Why This Entrepreneur Scaled Back His No. 1 Product- Valutrics

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 The story begins in 2001, when Dogfish created a beer called 90 Minute IPA. It’s powerful — at 9 percent alcohol 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. 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

Jason Feifer is the editor-in-chief at Entrepreneur magazine. Follow him @heyfeifer.