CEO Michael Hranicka is helping craft breweries grow by relieving the headaches of keg distribution.
Chris Sapyta founded the company in Redmond, Washington, with the simple presupposition that numerous breweries pooling their kegs would streamline distribution.
Sapyta has since moved on, but the model has proven itself time and time again. Growing from one brewery to 200 — including about 20 in Colorado — as MicroStar now owns about 2 million kegs.
“It’s a pooled keg model,” explains Hranicka. Breweries fill and ship MicroStar kegs to destinations all over the country, but don’t have to worry about wrangling them back home. “The distributor would have to herd that keg back to Colorado”– a costly, slow, and complex proposition.
Instead, MicroStar just gets it back to the nearest facility in its nationwide network and hands it off to a regional brewery. “We take responsibility for that keg and find another customer for that keg,” says Hranicka. “That model fundamentally reduces the miles that keg travels. It reduces costs and it drives a lower carbon footprint.”
Adds MicroStar VP of Marketing and Business Development Dan Vorlage: “The movement of a keg through the supply chain is a very difficult activity. It’s a fractured supply chain.”For most breweries, kegs represent the second largest capital expenditure after the brewery itself. Investing in kegs “would inhibit growth,” adds Vorlage. For a small craft brewery, the investment can be $100,000; a larger one might need $10 million worth of kegs.
Case in point: Avery Brewing‘s $27 million expansion in Boulder. “That increases significantly the production capacity of their operation,” says Hranicka. “We enable that growth. We let them focus on brewing beer and what they’ve got to do to brew more.”
For a growing brewing company, forecasting keg need can be a tricky business. “You better hope that number’s right,” says Hranicka. “If you’re long, you’re sitting on a lot of metal.”
MicroStar charges customers per fill and works with 1,600 distributors to help get kegs where they need to be.
The company’s regional presence is strong. “We’ve got a who’s who of Colorado craft brewers,” says Hranicka, highlighting Avery along with Oskar Blues, Ska, Breckenridge and Great Divide. But it’s largely because Colorado is a hub for craft beer. MicroStar has customers in every state and counts about 20 of the country’s top 50 craft breweries among its customers.
“We’re growing with the craft beer industry,” says Hranicka — a good thing, considering craft beer sales were up 17 percent in 2013. “Our customers have grown, their needs have grown, and they have become increasingly sophisticated.”
MicroStar also supports the annual Great American Beer Festival by helping breweries from coast to coast get their beer to Denver. Before MicroStar, “It was comical some of the things they would go through,” says Hranicka. “It literally has created a microcosm of some of the things we’ve brought to the broader market.”
Challenges: Keeping up with the growth in craft beer. “Our rallying cry is customer growth,” says Hranicka.
But there’s more. “The real challenge is about sustainability,” he adds. “We believe in our core this is a highly sustainable, low carbon footprint option for getting the highest quality beer to market.” The numbers back it up. PE International found MicroStar kept over 6 million pounds of carbon dioxide out of the atmosphere in 2013 alone.
Opportunities: “International markets for American craft beer is burgeoning,” says Hranicka. “We’ve got various pilot programs in the U.K. and other areas. We’re putting a lot of time and effort into them.”
A second one: “We see wine as an interesting opportunity as well,” says Hranicka. MicroStar is working with Denver’s Infinite Monkey Theorem, which Hranicka calls “a wonderful partner.”
Needs: A higher profile. “We felt we were this introverted company,” says Vorlage. That belied MicroStar’s growth. “We’re one of the largest suppliers to the entire craft beer industry.”
