Born to Brew

One night 14 years ago, I found myself seated across from a stranger at Fort Worth’s Flying Saucer Beer Emporium. He introduced himself as Fritz Rahr and quickly volunteered that he had given up an 11-year career in rail freight sales to start a microbrewery. I tried to keep my eyes from rolling.

North Texas had yet to create a craft beer culture. As a business writer for the Fort Worth Star-Telegram (and a very lucky beer columnist who got paid for quaffing the world’s best ales), I’d watched five ventures, from Plano to the Fort Worth Stockyards, launch and crash.

One Sunday afternoon, I watched a north Fort Worth brew house be meticulously deconstructed for shipment to Aarhus, Denmark. North Texas at the time couldn’t support a micro, but a European city with 1/20th the population could. Texas, like much of the South, was a decade or more behind, and didn’t begin catching up until around 2010, says Paul Gatza, a director of the Boulder, Colo.-based Brewers Association, a main craft beer industry group.

Rahr and I were attending a dinner for a celebrity brewmaster named Sam Calagione, the larger-than-life founder of Delaware’s Dogfish Head Brewery. A former male model with a Master of Fine Arts degree from Columbia, Calagione wowed the crowd with a rap song that dissed rival West Coast brewers, then pumped his already over-hopped 120 Minute IPA (India Pale Ale) through a swimming pool filter packed with fresh green hops for an extra jolt.

The thickly built, 36-year-old Rahr was as quietly solid as Calagione was flamboyantly charismatic. But Rahr eventually would triumph over epic life-and-death struggles that Calagione and other craft brewers could only imagine, even in a fledgling industry known for dramatic upheavals, highly restrictive state laws, cutthroat competition from major producers over shelf space, and powerful distributors who tried for decades to freeze them out.

“Fritz is honest as the day is long and had a vision in 2004 to bring craft beer to Texans in Fort Worth, which was not the same hub of craft beer [then] that it is today,” says Brad Farbstein, who runs Real Ale Brewing Co., which itself started in a cramped basement on Blanco’s courthouse square. “Selling craft beer in the 2000s was tough. You would have been better off selling ice to an Eskimo. Most bars had no more than four taps: Bud, Miller, Coors, and, if they were a little edgy, Shiner.”

Full-flavored beer was such an alien concept that some businesses turned hostile when approached, Farbstein recalls: “Getting a large distributor to even consider picking up a craft brand was an act of Congress. I even had a retailer threaten me with a baseball bat to get out of his bar because he didn’t need any craft beer. Funny thing is that most of the offerings there today are craft.”

Similarly, the owner of a landmark Fort Worth restaurant, who otherwise supported local businesses, once stood in front of Rahr and barked: “I don’t want your fucking beer.” Little wonder that Fritz Rahr is as surprised as anyone that his brewery is still standing.

More than once, his undercapitalized venture faced collapse. At one point, Rahr was down to a single worker—himself. So, how does one pack cases without paid employees? He relied on a unique, Tom Sawyer approach. Each weekend, volunteers and homeless men materialized to run the rickety, third-hand bottling line. Volunteers included a retired air traffic controller, a pharmacist, several IT guys, a truck loader, an environmental engineer, a private school track coach, and a handyman. Some lived their own brewing dreams vicariously through Rahr; others just wanted to support local craft beer. Free beer was an added incentive.

Then there was the investor who tried to wrest control from Rahr. The attempt failed, but six months later a monumental snowstorm brought down the roof, shuttering the brewery for five months and scuttling a just-signed deal with Costco that would have boosted Rahr’s annual beer sales by 25 percent.

Generational Craft

But, all that was yet to come when Frederick “Fritz” Rahr III uprooted his family from Houston and launched what he called Rahr & Sons Brewing Co. (A hopeful moniker, since his sons were then 6 and 8.) Rahr’s confidence in himself, misplaced or not, was based on multigenerational ties to beer. It’s unlikely few, if any, other American craft brewer has a lineage that compares.

Since emigrating from Wesel in Germany’s Rhineland to Wisconsin in 1847, Rahr’s forebears operated Midwest breweries and successful barley malting businesses. Most survived Prohibition, but namesake breweries in Wisconsin and Milwaukee had been closed for decades by the time Rahr traveled south to attend Texas Christian University, leaving behind a large, family-owned malting company. He grew up in the business, visited breweries and attended industry gatherings as a child, spent time at a German brewery run by family friends, and trained in brewing at Chicago’s well-regarded Siebel Institute. Beer was made at home, and Hallertau hops grew around the family pool.

In the 1990s, when Rahr was thinking of jettisoning his railroad career, he was taken aback to hear that he would not be welcome at the family malting business—despite blood ties and an MBA from TCU. “I was born on the wrong branch of the family tree,” he says. Asked his father’s reaction, Rahr says he kept it secret: “It would have broken him.”

At this point in his life—he was in his mid-20s—and fed up with corporate hierarchies and scapegoating, Rahr believed he might never again have the opportunity to give independent brewing a shot. “If I’m going to be that miserable in a job, it might as well be [in one] where I’d have some control,” he told his then-wife, Erin. “If we wait any longer, we’d be too old.”

In Houston, he hung out at the city’s vibrant Saint Arnold Brewing Co., started by banker-turned-brewer Brock Wagner, and learned all he could about running a U.S. micro-brewery from “Beer School: Bottling Success at Brooklyn Brewery,” a practical, how-to guide by journalist-turned-brewer Steve Hindy.

Rahr was apprehensive about how railroad colleagues would react to his radical career change: “But they were supportive. ‘You’re following your dream,’ they said. ‘It’s something we’ve thought about but never had the guts to do.’” Around the same time, Business Week had polled mid- and high-level executives about their dream jobs. A whopping 30 percent answered winemaker or brewmaster. Unsurprisingly, the industry is full of ex’s, including Jeff Lebesch, who gave up electrical engineering to found New Belgium Brewing Co. with his wife, and John Koch, a Harvard MBA who left Boston Consulting Group to create the Samuel Adams brand. Colorado’s governor, John Hickenlooper, was an oil company geologist before he started Denver’s first brewpub, the Wynkoop Brewing Co.

A TCU business school professor, shown Rahr’s business plan for a microbrewery, pronounced it great. Then, Rahr recalled, laughing, the professor asked why he hadn’t turned in work of that caliber as a student.

In 2003, Rahr siphoned savings and shook the bushes for investors, mainly relatives and friends. He raised upwards of $1 million, including a $200,000 loan from Summit Bank and a $250,000 loan from an individual investor. Raising capital was not easy in an industry with a dismal track record: 43 percent of all craft breweries that opened in the early 1980s had failed by 2004, says Gatza of the Brewers Association.

Rahr’s startup leased a 1960s-era, ex-Pepsi warehouse in a pre-gentrified area just south of downtown Fort Worth, next to Kroger’s old Vandervoort ice cream plant, and began brewing and selling German-style lagers. Sometimes it was sold case by case, which Rahr personally delivered and sometimes even shelved. Eighty-hour weeks were not uncommon. There were rush deliveries of kegs, and special events where draft beer was donated.

Under state law at the time, Rahr couldn’t sell beer directly to the public. But he borrowed Saint Arnold’s strategy of offering free Saturday tours and samplings. Rahr sold truckloads of logo-bearing T-shirts, ball caps, and glassware to make the marketing effort profitable. (Today, the brewery charges $10 for the tours—Saturdays 1 to 3 p.m. and Wednesdays 5 to 7:30 p.m.—entitling visitors to three draft beers, still poured by volunteers.)



All the beer produced was being sold out, but the volume still didn’t cover overhead. “In hindsight, I should have raised twice or three times the capital,” Rahr says. By late 2005, with red ink welling, he announced to his investors, “We’re shutting down.”

Nonetheless, Fritz and Erin decided to re-examine their options over a family camping trip to Mineral Wells. And they came up with an 11th-hour plan. Up until then, Rahr Brewing, like startups including Steve Hindy’s Brooklyn Brewery, had self-distributed mostly out of necessity, since most big distributors still avoided all but a few craft brands. And direct wholesale sales meant higher margins. But now, Rahr realized that an established distributor might be his only chance.

He called Tim Anfin, whose family then owned the local Coors distributor. Anfin was eager to take on the line, along with its 80 bar and 80 package-store accounts. Rahr asked him to send two semis and a check for $30,000. Anfin obliged, and the advance gave the brewery needed oxygen.

Even with the lifeline, Rahr’s personal savings were shot: “We were basically broke.” In a Hail Mary move, he decided to hand over management to Tony Formby, a large investor who was a veteran businessman, but whose only industry experience was selling beer signs. Rahr and his family then decamped for the Virgin Islands, where he had landed a job selling petroleum coke to regain solvency. Formby agreed to run the brewery for 2.5 years, then hand the reins back to Fritz in August of 2009.

At one point, Rahr’s return was complicated by an investor’s attempt to convince other partners to push the founder out. But the venture’s legal structure, and the fact that most of the other investors were personally close to Rahr, allowed him to retain control. The investor later sold his stake for what was described as a healthy profit.

Shelter From the Storm

As if all that tumult weren’t enough, there was also the big snowstorm, or “snowmageddon.” Rahr was nursing a head cold when an alarm company called on Feb. 12, 2010, to say something was wrong at the brewery. He was warned that the roads were not safe. “I have to go. I have a truck. And I’m from Minnesota.”

Opening the facility’s door, he found two feet of water, downed pipes, and all of his brewing tanks crushed by a roof that collapsed because of the heavy snow. Rahr said he looked around his devastated brewery and told himself he was out of the beer business: “My heart sank. I couldn’t believe it. Then firefighters started shouting that we had to clear out, saying, ‘You’re lucky you weren’t electrocuted.’”

He telephoned employees to say the brewery was gone. “When I called my parents, they thought I was ringing to wish them well on their 50th wedding anniversary. I was a mess. A hot mess. Felt decapitated. Just when we thought there was light at the end of the tunnel, it was like someone was trying to stop us, kill our dreams. And it seemed they succeeded.”

“Just when we thought there was light at the end of the tunnel, it was like someone was trying to stop us, kill our dreams,” Rahr said.

But his landlord promised to replace the roof, and his distributors worked to deliver $40,000 worth of beer that had been salvaged—after Fritz mustered a bucket brigade that passed keg after keg to Coors trucks waiting outside. Then the insurance company called.

Unbeknownst to Fritz, Formby had negotiated an insurance policy that included business interruption coverage. “I had tears in my eyes,” Rahr recalls. “The Farmers agent told me, ‘You’re going to be OK.’ The worst day in my life turned out to be one of the best.”

The just-signed Costco deal was off, due to all the damage, but bar accounts were serviced by the Coors distributor, while Rahr ordered new equipment that streamlined the brewing process. Meanwhile, the staff kept the Rahr brand in the public eye by starring in nine droll YouTube videos about killing time, titled, “What Brewers Do When They Can’t Brew Beer.”

Crucially, the five-month interval afforded Rahr time not only to structure a more efficient brewery, but also to re-brand his beer and rethink his business strategy. A vastly improved operation emerged, he says. A new label design for Rahr Blonde, a Munich-style lager, depicted a fräulein in Oktoberfest “dirndl” dress bearing the likeness of Rahr’s beauty-queen mother—Miss Minnesota 1952, and second runner-up Miss Universe and Miss USA the same year.

The timing was perfect. With a streamlined brewing plant that cut production work by hours, plus a brand-new bottling line from Italy, the reopened brewery began shipping just as the Texas craft beer market began taking off. (Created to mark the reopening was a strong winter ale, a one-off brew called, Snowmageddon.) From 2,500 barrels (77,500 gallons) in 2010, production soared to 7,500 (232,000 gallons) in just two years.

“Since the roof collapsed, it’s been growing and blowing,” Rahr says over endless glasses of ice water outside Fort Worth’s Press Café on a recent hot summer morning. By now, Rahr has gone far beyond its German-lager-only portfolio to include Dadgum IPA, now one of its biggest sellers among some 20 different beers (six year-round varieties, 14 seasonals). It’s also built an in-house laboratory and switched from longneck bottles to cans. From one employee, it’s now a beehive of 33.

Times have changed. Large distributors, which once shunned craft brands, now scramble for them, as the segment’s share of the total beer market has grown steadily while the large industrial brands remain stagnant at best. Craft’s share has gone from less than 3 percent in 2004 to more than 12 percent today, says the Brewers Association’s Gatza.

Still, challenges for Rahr are never far away. For example, the $500,000 bottling line imported from Italy didn’t perform as expected. For every 1,000 cases, 40 to 50 were not filled correctly, with no one around to service the machinery. So, after six years, Rahr said, “Screw it, we’re going to get a canning line.” It was an $800,000 decision.

Fifteen years ago, canning beer was seen as something the industrial-scale brewers did, along with screw-off caps. (One notable exception was Colorado’s Oskar Blues, which pioneered with canned Dale’s Pale Ale, and brewpubs that had a Canadian apparatus that canned one beer at a time.) But the smugness is long gone, and the aluminum can’s practical attributes have won out. Cans are lighter than bottles, which saves on shipping; easier to recycle; keep beer fresher longer by blocking more light; chill faster; and can be taken where glass bottles are not allowed, according to the Brewers Association. From a 4 to 5 percent reject rate with bottles, Rahr has seen rejects drop to 1 percent with the new canning line.

The privately held brewery won’t disclose profits or sales figures. But Rahr says that beer “sold” will have gone from 14,500 barrels (449,500 gallons) in 2013 to an estimated 19,500 barrels (604,500 gallons) this year—a 34 percent increase.

Today, Rahr & Sons is far from being the only craft brewer in the region. “Everything is being nibbled,” Rahr says. “Even those who opened two years ago are being nibbled on by new ones. Every week, every month, there are new ones.”

His was one of just 24 small breweries that opened nationwide in 2004. “Now we are seeing two microbreweries open per day,” the Brewing Association’s Gatza says. From 1,413 operating in 2004, there are now 5,600.

Faced with growing competition by startups, Rahr began looking beyond Texas. Shipments to Oklahoma began last year and to Nebraska and Kansas several months ago. Planned deliveries to Louisiana were scheduled to begin in October. In 2018, Rahr plans to have his beer sold in Tennessee, Arkansas, Minnesota, and Wisconsin, making a Rahr beer available in the two Midwestern states for the first time since the 1960s.

“It’s always been part of our growth plan to move to Minnesota and Wisconsin,” he says, reviving the family’s active brewing presence that began in the region during the mid-19th century. With laboratory and quality control measures, “we know our beer is stable; we know it can travel. We hope to be in 17 to 20 states by the fall of next year.”

And, he hasn’t forgotten Fort Worth. In the planning stage is a small, store-front brewery downtown with a tasting room. And in late November, the brewery will release its seasonal favorite, Winter Warmer Ale. This year it will be aged in Jack Daniels whiskey barrels through a collaborative effort with the iconic Tennessee distiller.
Personally meaningful to the rail freight salesman-turned-brewer is that the venture is truly becoming Rahr & Sons. His eldest son starts full-time in January, and the youngest works during school vacations.

Not all developments are positive, though, in keeping with the brewery’s roller-coaster history. “Our boiler crapped out on us last week,” Rahr recently reported. “It’s never boring at the Rahr brewery. But even during the worst days, this is still better than anywhere else.”