Now that I have moved back to Los Angeles I was privileged to meet with Bayhawk Ales’s General Manager and Brewmaster Karl Zappa. The brewery is located at 2000 Main Street in Irvine; the facilities are shared with a McCormick and Schmick’s restaurant. It is a showcase brewery with limited production.
Interview with Bayhawk Ale’s Manager Karl Zappa:
OH: What have been the biggest difficulties with production and costs?
KZ: Raw materials increases. The restaurant business is pretty flat right now and they are our biggest customers, Outback, Claim Jumper, and such. This is a showcase brewery and to grow our volume we need more production space we are running nearly at capacity of ten thousand barrels. Also, if we want to grow any sort of bottle business that will require more space. 3-6 percent of our business is currently in bottles, to grow more we have to produce larger than that.
OH: How do you sell the product?
KZ: We work mostly with large restaurant chains because distributors are not interested in selling one barrel a month to bars.
OH: What are your goals for the brewery?
KZ: We are following the hundred-year plan, I want this brewery to be here in a hundred year and so that’s how I look at my relationships and the company. I am not here to grow super fast and then flip for a big paycheck. This brewery will continue to work on its craft and its way of life for its employees, customers, and consumers.
OH: Who are the stakeholders in the company?
KZ: This is a public company, it is one of the breweries that was owned and operated by Jim Bernau.
OH: How is the distributor environment?
KZ: We have used several different distributors in different states, including Wine Warehouse, Glazer’s, Authentic Beverage, and some others.
OH: How do the different states compare as far as ease to function as a brewery and do business?
KZ: Texas was the hardest to deal with and we have actually decided to pull out of Texas. The license is around four thousand just to run in the state while the licenses for other states such as Nevada are as low as fifty. Also, Texas has a provision in their budgeting laws where if the state has a deficit they can raise permit fees on any of the businesses deemed “sin” business, which includes brewing. It is definitely one of the tougher beer markets and the regulations aren’t making it any easier. We currently operate in seven states, Hawaii, Oregon, Nevada, Arizona, Washington, and Illinois, of those Nevada and California have the best laws to support smaller breweries. California actually allows smaller brewers to act as their own distributors.
Karl and I spent a good two hours talking about his business and the industry environment in different states. The brewery is fully integrated into the “Pilsner Room” of McCormick and Schmick’s adding a great feel to the restaurant and bar. However, to grow the brewery is going to have to look into new facilities or contract brewing through another brewer. Many thanks to Karl and Bayhawk Ales to spending time with me and brewing great beer.
