As I was browsing through last week’s edition of Bloomsberg Businessweek magazine, I stumbled upon an interesting article entitled “A Craft Beer Pioneer Gets a Second Chance,” detailing the rebirth of one of the original American craft beers.
During the 1970s, Jack McAuliffe, a former submarine electrical technician in the U.S. Navy, began his own brewery. Jack tasted flavorful beers in Scotland while serving and was no longer satisfied with the selection offered in America. McAuliffe began New Albion Ale in 1976, using dairy equipment and Pepsi-Cola syrup drums. While in business, the brewery offered pale ale, porter, stout and draft ale, all of which sold quickly. The problem was that Jack McAuliffe had not planned for such success, which forced him to spend the brewery’s cash on an expansion plan. To his demise, no investor would finance such an outlandish concept. The craft brewery, New Albion, filed for bankruptcy in 1982 and left McAuliffe searching for stability. Could bankruptcy have been avoided if Jack McAuliffe had created a better business plan, strategy or operational structure?
The first microbrewer in America turned away from the beer industry after filing bankruptcy. For years, he designed control systems for sewage treatment facilities and manufacturing factories. Although his brewery failed, he served as motivation, courage, hope to the founders of the 2,360 U.S. microbreweries in business today. Because McAuliffe failed, Jim Koch, founder of Boston Beer, “realized he needed to quickly produce a lot more beer if his company was to survive and prosper.” He also produced Samuel Adams beer in his facility before beginning his own brew, so that he would have plenty of financial resources once he began his own line.
Koch recently contacted McAuliffe, informing him that Boston Beer had purchased the New Albion trademark and wanted to assist McAuliffe in restarting the beer production. Koch felt as though he owed his success to McAuliffe and planned to offer him all profit from the New Albion beer. Sadly, McAuliffe’s spirits were crushed by the beer industry when his original brewery failed, so it took persistence for McAuliffe to agree to Koch’s proposal. In January, McAuliffe and Boston Beer produced and shipped 6,000 barrels of New Albion Ale, more than was ever produced by the original brewery. Jack McAuliffe is now leaving the brewery in the hands of his daughter. It is her turn to learn from her father’s original mistakes.
I believe that Jack McAuliffe made an incredible impact on the American microbrew industry, bankruptcy or not. He stepped out as an entrepreneur, and created something on which our country is still building. If he had initially focused on items like facility location and size, inventory management and process and capacity design, New Albion would have been successful. If he had started with more knowledge of operations management, New Albion would not need a second chance. What hurt McAuliffe’s brewery most significantly? Would a stronger knowledge of operations management have kept the brewery alive? Should he have entered into the industry again after failing in the past?
Leonard, Devin. “A Craft Beer Pioneer Gets a Second Chance.” Bloomsberg Businessweek April 8-April 14, 2013: 17-18. Print.