By Leslie Wright
Free Press Staff Writer

SOUTH BURLINGTON -- In his prior entrepreneurial incarnations Alan Newman learned many lessons. Patience was one of them.

He's applied that lesson at Magic Hat Brewing Co. The South Burlington brewery even makes a beer called Humble Patience.

Patience is what made Magic Hat what it is today, the barefoot Buddhaesque 55-year-old said during a recent interview at the brewery.

Newman resisted urges that others grasped at during the go-go years in the craft beer business. He thinks that's why Magic Hat is still around.

As the company closes in on a decade, the maker of No. 9, Fat Angel and Blind Faith expects to make 38,000 barrels this year and continues to grow 20 percent per year, twice the rate of the company's peers.

Magic Hat is private, and Newman would not discuss the company's financials.

Newman has many ideas for the business built on an image of mysticism and mystery. To him, it's no mystery that patience will continue to be a key ingredient as Magic Hat moves forward.

Buying a brewery


Newman recently resisted the urge to open Magic Hat South in Key West, Fla. His fantasy about dividing his time between Burlington and the tropical paradise was fleeting.

He did buy the bankrupt brewery in late August. Instead of running it, he's cannibalizing the brewery for its contents and shipping them north. The new equipment will double the South Burlington brewery's capacity. Newman can't wait to get the equipment up and running.

"We had a horrendous summer where demand outstripped supply," Newman said. "Everybody says it's a good problem to have. I agree, but it's a problem none the less."

Orders were coming in close to 30 percent ahead of last year when, in mid-June, a filter went down, forcing production to halt for a week.

At the end of August Newman said the company was still recovering from the down time.

The Key West deal includes an extra filter so the brewery will have a back up.

Fighting temptation


When Magic Hat started in 1994, the craft brew craze was rapidly reaching a peak. In 1996 the business saw a record 333 brew pub and microbrewery openings.

Two years later the fizz started to go flat, and closings peaked at 123, said PaulGatza, director of the Institute for Brewing Studies in Boulder, Colo.

Vermont has not been immune to changes in the industry. Tunbridge Brewing Co. went out of business this spring after almost seven years. Golden Dome Brewing Co. in Montpelier closed in 1999. Franklin County Brewery Inc., maker of Rail City beers, in St. Albans closed in 2000.

"We were the last people, in my opinion, to get through what I call the window of opportunity," Newman said.

Newman started Magic Hat after founding Seventh Generation Inc., the Colchester company specializing in environmentally friendly household goods, and helping to start Gardener's Supply Co. in Burlington.

At Magic Hat he paired up with Bob Johnson. Newman handled the business side while Johnson oversaw beer making. This division of labor helped Magic Hat succeed, Newman said.

Many microbreweries failed because they were focused on one side of the business at the expense of the other, Newman said.

In the first few years, Magic Hat doubled in size annually. Every expansion seemed to be only a quick fix.

In Kennebunk, Maine, where the company first brewed beer, capacity was 15 kegs a week. When the brewery moved to Burlington in November 1994, capacity jumped to 60 kegs a week. Demand outstripped supply by January.

The brewery again doubled capacity and by April of that year was maxed out, Newman recalled.

The temptation at the time was to boost distribution to every corner of the country.

"It got heady. I had everything to do not to fall into the trap," Newman said. "There wasn't a day that went by that a new distributor called and said, 'We've got to have your product.'"

Since the boom years, growth in the small brewery industry has stabilized. Last year small breweries, those producing under 2 million barrels, grew 9.7 percent, said Daniel Bradford, president of the Brewers Association of America, in Durham, N.C. Newman is on the board of the industry organization.

Today there are 1,400 small breweries like Magic Hat that make 3 to 4 percent of the beer consumed in the country, Bradford said. He contends that the industry is back to a stabilized core of producers and hasn't changed all that much from before the mid-'90s boom.

Imported beers, Corona and Heineken leading the pack, have given small breweries a challenge most recently. Small breweries are still growing, he noted.

"Imports are clearly on fire, but the small breweries are doing a lot better than most people think," Bradford said. "All you need to do is look at Magic Hat."

Montreal and beyond


Newman has intentionally kept a lid on his company's growth. Magic Hat is only available in 10 states, most of them in the Northeast. The Magic Hat Web site bulletin board is full of pleadings for wider distributorship.

Distribution in the region can be expanded before going further afield, Newman said.

There's room to expand in New York and New Jersey. Magic Hat could be delivered to Pennsylvania, Washington, D.C., Virginia and North Carolina, he said.

Introducing the beer in a new area comes with a carefully crafted effort to create "buzz." Buzz starts in barrooms. Before Magic Hat is found on store shelves it appears on tap in bars.

Newman wants to stick to that community building model. He is determined to grow Magic Hat in measured steps.

He wants to keep quality ingredients in the beer and not compromise quality to make large volumes to sell at discounted prices.

There are a number of breweries that have managed to maintain quality and grow, he said. Newman likes New Belgium Brewing, the maker of Fat Tire Amber Ale and others, in Fort Collins, Colo.

New Belgium is distributed in 12 Western states and will make 260,000 barrels this year, nearly 10 times as much beer as Magic Hat. A barrel is 31 gallons.

Newman would like to see Magic Hat beer flow in other countries. Montreal and Manhattan are considered test markets for the brand's international appeal.

Magic Hat is not on tap in Montreal yet, but the company has tested the market with promotions. Getting the beer into Canada is complicated and expensive, but Newman hopes to be there in the next 12 to 18 months.

Magic Hat is flowing in Manhattan and Newman is keeping an eye on how it is received in a city that cuts newcomers no breaks.

The Vermont-based beer would go over well out West, said Jeremy Rubingh, 22, of Boulder Colo. An admitted beer snob, he characterized Magic Hat as every man's microbrew because of its broad appeal and wide acceptance.

"Magic Hat's the solid medium beer you can pick up at the store," Rubingh said over a pint at Three Needs, Burlington bar that brews its own beer.

Magic Hat is what you find at every college apartment in the Hill section in Burlington, he said. He prefers to drink little known house beers at bars like Three Needs or Vermont Pub and Brewery.

He conceded that Magic Hat has done a good job cultivating an underground beer image with promotions like exclusive beer tents at concerts.

"They have this whole scene that goes with them," Rubingh said.

Contact Leslie Wright at 660-1841 or lwright@bfp.burlingtonfreepress.com