You can’t run out of runway if you’re the one building it.
This aviation analogy intended as a maxim for charting a company’s growth is not lost on pilot and craft brewery veteran Eli Gershkovitch, CEO of Steamworks Group of Companies.
“I’ve always believed in the motto, ‘You grow to meet demand or demand will shrink to meet you,’” Gershkovitch said.
And with the summer sun soon to do its hard sell on beverages garnished with a patio table, and new craft breweries seemingly taking up residence in every neighbourhood, these are blue-sky times for piloting growth in the beer industry.
“Everybody is talking about craft beer at the moment,” he acknowledged. “I’ve been doing craft beer now coming up to 21 years. I’ve seen the cycles. I was part of the first wave, and now I’m part of the second wave.”
Since opening Steamworks Brew Pub in 1995, when such operations were novel rather than the norm, Gershkovitch has organically built out floor space at his Gastown location, boosting seats from an initial 184 to today’s 754 count. He also complemented Steamworks’ flagship operation by setting up shop at neighbouring Waterfront station with the Transcontinental restaurant before revamping it into the Rogue Kitchen and Wetbar. Add to that sponsorship of local Gastown events, and Gershkovitch could be given credit as an instrumental anchor tenant helping transform the area from dodgy tourist kitsch to hipster cool.
“I just kept growing piece by piece, adding elements to Steamworks as they became available,” he said of his organic evolution.
However, Gershkovitch’s steady flight plan took a dramatic change of course when he expanded with the opening of a full-scale brewery in November 2013.
The 40,000-hectolitre capacity of his brewery off Boundary Road dwarfs his brew pub’s 2,000-hectolitre output. With the brewery operating at full capacity, business has now achieved record altitude with revenue up 50%, according to Gershkovitch. His sales territory has also expanded from Water Street to worldwide; Steamworks is now selling products in several Canadian provinces and 14 U.S. states, as well as overseas in Hong Kong, Germany, Austria, Italy and Switzerland.
“Going from brew pub to brewery is transformational,” Gershkovitch said in an interview before flying to visit his sales team in Austria.
“The only carry-over is goodwill and brand equity. All of a sudden I have marketing, packaging and logistics costs. It’s a different business completely from operating a brew pub. [But] you either stay very small or you grow big. The middle ground is very treacherous.”
There is no middle ground for Gersh-kovitch when it comes to either his business or his personal passions. Whether it is flying one of his two planes, adding to his classic car collection or expanding his beer empire, Gershkovitch is singularly focused and all-in consumed on things that grab his interest. And, most importantly, he always wants the pilot’s seat.
Making good on his boyhood fascination with flying, Gershkovitch got his pilot’s licence in 1993.
However, he really earned his wings in 2009 when he flew from Vancouver to Europe and back in his single-engine Cessna 182, which for those wary of air travel is as reassuring as pedal-boating in a North Sea squall. Similarly, when it comes to flying into the great unknown of new business forays, there is only one person at the controls. Gershkovitch’s business strategy could be best called “controlled growth” – he’ll only grow as long as he’s in control.
“It’s not growth for growth’s sake,” he said. “There have been years when I haven’t grown, but the beauty is I don’t have shareholders or a board saying, ‘You must achieve growth.’”
Gershkovitch bought out his initial Steamworks partner, architect Soren Rasmussen, in 1997.
“I like control,” he said, “and I would rather give up a number of zeros in the size of the deal to retain control.”
Control is also why the former lawyer turned from litigation to lager. He describes law as the necessary grease that keeps the engine running. However, he longed to be a principal rather than an agent. A tour of European brewing establishments in 1987 opened up not only his taste buds, but also his eyes to the idea of owning an entire value chain.
“What appealed to me in Europe, in addition to the beer flavours, was this notion of vertical integration. There aren’t that many small businesses where you can control not just the production but the product all the way to selling it to the end consumer [at full retail markup],” explained Gershkovitch, whose legal background continues to prove invaluable in navigating the deep regulatory maze that runs through all beer markets.
If Gershkovitch could pass on sage advice to new craft brewers hoping to turn a love of beer into a viable business, he would paraphrase a line from Mark Twain: put all your eggs in one basket and watch it like a hawk.
“I think my advice to new brewers would be to really focus first and foremost on your local market. Work your taprooms – that’s going to be your highest margins and where you’re going to get your most reliable source of repeat customers. Certainly that’s what I did at Steamworks.”
Ken Beattie, executive director of BC Craft Brewers Guild, calls Gershkovitch “a pioneer” who has set a good example for others by committing to a fixed flight path.
“His vision and his staying true to his concept [stand out],” Beattie said. “He hasn’t changed his plan from 1995 to now. As he gets more successful he continues to keep to that original vision.”
Brewer Conrad Gmoser left Steamworks after 17 years to fly solo, starting up Brassneck Brewery in 2013. He credits Gersh-kovitch for giving him his start and providing the blueprint for success.
“In a place like Steamworks you’re serving all of your beer across the counter, so you get people’s reaction right away,” said Gmoser, whose brewery has gone on to collaborate with Steamworks on special beers. “And we wanted to do something that was similar in scale here. So we’re serving most of our beer on site, and we’re really not sending much beer out the door to draft accounts. We’re not in a rush to go to the next stage.”
Gershkovitch has been hands-on with the construction, operation and success of the brewery, especially of late. Walter Cosman, until recently president of Steamworks Brewery, left the industry to join the more weekend- and night-friendly Petcurean Pet Nutrition as a general manager. Gersh-kovitch has dived deep into the things that energize him: branding, concept development, market expansion and new products. As of this writing, Steamworks debuted YVR India Session Ale, featuring a bottle adorned not only according to the brewery’s steampunk design ethos, but also with a plane that looks very, very similar to Gershkovitch’s second flying machine – a Beechcraft Baron.
“The real attraction of this business is that it is so varied. [When I was young] it was a real toss-up between wanting to become a creative director at an ad agency or a lawyer. What I do with Steamworks really does allow me to do both,” Gershkovitch said. “My official title is CEO, but the way I really think of myself is chief creative officer. I’ve lived the brand for 20 years and I need to steward it.”
That’s the right recipe for brewery success, Beattie said.
“The guys who are successful as craft brewers stay and work in the business day to day,” he said. “Those we recognize as leaders in craft beers still lead their companies, lead their vision, are their chief creative officers and all roads run through them.”