WHAT’S IT TAKE TO TRY TO MAKE IT AS A SMALL FOOD MANUFACTURER in New York City? That was the theme of a panel discussion last Tuesday at Leonard Lopate’s popular annual event series about the New York food scene. Three entrepreneurs came together with the broadcaster at WNYC’s Greene Space in Manhattan: Steve Hindy, cofounder of Brooklyn Brewery, Mark Rosen, a family member from the second of three generations making Sabrett hot dogs, and Anna Wolf, founder/owner of My Friend’s Mustard.
The evening’s conversation frequently circled back to two pressing issues: distribution and struggles finding the right space to work in. Here are some snippets from the conversation:
How’d they get started?
Anna Wolf began making beer mustard as a hobby “for fun, shopping it out at the favorite watering hole,” she said. ‘You’ve gotta’ try my friend’s mustard,’ the bar owner would tell his customers. Hence the name. “He became my partner. We did a Kickstarter campaign. I made my first kitchen batches in March 2009, and we delivered them to the first six customers in his jeep.”
Steve Hindy was a foreign correspondent in the Middle East, where he worked in Beirut and Cairo for six years. It was in Cairo that he met American diplomats who were avid home brewers—a skill developed “out of necessity” when they were posted in Saudi Arabia. Hindy got interested. Back home in Brooklyn, he began to brew beer at home with his young downstairs neighbor Tom Potter, who had an MBA. They founded Brooklyn Brewery in 1987. “We raised $500,000 from colleagues and friends, but that wasn’t enough to build a brewery. We contracted out to a brewery in Utica and then trucked it down to an old warehouse in Bushwick. We went out in a van with our name on it and delivered to our first five customers.”
Mark Rosen is part of a family business started in 1926. Founder Gregory Papalexis, Rosen’s father-in-law, was the son of a baker who also had a hot dog business. Sabrett now manufactures 45 million pounds of frankfurters a year out of two plants in the Bronx, selling them up and down the east coast and wherever “New Yorkers are hiding out throughout the country,” said Rosen, but most visibly from pushcarts with the iconic blue and yellow umbrella all over New York City.
Their biggest challenges?
Hindy: “It took a lot longer to get licenses than we planned—six months instead of three—because NY State hadn’t approved a brewery in decades. There used to be 48 in Brooklyn alone, but the last one closed in 1976. To get approved, our investors had to reveal their deepest, darkest financial secrets, they had to be fingerprinted, which turned a lot of people off.”
Wolf: “Starting up was really a lesson in research—finding out all the different licenses we needed and how to get them. Luckily I was a librarian. But we got a lot of wires crossed, getting contradictory answers from different state offices.
“In the end, though, money for space is what it all comes down to. I used a restaurant kitchen in a bar in Greenpoint, where I did a $5,000 renovation to bring it up to NY Department of Agriculture and Markets standards. I worked there every day for a year and a half from 4 am to 2 pm—because that’s when the bar didn’t need it. Hauling barrels up and down some very sketchy stairs.
“For food production, you need big space with the proper ventilation, wiring. And prices are so high. The culinary incubators starting up are wonderful, but I’m beyond the incubator stage now. As a medium size business, it’s hard to grow—you run into all sorts of walls with money and space and time. We tried Philly for a while; I’m now manufacturing in Detroit—I’m from there.”
Hindy: “The Brooklyn Navy Yard is a huge success story, but there are 100 companies on the waiting list for space there. I encourage every elected official I meet to replicate it in other boroughs or parts of Brooklyn. The city needs to make a home for people like Anna. These are labor-intensive businesses, which is great for the city. It’s a very vibrant sector.”
When Brooklyn Brewery started up, it didn’t have enough capital to build a brewery in Brooklyn. And the old breweries like Schaefer and Rheingold were not only 19th century plants, they were in ruins by that time. “We opened a brewery in Brooklyn in 1996; we now make 120,000 barrels in Utica, and 60,000—expanding to 100,000—in Brooklyn.”
Rosen: “New York is such an expensive labor market. Over the years we’ve developed relationships with the unions. A state like Pennsylvania might offer a year of free labor and all sorts of tax credits. But we have 100+ employees in the Bronx, and they’re the ones who day to day run our business. They have been with us for 10 to 45 years” so there’s a lot of trust.
Hindy: “We were doing fine distributing our own beer so we decided to take on other craft beers, and then—it was the dotcom era—we blew $1 million on a plan to sell beer online. We believed our own baloney.”
Rosen: “Going up against the big guys is tough when you want to launch a new product. All they have to do is throw $8 or 10 million on advertising up against your new product and you’re done.”
Hindy: “I ran into Sophia Collier, who had just sold Soho Natural Sodas [which she started in Brooklyn] to Seagram for $20 million. I got her to try the beer and she liked it—and she loved the label [designed by Milton Glaser]. She said, ‘It’s exciting, it’s romantic, but it’s going to fail unless you guys distribute your own beer.’ I remember thinking, distribute beer in NYC? I can barely afford my car insurance. How will I insure a truck? What about the parking tickets? What about the mafia (a question my investors kept asking, too)? But she told us how she’d tried health food stores, soda distributors and beer distributors and nothing worked ’til she did her own distribution. About 20 other brewers started up during our first 15 years and they all failed, and you can pretty much trace all their problems to distribution.”
The great things about Brooklyn and NYC
Wolf: “New York is a very fertile food scene. My idea was born here for a reason. I don’t think I would have even started My Friend’s Mustard if I had gone to Wayne State for grad school instead of Pratt.”
Rosen: “We’re in an Empowerment Zone….With the opening of Hunts Point Market, we have trucks coming in seven days a week,” which is great both for bringing in the beef we use and then shipping out the finished product.”
Hilmarsson: “In New York, you have a very sophisticated market right at your doorstep. It’s so close and easy to get to. And stores around the country look to New York stores for trends” which helps get you broader distribution.
Hindy: “Our second biggest market is Sweden. We did an event in Stockholm with 15 Brooklyn bands. I knew maybe a couple of them, but the Swedish audience knew every single one of them. Brooklyn is such a magnet for youth culture in art and music, with links around the world. That’s great for Brooklyn businesses. Exports are 20 percent of our business now. Brooklyn Brewery is the biggest U.S. exporter of craft beer.”
Executive Editor Basia Hellwig directs the Food/Drink category of Brooklyn Artisan.