Rahr

posted on Sunday, Sep. 26, 2004

SPECIAL TO THE STAR-TELEGRAM/JESSICA KOURKOUNIS

Fritz Rahr, owner of Rahr & Sons Brewing Co., comes from a family with a 150-year history of beer-making.

CAREER hops
Fritz Rahr quit railroads to open a Fort Worth microbrewery
By Barry Shlachter
Star-Telegram Staff Writer

Fort Worth's newest microbrewery is the result of a midlife career change that at first glance looks radical but on reflection seems almost meant to be.

Frederick "Fritz" Rahr, once a competitive swimmer for Texas Christian University, spent 11 years in sales and marketing jobs at three railroads before deciding on a leap to brewing.

Fermenting lagers is a Rahr family tradition, brought from the Old World to the Midwest a century and a half ago. But the last Rahr brewery closed in the 1960s, although relatives still produce malted barley for breweries.

One evening, Fritz Rahr came home and told his wife that railroad work no longer enthused him. She asked him what he wanted to do, and he replied, "I just want to make beer."

"I had every confidence in Fritz," said Erin Rahr, a Fort Worth native. The couple put their house in Houston up for sale.

"And if it sold quickly," Fritz Rahr said, "we knew we were committed."

The house sold quickly.

"I had many close friends in the railroad and was concerned how they would react," he said. "But they were supportive. 'You're following your dream,' they said. 'It's something we've thought about but never had the guts to do.' "

Harboring such dreams is not uncommon. A BusinessWeek poll this year found that 30 percent of midlevel and high-level executives said their dream job is "winemaker or brewmaster."

But few undertake such entrepreneurial -- and challenging -- life makeovers. And it's risky business for those who do.

In 1998, the height of the U.S. craft beer boom, there were 1,600 microbreweries and brew pubs, according to the Association of Brewers, an industry group in Boulder, Colo. There are 1,370 this year.

Willing to take a gamble, Rahr, 37, returned to Fort Worth with his wife and two sons, ages 5 and 7. He had plans to build a microbrewery closely associated with Cowtown traditions and reflecting his family's brewing heritage.

And the timing for Rahr & Sons might be right.

"Back in 1990s, microbreweries were seen as a big business opportunity," said Paul Gatza, director of the brewers association. "People were crawling out of woodwork trying to make a fast buck rather than being passionate about the beer, and many faded rather quickly.

"What we're seeing now are a few new microbreweries opening and very few closing," Gatza said. "People are not getting into projects unless they are very well-funded."

Today there are about 1,000 brew pubs and 364 specialty breweries. Average production per brew pub has declined to 40 barrels (1,240 gallons) a year since 1998, while that of craft breweries has grown to about 50 barrels (1,550 gallons) per year since 1998.

"There two different trends, with one going up, the other down, so Rahr is on the right side of the business," Gatza said.

That said, microbreweries are still a tiny percentage of the overall beer market: They have 3.28 percent of the market, versus 11.59 percent for imports and 85.13 percent for the three major domestic brewers, Anheuser-Busch, Miller and Coors, as well as traditional brands such as Pabst, Dixie, Pittsburgh and Yuengling.

While the big-beer segment has seen stagnant growth, sales of microbrewed beer have climbed 3.4 percent during the last two years and are expected to climb another 3.4 percent this year, Gatza said. Sales of imports, which doubled during a five-year period ending in 2001, have slowed considerably, he added.

Even before Rahr brewed his first batch, a Fort Worth advertising firm got so caught up with his vision that it broke new ground by partnering with him. GCG Advertising invested $20,000 for an equity stake and pledged $50,000 in professional services.

"I felt good about it and went with my gut," said Neil Foster, 33, vice president of GCG. He now holds a seat on the Rahr & Sons Brewery board. "Fritz did a great job of selling us on his idea. As for the beer, you knew it had to be excellent."

That's not to say there were no in-house qualms after the deal closed last December, Foster recalled.

"The buzz around the office was, 'Hope the beer tastes good...' "

With much at stake, the GCG staff finally got to sample the two initial brews this summer: Rahr Blonde, a German-style golden lager known as Helles, and Rahr Red, an amber lager akin to Vienna and Oktoberfest Marzen types.

"We were pleasantly surprised by the beer," Foster said. "It was very good."

After raising "close to $1 million" from 10 investors, mainly family and friends, Rahr and his wife refurbished a 20,000-square-foot warehouse on Galveston Avenue south of downtown, bought a third-hand red delivery truck and picked up used brewing equipment from Louisiana and Minnesota.

One coup was getting a steep discount on a state-of-the-art brewing filter from Germany, the first in the United States, in return for allowing the microbrewery to be used as a showcase demonstration site for the manufacturer.

A terrific product isn't always enough, however.

"My sense is that the beer will be great," said Gatza. "The question is, will they get the right distribution to survive?"

Texas law allows small breweries to self-distribute. That's what Rahr expects to do, switching to a distributor when sales outpace his capability. Rahr has been delivering kegs to bars and, come November, will be schlepping cases of bottled beer to retailers when he gets approval from state authorities.

"We're all wearing multiple hats around here," said Rahr, whose wife helps with promotions and sales.

For Rahr & Sons, initial response is good.

"It's wonderful," Marc Castaldo, Flying Saucer's Fort Worth general manager, told Rahr after sampling a brew during a sales visit this month. "You can send me two kegs tomorrow, and we'll get them on line for Wednesday."

In the first week, the bar emptied three kegs of Rahr Blonde, which Castaldo said was a "pretty high" rate -- putting it up with such major imports as Guinness and Bass Ale. Significantly, customers are reordering, he said. "It's building loyalty."

During that initial sales call, Rahr stressed how close his brewery is to the bar.
The brewery's location will be a very strong pitch.

The advertising promotion created by GCG marries a strong Cowtown stamp on the beer with the Rahr family's long brewing history.

"One day, I hope we're the Shiner of Fort Worth," Rahr said over a glass of freshly poured Blonde lager. "Actually, the Rahr of Fort Worth. How about that?"