Spike Brewing and the Growing Phenomenon of Home Brewing
Milwaukee home brewing equipment manufacturer has swiftly transformed from a startup to an industry leader
Entrepreneurship is not for the faint of heart. It requires courage, ingenuity, a tireless work ethic, and an unwavering belief and confidence in one’s own abilities to succeed. The last and arguably most important difference between a successful entrepreneur and an unsuccessful one is a well-timed stroke of luck and inspiration.
For Ben Caya of Spike Brewing, that stroke of luck came in college. “I pretty much fell into it,” he says. “I always tell people that if you told me five years ago that I’d own a home brewing business, that I’d say ‘what’s home brewing?’”
For Caya, the inspiration was a byproduct of a typical college life trope- the keg party. “Pretty much how I got started is that I had some extra beer kegs in my basement, and I realized there was a market for them. When I started selling kegs, I was probably a junior in college, and it slowly transformed into a business through asking people what they were buying the kegs for. Some of the buyers said they’d cut the top off and use them to make beer.”
Even at a young age, Caya was industrious with an entrepreneurial streak, and used his background in engineering to start transforming the kegs into high-end beer manufacturing equipment. “I started punching holes in them and welding fittings for brewing tanks, and selling them. Eventually I couldn’t get enough kegs to meet demand and started getting kettles instead, and that led into a partnership with a manufacturer. ”
That was four years ago now, and in that time Caya has organically and cost-efficiently scaled his home brewing equipment manufacturing business. He recalls the humble beginnings of the business, starting with a $500 expenditure from his credit card. Despite the lack of funding, Caya’s entrepreneurial instincts and vision have enabled him to develop Spike Brewing into a major player in the industry, hoping to do $1 million in sales this year.
Caya sees limited funding as a veritable blessing, as it has forced him to keep his ambition in check and remain patient. “If we had a sudden influx of cash we could expand- hire more people, create more overhead- but scaling is extremely challenging, especially for manufacturing companies,” he says. “Businesses in some other industries can scale easier, but in the manufacturing industry it's safer to scale linearly."
Caya has been patient as the business has grown, but soon plans to expand Spike Brewing’s offerings. “Right now we primarily do home-brewing kettles and tanks, but that’s just one piece of the puzzle,” he says. “What we want to get into now is fermenters. Rolling out a new product is very expensive with research and development, engineering, designs, samples, approval… Once you go through the process initially, you’re into it about $150,000, and you haven’t sold a single unit. So for a small business it’s a huge step.”
Caya doesn’t approach a risky undertaking like unrolling a new product lightly, as he’s learned to meticulously weigh every facet of a decision before making it. “You can’t put yourself out there too much when you’re open to risk or failure,” Caya says. “Let’s say we spend $150,000 on a new product and put it out there and it flops, it’s very difficult to recover from that. The banks aren’t going to give you a second chance and they’re not going to extend more funds. They are just going to write you off. As a small business, there are a lot of risk and a lot of important choices to make, but also a lot of potential for reward.”
Spike Brewing has benefited from a relative lack of competition based on getting in on the ground-floor of the burgeoning home-brewing market. Caya says that when he entered the market, there was only one existing competitor, who had been around for six years at the time. Spike quickly emerged as a highly profitable business by taking an adeptly modern approach to sales and marketing.
“I don’t feel like our competition is keeping up with industry trends as well as they could,” he says. “So there’s opportunity for us. When we started three or four years ago, that was the only existing company, and we are more active on social media and have a better awareness of how to leverage the internet to attract interest and customers to the business.”
Spike Brewing’s optimized web presence has enabled them to sell and ship their products all over the United States, while also utilizing their web analytics to identify key markets. Although locals often see Milwaukee as a beer haven, it is heads and tales behind some of the nation’s microbrew meccas.
“Milwaukee is in our top ten markets, but it’s not one of the top,” Caya says. “The top are all west coast- California, Oregon, Washington and Colorado- those are the big four. Milwaukee has been an upcoming market for small breweries as of recently, but until about a year or so ago you didn’t see too many microbreweries in Milwaukee. Now you’ve got Enlightened, MobCraft, CityLights, GoodCity, and a number of other small breweries opening up in a short amount of time, and I think it shows that Milwaukee is ready. By next year, if all of these breweries are doing well, we’ll know that Milwaukee was ready for the craft movement that the west coast has already seen.”
As craft beer culture rampantly spreads throughout the United States like craft coffee culture did before it, Spike Brewing’s demand will continue to snowball. In order to facilitate a higher rate of production and storage, Caya is moving the business to from their current 2,00 square foot space to a new 15,000 square foot building this fall. Caya explains, “We’ve kind of hit the limit of what our current building can hold. We want to expand, come up with new products and do more marketing, but it’s hard to actually facilitate that expansion in sales when your space is too small.”
Caya is grateful for how far the business has come, but his plans for the future are fully-formulated like an architectural blueprint waiting to be built. “It’s cool to take a step back and see where we are and where we came from,” he says. “But in my head we still have a long way to go. That’s what I pride myself most on- I see where we are, where we’d like to be, and how we get there.”