along with two other financial partners. In the last year, the group also brought on Ricky Draehn as a partner who oversees production.

Charlson said the local brewery has an annual capacity of 600 barrels or 18,600 gallons. He said the growing demand for craft beer continues to grow and is likely to continue because he believes the region is still in its early stages of the craft beer revolution that has turned the national beer beverage industry upside down in recent years. Last year the investor group set out to find a second location and were attracted to the Market District. They wanted to stay in downtown Bentonville and locate along the Razorback Greenway trail system. He said the new public market complex – 8th Street Market – being renovated out of the former Tyson Foods fry plant was the perfect place for Bike Rack Brewery’s larger facility.

“The new brewery location will be 7,000 square feet and have the brewing capacity in one day what our other facility makes in a month. We will also have a canning operation at the new site so that we can begin selling canned product in more retail venues,” Charlson said. “Right now Guess Who liquor store in Bentonville buys our beer and sells it in growlers, but we want to be able to offer canned products to other retailers as well.”

He expects the company will hire 8 to 10 more people, some part-time and some full-time when the second brewing site comes online in mid-December. He said the cost between can and bottle processing is a wash but because craft beer is light sensitive and the cans also provide a better seal, the canned product offers more flexibility for retail. Bike Rack also is working with the Brightwater Culinary school that will use the Cicerone Certification Program for those who seek to become craft beer experts.

“Our mission as a community brewer is to become a regionally relevant beer that focuses on quality and experience,” Charlson said.

BEER BREWING ‘COOPETITION’
Bike Rack was the first craft brewery to open in downtown Bentonville, but Bentonville Brewing Company has since opened as well as others like Core Brewery of Springdale with plans to open tap rooms in Bentonville. Charlson said competition makes everybody stronger. He said the quality of Bike Rack brews improved and more beer was sold after Bentonville Brewing Company opened.

“We like to say it’s ‘coopetition’ because we cooperate with our competition as we work together to educate the public on quality craft beer, which is highly subjective,” he said.

Charlson said the equipment has been ordered, the lease signed and they are expected to open by December. Investors also are gearing up for the second shop in terms of added personnel. While Charlson declined to disclose how much the expansion will cost, he did say the six partners have bootstrapped the entire venture supplemented with personal bank loans of their own.

“It’s a capital intensive project.,” Charlson said, but he added that working for Wal-Mart “the group really didn’t want to have to deal with committees and investors seeking control in their venture.”

Tthe company now employs six full-time workers including a pair of brewmasters plucked from the University of Arkansas. He said brewmasters Zach Hickson and Sam Brehm were interns at Wal-Mart and they had a business plan to open their own brewery. The pair made a presentation of their business plan at the UA and then Wal-Mart asked them to make the same presentation to the its employees. Charlson said his partners Joey Lane and Steve Outain were in the Wal-Mart audience and bitten by the craft brewing bug after watching the presentation.

“Joey begin brewing at home for our friends and neighbors and we dabbled in it for about a year and half before we decided to open the small brewery,” Charlson said. “It’s been a learning process and after Sam and Zach graduated we approached them about coming to work for us. This year Ricky came onboard and he has 25 years of corporate experience with Anheuser Busch working on hops and other aspects in the beer giant’s craft beer acquisitions.”

He said since Draehn has taken active role in the day-to-day operations the blends have become more consistent.

“It takes 10 days to make a make a beer. Ricky’s expertise combined with the brewmasters’ talents have helped to increase the consistency and quality of the beer we make today,” he said.

BENEFITS OF EXPANSION
Charlson said the cost of making a barrel or 31 gallons of beer for a small brewer using whole grains is a minimum of $250 including labor. He said that same beer might only sell for $300 or so given the high cost of having a small production capacity. Expanded capacity of the new brewery will help lower the company’s overall production costs. He said the new facility will have 16 different taps and the hope is to continue to experiment with new flavor profiles more often than is now possible.

One of the things sets craft beer apart from traditional brews is the use of whole grains and various hops that can cost two or three times the normal range. The hops provide the bitterness component to the flavor profile and Charlson said craft beer connoisseurs look for specific hops in the blends they prefer.

“One thing we have seen is the our local craft beer drinkers line up for new releases. Some of our experimental beers sell through in a couple of weeks.

Charlson said the company’s focus has also been to source as much of the raw ingredients as possible from within a one-day drive. He said the brewmasters experimented with locally grown hops but most of the grains come from the upper midwest with exception of some winter wheat grown closer to home. One area the brewers are focusing on is using local ingredients to change flavor profiles such as blackberries which can be sourced in Northwest Arkansas. As the new production comes online later this year, Charlson said the brewmasters will be able to do more testing in the original site which can be a testing lab for new flavor profiles.

He said the local industry is behind the national curve and there is a lot of running room for brewers who turn out quality beer. He said local brewers that have invested in their own venues have a code they operate by that says anyone who is making craft beer must make a quality beer even if they means they have to help out their competitors at times.

INDUSTRY GROWTH
Craft beer is not a nothing new. It dates back to prohibition but over the years craft beer consistency has improved and many of the off-flavors have been eliminated, raising the overall quality.

The federal Bureau of Labor Statistics reports that the U.S. craft beer industry provided an estimated 424,000 jobs last year, including those who serve up the brews in tap rooms and pubs. Craftbeer.com also estimates the craft beer market grew by 12.2% last year in terms of volume with a 21% increase in dollar shares. Craft brewers sold an estimated 24.976 million barrels of beer last year worth an an estimated $22.3 billion. There were 4,201 craft brewers registered in the U.S. at the end of 2015.

Charlson said downtown Bentonville is a perfect location for neighborhood breweries given the increasing population density and large number of visitors the region hosts every month.

“Locals find us along the Razorback Trail system, but lots of visitors looking for local craft beer wander in off the street. Craft beer tap rooms are being destinations for after work and weekends where friends gather,” Charlson said, much like coffee houses rose to prominence a decade or two ago.

He said about 75% of the Bike Rack Brewing Company’s traffic is local and lots of that comes in on bikes. The remaining 25% are from visitors in the area, often in town to see Crystal Bridges or perhaps to meet with Wal-Mart.