Why the Founder of Dogfish Head Brewery Scaled Back His No. 1 Product When Dogfish Head created a hit beer, it did what seemed crazy at the time: It turned down sales.

By Jason Feifer

entrepreneur daily

This story appears in the July 2017 issue of Entrepreneur. Subscribe »

Dogfish Head

Sam Calagione is used to getting love in his hometown of Milton, Del. He created Dogfish Head Craft Brewery, one of America's hottest breweries, and is a major employer in town. People wave and say hi. Out-of-towners ask to take selfies with him. So it came as a surprise when a liquor store owner ran over with tears in her eyes.

Related: The Perfect Product is a Myth. Here's How to Scale the Almost-Perfect Product.

"I have customers walking into my store trying to buy your 60 Minute IPA and then yelling at me for not having it stocked," she said. "Then they're leaving without buying anything. I'm a local entrepreneur, you're a local entrepreneur -- can't you help me?"

Calagione had heard this before. 60 Minute IPA was his most popular beer. It was the sort of hit craft brewers would kill for. And yet he tamped down on production. He turned down sales. And he did it for years. Many entrepreneurs would consider this unthinkable. But Calagione was thinking ahead: Rather than push one giant hit, he believed his company would be better off in the long term by pushing a diverse range of smaller products. Now, 14 years after that hit beer debuted, he can evaluate whether it paid off.

The story begins in 2001, when Dogfish created a beer called 90 Minute IPA. It's powerful -- at 9 percent alcohol by volume, almost twice as boozy as a Budweiser. "Our distributor was like, "This is great, but it's strong for the average drinker,' so we said, let's do a more approachable, 6 percent version," Calagione says. That became known as the 60 Minute IPA, which he released in 2003.

Related: Should Your Product Be Perfect or Scalable? Can It Be Both?

This new beer took off. By 2006, it could have constituted 70 to 80 percent of all Dogfish sales. Calagione was excited, but also worried. He wanted Dogfish to be thought of as an innovator. But if the brewery became known for one product, that's all every store and bar would carry, and nobody would know about its other beers. Then if people's tastes changed, and drinkers lost interest in IPAs, they'd think of Dogfish as old news.

So in 2005, Calagione made the decision: This hit beer would never pass 50 percent of all Dogfish sales.

Retailers and distributors immediately complained. The Dogfish team worried about straining relationships, so they tried to turn the restriction into a positive. "It gave us a pretty unique soapbox to stand on in a crowded marketplace. We can say, "We want to stand for something different,'" Calagione says.

When Amtrak asked to carry the beer, Calagione persuaded the train service to offer only his 90 Minute IPA. (Amtrak is now that beer's largest buyer.) Dogfish trained its sales staff to act as a "beer education force," showing retailers its new beers and explaining that the limited supply meant everything was always fresh. Calagione and his staff listened sympathetically to unhappy retailers and found other ways to satisfy them. When that liquor store owner approached him in his hometown, for example, he offered a few free hats for customers and more of his other beers. "I'm not saying your business isn't important to us," he told her, "but we believe in this business model. Please bear with us."

Related: How to Launch a Product That Sells

Today, Calagione has a lot to show for his restraint. Dogfish is the 14th-largest craft brewer in the U.S. by volume, and people travel from across the country to visit its brewery and nearby Dogfish-themed hotel. And beer-drinking trends are moving in his direction. A recent Nielsen study found that the younger a (legal-age) drinker is, the more likely they are to want new and different beers. Only 44 percent of Gen Xers want that, for example, but the number jumps to 51 percent for 29- to 36-year-olds, and to 61 percent for 21- to 28-year-olds.

Dogfish's most popular beers are also looking different. 60 Minute IPA is still on top, with 43 percent of Dogfish's sales. But three of its top five beers are new creations. "One or two of them could overtake 60 Minute in the next five to ten years," Calagione says. And he'd be fine with that.

Jason Feifer

Entrepreneur Staff

Editor in Chief

Jason Feifer is the editor in chief of Entrepreneur magazine and host of the podcast Problem Solvers. Outside of Entrepreneur, he is the author of the book Build For Tomorrow, which helps readers find new opportunities in times of change, and co-hosts the podcast Help Wanted, where he helps solve listeners' work problems. He also writes a newsletter called One Thing Better, which each week gives you one better way to build a career or company you love.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Related Topics

Business Solutions

Save Nearly $200 on Microsoft Office 2021 for Mac or Windows

Enhance your productivity with a Microsoft Office licenses for either Mac or Windows.

Living

What's the Burnt Toast Theory? A Psychologist Explains the Mindset Hack That Can Make You Happier and More Successful.

Dr. Nadia Teymoorian, a psychologist at Moment of Clarity Health Center, breaks down the benefits.

Starting a Business

This Founder's Smart Sunglasses Retail for $849 — and He Crowdfunded More Than $300,000. Here's How He Came Up With the Idea That Could Revolutionize Eyewear.

'Entrepreneur' spoke with Deep Optics CEO and founder Yariv Haddad, who shared some exclusives about the startup's journey so far, plus its growth and expansion strategies.

Starting a Business

How Giving Your Time and Resources to Others Can Unlock Opportunity and Wealth

On this episode of "The Jeff Fenster Show," Jeff and his guest Roland Frasier delve into building relationships, adding value, and seizing opportunities in business.

Growing a Business

Go Beyond Swapping Business Cards and Small Talk — Here's How to Forge Meaningful Relationships.

Deeper connections are truly the most effective way to grow your career, company or personal life. Here's how to cultivate them through networking.

Growing a Business

Free Webinar | March 27: SheHacks Success: Unveiling Growth Practices for Female Entrepreneurs

Join our webinar on March 27th as our experts unveil empowering secrets that will allow you to lead with confidence in the competitive entrepreneurial world. Register now!