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Business

Victory Brewing grows

By JIM ESCH, Special
to the Local News

February
04, 2002

Staff photo by John Taggart
Ron Barchet, CEO of
Victory Brewing Co., left, and Bill Covaleski, president of
the beer company, look at the expansion blueprints at the new
building they recently
acquired.

DOWNINGTOWN -- Since opening in 1996, Victory Brewing Co.
has seen wholesale sales grow by double digits year after year. Last
year, for example, sales were up a heady 40
percent.

But despite those glowing figures, the company owners were
nervous about the future. The brewery's 23,000-square-foot facility
in the Downingtown Tech Center, site of the old Pepperidge Farm
bakery, has in many ways been an ideal spot to brew beer, but
capacity was becoming a problem.

"To make quality beer it
takes space because you have storage time, ripening and aging time
for the beer. And we felt the walls closing in on us," said Bill
Covaleski, Victory brewmaster and president.

Throughout 2001
Victory grappled with the issue of how to grow in a leased facility,
hemmed in by other tenants. The owners considered moving out and
building on a new location, but construction costs were prohibitive.

"Confronted with a lack of options, we did what is not
customary for us. We did nothing," said Covaleski.

Victory
kept busy making beer, until its landlord called with good news. The
tenant adjacent to Victory, East Coast Electronics, was going out of
business.

Victory leased an additional 23,000 square feet,
doubling its space, and took occupancy as of Nov. 1, 2001. The added
space is being used to establish a new bottling facility.

"If you'll forgive the pun, that's been the bottleneck in
our operation right now. We have plenty of production capacity but a
problem with throughput -- getting into bottles and kegs in an
efficient way," Covaleski said.

A brand-new German-built
bottling line will be installed in April.

The brewery's
existing bottling line has 15 filling valves and a maximum speed of
85 bottles per minute. The new automated bottling line will have 40
filling valves, more than doubling production speed.

Now the
company is faced with getting the word out that there is going to be
more beer on hand. The company's marketing budget is small; it has
never spent more than 1.5 percent of annual revenues on advertising.
Promotion is focused on opportunities to get its beer sampled by
potential customers.

Recently, Victory's Hop Devil Ale was
the featured beer at the First Union Center's club level.And Victory
was served at Immaculata College's Art Show this past weekend.

Victory scored a major international seal of approval from
Malt Advocate magazine, receiving the magazine's "Brewery of the
Year" award in January.

Lew Bryson, author of the book
"Pennsylvania Breweries," said Victory won out over a short list of
respectable candidates, even though it produces a 10th of the
barrels per year as the others -- one a well respected old German
brewery, and the other a successful western microbrewery.

"Victory makes just about everything out there and have
become masters of a wide range of beers -- that's what gave them the
nod," said Bryson. "They are good technical brewers. But they're not
content to do the same thing over and over."

Covaleski and
his partner, Ron Barchet, CEO and brewmaster, natives of Montgomery
County who trained in the art of brewing in Germany, are working
hard to change habits among Philadelphia-area beer drinkers.

"Philadelphia tends to have a provincial mind set," said
Covaleski. "Philadelphia is the number one Coors Light market in the
United States. I think that's appalling. That's saying that people
don't even want to drink beer."

Tastes are changing though.
Some of Victory's most expensive and flavorful beers are its best
sellers. Their Hop Devil Ale -- a highly hopped, spicy, bitter amber
ale -- accounts for 65 percent of the brewery's sales.

"We
find that very encouraging. People are responding to intensity of
flavor. The enthusiasm is there for full-flavored products," said
Covaleski.

Covaleski would like to grow the brewery to the
size of nearby regional micro-breweries, such as Old Dominion in the
Washington, D.C., area and Brooklyn Brewery in New York City -- both
of which produce about 30,000 barrels of beer annually. Victory made
10,000 last year.

While Philadelphia is lagging behind its
sister cities, Covaleski thinks Victory could become the dominant
microbrewery in the area.

Already, Victory is the biggest
brewery in Chester County. Other microbreweries in the county --
like Iron Hill in West Chester, The Sly Fox in Phoenixville, and
Valley Forge Brewing Co. in Devon -- are not packaging
breweries.

According to Bryson, Victory is getting
substantial nationwide buzz among "influential beer geeks." Even in
California, land of trendy microbrews where it's difficult for East
Coast beers to break through, customers are phoning in to reserve
their cases.

"With the expansion, they'll be able to stay
where they are and they can hold the line on prices, while expanding
the bottling line," said Bryson.

Currently, Victory beer is
distributed to 10 states.

"We're making import quality beer.
If you live local to the brewery, you're fortunate in getting
something on a par with European exports, but it's fresher,"
Covaleski said.

©Daily
Local News 2002

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