A Craft Beer Pioneer Begins Again

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.

3 thoughts on “A Craft Beer Pioneer Begins Again

  1. I believe you make a lot of valid points in this article. I would have to say that McAuliffe’s weakness was his lack of knowledge. Like you said, if he would have known more about operations management he might not have run into the problems he did. I believe a lot of early entrepreneurs have this problem as well. They get too excited about an idea and don’t take the time to really organize a plan to make sure all bases are covered. I also think it was good for him to enter the industry after failing. I’m sure he knew exactly what he did wrong, and was thankful he was given another oppertunity to give a shot at it.

  2. I also read this article and found it to be equally insightful. As a prospective entrepreneur myself, McAuliffe’s failure in creating a proper business model prior to dumping all of his cash into an expansion plan is just a reminder for me to learn as much as I can. There are a lot of people out there who start a business with an amazing product, but ultimately fail due to their lack of intermediate/advanced business know-how.

  3. This article was very interesting and inspiring to read. It pained me to hear that McAuliffe’s dreams were crushed after the failure of his initial business, but am glad to hear that he finally jumped back into pursuing his dreams. I think that a lot of small businesses now today have the same problem that McAuliffe had with not having the proper resources to deal with fast expansion and feel that if he had more knowledge about how to handle the rapid expansion, then his initial business may have survived. As to your question on if he should have entered into the business again a second time, I 100% feel it was a good decision for him to do so. Now, after seeing the downfalls of the business and having time to reflect on what happened, he can now bring a new insight and position to Koch’s business and make sure that it thrives this time around.

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