What does it take to make a brewery green and sustainable? What is the future for these types of operations?
July 24, 2015
John Shegerian: Welcome back to Green Is Good. This is the GoGreen edition of Green Is Good and we’re so honored to have with us today Sara Nelson. She is the Co-Founder and in charge of Special Ops at the Fremont Brewing Company. Sara Nelson: Yes. Thank you for having me. John Shegerian: Welcome to Green Is Good. Sara Nelson: I’m thrilled to be here. John Shegerian: And we’re going to be talking about not green beer in terms of St. Patrick’s Day or something like that but the sustainability revolution coming to the brewing industry. Sara Nelson: Yes. John Shegerian: Sara, before we get talking about Fremont Brewing can you share a little bit about your journey in sustainability and leading up to the founding of Fremont Brewing and then the greening of Fremont Brewing. Sara Nelson: OK. So my personal history is that I am a long time do-gooder and I decided to get a PhD in Anthropology because I wanted to change the world through blowing students minds like mine was blown in college. That’s why I came up to Washington from California – to get my PhD in Anthropology, realized that academia wasn’t for me, ended up working for a local council member – Richard Conlin – who had a very strong sustainable agenda and in the course of implementing his policy initiatives I learned a lot about the City of Seattle’s sustainability programs. I learned about zero waste principles. I learned about incentives. I learned a lot about the nexus between municipal government and the private sector, and it’s great because I was able to see really that local government is not as sexy as national or international politics, but in local governments you really can see decisions implemented on the ground. Right up the street from us the new transfer station is being built that Richard and I helped design. So the point is that it was through government work and academia that I became interested in sustainability as a core value. My husband who was an environmentalist went to law school to become and environmental lawyer. There are about five jobs in environmental law in Seattle so you have to be Harvard, Yale or Georgetown. John Shegerian: Wow. Sara Nelson: But he was a home-brewer and so he got funneled into beverage law and realized that he wanted to make his dream come true instead of continue contracting and establishing wineries and breweries. So long story short, we decided to start up the microbrewery in about 2008. John Shegerian: OK. Sara Nelson: At that brink of the financial disaster. That’s a different story. So we were founded then and we started with two used fermenters and now we have 19 and we’re up and running. John Shegerian: And where did you start the business? Sara Nelson: In Fremont. So Fremont is a neighborhood in Seattle. Pretty much in the heart of Seattle. John Shegerian: OK. Sara Nelson: And we never thought we could afford square footage right in town, but we found a warehouse that needed to be completely gutted and reworked and so we rented that. We sublet half of it to a company that used our spend grain to make clean energy, so that was a startup. John Shegerian: Wow. Sara Nelson: So we got our rent partly paid for and started that relationship, got us on the map as a green brewery with sustainable principles and then just grew. And part of our growth was starting a beer garden right in the neighborhood because it’s a really – for those of you of your audience who might not know, Fremont it’s right across the street from a bike trail, the Burke-Gilman Trail. John Shegerian: Beautiful. Sara Nelson: Runners, riders, lots of tech companies, but it’s also funky artists and independent businesses, and so the community welcomed us and we were happy to be there and it was a great synergy. John Shegerian: Wow. And for our audience members out there to learn more about Sara and her husband’s great company, Fremont Brewing Company, go to www.fremontbrewing.com. So now let’s talk about Fremont Brewing and the green revolution from 2008, when you started, to 2015. How has the journey been both in terms of growth as an eco and entrepreneur but also in terms of sustainability and then extending the recycling of your grains and what other things have you done? So let’s walk through the last seven years. Sara Nelson: So small businesses are usually on mission critical crisis management all the time. John Shegerian: Right. Sara Nelson: So the big constant has been this value and the value and sustainability that we have tried to maintain as a core value and giving beer to all environmental organizations and schools. We fuel the overbidding of options across the region. John Shegerian: Wow. Sara Nelson: So we buy what we can afford. Basically, the low hanging fruit is easy. So when that startup left and we had all this spent grain, we now produce 8,000 to 10,000 pounds of spent grain a day so what are we going to do with that? Well, it’s a higher and better use to provide it to farmers than to put it in the city’s waste stream or into Cedar Grove at Cedar Grove Composting. John Shegerian: Right. Sara Nelson: So we have found relationships with farmers to take our spent grain. We made the decision to use cans and not bottles because the recycling content in cans is vastly higher. It’s lighter. Less emissions to travel. It stores better. Less refrigeration required. So the production processes decisions that we’ve made reflect our sustainability and just trying to make sure that the people that we’ve got with us also share our values. Our employees are great. Sustainability isn’t just environmental. It’s also social and economic. So we treat our employees well – free health care, 401k with three percent match. So it’s about creating a community that can reflect our values and that generates business so we have money to grow and continue doing the right thing. John Shegerian: It is fair to say that being sustainable and being green and messaging what you’re doing is good for the bottom line? Sara Nelson: I think so. I would like to think so. In our community, yes. We have that reputation. Right now we’re just situated in Washington. As we grow beyond Washington are the people in – I don’t know – Idaho going to know about our reputation when they’re choosing a beer off their shelf? No. Is the executive at Kroger going to really care? I don’t know. So profitability and sustainability, I have to say, we do it because it’s the right thing to do. John Shegerian: Got it. Sara Nelson: I wish that I – I mean. John Shegerian: It’s part of your DNA and culture. Sara Nelson: Yeah. And we don’t have very many investors, so I don’t really have to make a business case for everything that we do. John Shegerian: Right. Sara Nelson: And how do you put an ROI on writing a check for an organization to plant trees? And plus when we have to buy a big piece of equipment, that is an upfront cost and the financing is not driven by our return on investment. “In five years we’ll be saving this money on our water” or whatever. So yes, it’s important and a lot of it is value driven. John Shegerian: Right. But those values have allowed you to not only have a cultural and DNA quality that has been attractive to your client base here, which is the City of Seattle, which is the more you look around, walk around and see the business base here and the community, pioneers, innovatives and sustainability seem to be – the three of them – the pillars and common themes of this whole community. Sara Nelson: Right. And that reputation gives us that platform to participate in not the Washington Business Climate Declaration but the National Brewery Climate Declaration and that has a national reach. I go to D.C. to advocate for the craft industry in federal excise taxes against the big breweries. So I guess in answer to your question we’re getting to a more nuanced issue about sustainability. John Shegerian: Yeah. Sara Nelson: There might not be a clear benefit month to month with the cash flow but what we are doing is we are setting an example. We are giving policy makers some cover and that’s important. John Shegerian: Sure. Sara Nelson: And we’re not going to be able to regulate our way out of the climate problem. What we can do as businesses is the right thing and help other businesses do the right thing. John Shegerian: But because you and your husband have this in your DNA anyway to make the world a better place, the success of your business, and because how you’ve run it, has now given you a bigger platform so you truly do have the opportunity from the top down to make the world a better place. Sara Nelson: Right. John Shegerian: That’s great. Sara Nelson: Can I tell you something about our industry though? John Shegerian: Yeah. Sara Nelson: So it turns out beer is big business. Craft beer. Just craft beer. The number of new craft breweries increased by 19.7 percent just last year. So now we are at about 3400 craft breweries across the country. John Shegerian: Wow. Sara Nelson: Washington State is the fastest growing, 83. John Shegerian: Really? Sara Nelson: New York, 57. California, 52. New breweries last year. John Shegerian: Wow. Sara Nelson: So what does this mean? What this means is that we’re all buying really expensive equipment, and besides the jobs they give, we’re buying a bunch of people and we’re buying local and all that trickle down benefit to our communities. But I am hoping to become industry leaders in incentivizing technologies that are scaled to small brewers. So I was just in this panel talking about the fact that nobody is making a CO2 recapture system for my-sized brewery. Sierra Nevada has one that costs almost a million dollars. But what I’m hoping is that through our activism and our example and the power of craft beer that technology and green tech companies will take notice and start thinking about scalable solutions for us. John Shegerian: That is just wonderful. For our audience members that just joined us, we have Sara Nelson with us. She is the cofounder and co-owner of Fremont Brewing Company. To learn more about Fremont Brewing and all the sustainable practices they use, go to www.fremontbrewing.com. We’re here today at this GoGreen edition of Green Is Good, and this is a wonderful conference. Talk a little bit about the panel you were on today and what the panel’s topic was. Sara Nelson: OK. So I was on a panel. It was basically the city and the private sector bridging to make going green easier. John Shegerian: Right. Sara Nelson: So they wanted to present their efforts to make it easier for businesses to go green, and so the more that they can consolidate their businesses – when I started out at the brewery, I had to go to three different offices to figure out “what are the incentives for changing our light bulbs?” So they are in a constant process of consolidating their services to be a one-stop shop for businesses and just make it easy for us small business owners who don’t have time to – they don’t know who to call, let alone three people. So basically the panel was about their efforts and asking me and the owner of a wildly popular pizza company, Pagliacci, what could they do better? So that’s what we were talking about today. John Shegerian: Let’s talk about, you just said “wildly popular pizza company.” You’re very humble. Talk about Fremont Brewing. How big have you grown in the seven years in terms of regional breweries are you one of the larger breweries in Seattle or in the region? Sara Nelson: Yeah. So we’ve had about 50 to 100 percent growth a year. John Shegerian: Wow. Sara Nelson: And it depends on are you talking about sales or production etc., but we’ve grown very fast and we are now a regional brewing company. John Shegerian: Wow. Sara Nelson: So once we surpassed 15,000 barrels – it was 18,000 last year. John Shegerian: Yeah. Sara Nelson: Now we’re regional. Yes, we are the fastest growing small brewery in Washington State. It depends on which net books you use. Sales-wise we’re very successful. So we are growing very fast, that presents its challenges. John Shegerian: Sure. Sara Nelson: And now we’re going to be engaging in a massive expansion in our production. John Shegerian: So people buy your beer both on premise in the beer garden, but they also can find it in local stores in bottles. Sara Nelson: Yeah. In cans. John Shegerian: In cans. Sara Nelson: When we started out we were going to be a wholesale. Sell kegs to bars. John Shegerian: Right. Sara Nelson: And that was because we always wanted to can and we couldn’t get a loan until a couple years ago to buy a canning line. So we finally got a canning line. Now our main business, more than bars and restaurants, is grocery stores, convenience stores. So that’s our sort of off-premises market and then we have a beer garden that is open seven days a week, it’s kid- and dog-friendly, we just keep building more tables and taking over the parking lot and people keep coming. So that is fun for us because it is our front porch and it’s many people’s first encounter with our brand. John Shegerian: And beer and food or is it? Sara Nelson: No. John Shegerian: Sorry. Sara Nelson: We don’t want to lose any more money. That’s what people say, “When are you going to get food?” We are licensed as a tasting room, because we are a production facility. Remember, my husband was a lawyer. John Shegerian: Right. So it’s just a tasting facility, beer garden type. Sara Nelson: So it’s, basically, we give away pretzels and apples, and then people can bring – Pagliacci Pizza, they can bring their food, they can have it delivered. We have menus of local restaurants. We also didn’t want to compete against food establishments. John Shegerian: Right. And that’s how it works. Sara Nelson: So people can eat at our place, but we don’t serve. John Shegerian: And how many lines of your beer are in cans? Sara Nelson: We have two regulars all year-round. Our IPA, our inter-urban IPA in the yellow can – people say, “I love your yellow can” – and our Universe Ale Pale. Fremont considers itself the center of the universe, so that’s why we called it “Universe Ale.” So two year-round and then four seasonals. Right now, it’s the summer seasonal ale. John Shegerian: And where else can people buy Fremont beer in cans? Is it just in this region or it is outside of the region already? Sara Nelson: It’s in Washington. John Shegerian: That’s it. Sara Nelson: Well, we’ve – don’t tell Portland – we’re dipping our toe into Oregon. We’ve got a few accounts in Colorado and a little bit on the Idaho border. John Shegerian: And when California? Is that coming? Sara Nelson: When we get our new facility open, and then we can make more. So we are at capacity now. We cannot make more. John Shegerian: And where is that new facility going to be? Sara Nelson: It’s going to be in Ballard, right down the street. John Shegerian: OK. Sara Nelson: So it is in the next neighborhood over and it’s just going to be production. It has places for big trucks to come and go and we’ll have a lot more there. John Shegerian: And what happens to the original brewery then? Sara Nelson: It will become the small batch experimental facility. John Shegerian: Whoa. Sara Nelson: We’re keeping our tasting room because people love it. We don’t want to move, and we’re called “Fremont Brewing Company,” so we can’t be in Ballard. John Shegerian: That’s right. You need your roots. Sara Nelson: Yeah. John Shegerian: You need your roots. Sara Nelson: So it’s just basically an expansion. John Shegerian: Talk a little bit about the steam, your element of using steam to heat your water and how is that unique in the brewing industry? Sara Nelson: So it is not necessarily unique, but it’s what the big boys do. John Shegerian: OK. Sara Nelson: It is much more efficient to heat water with steam. Partly because the latent heat retention and also our kettles are designed to have the steam wrap around them. Long story short, it reduces our natural gas usage by 50 percent. John Shegerian: Wow. Sara Nelson: But it was a huge upfront expense. I don’t know when the ROI is, but we did it knowing that it was the right thing to do for emissions, and also as we grow, it will become more efficient. John Shegerian: Got you. And when you go to Whole Foods or other fine establishments to buy your fruit and produce now things are becoming labeled more and more organic. And we see that. We’ve had many wineries on. You’re our first sustainable brewery that we’ve had on Green Is Good. Is the organic labeling of products now coming to the brewing industry, and where is Fremont in that process if it’s coming at all? Sara Nelson: I think organic will become more and more important, and we are embarking on organic certification for a couple of our beers that have organic hops and will have organic grain. And our hops are salmon-safe. So yes, it will be important. I think it will be a differentiator in the market. John Shegerian: Got it. Sara Nelson: The difficulty is that organic green sourcing is difficult because they are big farms. We’re talking about big operations and it’s difficult for breweries of my size to find a dedicated source of organic barley so those relationships have to exist. What we’re trying to do is incentivize sustainable grain growing locally, so that not only do we have the option to buy organic we also have the option to buy local grains because that is a big part of sustainability is local versus organic from far away. So there is always that balance of decision you have to make. John Shegerian: Got you. We’re down to the last two minutes or so, Sara. Can you share with our audience members the Cowiche Project? Sara Nelson: Cowiche Canyon. That is west of Yakima – the biggest hop growing region in the country – and one of the growers there wanted to grow organic crops on his property at the mouth of the Cowiche River that comes down from Rainier and he needed a buyer to ensure that somebody would buy his hops. So we entered into this relationship in 2010, and it is delicious so we buy all of his hops and they’re trucked over the mountains and put into our kettle within 24 hours and that becomes our Cowiche Canyon organic fresh hops. John Shegerian: Wow. Sara Nelson: Pretty much all beer people drink has pelletized hop. So fresh hop beer and then the proceeds go to the Cowiche Canyon Conservancy. John Shegerian: That is just awesome. That is just awesome. Sara, please come back on Green Is Good to continue the story and the journey of Fremont Brewing and the success, especially as you expand and get bigger and continue to grow the green message at Fremont Brewing. It has just been a delight having you on today. For our audience members out there to learn more about Sara and her colleagues and husband and what they are doing at Fremont Brewing Company in sustainability and green please go to www.fremontbrewing.com. Sara, you are both an inspirational ecopreneur and entrepreneur and sustainability superstar and truly living proof that Green Is Good. Thank you so much for being with us today. Sara Nelson: Thank you very much for spreading our message.