Woodchuck Hard Cider takes on the big guns

MIDDLEBURY – It's Monday morning and the new $34 million Woodchuck Hard Cider cidery is a ghost town. The post-and-beam tasting room, with its soaring cathedral ceiling and 20 styles of hard cider on tap behind the tasteful bar, is quiet as a church.

The 85,000-square-foot bottling and packaging floor, a roller-coaster line of bottles that sail by at a rate of 600 bottles per minute when it's up and running — that's 10 every second — sits idle, emanating a kinetic energy you can almost feel.

The massive stainless steel pasteurizer, which heats the cider to 140 degrees, eliminating the need for any chemical preservatives, sits silent.

Starting on Wednesday and running through Sunday, that will change, as cider aficionados line up for the tasting room and tour gallery. They come at a rate of about 700 per week. The cidery first opened to the public last August, drawing 10,000 people for a grand opening/music festival. It was supposed to be a one-time thing, but the response was so overwhelming that Woodchuck is planning a follow-up festival this year, on Aug. 22.

On the production floor, starting Tuesday morning at 6 a.m., everything will be running at top speed: The bottling and packing will continue uninterrupted until 4 a.m. the next morning, 22 hours later, before starting up again at 6 a.m. for another 22-hour run.

Dan Rowell, the 47-year-old CEO of Woodchuck Hard Cider, explained the production line runs 22 hours a day from Tuesday to Thursday, then 10 hours on Friday before taking the weekend and Monday off.

"That gives our maintenance guys a full day," Rowell said. "Once this equipment gets up and running it likes to stay running. That's why we scheduled it the way we did."

Rowell said Woodchuck experimented with running the production line 72 hours straight, but that didn't go over too well with workers. Woodchuck needs long hours of production to keep up with the demand for hard cider in America these days, which has exploded. Demand grew by 65 percent last year alone.

Major players such as Heineken, Boston Beer Co. — makers of Samuel Adams — MillerCoors, and Anheuser Busch all have hard ciders, jumping on Woodchuck's bandwagon. Still, Woodchuck remains the second biggest cider maker in the country, Rowell said. It ferments 10 million gallons of apple juice annually.

Before Boston Beer Co. passed Woodchuck by with its Angry Orchard hard cider a few years ago, Woodchuck had the market wrapped up with a 62 percent share. Today, Woodchuck's share of the market is less than 10 percent, Rowell said, but the overall market is much bigger.

When Woodchuck dominated the market, the company was privately held and did not publicly report annual revenue. Now part of the C&C Group, PLC, a publicly traded Irish company, Woodchuck reported $64 million in sales in the 12 months ending Feb. 28, 2015.

"If you look at volume, five major players make up probably close to 90 percent of the market," Rowell said.

The other four besides Woodchuck — all major brewers— spent more than $100 million advertising hard cider on television alone.

"And they have distribution power," Rowell said. "But they also brought in a lot of consumers we weren't able to reach. That's why we're doing the marketing campaign we have now. There are more than twice as many people drinking cider now than there were a few years ago."

Woodchuck's campaign is not on television. It's on social media and radio in select markets such as Austin, Kansas City, Phoenix, Denver and Hartford. The campaign, "Real Cider From a Real Cidery," emphasizes Woodchuck's exclusively hard cider roots, no beer involved.

"Budweiser can't do that, Boston Beer can't do that, all we do is cider, we've been doing it for 24 years," Rowell said. "We're still the most respected cider company in the industry."

But not the best known, as Rowell found out when he commissioned a somewhat sobering market study. The research showed that among cider drinkers in general, only 50 percent knew Woodchuck existed, and that among prospective cider drinkers, that percentage dropped to 40 percent.

"Here we are thinking, 'We've been around 24 years, everybody must know us,'" Rowell said.

Rowell insists he's excited about the research results.

"That's an opportunity," he said. "Our whole approach is — here we are, visit, try our products, learn about us. If you do that, we think you'll be a fan."

Done in by Prohibition

Rowell joined Woodchuck Hard Cider in October 1996, five years after it was first launched in Proctorsville at a small winery owned by Joseph Cerniglia. Cerniglia was making apple wines before experimenting with hard cider.

Hard cider was America's drink of choice before Prohibition, Rowell said, not beer. Many of the apple trees in the country were planted specifically to supply the cider industry and did not make for good eating apples.

"Prohibition came around making alcohol illegal," Rowell said. "People that had those apples were kind of looked down upon, drunkards or whatever, so they pulled a lot of the cider apple trees up. When Prohibition ended, it takes seven years to grown an apple tree again."

Malt, barley and hops were readily available, and soon beer replaced hard cider as America's mainstay drink, according to Rowell.

"Cider went away," he said.

Joseph Cerniglia brought it back in 1991. Cerniglia's first salesman, Bret Williams, was hired one month after Rowell, in November 1996, and would go on to become Woodchuck's CEO before Dan Rowell took in February 2014.

In 1997, Cerniglia entered into a joint partnership with Stroh Brewery in Detroit, which lasted only a year before Stroh sold to an English company, H.P. Bulmer. Rowell left Woodchuck in 2000 for a job at a craft brewery in Windsor, Vermont. Bret Williams stuck around.

"Bulmer expanded globally and fell on hard times," Rowell said. "They decided in 2003 to sell off their North American division. That was Bret's opportunity."

Williams was putting together a group of investors to buy Woodchuck from Bulmer, and asked Rowell to come back to the company as vice president of operations. Rowell would also have about a 5 percent equity stake in the company. A group of about 35 investors paid $2.3 million for Woodchuck. Bret Williams was the largest single shareholder, with a stake of about 25 percent.

"It reminded me of when I bought my first boat," Rowell said. "When I was in high school I loved boating. I found a boat but couldn't afford it, so I called my brother and asked him to go halves. We still couldn't afford it so I called my other brother and my father. At the end of it, six of us owned a small boat."

Woodchuck turned out to be a much better investment than a small boat. Over the next decade, Williams and Rowell built Woodchuck into the largest hard cider maker in the country, resurrecting a category that had died with Prohibition. They drew the attention of current owner C&C a hard cider maker since 1935. Hard cider never fell on hard times in Europe the way it did in the United States. C&C offered $305 million for Woodchuck.

"That's life-changing money," Dan Rowell said.

And it did change Bret Williams' life. Williams stepped down as CEO last year to spend more time with his family — for real — although he continues to serve on Woodchuck's board of directors, as does Rowell.

"I could have retired, but I love it here," Rowell said. "The management team Bret and I put together is still here, still intact. We've all been together for a long time. Bret decided he wanted to enjoy life and take some time off."

And Rowell? He's still working about 60 hours a week.

"It drives my wife nuts that I work so much, but I still have plenty of time for family stuff," Rowell said.

Tied to wine

Wandering among a forest of giant stainless steel tanks that hold anywhere from 6,000 to 12,000 gallons of fermented cider each in Woodchuck's chilled "cellar," Rowell talked about some of the company's challenges and projects.

He is involved in an effort in Congress to pass legislation redefining the cider category. Among other issues, cider is made under the same rules governing wine, which limits the level of carbonation, putting it at a disadvantage with beer. Rowell said consumers complain that hard cider tastes flat compared to beer.

"If you look at our product, we compete in the beer industry," he said. "We're in six packs of 12-ounce bottles. We're trying to compete with craft beers, but we've got to follow wine rules. That's one of the reasons we have to have nutritional information on our labels, with calories and all that other stuff. Beer doesn't have to do that."

Rowell is also on a mission to convince Vermont apple growers to start growing cider apples, not just eating apples. He said he has a "very different mentality" toward apples than the average shopper.

"If you grow for table fruit, about 15 percent of your crop won't meet standards — too red, not red enough, odd-shaped, hail hits it and it has a brown spot," Rowell said. "We use the 15 percent of apples that don't make it to the grocery store. I don't care how red it is, we're smashing it up."

What Rowell is fighting against is a belief among apple growers that fruit for cider generates less revenue per bushel, despite the fact that many costs can be cheaper. For example, table apples are carefully hand-picked, a labor intensive process. Cider apples can be mechanically harvested, shaken from the tree by a tractor with a claw that grabs the trunk, and scooped up by other tractors following behind.

Rowell shot video of the mechanical picking process on a trip to England and showed it to some local apple growers when he returned home. The reviews were less than stellar.

"One of the farmers said, 'If you bring that piece of equipment onto my property, I'll shoot you on the spot,'" Rowell remembered.

Rowell is expecting a better reception for the company's new marketing campaign to remind people that Woodchuck is the original cider that started the current cider boom. The campaign includes all new packaging for Woodchuck's various lines of cider that Rowell believes is going to have an immediate impact when it is launched Aug. 1.

"Growing up as a kid thinking I could be part of reviving or creating an industry didn't even enter my mind," Rowell said. "To be part of that is absolutely amazing. I wouldn't give it up for anything."

This story was first published on July 23, 2015. Contact Dan D'Ambrosio at 660-1841 or ddambrosio@freepressmedia.com. Follow him on Twitter at www.twitter.com/DanDambrosioVT.

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